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
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Nuveen Insured California Tax-Free Advantage Municipal Fund
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: February 28
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Date of reporting period: February 28, 2010
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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.
[LOGO]
NUVEEN
INVESTMENTS
Closed-End Funds
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Nuveen Investments
Municipal Closed-End Funds
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
Annual Report
February 28, 2010
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------------------------- ------------------------- ------------------------- --------------------------
NUVEEN INSURED CALIFORNIA NUVEEN INSURED CALIFORNIA NUVEEN CALIFORNIA NUVEEN CALIFORNIA
PREMIUM INCOME MUNICIPAL PREMIUM INCOME MUNICIPAL PREMIUM INCOME DIVIDEND ADVANTAGE
FUND, INC. FUND 2, INC. MUNICIPAL FUND MUNICIPAL FUND
NPC NCL NCU NAC
------------------------- ------------------------- ------------------------- --------------------------
NUVEEN CALIFORNIA NUVEEN CALIFORNIA NUVEEN INSURED CALIFORNIA NUVEEN INSURED CALIFORNIA
DIVIDEND ADVANTAGE DIVIDEND ADVANTAGE DIVIDEND ADVANTAGE TAX-FREE ADVANTAGE
MUNICIPAL FUND 2 MUNICIPAL FUND 3 MUNICIPAL FUND MUNICIPAL FUND
NVX NZH NKL NKX
FEBRUARY
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NUVEEN
INVESTMENTS
Chairman's
Letter to Shareholders
[PHOTO OF ROBERT P. BREMNER]
DEAR SHAREHOLDER,
The economic environment in which your Fund operates reflects continuing but
uneven economic recovery. The U.S. and other major industrial countries are
experiencing steady but comparatively low levels of economic growth, while
emerging market countries are seeing a resumption of relatively strong economic
expansion. The largest source of economic uncertainty is the potential impact of
steps being considered by many governments to counteract the extraordinary
governmental spending and credit expansion carried out to deal with the
financial and economic crisis of 2008. Consequently, the implications for future
tax rates, government spending, interest rates and the pace of economic recovery
in the U.S. and other leading economies are extremely difficult to predict at
the present time. The long term health of the global economy depends on
restoring some measure of fiscal discipline around the world, but since all of
the corrective steps require economic pain, it is not surprising that
governments are reluctant to undertake them.
In the near term, governments remain committed to furthering economic recovery
and realizing a meaningful reduction in their national unemployment rates. Such
an environment should produce continued economic growth and, consequently,
attractive investment opportunities. Over the longer term, the larger
uncertainty mentioned earlier carries the risk of unexpected potholes in the
road to sustained recovery. For this reason, Nuveen's investment management
teams are working hard to balance return and risk by building well-diversified
portfolios, among other strategies. I encourage you to read the following
commentary on the management of your Fund. As always, I also encourage you to
contact your financial consultant if you have any questions about your Nuveen
Fund investment.
Over the last twelve months, the Nuveen leveraged municipal closed-end funds
continued to make progress in refinancing their auction rate preferred shares
(ARPS). By the fall of 2009, all of the Nuveen taxable closed-end Funds had
completed redemption of their ARPS at par value. As of March 31, 2010,
approximately 40% of the municipal ARPS issued by the Nuveen Funds also had been
redeemed. Please consult the Nuveen web site for the most recent information on
this issue and all recent developments on your Nuveen Funds at: www.nuveen.com.
On behalf of 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 Board
April 19, 2010
Nuveen Investments 1
Portfolio Manager's Comments
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)
PORTFOLIO MANAGER SCOTT ROMANS REVIEWS ECONOMIC AND MUNICIPAL MARKET CONDITIONS
AT BOTH THE NATIONAL AND STATE LEVELS, KEY INVESTMENT STRATEGIES, AND THE
TWELVE-MONTH PERFORMANCE OF THE 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 TWELVE-MONTH REPORTING PERIOD ENDED FEBRUARY 28, 2010?
During this reporting period, municipal bond prices generally rose as strong
cash flows into municipal bond funds combined with tighter supply of new
tax-exempt issuance to provide favorable supply and demand conditions. As the
period began, there continued to be considerable downward pressure on the
economy, and both the Federal Reserve (Fed) and the federal government continued
their efforts to improve overall economic conditions. The Fed kept the benchmark
fed funds rate in a target range of zero to 0.25% after cutting it to its record
low level in December 2008. In February 2009, the federal government passed a
$787 billion economic stimulus package. At its meeting in March 2010 (after the
close of this reporting period), the Fed pledged to keep the fed funds rate
"exceptionally low" for an "extended period."
In recent months, these and other measures taken by the Fed and the government
to ease the economic recession have produced some incipient signs of
improvement. In the fourth quarter of 2009, the U.S. gross domestic product
(GDP), grew at an annualized rate of 5.6%, the fastest pace in six years. This
was the second quarter in a row that the economy posted positive growth,
following four quarters of contraction. Housing prices also provided a bright
spot between May 2009 and January 2010 by recording nine consecutive months of
positive returns (on a seasonally adjusted basis) after three years of decline.
At the same time, inflation remained relatively tame, as the Consumer Price
Index (CPI) rose 2.1%. The core CPI (which excludes food and energy) rose 1.3%
over the year, within the Fed's unofficial objective of 2.0% or lower for this
measure. Since the recession began in December 2007, the U.S. economy has lost a
total of 8.4
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.
2 Nuveen Investments
million jobs, the biggest decline since the Great Depression. While labor
markets remained weak, recent months saw a slight improvement. As of February
2010, the national unemployment rate was 9.7%, up from 8.2% in February 2009 but
down from the 26-year high of 10.1% in October 2009.
Municipal market conditions began to show general signs of improvement
throughout most of the period. This trend was bolstered by the reduced supply of
tax-exempt municipal debt in the marketplace, due in part to the introduction of
the Build America Bond program in April 2009. Build America Bonds are a new
class of taxable municipal debt created as part of the February 2009 economic
stimulus package. These bonds currently offer municipal issuers a federal
subsidy equal to 35% of the security's interest payments and therefore provide
issuers with an attractive alternative to traditional tax-exempt debt. Between
April 2009 and the end of this reporting period, taxable Build America Bonds
issuance totaled $78.2 billion, accounting for 20% of new bonds issued in the
municipal market during that time. Over the twelve months ended February 28,
2010, municipal bond issuance nationwide--both tax-exempt and taxable--totaled
$423.1 billion, an increase of 7.3% compared with the twelve-month period ended
February 28, 2009. Demand for tax-exempt bonds remained strong during this
period and, combined with lower tax-exempt supply, provided support for
municipal bond prices.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN CALIFORNIA DURING THIS PERIOD?
California continued to struggle to emerge from a deep recession, which was
driven in part by the severe correction in the state's housing market. As of
February 2010, California's unemployment rate had risen to 12.5%, up from 10.2%
in February 2009. On the positive side, California's economy remained relatively
diverse, and exports, which increased in recent months, continue to grow based
on improving global demand, especially for the state's technology products.
According to the Standard & Poor's (S&P)/Case-Shiller home price index of 20
major metropolitan areas, home prices in San Francisco, San Diego and Los
Angeles rose 9.0%, 5.9%, and 3.9%, respectively, during the twelve months ended
January 2010, compared with an average decline of 0.7% nationally. The increases
in home value in these three cities contrasted sharply with their declines for
the twelve months ended January 2009, which ranged from 25% to 32%.
During the summer of 2009, the state closed a gap in the fiscal 2009-2010 budget
using an assortment of one-time measures, which led to the reappearance of the
same kinds of deficit problems in the fiscal 2010-2011 budget. For the 2010-2011
budget, California faces a total shortfall of almost $20 billion. Plans called
for closing that gap by cutting spending on health and human services, welfare,
transportation, and environmental programs as well as by generating additional
revenue through the rollback of recent corporate tax breaks and expansion of oil
drilling off the Santa Barbara coast. In addition, the state proposed asking the
federal government for increased funds to help cover costs for Medicaid,
imprisoning illegal immigrants and implementing federal education mandates.
After billions of dollars in cuts to school funding in California in recent
years, spending for public schools and colleges, which accounted for $36 billion
of expenditures in the 2010-2011 budget, would be protected under the current
plan.
Nuveen Investments 3
As of February 2010, Moody's, S&P and Fitch rated California general obligation
(GOs) bonds at Baa1, A-, and BBB, respectively. These ratings reflected Moody's
downgrades to A2 from A1 in March 2009 and to Baa1 from A2 in July 2009. In
January 2010, S&P lowered California's GO rating to A- from A. Fitch, which had
rated California GOs at A+ in February 2009, downgraded its rating three times
during this period--in March, June and July 2009. All three rating agencies
cited the state's severe fiscal imbalance and continued budgetary stress as
reasons for the downgrades. For the twelve months ended February 28, 2010,
municipal issuance in California totaled $74.0 billion, an increase of 42% from
the previous twelve months. California remained the largest state issuer in the
nation, representing approximately 17.5% of total issuance nationwide for the
twelve months ended February 2010.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE CALIFORNIA FUNDS DURING THIS
REPORTING PERIOD?
As previously mentioned, the availability of new tax-exempt bonds declined
during this period, due in part to the introduction of taxable Build America
Bonds in April 2009. Although total municipal issuance--including tax-exempt as
well as taxable issuance--was up substantially in California for the twelve
months ended February 28, 2010, Build America Bonds accounted for more than 83%
of the increase. With $18.3 billion in Build America Bonds issued in the state
during this period, California ranked as the largest user of these bonds among
the 50 states. Since interest payments from Build America Bonds represent
taxable income, we do not view these bonds as good investment opportunities for
the tax-exempt California Funds.
For the insured California Funds, this situation was compounded by the severe
decline in the issuance of AAA rated insured bonds. Over the past twelve months,
new insured securities accounted for approximately 8% of national issuance,
compared with about 18% during the same period a year earlier and historical
levels of approximately 50%.
Given the constrained supply, we continued to find attractive value
opportunities, taking a bottom-up approach to discovering undervalued sectors
and individual credits with the potential to perform well over the long term.
During this period, the California Funds purchased health care, health care
district and public utilities bonds. Tax-exempt supply was usually more
plentiful in the health care sector because hospitals generally do not qualify
for the Build America Bond program and so must continue to issue bonds in the
tax-exempt municipal market. In addition, health care entities in California
were active issuers during this period, as they sought to replace variable rate
issuance with fixed rates. Although we had previously de-emphasized bonds issued
by the State of California due to their exposure to the state's economic
problems, we believed that California GOs and public works bonds (backed by
appropriation debt of the state) offered good value as credit spreads on these
bonds widened. Many of the Funds took new positions in these state credits for
the first time in a long while, especially during the last part of 2009. Some of
the Funds also purchased local GOs for school districts, waste water bonds
and--in the insured Funds--insured utilities credits. We also found attractive
new issuances offering favorable structures and large coupons in the "dirt deal"
(i.e., land-secured bonds that finance public infrastructure costs for new
developments)
4 Nuveen Investments
segment of the market, and we increased our exposure to certain issuers of these
bonds that we already held in our portfolios.
Cash for new purchases during this period was generated largely by maturing or
called bonds. In addition, the Funds took advantage of selected opportunities to
sell a few pre-refunded and other bonds with very short maturities. In general,
we tried to manage our purchase opportunities around anticipated cash flows.
As of February 28, 2010, all eight of these Funds continued to use inverse
floating rate securities.(1) We employ inverse floaters as a form of leverage
for a variety of reasons, including duration(2) management, income enhancement
and total return enhancement.
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 2/28/10
1-YEAR 5-YEAR 10-YEAR
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UNINSURED FUNDS
NCU 17.06% 3.70% 6.80%
NAC 21.97% 3.79% 7.75%
NVX 19.52% 4.52% N/A
NZH 22.17% 3.21% N/A
Standard & Poor's (S&P) California Municipal Bond Index(3) 9.81% 3.95% 5.59%
Standard & Poor's (S&P) National Municipal Bond Index(4) 11.20% 4.32% 5.77%
Lipper California Municipal Debt Funds Average(5) 20.09% 2.84% 6.16%
INSURED FUNDS
NPC 10.66% 3.97% 6.58%
NCL 15.35% 3.75% 6.44%
NKL 15.42% 4.44% N/A
NKX 15.49% 4.10% N/A
Standard & Poor's (S&P) California Municipal Bond Index(3) 9.81% 3.95% 5.59%
Standard & Poor's (S&P) Insured National
Municipal Bond Index(6) 10.49% 4.22% 6.00%
Lipper Single-State Insured Municipal Debt Funds Average(7) 16.93% 3.63% 6.49%
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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.
(1) An inverse floating rate security, also known as an inverse floater, 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 this reporting period, are further defined within
the Notes to Financial Statements and Glossary of Terms Used in this
Report sections of this report.
(2) 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.
(3) 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. This
index does not reflect any initial or ongoing expenses and is not
available for direct investment.
(4) The Standard & Poor's (S&P) National Municipal Bond Index is an
unleveraged, market value-weighted index designed to measure the
performance of the investment-grade U.S. municipal bond market. This index
does not reflect any initial or ongoing expenses and is not available for
direct investment.
(5) 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-year, 24 funds; and 10-year, 12 funds. Lipper
returns account for the effects of management fees and assume reinvestment
of dividends, but do not reflect any applicable sales charges. The Lipper
average is not available for direct investment.
(6) The Standard & Poor's (S&P) Insured National Municipal Bond Index is a
national unlever-aged, market value-weighted index designed to measure the
performance of the insured U.S. municipal bond market. This index does not
reflect any initial or ongoing expenses and is not available for direct
investment.
(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-year, 44 funds funds; and 10-year, 24
funds. Lipper returns account for the effects of management fees and
assume reinvestment of dividends, but do not reflect any applicable sales
charges. The Lipper average is not available for direct investment.
Nuveen Investments 5
For the twelve months ended February 28, 2010, the total returns on common share
net asset value (NAV) for all eight of these California Funds exceeded the
return for the Standard & Poor's (S&P) California Municipal Bond Index. NCU,
NAC, NVX and NZH outperformed the S&P National Municipal Bond Index, while NPC,
NCL, NKL and NKX surpassed the return on the S&P Insured National Municipal Bond
Index. NAC and NZH exceeded the average return for the Lipper California
Municipal Debt Funds Average, while NCU and NVX trailed this measure. All four
of the insured Funds underperformed the Lipper Single-State Insured Municipal
Debt Funds Average. 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 yield curve and duration positioning, credit exposure and sector
allocation. In addition, the use of leverage was an important factor affecting
each of the Funds' performances over this period. The impact of leverage is
discussed in more detail on page seven.
During this period, yields on tax-exempt bonds generally declined and bond
prices rose, especially at the longer end of the municipal yield curve. As a
result, longer-term bonds generally outperformed credits with shorter
maturities. Overall, duration and yield curve positioning proved positive for
the performances of these Funds. The Funds tended to have durations that were
longer than that of the market or--in the case of NKL and NKX--longer than their
duration targets, which had a positive impact on performance. In NVX, however,
which had a duration slightly shorter than that of the market, duration
positioning was a modest negative.
While duration and yield curve positioning played an important role in
performance during these twelve months, credit exposure had an even greater
impact. The demand for municipal bonds increased during this period, driven by a
variety of factors, including concerns about potential tax increases, the need
to rebalance portfolio allocations and a growing appetite for additional risk.
At the same time, the supply of tax-exempt municipal paper declined. As
investors bid up municipal bond prices, bonds rated BBB or below and non-rated
bonds generally outperformed those rated AAA. In this environment, the Funds'
performances benefited from their allocations of lower quality credits. This was
especially true in NAC and NZH, which had the heaviest weightings of BBB and
non-rated bonds among the four uninsured Funds. In addition, uninsured Dividend
Advantage Funds, NAC, NVX and NZH were able to invest in subinvestment-grade
bonds, which boosted their performances for the twelve months, especially
relative to NCU, which cannot purchase bonds in this credit quality sector. On
the other hand, the higher credit quality holdings of the four insured Funds
hampered their relative performances during this period. NKX had the most
exposure to BBB and non-rated bonds among these four Funds, followed by NKL and
NCL, while NPC had the least. These weightings were reflected in their relative
performances.
Holdings that generally contributed to each Funds' performance during this
period included industrial development revenue and health care bonds. In
particular, NCU, NAC and NZH were overweight in health care, which had a
positive impact on their performances. Revenue bonds as a whole performed well,
with housing, transportation and public utilities among the sectors also
outperforming the general municipal market
6 Nuveen Investments
for this period. In addition, zero coupon bonds and lower-rated tobacco bonds
were among the strongest performers.
Pre-refunded bonds, which are typically backed by U.S. Treasury securities,
performed relatively poorly during this period. The underperformance of these
bonds can be attributed primarily to their shorter effective maturities and
higher credit quality. Many general obligation bonds also failed to keep pace
with the overall municipal market, while education, water and sewer, leasing and
resource recovery trailed the other revenue sectors for the twelve months. NAC,
NVX, NZH and NKX were underweighted in GOs, which lessened the impact of the
underperformance of this sector on these Funds' returns. Our holdings of "dirt
deal" bonds also generally performed poorly during this period.
IMPACT OF THE FUNDS' LEVERAGE STRATEGIES ON PERFORMANCE
One important factor impacting the returns of these Funds relative to the
comparative indexes was the Funds' use of financial leverage. The Funds use
leverage because their managers believe that, over time, leveraging provides
opportunities for additional income and total returns for common shareholders.
However, use of leverage also can expose common shareholders to additional
volatility. For example, as the prices of securities held by a Fund decline, the
negative impact of these valuation changes on common share net asset value and
common shareholder total return is magnified by the use of leverage. Conversely,
leverage may enhance common share returns during periods when bond prices
generally are rising.
Leverage made a significant positive contribution to the performance of these
Funds over this reporting period.
RECENT DEVELOPMENTS REGARDING THE FUNDS' LEVERAGED CAPITAL STRUCTURE
Shortly after their inception, each of the Funds issued auction rate preferred
shares (ARPS) to create financial leverage. As noted in past shareholder
reports, the ARPS issued by many closed-end funds, including these Funds, have
been hampered by a lack of liquidity since February 2008. Since that time, more
ARPS have been submitted for sale in each of their regularly scheduled auctions
than there have been offers to buy. In fact, offers to buy have been almost
completely non-existent since late February 2008. This means that these auctions
have "failed to clear," and that many, or all, of the ARPS shareholders who
wanted to sell their shares in these auctions were unable to do so. This lack of
liquidity in ARPS did not lower the credit quality of these shares, and ARPS
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 ARPS. In the recent market, with short-term rates
at multigenerational lows, those maximum rates also have been low.
One continuing implication for common shareholders from the auction failures is
that each Fund's cost of leverage likely has been incrementally higher at times
than it otherwise might have been had the auctions continued to be successful.
As a result, each Fund's common share earnings likely have been incrementally
lower at times than they otherwise might have been.
Nuveen Investments 7
As noted in past shareholder reports, the Nuveen funds' Board of
Directors/Trustees authorized several methods to refinance a portion of the
Nuveen funds' outstanding ARPS. Some Funds have invested in tender option bonds
(TOBs), also known as floating rate securities. The amount of TOBs that a Fund
may use varies according to the composition of each Fund's portfolio. Some Funds
have a greater ability to use TOBs than others. As of February 28, 2010, some
Funds have issued Variable Rate Demand Preferred Shares (VRDP), but these
issuances have been limited since it has been difficult to find liquidity
providers on economically viable terms given the constrained credit environment.
Some Funds have issued MuniFund Term Preferred Shares (MTP), a fixed-rate form
of preferred stock with a mandatory redemption period of five years.
While all these efforts have reduced the total amount of outstanding ARPS issued
by the Nuveen funds, the Funds cannot provide any assurance on when the
remaining outstanding ARPS might be redeemed.
As of February 28, 2010, the amount of ARPS redeemed by the Funds are as shown
in the accompanying table.
AUCTION RATE % OF ORIGINAL
PREFERRED SHARES AUCTION RATE
FUND REDEEMED PREFERRED SHARES
--------------------------------------------------------------------------------
NPC -- --
NCL $ 15,175,000 16.0%
NCU $ 8,625,000 20.1%
NAC $ 39,475,000 22.6%
NVX $ 16,225,000 14.8%
NZH $117,500,000 62.8%
NKL $ 9,750,000 8.3%
NKX $ 45,000,000 100.0%
--------------------------------------------------------------------------------
Subsequent to the reporting period, the following Funds noticed for redemption
at par additional ARPS. The total amount of ARPS redeemed and percentage of each
Fund's original ARPS subsequent to the reporting period are as shown in the
accompanying table.
AUCTION RATE AUCTION RATE % OF ORIGINAL
PREFERRED SHARES PREFERRED SHARES AUCTION RATE
FUND NOTICED FOR REDEMPTION REDEEMED PREFERRED SHARES
--------------------------------------------------------------------------------
NPC $45,000,000 45,000,000 100.0%
NCL $ 6,500,000 21,675,000 22.8%
NKL $ 4,500,000 14,250,000 12.1%
--------------------------------------------------------------------------------
Subsequent to the reporting period, NPC issued $42.7 million of VRDP to redeem
at par the Fund's outstanding ARPS. As noted previously, VRDP is a
newly-developed instrument that essentially replaces all or a portion of the
ARPS used as leverage and potentially could be used to refinance all or a
portion of the ARPS of other Funds. VRDP shares include a liquidity feature that
allows holders of VRDP to have their shares purchased by a liquidity provider in
the event that sell orders have not been matched with purchase orders and
successfully settled in a remarketing. The liquidity feature for NPC's VRDP is
being provided by Deutsche Bank AG, acting through its New York Branch. VRDP
dividends will be set weekly at a rate established by Morgan Stanley & Co.
Incorporated, as remarketing agent. VRDP is offered only to qualified
institutional buyers, defined pursuant to Rule 144A under the Securities Act of
1933.
8 Nuveen Investments
Subsequent to the reporting period, NCU, NAC, NVX and NKL filed with the
Securities and Exchange Commission (SEC) registration statements seeking to
register MTP. These registration statements, declared effective by the SEC,
enable the Funds to issue to the public shares of MTP to refinance all or a
portion of their ARPS. The issuance of MTP by these Funds is subject to market
conditions. There is no assurance that these MTP shares will be issued.
As of February 28, 2010, 80 out of the 84 Nuveen closed-end municipal funds that
had issued ARPS have redeemed, at par, all or a portion of these shares. These
redemptions bring the total amount of Nuveen's municipal closed-end funds' ARPS
redemptions to approximately $3.0 billion of the original approximately $11.0
billion outstanding.
For up-to-date information, please visit the Nuveen CEF Auction Rate Preferred
Resource Center at: http://www.nuveen.com/arps.
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
During the period covered by this report, some bond insurers may have
experienced rating reductions by at least one or more rating agencies. By the
end of this reporting period, there were no longer any bond insurers rated AAA
by more than one of the major rating agencies (Moody's Investor Service, S&P and
Fitch) and most insured bonds were being valued according to their fundamentals
as if they were uninsured. On the whole, the holdings of all of these Funds
continued to be well diversified and it is important to note that municipal
bonds historically have had a very low rate of default.
RECENT CHANGES TO INVESTMENT POLICIES OF NUVEEN INSURED FUNDS
On January 22, 2010, the Board of Directors/Trustees of NCL, NKL and NKX
approved changes to the investment policies of each of these Funds. The Board
took this action in response to the continuing challenges faced by municipal
bond insurers. The changes to the Funds' investment policies are intended to
increase the Funds' investment flexibility in pursuing their investment
objective, while retaining the insured nature of their portfolios. The changes,
which took effect immediately, allow the Funds to invest:
o At least 80% of their net assets in municipal bonds insured by
insurance providers with a claims-paying ability of at least
investment grade at the time of investment; and
o Up to 20% in uninsured municipal bonds that are either escrowed to
maturity, rated investment grade, or unrated but judged by the
Fund's investment adviser to be investment grade quality.
Nuveen Investments 9
Common Share Dividend
and Share Price Information
During the twelve months ended February 28, 2010, each of these Nuveen
California Funds had three increases in their monthly dividends. NCL, NVX, NZH
and NKL also had an additional dividend increase that was declared just prior to
the start of this reporting period and took effect in March 2009.
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, 2010, all of
the Funds in this report had positive UNII balances for both tax and financial
statement purposes.
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
As of February 28, 2010, and the since inception of the Funds' repurchase
program the following Funds have cumulatively repurchased common shares as shown
in the accompanying table.
COMMON SHARES % OF OUTSTANDING
FUND REPURCHASED COMMON SHARES
--------------------------------------------------------------------------------
NPC 17,700 0.3%
NCL 53,500 0.4%
NCU 42,100 0.7%
NAC -- --
NVX 50,700 0.3%
NZH 12,900 0.1%
NKL 32,700 0.2%
NKX -- --
--------------------------------------------------------------------------------
10 Nuveen Investments
During the twelve-month reporting period, the following Funds repurchased common
shares at a weighted average price and a weighted average discount per common
share as shown in the accompanying table.
WEIGHTED AVERAGE WEIGHTED AVERAGE
COMMON SHARES PRICE PER SHARE DISCOUNT PER SHARE
FUND REPURCHASED REPURCHASED REPURCHASED
--------------------------------------------------------------------------------
NPC 11,500 $ 11.90 16.06%
NCL 11,700 $ 10.43 18.03%
NCU 27,400 $ 10.06 19.22%
NVX 32,400 $ 10.28 19.87%
NKL 13,700 $ 11.04 18.04%
--------------------------------------------------------------------------------
As of February 28, 2010, the Funds' common share prices were trading at (-)
discounts to their common share NAVs as shown in the accompanying table.
2/28/10 TWELVE-MONTH AVERAGE
FUND (-)DISCOUNT (-)DISCOUNT
--------------------------------------------------------------------------------
NPC -9.77% -12.14%
NCL -9.08% -9.37%
NCU -11.67% -13.33%
NAC -9.22% -10.03%
NVX -6.42% -10.22%
NZH -3.87% -6.42%
NKL -7.14% -9.59%
NKX -8.27% -8.30%
--------------------------------------------------------------------------------
Nuveen Investments 11
NPC Performance OVERVIEW | Nuveen Insured California
| Premium Income
| Municipal Fund, Inc.
| as of February 28, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.30
--------------------------------------------------------------------------------
Common Share Net Asset Value $14.74
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -9.77%
--------------------------------------------------------------------------------
Market Yield 5.86%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(3) 9.00%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $94,944
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.59
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.80
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/19/92)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 17.13% 10.66%
--------------------------------------------------------------------------------
5-Year 1.76% 3.97%
--------------------------------------------------------------------------------
10-Year 6.14% 6.58%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 31.6%
--------------------------------------------------------------------------------
Tax Obligation/General 24.7%
--------------------------------------------------------------------------------
U.S. Guaranteed 22.1%
--------------------------------------------------------------------------------
Water and Sewer 12.4%
--------------------------------------------------------------------------------
Other 9.2%
--------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
--------------------------------------------------------------------------------
NPFG(4) 30.0%
--------------------------------------------------------------------------------
AGM 27.3%
--------------------------------------------------------------------------------
AMBAC 18.5%
--------------------------------------------------------------------------------
FGIC 15.0%
--------------------------------------------------------------------------------
AGC 7.0%
--------------------------------------------------------------------------------
Other 2.2%
--------------------------------------------------------------------------------
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)(1),(2)
[PIE CHART]
Insured 78%
U.S. Guaranteed* 22%
* U.S. Guaranteed includes 4% (as a % of total investments) of Insured
securities.
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0605
Apr 0.0605
May 0.0615
Jun 0.0615
Jul 0.0615
Aug 0.0615
Sep 0.0630
Oct 0.0630
Nov 0.0630
Dec 0.0650
Jan 0.0650
Feb 0.0650
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 11.67
11.28
11.25
11.29
11.80
11.83
11.74
11.83
12.12
12.35
12.51
12.38
12.32
12.36
12.25
11.86
12.18
11.79
11.86
12.04
12.15
12.62
12.75
12.94
12.88
12.96
12.98
13.65
13.66
13.78
13.67
13.74
13.70
13.04
13.34
13.15
13.16
12.95
12.83
12.90
13.11
13.32
13.11
12.99
13.00
12.97
12.91
12.90
12.89
12.95
13.07
13.06
13.30
2/28/10 13.30
(1) Primarily all of the Fund's net assets 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.
(2) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds whose insurer has experienced downgrades as of the end of
the reporting period. Please see the Portfolio Manager's Comments 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 during the period.
(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) MBIA's public finance subsidiary.
12 Nuveen Investments
NCL Performance OVERVIEW | Nuveen Insured California
| Premium Income
| Municipal Fund 2, Inc.
| as of February 28, 2010
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)(1,2)
[PIE CHART]
Insured 89%
U.S. Guaranteed* 9%
AA (uninsured) 2%
* U.S. Guaranteed includes 7% (as a % of total investments) of Insured
securities.
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0580
Apr 0.0580
May 0.0650
Jun 0.0650
Jul 0.0650
Aug 0.0650
Sep 0.0670
Oct 0.0670
Nov 0.0670
Dec 0.0690
Jan 0.0690
Feb 0.0690
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 10.69
10.36
10.53
10.72
10.81
11.02
11.22
11.15
11.67
11.95
12.03
11.89
11.98
12.08
12.22
11.95
11.66
11.30
11.29
11.43
11.68
12.00
12.27
12.34
12.32
12.53
12.60
13.18
13.04
13.80
13.73
13.57
13.34
12.60
12.95
13.08
12.81
12.72
12.65
12.69
12.85
12.80
12.65
12.57
12.55
12.59
12.53
12.51
12.56
12.55
12.65
12.61
12.72
2/28/10 12.72
(1) At least 80% of the Fund's net assets 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.
(2) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds whose insurer has experienced downgrades as of the end of
the reporting period. Please see the Portfolio Manager's Comments 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 during the period.
(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) MBIA's public finance subsidiary.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $12.72
--------------------------------------------------------------------------------
Common Share Net Asset Value $13.99
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -9.08%
--------------------------------------------------------------------------------
Market Yield 6.51%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(3) 10.00%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $177,169
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.79
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.37
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 24.41% 15.35%
--------------------------------------------------------------------------------
5-Year 2.45% 3.75%
--------------------------------------------------------------------------------
10-Year 6.13% 6.44%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 40.9%
--------------------------------------------------------------------------------
Tax Obligation/General 17.8%
--------------------------------------------------------------------------------
Water and Sewer 15.2%
--------------------------------------------------------------------------------
U.S. Guaranteed 8.7%
--------------------------------------------------------------------------------
Utilities 6.8%
--------------------------------------------------------------------------------
Other 10.6%
--------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
--------------------------------------------------------------------------------
AMBAC 26.4%
--------------------------------------------------------------------------------
FGIC 24.7%
--------------------------------------------------------------------------------
NPFG(4) 22.2%
--------------------------------------------------------------------------------
AGM 21.0%
--------------------------------------------------------------------------------
AGC 4.9%
--------------------------------------------------------------------------------
Other 0.8%
--------------------------------------------------------------------------------
Nuveen Investments 13
NCU Performance OVERVIEW | Nuveen California
| Premium Income
| Municipal Fund
| as of February 28, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.11
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 13.71
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.67%
--------------------------------------------------------------------------------
Market Yield 6.59%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 10.12%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $78,581
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.13
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.27
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/18/93)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 28.13% 17.06%
--------------------------------------------------------------------------------
5-Year 2.51% 3.70%
--------------------------------------------------------------------------------
10-Year 5.76% 6.80%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 30.2%
--------------------------------------------------------------------------------
Health Care 17.9%
--------------------------------------------------------------------------------
Tax Obligation/General 16.9%
--------------------------------------------------------------------------------
U.S. Guaranteed 10.7%
--------------------------------------------------------------------------------
Utilities 5.3%
--------------------------------------------------------------------------------
Water and Sewer 4.6%
--------------------------------------------------------------------------------
Other 14.4%
--------------------------------------------------------------------------------
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)
[PIE CHART]
AAA/U.S. Guaranteed 22%
AA 28%
A 28%
BBB 19%
N/R 3%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0555
Apr 0.0555
May 0.0570
Jun 0.0570
Jul 0.0570
Aug 0.0570
Sep 0.0620
Oct 0.0620
Nov 0.0620
Dec 0.0665
Jan 0.0665
Feb 0.0665
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 9.66
9.52
9.68
9.79
9.85
9.91
10.00
10.12
10.48
10.77
10.95
10.85
10.82
10.93
10.92
10.76
10.70
10.53
10.64
10.73
10.80
11.07
11.49
11.53
11.58
11.84
12.03
12.18
12.59
12.78
12.79
12.84
12.74
12.23
12.25
12.06
12.23
11.79
11.65
11.76
11.99
12.06
11.84
12.02
12.13
12.08
12.04
11.93
12.00
12.07
12.02
12.00
12.11
2/28/10 12.11
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
14 Nuveen Investments
NAC Performance OVERVIEW | Nuveen California Dividend Advantage
| Municipal Fund
| as of February 28, 2010
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)
[PIE CHART]
AAA/U.S. Guaranteed 31%
AA 17%
A 27%
BBB 14%
BB or Lower 2%
N/R 9%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0630
Apr 0.0630
May 0.0665
Jun 0.0665
Jul 0.0665
Aug 0.0665
Sep 0.0680
Oct 0.0680
Nov 0.0680
Dec 0.0720
Jan 0.0720
Feb 0.0720
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 10.55
9.70
9.81
10.30
10.13
10.55
10.46
10.64
10.99
11.30
11.42
11.33
11.40
11.62
11.33
10.83
10.94
10.90
10.92
11.10
11.20
11.45
11.70
11.83
11.99
12.15
12.16
12.54
12.96
13.17
13.15
13.46
13.48
12.49
12.83
12.36
12.75
12.40
12.18
12.36
12.52
12.58
12.48
12.46
12.40
12.52
12.36
12.47
12.51
12.67
12.50
12.44
12.60
2/28/10 12.60
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $12.60
--------------------------------------------------------------------------------
Common Share
Net Asset Value $13.88
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -9.22%
--------------------------------------------------------------------------------
Market Yield 6.86%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 10.54%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $325,791
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 18.10
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.46
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/26/99)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 24.62% 21.97%
--------------------------------------------------------------------------------
5-Year 3.24% 3.79%
--------------------------------------------------------------------------------
10-Year 6.65% 7.75%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 22.1%
--------------------------------------------------------------------------------
Health Care 17.8%
--------------------------------------------------------------------------------
U.S. Guaranteed 17.3%
--------------------------------------------------------------------------------
Transportation 13.6%
--------------------------------------------------------------------------------
Tax Obligation/General 8.1%
--------------------------------------------------------------------------------
Education and Civic Organizations 4.7%
--------------------------------------------------------------------------------
Consumer Staples 4.5%
--------------------------------------------------------------------------------
Other 11.9%
--------------------------------------------------------------------------------
Nuveen Investments 15
NVX Performance OVERVIEW | Nuveen California
| Dividend Advantage
| Municipal Fund 2
| as of February 28, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 13.56
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 14.49
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -6.42%
--------------------------------------------------------------------------------
Market Yield 6.99%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 10.74%
--------------------------------------------------------------------------------
Net Assets Applicable
to Common Shares ($000) $213,687
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 14.68
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.17
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 38.29% 19.52%
--------------------------------------------------------------------------------
5-Year 5.33% 4.52%
--------------------------------------------------------------------------------
Since Inception 5.07% 6.00%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 27.6%
--------------------------------------------------------------------------------
Tax Obligation/Limited 12.4%
--------------------------------------------------------------------------------
Health Care 13.6%
--------------------------------------------------------------------------------
Transportation 7.8%
--------------------------------------------------------------------------------
Water and Sewer 7.4%
--------------------------------------------------------------------------------
Tax Obligation/General 7.3%
--------------------------------------------------------------------------------
Utilities 6.3%
--------------------------------------------------------------------------------
Education and Civic Organizations 5.4%
--------------------------------------------------------------------------------
Consumer Staples 5.1%
--------------------------------------------------------------------------------
Other 7.1%
--------------------------------------------------------------------------------
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)
[PIE CHART]
AAA/U.S. Guaranteed 34%
AA 20%
A 23%
BBB 13%
BB or Lower 2%
N/R 8%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0660
Apr 0.0660
May 0.0695
Jun 0.0695
Jul 0.0695
Aug 0.0695
Sep 0.0760
Oct 0.0760
Nov 0.0760
Dec 0.0790
Jan 0.0790
Feb 0.0790
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 10.42
10.20
10.37
10.55
10.72
11.00
10.92
10.98
11.20
11.48
12.00
11.88
11.80
12.05
11.69
11.51
11.44
11.33
11.42
11.50
11.81
11.90
12.26
12.33
12.40
12.59
12.65
13.17
13.41
13.50
13.73
13.82
13.66
13.12
13.36
13.15
13.23
13.10
13.06
13.09
13.26
13.31
13.10
13.29
13.47
13.42
13.40
13.39
13.46
13.54
13.60
13.42
13.56
2/28/10 13.56
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
16 Nuveen Investments
NZH Performance OVERVIEW | Nuveen California
| Dividend Advantage
| Municipal Fund 3
| as of February 28, 2010
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)
[PIE CHART]
AAA/U.S. Guaranteed 29%
AA 18%
A 25%
BBB 19%
BB or Lower 1%
N/R 8%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0640
Apr 0.0640
May 0.0675
Jun 0.0675
Jul 0.0675
Aug 0.0675
Sep 0.0700
Oct 0.0700
Nov 0.0700
Dec 0.0750
Jan 0.0750
Feb 0.0750
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 10.23
9.60
10.01
9.86
10.18
10.23
10.20
10.22
10.71
10.89
11.38
11.12
11.34
11.37
11.27
10.72
10.77
10.46
10.53
10.65
10.95
11.09
11.35
11.45
11.75
12.14
12.13
12.41
12.60
12.79
12.89
13.03
12.84
12.28
12.65
12.13
12.23
11.94
11.87
11.88
12.22
12.28
12.21
12.32
12.40
12.50
12.49
12.58
12.72
12.57
12.75
12.58
12.67
2/28/10 12.67
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.67
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.18
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -3.87%
--------------------------------------------------------------------------------
Market Yield 7.10%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 10.91%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $317,860
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.83
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.07
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 32.93% 22.17%
--------------------------------------------------------------------------------
5-Year 4.62% 3.21%
--------------------------------------------------------------------------------
Since Inception 4.18% 4.88%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 25.2%
--------------------------------------------------------------------------------
Health Care 18.4%
--------------------------------------------------------------------------------
U.S. Guaranteed 14.8%
--------------------------------------------------------------------------------
Tax Obligation/General 13.3%
--------------------------------------------------------------------------------
Water and Sewer 5.4%
--------------------------------------------------------------------------------
Consumer Staples 5.3%
--------------------------------------------------------------------------------
Transportation 4.8%
--------------------------------------------------------------------------------
Other 12.8%
--------------------------------------------------------------------------------
Nuveen Investments 17
NKL Performance OVERVIEW | Nuveen Insured California
| Dividend Advantage
| Municipal Fund
| as of February 28, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 13.66
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 14.71
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -7.14%
--------------------------------------------------------------------------------
Market Yield 6.59%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(3) 10.12%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $224,301
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.12
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 8.90
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 30.55% 15.42%
--------------------------------------------------------------------------------
5-Year 4.56% 4.44%
--------------------------------------------------------------------------------
Since Inception 5.01% 6.29%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 31.6%
--------------------------------------------------------------------------------
Tax Obligation/General 18.5%
--------------------------------------------------------------------------------
U.S. Guaranteed 14.0%
--------------------------------------------------------------------------------
Utilities 9.9%
--------------------------------------------------------------------------------
Water and Sewer 9.6%
--------------------------------------------------------------------------------
Health Care 4.3%
--------------------------------------------------------------------------------
Other 12.1%
--------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
--------------------------------------------------------------------------------
AMBAC 24.8%
--------------------------------------------------------------------------------
AGM 24.3%
--------------------------------------------------------------------------------
NFPG(4) 23.6%
--------------------------------------------------------------------------------
FGIC 20.2%
--------------------------------------------------------------------------------
SYNCORA 4.3%
--------------------------------------------------------------------------------
Other 2.8%
--------------------------------------------------------------------------------
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)(1,2)
[PIE CHART]
Insured 72%
U.S. Guaranteed* 14%
GNMA/FNMA Guaranteed 1%
AAA (Uninsured) 1%
A (Uninsured) 5%
BBB (Uninsured) 7%
* U.S. Guaranteed includes 9% (as a % of total investments) of Insured
securities.
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0635
Apr 0.0635
May 0.0695
Jun 0.0695
Jul 0.0695
Aug 0.0695
Sep 0.0705
Oct 0.0705
Nov 0.0705
Dec 0.0750
Jan 0.0750
Feb 0.0750
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 10.88
10.95
10.95
11.15
11.38
11.54
11.25
11.48
11.90
11.98
12.48
12.46
12.51
12.60
12.10
11.55
11.81
11.78
11.88
11.88
12.14
12.44
12.89
12.80
13.05
13.13
13.15
13.81
13.81
14.11
13.99
14.15
14.10
13.27
13.85
13.81
13.88
13.82
13.25
13.33
13.25
13.45
13.34
13.37
13.51
13.54
13.32
13.43
13.42
13.60
13.63
13.59
13.66
2/28/10 13.66
(1) At least 80% of the Fund's net assets 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.
(2) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds whose insurer has experienced downgrades as of the end of
the reporting period. Please see the Portfolio Manager's Comments 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 during the period.
(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) MBIA's public finance subsidiary.
18 Nuveen Investments
NKX Performance OVERVIEW | Nuveen Insured California
| Tax-Free Advantage
| Municipal Fund
| as of February 28, 2010
CREDIT QUALITY (AS A % OF TOTAL INVESTMENTS)(1,2,3)
[PIE CHART]
Insured 70%
U.S. Guaranteed* 14%
AAA (Uninsured) 2%
AA (Uninsured) 1%
A (Uninsured) 7%
BBB (Uninsured) 6%
* U.S. Guaranteed includes 10% (as a % of long-term investments) of Insured
securities.
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Mar 0.0590
Apr 0.0590
May 0.0630
Jun 0.0630
Jul 0.0630
Aug 0.0630
Sep 0.0650
Oct 0.0650
Nov 0.0650
Dec 0.0660
Jan 0.0660
Feb 0.0660
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
3/01/09 11.83
10.75
10.99
10.96
11.49
11.69
11.30
11.50
12.04
12.40
12.26
11.86
12.19
12.45
11.97
11.48
11.73
11.47
11.80
11.78
11.90
12.04
12.30
12.34
12.33
12.65
12.75
13.00
13.42
13.57
13.70
13.67
13.73
13.05
13.00
12.98
12.95
12.80
12.56
12.44
12.65
12.63
12.75
12.76
12.68
12.79
12.75
12.71
12.81
12.94
12.95
12.69
12.87
2/28/10 12.87
(1) Excluding short-term investments.
(2) At least 80% of the Fund's net assets 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) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds whose insurer has experienced downgrades as of the end of
the reporting period. Please see the Portfolio Manager's Comments 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 during the period.
(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) MBIA's public finance subsidiary.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.87
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 14.03
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -8.27%
--------------------------------------------------------------------------------
Market Yield 6.15%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(4) 9.45%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 82,579
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.83
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.65
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/21/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year 16.39% 15.49%
--------------------------------------------------------------------------------
5-Year 2.83% 4.10%
--------------------------------------------------------------------------------
Since Inception 3.61% 5.30%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 31.6%
--------------------------------------------------------------------------------
Health Care 17.1%
--------------------------------------------------------------------------------
U.S. Guaranteed 13.5%
--------------------------------------------------------------------------------
Tax Obligation/General 12.5%
--------------------------------------------------------------------------------
Water and Sewer 9.6%
--------------------------------------------------------------------------------
Transportation 6.9%
--------------------------------------------------------------------------------
Other 8.8%
--------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
--------------------------------------------------------------------------------
AMBAC 44.3%
--------------------------------------------------------------------------------
NPFG(5) 24.4%
--------------------------------------------------------------------------------
AGM 11.7%
--------------------------------------------------------------------------------
BHAC 5.4%
--------------------------------------------------------------------------------
FGIC 4.9%
--------------------------------------------------------------------------------
SYNCORA 4.8%
--------------------------------------------------------------------------------
Other 4.5%
--------------------------------------------------------------------------------
Nuveen Investments 19
NPC NCL NCU | Shareholder Meeting Report
|
| The annual meeting of shareholders was held in the offices of
Nuveen Investments on November 30, 2009; 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.3 The meeting for
all Funds was subsequently adjourned to January 12, 2010; the
meeting for NPC, NAC, NVX, NZH and NKL was additionally adjourned
to March 23, 2010.
NPC NCL NCU
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 3,260,159 1,371 6,287,947 1,594 2,909,081 829
Against 168,038 7 368,237 61 141,649 29
Abstain 148,949 38 413,889 12 99,969 --
Broker Non-Votes 1,005,293 -- 2,195,420 -- 881,718 --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 4,032,417 858
====================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY
RELATING TO COMMODITIES.
For 3,262,368 1,371 6,263,484 1,588 2,898,853 829
Against 159,740 7 331,173 53 147,780 29
Abstain 155,038 38 475,416 26 104,065 --
Broker Non-Votes 1,005,293 -- 2,195,420 -- 881,719 --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 4,032,417 858
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
DERIVATIVES AND SHORT SALES.
For 3,247,940 1,371 6,249,904 1,596 2,896,198 831
Against 181,874 7 367,487 53 144,939 27
Abstain 147,332 38 452,682 18 109,562 --
Broker Non-Votes 1,005,293 -- 2,195,420 -- 881,718 --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 4,032,417 858
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES PROHIBITING
INVESTMENT IN OTHER INVESTMENT COMPANIES.
For 3,238,876 1,365 6,238,708 1,589 2,888,646 831
Against 189,486 13 366,301 66 158,038 27
Abstain 148,784 38 465,064 12 104,014 --
Broker Non-Votes 1,005,293 -- 2,195,420 -- 881,719 --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 4,032,417 858
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
INVESTMENTS IN INSURED MUNICIPAL
SECURITIES.
For 3,280,486 1,374 6,288,723 1,609 -- --
Against 155,133 7 373,621 46 -- --
Abstain 141,527 35 407,729 12 -- --
Broker Non-Votes 1,005,293 -- 2,195,420 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 -- --
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUND'S
FUNDAMENTAL POLICIES RELATING TO
INVESTMENTS IN MUNICIPAL SECURITIES AND
BELOW INVESTMENT GRADE SECURITIES.
For -- -- -- -- 2,922,512 829
Against -- -- -- -- 137,287 29
Abstain -- -- -- -- 90,900 --
Broker Non-Votes -- -- -- -- 881,718 --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- 4,032,417 858
====================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY
RELATING TO INVESTMENTS IN INSURED
MUNICIPAL SECURITIES.
For 3,280,706 1,371 6,343,433 1,602 -- --
Against 143,349 7 338,923 45 -- --
Abstain 153,091 38 387,717 20 -- --
Broker Non-Votes 1,005,293 -- 2,195,420 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,582,439 1,416 9,265,493 1,667 -- --
====================================================================================================================================
20 Nuveen Investments
NPC NCL NCU
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 NEW FUNDAMENTAL POLICY
RELATING TO INVESTMENTS IN MUNICIPAL
SECURITIES.
For -- -- -- -- 2,914,926 831
Against -- -- -- -- 133,626 27
Abstain -- -- -- -- 102,146 --
Broker Non-Votes -- -- -- -- 881,719 --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- 4,032,417 858
====================================================================================================================================
APPROVAL OF THE BOARD MEMBERS WAS
REACHED AS FOLLOWS:
John P. Amboian
For 4,400,738 579 8,778,058 1,234 -- --
Withhold 180,994 130 487,435 433 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 -- --
====================================================================================================================================
Robert P. Bremner
For 4,399,411 579 8,779,503 1,234 3,876,104 658
Withhold 182,321 130 485,990 433 156,313 200
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 4,032,417 858
====================================================================================================================================
Jack B. Evans
For 4,400,844 579 8,779,878 1,234 3,873,853 658
Withhold 180,888 130 485,615 433 158,564 200
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 4,032,417 858
====================================================================================================================================
William C. Hunter
For -- 579 -- 1,234 -- 658
Withhold -- 130 -- 433 -- 200
------------------------------------------------------------------------------------------------------------------------------------
Total -- 709 -- 1,667 -- 858
====================================================================================================================================
David J. Kundert
For 4,397,767 579 8,775,870 1,234 -- --
Withhold 183,965 130 489,623 433 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 -- --
====================================================================================================================================
William J. Schneider
For -- 579 -- 1,234 -- 658
Withhold -- 130 -- 433 -- 200
------------------------------------------------------------------------------------------------------------------------------------
Total -- 709 -- 1,667 -- 858
====================================================================================================================================
Judith M. Stockdale
For 4,395,567 579 8,798,409 1,234 -- --
Withhold 186,165 130 467,084 433 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 -- --
====================================================================================================================================
Carole E. Stone
For 4,394,672 579 8,797,589 1,234 -- --
Withhold 187,060 130 467,904 433 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 -- --
====================================================================================================================================
Terence J. Toth
For 4,402,382 579 8,766,114 1,234 -- --
Withhold 179,350 130 499,379 433 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 4,581,732 709 9,265,493 1,667 -- --
====================================================================================================================================
Nuveen Investments 21
NAC NVX NZH | Shareholder Meeting Report (continued)
NAC NVX NZH
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUND'S
FUNDAMENTAL POLICIES RELATING TO
INVESTMENTS IN MUNICIPAL SECURITIES AND
BELOW INVESTMENT GRADE SECURITIES.
For 11,594,421 2,927 7,041,357 1,890 11,669,303 2,686
Against 666,036 165 426,880 255 652,704 436
Abstain 395,752 61 250,319 17 386,354 8
Broker Non-Votes 4,202,285 453 2,231,044 401 4,107,774 768
------------------------------------------------------------------------------------------------------------------------------------
Total 16,858,494 3,606 9,949,600 2,563 16,816,135 3,898
====================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY
RELATING TO INVESTMENTS IN INSURED
MUNICIPAL SECURITIES.
For -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
22 Nuveen Investments
NAC NVX NZH
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 NEW FUNDAMENTAL POLICY
RELATING TO INVESTMENTS IN MUNICIPAL
SECURITIES.
For 11,774,316 2,919 7,112,860 1,910 11,741,736 2,748
Against 466,099 154 393,172 235 586,743 374
Abstain 415,794 80 212,524 17 379,882 8
Broker Non-Votes 4,202,285 453 2,231,044 401 4,107,774 768
------------------------------------------------------------------------------------------------------------------------------------
Total 16,858,494 3,606 9,949,600 2,563 16,816,135 3,898
====================================================================================================================================
APPROVAL OF THE BOARD MEMBERS WAS
REACHED AS FOLLOWS:
John P. Amboian
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
Robert P. Bremner
For 16,193,325 1,883 9,503,740 1,374 16,135,295 2,297
Withhold 628,463 367 416,689 384 578,996 676
------------------------------------------------------------------------------------------------------------------------------------
Total 16,821,788 2,250 9,920,429 1,758 16,714,291 2,973
====================================================================================================================================
Jack B. Evans
For 16,201,156 1,883 9,518,348 1,374 16,139,176 2,297
Withhold 620,632 367 402,081 384 575,115 676
------------------------------------------------------------------------------------------------------------------------------------
Total 16,821,788 2,250 9,920,429 1,758 16,714,291 2,973
====================================================================================================================================
William C. Hunter
For -- 1,883 -- 1,374 -- 2,297
Withhold -- 367 -- 384 -- 676
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,250 -- 1,758 -- 2,973
====================================================================================================================================
David J. Kundert
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
William J. Schneider
For -- 1,883 -- 1,374 -- 2,297
Withhold -- 267 -- 384 -- 676
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,150 -- 1,758 -- 2,973
====================================================================================================================================
Judith M. Stockdale
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
Carole E. Stone
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
Terence J. Toth
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
====================================================================================================================================
Nuveen Investments 23
NKL NKX | Shareholder Meeting Report (continued)
NKL NKX
---------------------------------------------------------------------------------------------------------------------
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 7,717,015 3,156 2,746,770 355
Against 326,480 214 243,519 --
Abstain 283,950 18 144,409 --
Broker Non-Votes 3,085,696 -- 850,354 --
---------------------------------------------------------------------------------------------------------------------
Total 11,413,141 3,388 3,985,052 355
=====================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUND'S FUNDAMENTAL
POLICIES RELATING TO INVESTMENTS IN MUNICIPAL
SECURITIES AND BELOW INVESTMENT GRADE SECURITIES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING TO
INVESTMENTS IN INSURED MUNICIPAL SECURITIES.
For 7,748,169 3,156 2,761,812 355
Against 282,052 214 244,422 --
Abstain 297,224 18 128,464 --
Broker Non-Votes 3,085,696 -- 850,354 --
---------------------------------------------------------------------------------------------------------------------
Total 11,413,141 3,388 3,985,052 355
=====================================================================================================================
24 Nuveen Investments
NKL NKX
---------------------------------------------------------------------------------------------------------------------
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
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 NEW FUNDAMENTAL POLICY RELATING TO
INVESTMENTS IN MUNICIPAL SECURITIES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
John P. Amboian
For -- -- -- --
Withhold -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
Robert P. Bremner
For 10,973,853 1,738 3,809,153 177
Withhold 430,059 379 175,899 178
---------------------------------------------------------------------------------------------------------------------
Total 11,403,912 2,117 3,985,052 355
=====================================================================================================================
Jack B. Evans
For 10,969,053 1,738 3,808,861 177
Withhold 434,859 379 176,191 178
---------------------------------------------------------------------------------------------------------------------
Total 11,403,912 2,117 3,985,052 355
=====================================================================================================================
William C. Hunter
For -- 1,738 -- 177
Withhold -- 379 -- 178
---------------------------------------------------------------------------------------------------------------------
Total -- 2,117 -- 355
=====================================================================================================================
David J. Kundert
For -- -- -- --
Withhold -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
William J. Schneider
For -- 1,616 -- 177
Withhold -- 501 -- 178
---------------------------------------------------------------------------------------------------------------------
Total -- 2,117 -- 355
=====================================================================================================================
Judith M. Stockdale
For -- -- -- --
Withhold -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
Carole E. Stone
For -- -- -- --
Withhold -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
Terence J. Toth
For -- -- -- --
Withhold -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
=====================================================================================================================
Nuveen Investments 25
Report of Independent
Registered Public Accounting Firm
The BOARD 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 statement of assets and liabilities, including
the portfolio 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,
2010, and the related statements of operations, changes in net assets, 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, 2010, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen Insured
California Premium Income Municipal Fund 2, Inc., Nuveen California Premium
Income Municipal Fund, Nuveen California Dividend Advantage Municipal Fund,
Nuveen California Dividend Advantage Municipal Fund 2, Nuveen California
Dividend Advantage Municipal Fund 3, Nuveen Insured California Dividend
Advantage Municipal Fund, and Nuveen Insured California Tax-Free Advantage
Municipal Fund at February 28, 2010, the results of their operations, the
changes in their net assets, 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 23, 2010
26 Nuveen Investments
NPC | Nuveen Insured California Premium Income Municipal Fund, Inc.
| Portfolio of Investments
February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 4.6% (3.2% OF TOTAL
INVESTMENTS)
$ 750 California Educational Facilities Authority, Student 3/10 at 100.00 Baa1 $ 750,255
Loan Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 - NPFG Insured (Alternative Minimum Tax)
1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 Aa3 1,562,355
Series 2005A, 5.000%, 11/01/25 - AMBAC Insured
2,000 California State University, Systemwide Revenue Bonds, 11/15 at 100.00 Aa3 2,069,780
Series 2005C, 5.000%, 11/01/27 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
4,250 Total Education and Civic Organizations 4,382,390
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 5.6% (3.8% OF TOTAL INVESTMENTS)
3,000 California Health Facilities Financing Authority, 8/10 at 100.00 Aa3 3,002,280
Insured Revenue Bonds, Sutter Health, Series 1998A,
5.375%, 8/15/30 - NPFG Insured
724 California Statewide Communities Development Authority, 7/18 at 100.00 AAA 759,925
Revenue Bonds, Saint Joseph Health System, Trust 2554,
18.719%, 7/01/47 - AGM Insured (IF)
1,500 California Statewide Community Development Authority, 8/10 at 100.00 AAA 1,520,490
Certificates of Participation, Sutter Health Obligated
Group, Series 1999, 5.500%, 8/15/19 - AGM Insured
------------------------------------------------------------------------------------------------------------------------------------
5,224 Total Health Care 5,282,695
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.3% (0.2% OF TOTAL INVESTMENTS)
145 California Housing Finance Agency, Home Mortgage Revenue 2/16 at 100.00 AA- 155,905
Bonds, Series 2006H, 5.750%, 8/01/30 - FGIC Insured
(Alternative Minimum Tax)
90 California Housing Finance Agency, Single Family 8/10 at 100.00 AA 90,099
Mortgage Bonds II, Series 1997A-1, 6.000%, 8/01/20 -
NPFG Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
235 Total Housing/Single Family 246,004
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 35.8% (24.7% OF TOTAL INVESTMENTS)
Bonita Unified School District, San Diego County,
California, General Obligation Bonds, Series 2004A:
1,890 5.250%, 8/01/23 - NPFG Insured 8/14 at 100.00 AA- 2,014,381
1,250 5.250%, 8/01/25 - NPFG Insured 8/14 at 100.00 AA- 1,322,138
2,000 California, General Obligation Veterans Welfare Bonds, 6/10 at 100.00 AA- 1,999,980
Series 2001BZ, 5.375%, 12/01/24 - NPFG 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- 2,796,797
1,775 5.250%, 9/01/22 - FGIC Insured 9/14 at 100.00 AA- 1,910,646
1,130 Fontana Unified School District, San Bernardino County, 8/18 at 100.00 AAA 1,246,141
California, General Obligation Bonds, Trust 2668,
9.329%, 8/01/28 - AGM Insured (IF)
1,225 Fresno Unified School District, Fresno County, 2/13 at 103.00 A+ 1,416,149
California, General Obligation Refunding Bonds, Series
1998A, 6.550%, 8/01/20 - NPFG Insured
1,180 Jurupa Unified School District, Riverside County, 8/13 at 100.00 A 1,218,975
California, General Obligation Bonds, Series 2004,
5.000%, 8/01/21 - FGIC Insured
3,000 Pomona Unified School District, Los Angeles County, 8/11 at 103.00 A 3,315,210
California, General Obligation Refunding Bonds, Series
1997A, 6.500%, 8/01/19 - NPFG Insured
160 Roseville Joint Union High School District, Placer 8/15 at 100.00 AA- 165,760
County, California, General Obligation Bonds, Series
2006B, 5.000%, 8/01/27 - FGIC Insured
3,000 Sacramento City Unified School District, Sacramento 7/15 at 100.00 Aa3 3,067,560
County, California, General Obligation Bonds, Series
2005, 5.000%, 7/01/27 - NPFG 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 - AGM Insured 7/11 at 102.00 AAA 1,432,989
3,500 5.000%, 7/01/22 - AGM Insured 7/11 at 102.00 AAA 3,756,900
4,895 5.000%, 7/01/23 - AGM Insured 7/11 at 102.00 AAA 5,254,293
3,000 San Jacinto Unified School District, Riverside County, No Opt. Call AAA 3,057,150
California, General Obligation Bonds, Series 2007,
5.250%, 8/01/32 - AGM Insured
------------------------------------------------------------------------------------------------------------------------------------
31,920 Total Tax Obligation/General 33,975,069
------------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 27
NPC | Nuveen Insured California Premium Income Municipal Fund, Inc. (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 45.8% (31.6% OF TOTAL
INVESTMENTS)
$ 1,000 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA $ 1,033,240
California, Certificates of Participation Refunding,
Series 2002A, 5.125%, 8/01/26 - AGM 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- 1,277,463
1,615 5.000%, 12/01/21 - AMBAC Insured 12/13 at 100.00 AA- 1,684,122
195 Capistrano Unified School District, Orange County, 9/15 at 100.00 A 189,511
California, Special Tax Bonds, Community Facilities
District, Series 2005, 5.000%, 9/01/24 - FGIC Insured
595 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 514,931
Redevelopment Project Area Tax Allocation Bonds, Series
2006, 5.000%, 9/01/38 - AMBAC Insured
1,900 Corona-Norco Unified School District, Riverside County, 9/12 at 100.00 N/R 1,915,124
California, Special Tax Bonds, Community Facilities
District 98-1, Series 2002, 5.100%, 9/01/25 - AMBAC
Insured
5,000 El Monte, California, Senior Lien Certificates of 1/11 at 100.00 A3 5,004,550
Participation, Department of Public Services Facility
Phase II, Series 2001, 5.250%, 1/01/34 - AMBAC Insured
3,180 Golden State Tobacco Securitization Corporation, 6/15 at 100.00 AAA 2,686,782
California, Enhanced Tobacco Settlement Revenue Bonds,
Drivers Trust 2091, 9.613%, 6/01/45 - AGC Insured (IF)
1,000 Hesperia Public Financing Authority, California, 9/17 at 100.00 Baa2 817,680
Redevelopment and Housing Projects Tax Allocation Bonds,
Series 2007A, 5.000%, 9/01/37 - SYNCORA GTY Insured
435 Indian Wells Redevelopment Agency, California, Tax 9/13 at 100.00 A 439,080
Allocation Bonds, Consolidated Whitewater Project Area,
Series 2003A, 5.000%, 9/01/20 - AMBAC Insured
345 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 A2 299,633
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
895 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 968,122
Tax Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - AGM Insured
1,500 Los Angeles, California, Municipal Improvement 1/17 at 100.00 A+ 1,446,045
Corporation, Lease Revenue Bonds, Police Headquarters,
Series 2006A, 4.750%, 1/01/31 - FGIC Insured
3,150 Moreno Valley Community Redevelopment Agency, 8/17 at 100.00 A- 2,726,483
California, Tax Allocation Bonds, Series 2007A, 5.000%,
8/01/38 - AMBAC Insured
7,000 Rancho Cucamonga Redevelopment Agency, California, 9/17 at 100.00 A+ 6,280,540
Housing Set-Aside Tax Allocation Bonds, Series 2007A,
5.000%, 9/01/34 - NPFG Insured
165 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 A- 145,144
Bonds, Merged Project Area, Series 2005A, 5.000%,
9/01/35 - SYNCORA GTY Insured
205 Roseville, California, Certificates of Participation, 8/13 at 100.00 AA- 205,121
Public Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC
Insured
5,150 San Jacinto Unified School District, Riverside County, 9/20 at 100.00 AAA 5,138,464
California, Certificates of Participation, Series 2010,
5.375%, 9/01/40 - AGC Insured
1,500 San Jose Redevelopment Agency, California, Tax 8/15 at 100.00 A 1,394,040
Allocation Bonds, Merged Project Area, Series 2005A,
5.000%, 8/01/28 - NPFG Insured
3,565 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 3,583,716
Authority, California, Special Tax Revenue Bonds, Series
2005A, 5.000%, 9/01/25 - AGM Insured
3,250 Tustin Community Redevelopment Agency, California, Tax 9/20 at 100.00 AAA 3,183,115
Allocation Housing Bonds Series 2010, 5.250%, 9/01/39
(WI/DD, Settling 3/04/10) - AGM Insured
2,805 Yucaipa-Calimesa Joint Unified School District, San 10/11 at 100.00 A 2,559,450
Bernardino County, California, General Obligation
Refunding Bonds, Series 2001A, 5.000%, 10/01/31 - NPFG
Insured
------------------------------------------------------------------------------------------------------------------------------------
45,665 Total Tax Obligation/Limited 43,492,356
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.5% (1.8% OF TOTAL INVESTMENTS)
2,400 San Diego Unified Port District, California, Revenue 9/14 at 100.00 A+ 2,422,152
Bonds, Series 2004B, 5.000%, 9/01/29 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 32.0% (22.1% OF TOTAL INVESTMENTS) (4)
2,500 Fresno Unified School District, Fresno County,
California, General Obligation Bonds, Series 2001A, 8/10 at 101.00 AAA 2,572,825
5.125%, 8/01/26 - AGM Insured (ETM)
6,000 Huntington Park Redevelopment Agency, California, Single No Opt. Call AAA 8,624,698
Family Residential Mortgage Revenue Refunding Bonds,
Series 1986A, 8.000%, 12/01/19 (ETM)
28 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 5,135 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA $ 6,530,077
Single Family Restructured Mortgage Revenue Bonds,
Series 1986A, 8.000%, 3/01/16 (Alternative Minimum Tax) (ETM)
6,220 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 8,579,433
Securities Program Single Family Mortgage Revenue Bonds,
Series 1987A, 9.000%, 5/01/21 (Alternative Minimum Tax) (ETM)
1,485 San Jose, California, Single Family Mortgage Revenue No Opt. Call Aaa 1,929,876
Bonds, Series 1985A, 9.500%, 10/01/13 (ETM)
2,150 Santa Clara Valley Water District, California, Water 6/10 at 100.00 AA (4) 2,177,585
Utility System Revenue Bonds, Series 2000A, 5.125%,
6/01/31 (Pre-refunded 6/01/10) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
23,490 Total U.S. Guaranteed 30,414,494
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.3% (0.2% OF TOTAL INVESTMENTS)
345 Merced Irrigation District, California, Electric System 9/15 at 100.00 N/R 309,555
Revenue Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA
GTY Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 18.0% (12.4% OF TOTAL INVESTMENTS)
2,200 Atwater Public Financing Authority, California, 5/19 at 100.00 AAA 2,152,612
Wastewater Revenue Bonds, Tender Option Bond Trust 3145,
18.517%, 5/01/40 - AGM Insured (IF)
5,255 El Dorado Irrigation District, California, Water and 3/13 at 100.00 A 5,413,754
Sewer Certificates of Participation, Series 2003A,
5.000%, 3/01/20 - FGIC Insured
1,230 El Dorado Irrigation District, California, Water and 3/14 at 100.00 A 1,274,268
Sewer Certificates of Participation, Series 2004A,
5.000%, 3/01/21 - FGIC Insured
235 Healdsburg Public Financing Authority, California, 4/16 at 100.00 AA- 232,622
Wastewater Revenue Bonds, Series 2006, 5.000%, 4/01/36 -
NPFG Insured
5,000 Indio Water Authority, California, Water Revenue Bonds, 4/16 at 100.00 A+ 5,033,700
Series 2006, 5.000%, 4/01/31 - AMBAC Insured
220 Marina Coast Water District, California, Enterprise 6/16 at 100.00 A+ 220,334
Certificate of Participation, Series 2006, 5.000%,
6/01/31 - NPFG Insured
1,500 Placerville Public Financing Authority, California, 9/16 at 100.00 N/R 1,326,180
Wastewater System Refinancing and Improvement Project
Revenue Bonds, Series 2006, 5.000%, 9/01/34 - SYNCORA
GTY Insured
1,345 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AA- 1,420,118
Certificates of Participation, Series 2003A, 5.000%,
8/01/20 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
16,985 Total Water and Sewer 17,073,588
------------------------------------------------------------------------------------------------------------------------------------
$ 130,514 Total Investments (cost $133,461,573) - 144.9% 137,598,303
=============-----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.5% 2,345,256
---------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (47.4)% (5) (45,000,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 94,943,559
=====================================================================================================================
Primarily all of the Fund's net assets 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
whose insurer has experienced downgrades as of the end of the reporting
period. Please see the Portfolio Manager's Comments 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 during the period.
(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 32.7%.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 29
NPC | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| Portfolio of Investments
February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.2% (3.4% OF TOTAL
INVESTMENTS)
$ 620 California Educational Facilities Authority, Revenue 11/10 at 100.00 A2 $ 626,597
Bonds, University of the Pacific, Series 2000, 5.875%,
11/01/20 - NPFG Insured
750 California Educational Facilities Authority, Student 3/10 at 100.00 Baa1 750,255
Loan Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 - NPFG Insured (Alternative Minimum Tax)
1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 Aa3 1,562,355
Series 2005A, 5.000%, 11/01/25 - AMBAC Insured
6,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 Aa1 6,258,420
Projects, Series 2003A, 5.000%, 5/15/27 - AMBAC Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
8,870 Total Education and Civic Organizations 9,197,627
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 2.3% (1.5% OF TOTAL INVESTMENTS)
1,410 California Statewide Communities Development Authority, 7/18 at 100.00 AAA 1,479,964
Revenue Bonds, Saint Joseph Health System, Trust 2554,
18.719%, 7/01/47 - AGM Insured (IF)
2,000 The Regents of the University of California, Medical 5/15 at 101.00 Aa2 1,849,220
Center Pooled Revenue Bonds, Series 2007A, 4.500%,
5/15/37 - NPFG Insured
650 University of California, Hospital Revenue Bonds, UCLA 5/12 at 101.00 N/R 672,211
Medical Center, Series 2004A, 5.500%, 5/15/18 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
4,060 Total Health Care 4,001,395
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.3% (0.9% OF TOTAL INVESTMENTS)
275 California Housing Finance Agency, Home Mortgage Revenue 2/16 at 100.00 AA- 295,683
Bonds, Series 2006H, 5.750%, 8/01/30 - FGIC Insured
(Alternative Minimum Tax)
1,735 California Housing Finance Agency, Home Mortgage Revenue 2/16 at 100.00 Aaa 1,850,482
Bonds, Series 2006K, 5.500%, 2/01/42 - AMBAC Insured
(Alternative Minimum Tax)
155 California Housing Finance Agency, Single Family 8/10 at 100.00 AA 155,031
Mortgage Bonds, Series 1997C-2-II, 5.625%, 8/01/20 -
NPFG Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,165 Total Housing/Single Family 2,301,196
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.1% (17.8% OF TOTAL INVESTMENTS)
1,460 ABC Unified School District, Los Angeles County, 8/10 at 101.00 A+ 1,506,778
California, General Obligation Bonds, Series 2000B,
5.750%, 8/01/16 - FGIC Insured
1,425 Bassett Unified School District, Los Angeles County, 8/16 at 100.00 A 1,456,108
California, General Obligation Bonds, Series 2006B,
5.250%, 8/01/30 - FGIC Insured
3,000 California State, General Obligation Bonds, Series 2006, 9/16 at 100.00 AAA 2,679,870
4.500%, 9/01/36 - AGM Insured
4,400 California, General Obligation Bonds, Series 2003, 5.000%, 2/13 at 100.00 A 4,102,428
2/01/31 - NPFG Insured
3,000 California, General Obligation Veterans Welfare Bonds, 6/10 at 100.00 AA- 2,999,970
Series 2001BZ, 5.375%, 12/01/24 - NPFG Insured
(Alternative Minimum Tax)
3,200 Coast Community College District, Orange County, 8/18 at 100.00 AAA 2,721,248
California, General Obligation Bonds, Series 2006C,
0.000%, 8/01/31 - AGM Insured
2,500 Corona-Norco Unified School District, Riverside County, 8/18 at 100.00 AAA 2,575,900
California, General Obligation Bonds, Election 2006
Series 2009B, 5.375%, 2/01/34 - AGC Insured
2,210 Fontana Unified School District, San Bernardino County, 8/18 at 100.00 AAA 2,437,144
California, General Obligation Bonds, Trust 2668,
9.329%, 8/01/28 - AGM Insured (IF)
1,255 Los Angeles Community College District, Los Angeles 8/15 at 100.00 AAA 1,323,071
County, California, General Obligation Bonds, Series
2005A, 5.000%, 8/01/24 - AGM Insured
4,000 Los Angeles Unified School District, Los Angeles County, 7/17 at 100.00 AAA 4,069,920
California, General Obligation Bonds, Series 2007A,
4.500%, 7/01/24 - AGM 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 - AGM Insured (UB) 8/14 at 102.00 AAA 2,239,027
3,250 5.000%, 8/01/22 - AGM Insured (UB) 8/14 at 102.00 AAA 3,590,308
3,395 5.000%, 8/01/23 - AGM Insured (UB) 8/14 at 102.00 AAA 3,734,636
1,270 Merced City School District, Merced County, California, 8/13 at 100.00 A 1,329,919
General Obligation Bonds, Series 2004, 5.000%, 8/01/22 -
FGIC Insured
30 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 305 Roseville Joint Union High School District, Placer 8/15 at 100.00 AA- $ 315,980
County, California, General Obligation Bonds, Series
2006B, 5.000%, 8/01/27 - FGIC Insured
2,500 Sacramento City Unified School District, Sacramento 7/15 at 100.00 Aa3 2,556,300
County, California, General Obligation Bonds, Series
2005, 5.000%, 7/01/27 - NPFG Insured
1,125 San Diego Unified School District, California, General No Opt. Call AA 682,751
Obligation Bonds, Election of 1998, Series 1999A,
0.000%, 7/01/21 - FGIC Insured
2,000 San Francisco Community College District, California, 6/10 at 102.00 Aa3 2,020,200
General Obligation Bonds, Series 2002A, 5.000%, 6/15/26
- FGIC Insured
2,000 San Jacinto Unified School District, Riverside County, No Opt. Call AAA 2,038,100
California, General Obligation Bonds, Series 2007,
5.250%, 8/01/32 - AGM Insured
1,000 San Ramon Valley Unified School District, Contra Costa 8/14 at 100.00 AAA 1,041,980
County, California, General Obligation Bonds, Series
2004, 5.000%, 8/01/24 - AGM Insured
2,445 Washington Unified School District, Yolo County, 8/13 at 100.00 A 2,573,533
California, General Obligation Bonds, Series 2004A,
5.000%, 8/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
47,850 Total Tax Obligation/General 47,995,171
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 62.3% (40.9% OF TOTAL INVESTMENTS)
Anaheim Public Finance Authority, California,
Subordinate Lease Revenue Bonds, Public Improvement
Project, Series 1997C:
5,130 0.000%, 9/01/18 - AGM Insured No Opt. Call AAA 3,520,924
8,000 0.000%, 9/01/21 - AGM Insured No Opt. Call AAA 4,281,920
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- 1,606,301
1,780 5.000%, 12/01/23 - AMBAC Insured 12/13 at 100.00 AA- 1,843,528
3,725 California State Public Works Board, Lease Revenue 1/16 at 100.00 BBB+ 3,915,348
Bonds, Department of Corrections & Rehabilitation,
Series 2005J, 5.000%, 1/01/17 - AMBAC Insured
380 Capistrano Unified School District, Orange County, 9/15 at 100.00 A 369,303
California, Special Tax Bonds, Community Facilities
District, Series 2005, 5.000%, 9/01/24 - FGIC Insured
5,625 El Monte, California, Senior Lien Certificates of 1/11 at 100.00 A3 5,671,125
Participation, Department of Public Services Facility
Phase II, Series 2001, 5.000%, 1/01/21 - AMBAC Insured
8,280 Fontana Public Financing Authority, California, Tax 10/15 at 100.00 A 7,577,690
Allocation Revenue Bonds, North Fontana Redevelopment
Project, Series 2005A, 5.000%, 10/01/32 - AMBAC Insured
6,215 Golden State Tobacco Securitization Corporation, 6/15 at 100.00 AAA 5,251,054
California, Enhanced Tobacco Settlement Revenue Bonds,
Drivers Trust 2091, 9.613%, 6/01/45 - AGC Insured (IF)
2,000 Golden State Tobacco Securitization Corporation, 6/15 at 100.00 BBB+ 1,070,340
California, Enhanced Tobacco Settlement Revenue Bonds,
Residual Series 2040, 10.560%, 6/01/45 - FGIC Insured (IF)
Golden State Tobacco Securitization Corporation,
California, Tobacco Settlement Asset-Backed Revenue
Bonds, Series 2005A:
15,830 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 BBB+ 13,969,658
4,280 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 AAA 4,127,974
7,500 5.000%, 6/01/45 - FGIC Insured 6/15 at 100.00 BBB+ 6,337,725
1,255 Hesperia Public Financing Authority, California, 9/17 at 100.00 Baa2 1,026,188
Redevelopment and 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 BBB+ 1,464,227
California, Certificates of Participation, Capital
Improvement, Series 2007, 5.000%, 2/01/41 - AMBAC Insured
1,810 Kern County Board of Education, California, Certificates 5/10 at 100.00 A 1,812,226
of Participation Refunding, Series 1998A, 5.200%,
5/01/28 - NPFG Insured
5,000 La Quinta Redevelopment Agency, California, Tax 3/10 at 100.00 A+ 4,883,800
Allocation Refunding Bonds, Redevelopment Project Area
1, Series 1998, 5.200%, 9/01/28 - AMBAC Insured
2,185 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 A2 1,897,673
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
1,000 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 1,081,700
Tax Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - AGM Insured
1,250 Los Angeles County Metropolitan Transportation 7/13 at 100.00 AAA 1,357,038
Authority, California, Proposition A First Tier Senior
Sales Tax Revenue Bonds, Series 2003B, 5.000%, 7/01/19 -
NPFG Insured
Nuveen Investments 31
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 4,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 A+ $ 4,014,040
Municipal Improvement Corporation, Series 2003AW, 5.000%,
6/01/33 - AMBAC Insured
3,000 Los Angeles, California, Municipal Improvement 1/17 at 100.00 A+ 2,892,090
Corporation, Lease Revenue Bonds, Police Headquarters,
Series 2006A, 4.750%, 1/01/31 - FGIC Insured
6,120 Moreno Valley Community Redevelopment Agency, California, 8/17 at 100.00 A- 5,297,166
Tax Allocation Bonds, Series 2007A, 5.000%, 8/01/38 -
AMBAC Insured
2,810 Oakland Joint Powers Financing Authority, California, 8/18 at 100.00 AAA 2,990,711
Lease Revenue Bonds, Administration Building Projects,
Series 2008B, 5.000%, 8/01/21 - AGC Insured
4,140 Plumas County, California, Certificates of Participation, 6/13 at 101.00 A- 3,916,688
Capital Improvement Program, Series 2003A, 5.000%,
6/01/28 - AMBAC Insured
390 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 N/R 390,062
Refunding Bonds, Paguay Redevelopment Project, Series
2000, 5.750%, 6/15/33 - NPFG Insured
325 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 A- 285,890
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35
- SYNCORA GTY Insured
1,000 Rocklin Unified School District, Placer County, 9/13 at 100.00 A 979,920
California, Special Tax Bonds, Community Facilities
District 1, Series 2004, 5.000%, 9/01/25 - NPFG Insured
405 Roseville, California, Certificates of Participation, 8/13 at 100.00 AA- 405,239
Public Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC
Insured
5,000 San Bernardino Joint Powers Financing Authority, 3/10 at 102.00 A 5,117,300
California, Certificates of Participation Refunding,
Police Station Financing Project, Series 1999, 5.500%,
9/01/20 - NPFG Insured
2,000 San Jacinto Unified School District, Riverside County, 9/20 at 100.00 AAA 1,995,520
California, Certificates of Participation, Series 2010,
5.375%, 9/01/40 - AGC Insured
1,500 San Jose Redevelopment Agency, California, Tax Allocation 8/15 at 100.00 A 1,394,040
Bonds, Merged Project Area, Series 2005A, 5.000%, 8/01/28
- NPFG Insured
5,510 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 5,483,607
Authority, California, Special Tax Revenue Bonds, Series
2005A, 5.000%, 9/01/28 - AGM Insured
1,205 Tustin Community Redevelopment Agency, California, Tax 9/20 at 100.00 AAA 1,200,397
Allocation Housing Bonds Series 2010, 5.000%, 9/01/30
(WI/DD, Settling 3/04/10) - AGM Insured
1,020 Washington Unified School District, Yolo County, 8/17 at 100.00 BBB+ 982,882
California, Certificates of Participation, Series 2007,
5.125%, 8/01/37 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
122,905 Total Tax Obligation/Limited 110,411,294
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.3% (4.8% OF TOTAL INVESTMENTS)
6,500 Foothill/Eastern Transportation Corridor Agency, 4/10 at 66.39 A 3,809,910
California, Toll Road Revenue Refunding Bonds, Series
1999, 0.000%, 1/15/18 - NPFG Insured
4,000 Orange County Transportation Authority, California, Toll 8/13 at 100.00 A1 4,160,160
Road Revenue Bonds, 91 Express Lanes Project, Series
2003A, 5.000%, 8/15/18 - AMBAC Insured
5,000 San Francisco Airports Commission, California, Revenue 5/11 at 100.00 A1 4,961,700
Refunding Bonds, San Francisco International Airport,
Second Series 2001, Issue 27A, 5.250%, 5/01/31 - NPFG
Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
15,500 Total Transportation 12,931,770
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 13.2% (8.7% OF TOTAL INVESTMENTS) (4)
1,380 California Educational Facilities Authority, Revenue 11/10 at 100.00 A2 (4) 1,433,723
Bonds, University of the Pacific, Series 2000, 5.875%,
11/01/20 (Pre-refunded 11/01/10) - MBIA Insured
1,900 Central Unified School District, Fresno County, 3/10 at 100.00 N/R (4) 1,948,906
California, General Obligation Bonds, Series 1993,
5.625%, 3/01/18 - AMBAC Insured (ETM)
3,000 Escondido Union High School District, San Diego County, 5/10 at 100.00 A (4) 3,029,310
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 - AGM Insured (ETM) 8/10 at 101.00 AAA 1,096,023
1,160 5.125%, 8/01/22 - AGM Insured (ETM) 8/10 at 101.00 AAA 1,193,791
1,220 5.125%, 8/01/23 - AGM Insured (ETM) 8/10 at 101.00 AAA 1,255,539
32 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,500 Hacienda La Puente Unified School District, Los Angeles 8/10 at 101.00 A+ (4) $ 1,548,045
County, 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) - AGM Insured 8/14 at 100.00 AAA 1,179,970
1,000 5.250%, 8/01/22 (Pre-refunded 8/01/14) - AGM Insured 8/14 at 100.00 AAA 1,179,970
1,610 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 N/R (4) 1,714,215
Refunding 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 No Opt. Call AAA 5,831,050
Securities Program Single Family Mortgage Revenue Bonds,
Series 1987B, 8.625%, 5/01/16 (Alternative Minimum Tax) (ETM)
1,000 Sacramento County Sanitation District Financing 12/10 at 101.00 AA (4) 1,050,720
Authority, 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 5/12 at 101.00 N/R (4) 1,009,853
Medical Center, Series 2004A, 5.500%, 5/15/18
(Pre-refunded 5/15/12) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
21,060 Total U.S. Guaranteed 23,471,115
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.4% (6.8% OF TOTAL INVESTMENTS)
3,740 California Pollution Control Financing Authority, Revenue 3/10 at 101.00 A1 3,773,959
Refunding Bonds, Southern California Edison Company,
Series 1999B, 5.450%, 9/01/29 - NPFG Insured
670 Merced Irrigation District, California, Electric System 9/15 at 100.00 N/R 601,164
Revenue Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA
GTY Insured
100 Sacramento City Financing Authority, California, Capital 6/10 at 102.00 N/R 101,109
Improvement Revenue Bonds, Solid Waste and Redevelopment
Projects, Series 1999, 5.800%, 12/01/19 - AMBAC Insured
1,950 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 A- 1,829,198
Bonds, Series 2002, 5.250%, 8/01/27 - AMBAC Insured
(Alternative Minimum Tax)
Santa Clara, California, Subordinate Electric Revenue
Bonds, Series 2003A:
2,800 5.000%, 7/01/24 - NPFG Insured 7/13 at 100.00 A1 2,858,604
5,000 5.000%, 7/01/28 - NPFG Insured 7/13 at 100.00 A1 5,047,200
4,000 Southern California Public Power Authority, California, No Opt. Call AA- 4,163,920
Milford Wind Corridor Phase I Revenue Bonds, Series
2010-1, 5.000%, 7/01/28
------------------------------------------------------------------------------------------------------------------------------------
18,260 Total Utilities 18,375,154
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 23.1% (15.2% OF TOTAL INVESTMENTS)
1,100 Atwater Public Financing Authority, California, 5/19 at 100.00 AAA 1,076,306
Wastewater Revenue Bonds, Tender Option Bond Trust 3145,
18.517%, 5/01/40 - AGM Insured (IF)
2,975 Chino Basin Regional Finance Authority, California, 8/10 at 100.00 AA- 2,987,971
Sewerage System Revenue Bonds, Inland Empire Utilities
Agency, Series 1994, 6.000%, 8/01/16 - AMBAC Insured
2,000 El Dorado Irrigation District, California, Water and 3/14 at 100.00 A 2,071,980
Sewer Certificates of Participation, Series 2004A,
5.000%, 3/01/21 - FGIC Insured
750 Fortuna Public Finance Authority, California, Water 10/16 at 100.00 AAA 736,965
Revenue Bonds, Series 2006, 5.000%, 10/01/36 - AGM Insured
460 Healdsburg Public Financing Authority, California, 4/16 at 100.00 AA- 455,345
Wastewater Revenue Bonds, Series 2006, 5.000%, 4/01/36 -
NPFG Insured
2,700 Los Angeles County Sanitation Districts Financing 10/13 at 100.00 AAA 2,912,328
Authority, California, Senior Revenue Bonds, Capital
Projects, Series 2003A, 5.000%, 10/01/21 - AGM Insured
2,000 Los Angeles, California, Wastewater System Revenue Bonds, 6/15 at 100.00 AA 1,971,980
Series 2005A, 4.500%, 6/01/29 - NPFG Insured
430 Marina Coast Water District, California, Enterprise 6/16 at 100.00 A+ 430,654
Certificate of Participation, Series 2006, 5.000%,
6/01/31 - NPFG Insured
12,000 Orange County Sanitation District, California, 8/13 at 100.00 AAA 12,259,200
Certificates of Participation, Series 2003, 5.000%,
2/01/33 - FGIC Insured (UB)
1,520 San Buenaventura, California, Water Revenue Certificates 10/14 at 100.00 AA 1,556,890
of Participation, Series 2004, 5.000%, 10/01/25 - AMBAC
Insured
Nuveen Investments 33
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 San Diego County Water Authority, California, Water 5/18 at 100.00 AAA $ 1,014,010
Revenue Certificates of Participation,
Series 2008A, 5.000%, 5/01/38 - AGM Insured
3,675 San Dieguito Water District, California, Water Revenue 10/14 at 100.00 AA+ 3,842,066
Bonds, Series 2004, 5.000%, 10/01/23 -
FGIC Insured
Santa Clara Valley Water District, California,
Certificates of Participation, Series 2004A:
1,400 5.000%, 2/01/19 - FGIC Insured 2/14 at 100.00 AA+ 1,490,650
445 5.000%, 2/01/20 - FGIC Insured 2/14 at 100.00 AA+ 470,240
465 5.000%, 2/01/21 - FGIC Insured 2/14 at 100.00 AA+ 489,138
2,500 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AA- 2,532,900
Certificates of Participation, Series
2003A, 5.000%, 8/01/30 - NPFG 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 2,083,667
2,530 5.000%, 10/01/33 - FGIC Insured 10/13 at 100.00 AAA 2,571,467
------------------------------------------------------------------------------------------------------------------------------------
39,960 Total Water and Sewer 40,953,757
------------------------------------------------------------------------------------------------------------------------------------
$ 280,630 Total Investments (cost $266,116,665) - 152.2% 269,638,479
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (10.1)% (17,880,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.0% 5,235,736
---------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (45.1)% (5) (79,825,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 177,169,215
=====================================================================================================================
At least 80% of the Fund's net assets 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
whose insurer has experienced downgrades as of the end of the reporting
period. Please see the Portfolio Manager's Comments 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 during the period.
(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 29.6%.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 Nuveen Investments
NCU | Nuveen California Premium Income Municipal Fund
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.9% (4.6% OF TOTAL INVESTMENTS)
$ 1,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 1,406,940
Settlement Asset-Backed Bonds, Alameda County Tobacco
Asset Securitization Corporation, Series 2002, 5.750%,
6/01/29
230 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB 216,324
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
2,995 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 Baa3 2,937,945
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 858,924
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
6,075 Total Consumer Staples 5,420,133
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.4% (4.3% OF TOTAL
INVESTMENTS)
70 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 66,884
University of Redlands, Series 2005A, 5.000%, 10/01/35
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
45 5.000%, 11/01/21 11/15 at 100.00 A2 47,147
60 5.000%, 11/01/25 11/15 at 100.00 A2 61,154
1,112 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 Aa2 1,129,525
University of California Regents, Trust 1065, 9.306%,
3/01/33 (IF)
2,000 California State University, Systemwide Revenue Bonds, Series 11/15 at 100.00 Aa3 2,069,780
2005C, 5.000%, 11/01/27 - NPFG Insured
1,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 Aa1 1,650,195
Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured (UB)
-----------------------------------------------------------------------------------------------------------------------------------
4,787 Total Education and Civic Organizations 5,024,685
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.6% (0.4% OF TOTAL INVESTMENTS)
500 Virgin Islands Public Finance Authority, Revenue Bonds, 1/15 at 100.00 Baa3 447,750
Refinery Project Hovensa LLC, Series 2007, 4.700%, 7/01/22
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 26.9% (17.9% OF TOTAL INVESTMENTS)
4,090 California Health Facilities Financing Authority, Hospital 5/10 at 100.00 N/R 2,706,926
Revenue Bonds, Downey Community Hospital, Series 1993,
5.750%, 5/15/15
155 California Health Facilities Financing Authority, Revenue 4/16 at 100.00 A+ 147,703
Bonds, Kaiser Permanante System, Series 2006, 5.000%,
4/01/37
3,525 California Health Facilities Financing Authority, Revenue 11/16 at 100.00 Aa3 3,341,735
Bonds, Sutter Health, Series 2007A, 5.250%, 11/15/46 (UB)
1,500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 1,516,710
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 579,620
Participation, Community Hospitals of Central California,
Series 2007, 5.250%, 2/01/46
377 California Statewide Communities Development Authority, 7/18 at 100.00 AAA 395,182
Revenue Bonds, Saint Joseph Health System, Trust 2554,
18.719%, 7/01/47 - AGM Insured (IF)
1,000 California Statewide Community Development Authority, Insured 10/17 at 100.00 A- 863,480
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+ 457,866
Bonds, Kaiser Permanante System, Series 2006, 5.000%,
3/01/41
730 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 732,343
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+ 929,690
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 3,249,960
Bonds, Methodist Hospital Project, Series 2009, 6.750%,
2/01/38
Nuveen Investments 35
NCU | Nuveen California Premium Income Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 2,100 California Statewide Community Development Authority, Revenue No Opt. Call A- $ 2,096,451
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 Aa3 1,546,435
Bonds, Sutter Health, Series 2005A, 5.000%, 11/15/43
760 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/17 at 100.00 BBB 839,481
University Medical Center, Series 2008A, 8.250%, 12/01/38
800 Sierra View Local Health Care District, Tulare County, 7/10 at 100.00 A- 800,056
California, Refunding Revenue Bonds, Series 1998, 5.400%,
7/01/22
1,000 The Regents of the University of California, Medical Center 5/15 at 101.00 Aa2 924,610
Pooled Revenue Bonds, Series 2007A, 4.500%, 5/15/37 - NPFG
Insured
-----------------------------------------------------------------------------------------------------------------------------------
22,902 Total Health Care 21,128,248
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.6% (2.4% OF TOTAL INVESTMENTS)
2,500 California Housing Finance Agency, California, Home Mortgage 2/18 at 100.00 AA- 2,512,650
Revenue Bonds, Series 2008L, 5.500%, 8/01/38
130 California Housing Finance Agency, Home Mortgage Revenue 2/16 at 100.00 AA- 139,777
Bonds, Series 2006H, 5.750%, 8/01/30 - FGIC Insured
(Alternative Minimum Tax)
160 California Housing Finance Agency, Single Family Mortgage 8/10 at 100.00 AA 160,176
Bonds II, Series 1997A-1, 6.000%, 8/01/20 - NPFG Insured
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
2,790 Total Housing/Single Family 2,812,603
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS)
500 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 495,255
Disposal Revenue Bonds, Waste Management Inc., Series
2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 25.4% (16.9% OF TOTAL INVESTMENTS)
1,500 California, General Obligation Bonds, Series 2003, 5.000%, 2/13 at 100.00 A 1,398,555
2/01/31 - NPFG Insured
California, General Obligation Bonds, Various Purpose
Series 2009:
2,350 6.000%, 11/01/39 11/19 at 100.00 A- 2,431,710
1,300 5.500%, 11/01/39 11/19 at 100.00 A- 1,262,872
4,000 California, General Obligation Veterans Welfare Bonds, Series 6/10 at 100.00 AA- 3,886,120
1999BR, 5.300%, 12/01/29 (Alternative Minimum Tax)
6,000 Hartnell Community College District, California, General 6/16 at 100.00 AAA 6,122,340
Obligation Bonds, Series 2006B, 5.000%, 6/01/29 - AGM
Insured (UB)
3,000 Pomona Unified School District, Los Angeles County, 8/11 at 103.00 A 3,316,380
California, General Obligation Refunding Bonds, Series
1997A, 6.150%, 8/01/15 - NPFG Insured
15 Riverside Community College District, California, General 8/14 at 100.00 AA- 16,541
Obligation Bonds, Series 2004A, 5.250%, 8/01/22 - NPFG
Insured
135 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 139,860
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
1,355 San Jose-Evergreen Community College District, Santa Clara 9/15 at 100.00 Aa2 1,421,449
County, California, General Obligation Bonds, Series 2005A,
5.000%, 9/01/25 - NPFG Insured
-----------------------------------------------------------------------------------------------------------------------------------
19,655 Total Tax Obligation/General 19,995,827
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 45.4% (30.2% OF TOTAL INVESTMENTS)
1,000 Bell Community Redevelopment Agency, California, Tax 10/13 at 100.00 BBB- 902,300
Allocation 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- 1,760,902
1,865 5.000%, 12/01/24 - AMBAC Insured 12/13 at 100.00 AA- 1,923,673
5,920 California State Public Works Board, Lease Revenue Bonds, 5/10 at 101.00 BBB+ 5,982,927
Department of Veterans Affairs, Southern California
Veterans Home - Chula Vista Facility, Series 1999A, 5.600%,
11/01/19 - AMBAC Insured
1,000 California State Public Works Board, Lease Revenue Bonds, 10/19 at 100.00 BBB+ 999,940
Various Capital Projects, Series 2009G-1, 5.750%, 10/01/30
36 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 California State Public Works Board, Lease Revenue Bonds, 11/19 at 100.00 BBB+ $ 2,069,840
Various Capital Projects, Series 2009I-1, 6.375%, 11/01/34
535 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 A+ 597,237
5.000%, 7/01/15
165 Capistrano Unified School District, Orange County, 9/15 at 100.00 A 160,355
California, Special Tax Bonds, Community Facilities
District, Series 2005, 5.000%, 9/01/24 - FGIC Insured
500 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 432,715
Redevelopment Project Area Tax Allocation Bonds, Series
2006, 5.000%, 9/01/38 - AMBAC Insured
Irvine, California, Unified School District, Community
Facilities District Special Tax Bonds, Series 2006A:
75 5.000%, 9/01/26 9/16 at 100.00 N/R 66,920
175 5.125%, 9/01/36 9/16 at 100.00 N/R 146,696
3,500 Livermore Redevelopment Agency, California, Tax Allocation 8/11 at 100.00 A 3,344,948
Revenue Bonds, Livermore Redevelopment Project Area,
Series 2001A, 5.000%, 8/01/26 - NPFG Insured
310 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 269,235
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
2,000 Los Angeles, California, Municipal Improvement Corporation, 1/17 at 100.00 A+ 1,928,060
Lease Revenue Bonds, Police Headquarters, Series 2006A,
4.750%, 1/01/31 - FGIC Insured
3,230 Murrieta Redevelopment Agency, California, Tax Allocation 8/15 at 100.00 A 2,841,754
Bonds, Series 2005, 5.000%, 8/01/35 - NPFG Insured
155 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 A- 136,347
Bonds, 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 AA- 190,112
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,500 Sacramento City Financing Authority, California, Lease No Opt. Call A 1,605,765
Revenue Refunding Bonds, Series 1993A, 5.400%, 11/01/20 -
NPFG Insured
3,000 Sacramento City Financing Authority, California, Lease No Opt. Call A 3,211,530
Revenue Refunding Bonds, Series 1993B, 5.400%, 11/01/20
2,000 San Francisco City and County, California, Certificates of 4/19 at 100.00 AA- 2,076,240
Participation, Multiple Capital Improvement Projects,
Series 2009A, 5.200%, 4/01/26
San Marcos Public Facilities Authority, California, Revenue
Refunding Bonds, Series 1998:
1,500 5.800%, 9/01/18 3/10 at 100.50 Baa3 1,508,565
1,000 5.800%, 9/01/27 3/10 at 100.50 Baa3 983,810
325 San Mateo Union High School District, San Mateo County, 12/17 at 100.00 N/R 298,942
California, Certificates of Participation, Phase 1, Series
2007A, 5.000%, 12/15/30 - AMBAC Insured
2,050 Santa Barbara County, California, Certificates of 12/11 at 102.00 AA+ 2,227,305
Participation, Series 2001, 5.250%, 12/01/19 - AMBAC
Insured
-----------------------------------------------------------------------------------------------------------------------------------
35,690 Total Tax Obligation/Limited 35,666,118
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.5% (2.3% OF TOTAL INVESTMENTS)
780 Bay Area Toll Authority, California, Revenue Bonds, San 4/16 at 100.00 AA 790,982
Francisco Bay Area Toll Bridge, Series 2006F, 5.000%,
4/01/31 (UB)
220 Bay Area Toll Authority, California, Revenue Bonds, San 4/18 at 100.00 AA 252,019
Francisco Bay Area Toll Bridge, Series 2008, Trust 3211,
13.541%, 4/01/39 (IF)
2,000 Foothill/Eastern Transportation Corridor Agency, California, 7/10 at 100.00 BBB- 1,708,880
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
-----------------------------------------------------------------------------------------------------------------------------------
3,000 Total Transportation 2,751,881
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.0% (10.7% OF TOTAL INVESTMENTS) (4)
2,250 California Department of Water Resources, Power Supply 5/12 at 101.00 Aaa 2,490,435
Revenue Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded
5/01/12)
3,000 California Infrastructure Economic Development Bank, First No Opt. Call AAA 3,613,470
Lien Revenue Bonds, San Francisco Bay Area Toll Bridge,
Series 2003A, 5.000%, 7/01/22 - AGM Insured (ETM)
370 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AAA 429,973
5.000%, 7/01/15 (Pre-refunded 7/01/14)
Nuveen Investments 37
NCU | Nuveen California Premium Income Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 3,495 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA $ 4,011,526
of 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 A (4) 2,037,260
Series 2000, 5.750%, 7/01/21 (Pre-refunded 7/01/10) - NPFG
Insured
-----------------------------------------------------------------------------------------------------------------------------------
11,115 Total U.S. Guaranteed 12,582,664
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.9% (5.3% OF TOTAL INVESTMENTS)
890 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 860,452
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- 296,247
System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 -
NPFG Insured
295 Merced Irrigation District, California, Electric System 9/15 at 100.00 N/R 264,692
Revenue 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 4,788,848
Revenue Refunding Bonds, Series 2002Q, 5.250%, 8/15/20 -
AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
6,040 Total Utilities 6,210,239
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.0% (4.6% OF TOTAL INVESTMENTS)
1,125 Burbank, California, Wastewater System Revenue Bonds, Series 6/14 at 100.00 AA+ 1,169,798
2004A, 5.000%, 6/01/23 - AMBAC Insured
205 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 202,925
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
670 Metropolitan Water District of Southern California, 7/19 at 100.00 AAA 774,292
Waterworks Revenue Bonds, Tender Option Bond Trust 09-8B,
17.472%, 7/01/35 (IF)
1,500 Orange County Water District, California, Revenue 8/19 at 100.00 AAA 1,572,180
Certificates of Participation, Tender Option Bond Trust
11782-1, 17.862%, 8/15/41 (IF)
1,795 Woodbridge Irrigation District, California, Certificates of 7/13 at 100.00 A+ 1,739,822
Participation, Water Systems Project, Series 2003, 5.500%,
7/01/33
-----------------------------------------------------------------------------------------------------------------------------------
5,295 Total Water and Sewer 5,459,017
-----------------------------------------------------------------------------------------------------------------------------------
$ 118,349 Total Investments (cost $117,531,503) - 150.2% 117,994,420
=============----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (8.5)% (6,650,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 1,611,745
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (43.7)% (5) (34,375,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 78,581,165
===================================================================================================================
(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.
(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 29.1%.
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. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 Nuveen Investments
NAC | Nuveen California Dividend Advantage Municipal Fund
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.7% (4.5% OF TOTAL INVESTMENTS)
$ 990 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 931,135
Settlement 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 5,530,275
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 15,438,364
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
32,755 Total Consumer Staples 21,899,774
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.9% (4.7% OF TOTAL
INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 277,092
University of Redlands, Series 2005A, 5.000%, 10/01/35
10,000 California Educational Facilities Authority, Revenue Bonds, 10/17 at 100.00 AA+ 9,663,600
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 209,544
265 5.000%, 11/01/25 11/15 at 100.00 A2 270,096
4,685 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 Aa2 4,758,836
University of California Regents, Trust 1065, 9.306%,
3/01/33 (IF)
615 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 551,022
Bonds, Notre Dame de Namur University, Series 2003,
6.500%, 10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 100.00 BBB 3,058,290
Revenue 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 5/13 at 100.00 Aa1 3,850,455
Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured (UB)
-----------------------------------------------------------------------------------------------------------------------------------
22,555 Total Education and Civic Organizations 22,638,935
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 26.4% (17.8% OF TOTAL INVESTMENTS)
2,160 California Health Facilities Financing Authority, Health 3/13 at 100.00 A 2,270,657
Facility Revenue Bonds, Adventist Health System/West,
Series 2003A, 5.000%, 3/01/15
660 California Health Facilities Financing Authority, Revenue 4/16 at 100.00 A+ 628,927
Bonds, Kaiser Permanante System, Series 2006, 5.000%,
4/01/37
10,000 California Health Facilities Financing Authority, Revenue 11/16 at 100.00 Aa3 9,187,500
Bonds, Sutter Health, Series 2007A, 5.000%, 11/15/42 -
NPFG Insured
14,895 California Health Facilities Financing Authority, Revenue 11/16 at 100.00 Aa3 14,120,609
Bonds, Sutter Health, Series 2007A, 5.250%, 11/15/46 (UB)
1,120 California Statewide Communities Development Authority, 3/15 at 100.00 A 1,045,822
Revenue Bonds, Adventist Health System West, Series 2005A,
5.000%, 3/01/35
1,586 California Statewide Communities Development Authority, 7/18 at 100.00 AAA 1,664,697
Revenue Bonds, Saint Joseph Health System, Trust 2554,
18.719%, 7/01/47 - AGM Insured (IF)
California Statewide Communities Development Authority,
Revenue Bonds, ValleyCare Health System, Series 2007A:
900 4.800%, 7/15/17 No Opt. Call N/R 861,597
3,325 5.125%, 7/15/31 7/17 at 100.00 N/R 2,721,047
19,420 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 18,146,436
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+ 3,104,935
Bonds, Kaiser Permanente System, Series 2001C, 5.250%,
8/01/31
9,980 California Statewide Community Development Authority, Revenue 3/16 at 100.00 AA+ 10,000,459
Bonds, Kaiser Permanente System, 5.000%, 3/01/41 - BHAC
Insured (UB)
2,250 California Statewide Community Development Authority, Revenue 8/19 at 100.00 AA 2,437,470
Bonds, Methodist Hospital Project, Series 2009, 6.750%,
2/01/38
Nuveen Investments 39
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 10,500 Duarte, California, Certificates of Participation, City of 4/10 at 100.50 A+ $ 10,499,475
Hope National Medical Center, Series 1999A, 5.250%, 4/01/31
2,860 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/17 at 100.00 BBB 3,159,099
University Medical Center, Series 2008A, 8.250%, 12/01/38
675 Oak Valley Hospital District, Stanislaus Conty, California, 11/20 at 100.00 BBB- 658,834
Revenue Bonds, Series 2010, 6.500%, 11/01/29
2,570 Rancho Mirage Joint Powers Financing Authority, California, 7/17 at 100.00 A3 2,328,369
Revenue Bonds, Eisenhower Medical Center, Series 2007A,
5.000%, 7/01/38
3,000 Santa Clara County Financing Authority, California, Insured 8/17 at 100.00 A+ 3,083,580
Revenue Bonds, El Camino Hospital, Series 2007A, 5.750%,
2/01/41 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
88,996 Total Health Care 85,919,513
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 2.3% (1.6% OF TOTAL INVESTMENTS)
4,895 Contra Costa County, California, Multifamily Housing Revenue 6/10 at 101.00 N/R 4,532,623
Bonds, Delta View Apartments Project, Series 1999C,
6.750%, 12/01/30 (Alternative Minimum Tax)
320 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 273,168
Mobile Home Park Revenue Bonds, San Juan Mobile Estates,
Series 2006B, 5.850%, 5/15/41
1,725 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A+ 1,628,210
Revenue Bonds, Rancho Feliz Mobile Home Park, Series
2003A, 5.750%, 9/15/38
1,120 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,106,784
Revenue Bonds, Rancho Feliz Mobile Home Park, Series
2003B, 6.625%, 9/15/38
-----------------------------------------------------------------------------------------------------------------------------------
8,060 Total Housing/Multifamily 7,540,785
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,670 California Housing Finance Agency, California, Home Mortgage 2/17 at 100.00 AA- 1,754,920
Revenue Bonds, Series 2008, Trust 3137, 15.580%, 8/01/37
(Alternative Minimum Tax) (IF)
530 California Housing Finance Agency, California, Home Mortgage 2/16 at 100.00 AA- 569,861
Revenue Bonds, Series 2006H, 5.750%, 8/01/30 - FGIC
Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
2,200 Total Housing/Single Family 2,324,781
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,981,020
Disposal Revenue Bonds, Waste Management Inc., Series
2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
5,120 California Statewide Communities Development Authority, No Opt. Call BB 3,436,134
Revenue Bonds, EnerTech Regional Biosolids Project, Series
2007A, 5.500%, 12/01/33 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
7,120 Total Industrials 5,417,154
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.5% (1.7% OF TOTAL INVESTMENTS)
1,000 California Municipal Finance Authority, Revenue Bonds, Harbor 11/19 at 100.00 Ba1 1,016,020
Regional Center Project, Series 2009, 8.000%, 11/01/29
8,500 Riverside County Public Financing Authority, California, 5/10 at 100.50 BB+ 7,232,990
Certificates of Participation, Air Force Village West,
Series 1999, 5.800%, 5/15/29
-----------------------------------------------------------------------------------------------------------------------------------
9,500 Total Long-Term Care 8,249,010
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 12.0% (8.1% OF TOTAL INVESTMENTS)
10,000 California, General Obligation Bonds, Various Purpose Series 11/19 at 100.00 A- 10,347,700
2009, 6.000%, 11/01/39
4,435 California, General Obligation Refunding Bonds, Series 2002, No Opt. Call A- 5,095,238
6.000%, 4/01/16 - AMBAC Insured
3,425 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA 2,912,586
General Obligation Bonds, Series 2006C, 0.000%, 8/01/31 -
AGM Insured
5,150 Hacienda La Puente Unified School District Facilities No Opt. Call AAA 5,686,991
Financing Authority, California, General Obligation
Revenue Bonds, Series 2007, 5.000%, 8/01/26 - AGM Insured
5,210 Oak Valley Hospital District, Stanislaus County, California, 7/14 at 101.00 A3 4,789,084
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- 595,700
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
40 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 5,000 San Diego Unified School District, San Diego County, California, 7/13 at 101.00 AAA $ 5,701,500
General Obligation Bonds, Series 2003E, 5.250%, 7/01/20 - AGM
Insured
3,605 West Contra Costa Unified School District, Contra Costa County, 8/11 at 101.00 AAA 3,822,454
California, General Obligation Bonds, Series 2003B, 5.000%,
8/01/21 - AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
37,400 Total Tax Obligation/General 38,951,253
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 32.7% (22.1% 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 931,820
615 5.800%, 9/01/35 9/14 at 102.00 N/R 549,816
1,990 Borrego Water District, California, Community Facilities 8/17 at 102.00 N/R 1,755,717
District 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 2,064,804
Infrastructure Revenue Refunding Bonds, Series 2002A, 5.125%,
9/02/24 - AGM Insured
Brentwood Infrastructure Financing Authority, Contra Costa
County, California, Capital Improvement Revenue Bonds,
Series 2001:
1,110 5.375%, 11/01/18 - AGM Insured 11/11 at 100.00 AAA 1,185,846
1,165 5.375%, 11/01/19 - AGM Insured 11/11 at 100.00 AAA 1,243,463
1,000 California State Public Works Board, Lease Revenue Bonds, 10/19 at 100.00 BBB+ 999,940
Various Capital Projects, Series 2009G-1, 5.750%, 10/01/30
2,000 California State Public Works Board, Lease Revenue Bonds, 11/19 at 100.00 BBB+ 2,069,840
Various Capital Projects, Series 2009I-1, 6.375%, 11/01/34
2,000 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 1,889,500
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 A 690,014
Special Tax Bonds, Community Facilities District, Series
2005, 5.000%, 9/01/24 - FGIC Insured
1,225 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 1,060,152
Redevelopment Project Area Tax Allocation Bonds, Series 2006,
5.000%, 9/01/38 - AMBAC Insured
3,490 Fontana, California, Senior Special Tax Refunding Bonds, 3/10 at 101.00 A 3,509,404
Heritage Village Community Facilities District 2, Series
1998A, 5.250%, 9/01/17 - NPFG Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,057,793
Facilities District 22, Series 2004, 6.000%, 9/01/34
3,980 Garden Grove, California, Certificates of Participation, 3/12 at 101.00 A 4,239,058
Financing Project, Series 2002A, 5.500%, 3/01/22 - AMBAC
Insured
Golden State Tobacco Securitization Corporation,
California, Tobacco Settlement Asset-Backed Revenue Bonds,
Series 2005A:
25,650 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 BBB+ 22,635,612
5,940 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 AAA 5,729,011
2,850 Hesperia Community Redevelopment Agency, California, Tax 9/15 at 100.00 BBB 2,276,067
Allocation Bonds, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
4,500 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call N/R 4,465,035
Refunding Bonds, Merged Area Redevelopment Project, Series
1998A, 5.250%, 5/01/23 - AMBAC Insured
Irvine, California, Unified School District, Community
Facilities District Special Tax Bonds, Series 2006A:
325 5.000%, 9/01/26 9/16 at 100.00 N/R 289,985
755 5.125%, 9/01/36 9/16 at 100.00 N/R 632,886
675 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 518,245
Community Facilities District 2002, Mountain House Special
Tax Bonds, Series 2006, 5.125%, 9/01/35
2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 1,866,660
Tax Bonds, Community Facilities District 1 of Sycamore Creek,
Series 2003, 6.500%, 9/01/24
1,000 Lindsay Redevelopment Agency, California, Project 1 Tax 8/17 at 100.00 BBB+ 794,130
Allocation 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 1,120,365
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
Nuveen Investments 41
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,530 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA $ 1,576,313
California, Certificates of Participation, Series 2005,
5.000%, 3/01/24 - AGM Insured
3,500 Murrieta Redevelopment Agency, California, Tax Allocation Bonds, 8/17 at 100.00 A 3,040,205
Series 2007A, 5.000%,8/01/37 - NPFG Insured
9,200 Norco Redevelopment Agency, California, Tax Allocation Refunding 3/11 at 102.00 A 9,363,206
Bonds, Project Area 1, Series 2001, 5.000%, 3/01/19 - NPFG
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 483,671
250 5.000%, 9/01/33 9/14 at 102.00 N/R 206,953
3,290 Oakland Redevelopment Agency, California, Subordinate Lien Tax 3/13 at 100.00 A 3,448,117
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 A 5,669,384
Refunding Bonds, Convention Center Project, Series 2001A,
5.000%, 11/01/22 - NPFG Insured
1,000 Palmdale Community Redevelopment Agency, California, Tax 12/14 at 100.00 A- 1,001,600
Allocation 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 N/R 1,570,251
Bonds, Paguay Redevelopment Project, Series 2000, 5.750%,
6/15/33 - NPFG Insured
620 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 545,389
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA
GTY Insured
1,860 Riverside Redevelopment Agency, California, Tax Allocation 8/13 at 100.00 A 1,881,074
Refunding Bonds, Merged Project Areas, Series 2003, 5.250%,
8/01/22 - NPFG Insured
770 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AA- 770,454
Facilities, Series 2003A, 5.000%,8/01/25 - AMBAC Insured
2,500 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call A 2,676,275
Refunding Bonds, Series 1993A, 5.400%, 11/01/20 - AMBAC
Insured
1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 1,102,528
Community Facilities District 4, Series 2003C, 6.000%, 9/01/33
2,695 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AA+ 2,911,085
Refunding Bonds, Civic Center Project, Series 2002B, 5.250%,
6/01/19 - AMBAC Insured
1,000 Washington Unified School District, Yolo County, California, 8/17 at 100.00 BBB+ 963,610
Certificates of Participation, Series 2007, 5.125%, 8/01/37 -
AMBAC Insured
600 West Patterson Financing Authority, California, Special Tax 9/14 at 105.00 N/R 637,266
Bonds, Community Facilities District 01-1, Refunding Series
2009A, 8.625%, 9/01/39
2,810 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 2,473,615
Bonds, Community Facilities District 01-1, Series 2003B,
7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, Special Tax 9/13 at 102.00 N/R 1,534,820
Bonds, Community Facilities District 01-1, Series 2004B,
6.000%, 9/01/39
1,350 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 1,054,877
Bonds, Community Facilities District 2001-1, Series 2004A,
6.125%, 9/01/39
-----------------------------------------------------------------------------------------------------------------------------------
112,225 Total Tax Obligation/Limited 106,485,856
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 20.2% (13.6% OF TOTAL INVESTMENTS)
1,430 Bay Area Toll Authority, California, Revenue Bonds, San 4/16 at 100.00 AA 1,450,134
Francisco Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31
(UB)
830 Bay Area Toll Authority, California, Revenue Bonds, San 4/18 at 100.00 AA 950,798
Francisco Bay Area Toll Bridge, Series 2008, Trust 3211,
13.541%, 4/01/39 (IF)
8,150 Foothill/Eastern Transportation Corridor Agency, California, 7/10 at 101.00 BBB- 7,777,627
Toll 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 8,884,381
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 109,339
International Airport Revenue Bonds, Series 2006, 5.450%,
7/01/20 (Alternative Minimum Tax)
42 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
$ 22,825 Port of Oakland, California, Revenue Bonds, Series 2000K, 5/10 at 100.00 A $ 22,837,326
5.750%, 11/01/29 - FGIC Insured
23,275 San Francisco Airports Commission, California, Revenue Bonds, 5/10 at 101.00 AAA 23,709,544
San Francisco International Airport, Second Series 2000,
Issue 24A, 5.750%, 5/01/30 - AGM Insured (Alternative Minimum
Tax)
-----------------------------------------------------------------------------------------------------------------------------------
65,145 Total Transportation 65,719,149
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 25.6% (17.3% OF TOTAL INVESTMENTS) (4)
9,750 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 10,791,885
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 124,661
Bonds, Central Valley Project, Series 2001W, 5.250%, 12/01/22
(Pre-refunded 12/01/11) - AGM Insured
8,400 California Health Facilities Financing Authority, Revenue Bonds, 4/10 at 100.50 AAA 8,482,740
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) 795,309
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
4,370 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 4,865,383
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 9/13 at 102.00 N/R (4) 2,338,049
Community 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 9/13 at 102.00 N/R (4) 1,585,967
Community 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 7/12 at 100.00 AA- (4) 11,932,645
Obligation 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 2,653,175
4,500 5.375%, 6/01/41 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 4,782,825
5,840 Orange County Water District, California, Revenue Certificates 8/10 at 100.00 AAA 6,341,072
of Participation, Series 1999A, 5.375%, 8/15/29 (ETM)
6,530 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 N/R (4) 6,952,687
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 A (4) 4,074,520
Series 2000, 5.750%, 7/01/16 (Pre-refunded 7/01/10) - NPFG
Insured
2,860 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 AAA 3,139,365
Settlement Asset-Backed Bonds, San Diego County Tobacco Asset
Securitization Corporation, Senior Series 2001A,
5.250%, 6/01/27 (Pre-refunded 6/01/12)
11,305 University of California, Revenue Bonds, Multi-Purpose Projects, 9/10 at 101.00 AA (4) 11,700,562
Series 2002O, 5.000%, 9/01/21 (Pre-refunded 9/01/10) - FGIC
Insured
2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 N/R (4) 2,799,725
Presbyterian Intercommunity Hospital, Series 2002, 5.600%,
6/01/22 (Pre-refunded 6/01/12)
-----------------------------------------------------------------------------------------------------------------------------------
77,505 Total U.S. Guaranteed 83,360,570
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.3% (2.9% OF TOTAL INVESTMENTS)
3,630 Imperial Irrigation District, California, Certificates of 11/13 at 100.00 AAA 3,886,532
Participation, Electric System Revenue Bonds, Series 2003,
5.250%, 11/01/23 - AGM Insured
3,775 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 3,401,539
Purchase Revenue Bonds, Series 2007A, 5.000%, 11/15/35
5,500 Los Angeles Department of Water and Power, California, Power 7/15 at 100.00 AAA 5,667,310
System Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 - AGM
Insured (UB)
1,270 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 1,139,520
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
-----------------------------------------------------------------------------------------------------------------------------------
14,175 Total Utilities 14,094,901
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 43
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.0% (4.1% OF TOTAL INVESTMENTS)
$ 875 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- $ 866,145
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
2,500 Indio Water Authority, California, Water Revenue Bonds, Series 4/16 at 100.00 A+ 2,516,850
2006, 5.000%, 4/01/31 - AMBAC Insured
835 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 A+ 836,269
of Participation, Series 2006, 5.000%, 6/01/31 - NPFG Insured
8,250 Pico Rivera Water Authority, California, Revenue Bonds, Series 12/11 at 102.00 N/R 7,664,333
2001A, 6.250%, 12/01/32
2,250 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AA 2,300,805
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- 5,523,995
California, Water Revenue Bonds, Series 2002A, 5.000%,
11/01/18 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
19,825 Total Water and Sewer 19,708,397
------------------------------------------------------------------------------------------------------------------------------------
$ 497,461 Total Investments (cost $481,010,647) - 148.0% 482,310,078
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (8.8)% (28,545,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 7,550,445
---------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (41.6)% (5) (135,525,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 325,790,523
=====================================================================================================================
(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.
(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 28.1%.
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. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 Nuveen Investments
NVX | Nuveen California Dividend Advantage Municipal Fund 2
| Portfolio of Investments
February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 7.4% (5.1% OF TOTAL INVESTMENTS)
$ 615 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 578,432
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
4,515 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 3,833,506
Settlement 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 2,949,480
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 8,576,515
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
22,610 Total Consumer Staples 15,937,933
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.9% (5.4% OF TOTAL
INVESTMENTS)
2,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 2,077,100
Stanford University, Series 2001Q, 5.250%, 12/01/32
2,745 California Educational Facilities Authority, Revenue Bonds, 10/18 at 100.00 AA+ 3,168,059
University of Southern California, Tender Option Bond Trust
09-11B, 17.624%, 10/01/38 (IF)
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
125 5.000%, 11/01/21 11/15 at 100.00 A2 130,965
165 5.000%, 11/01/25 11/15 at 100.00 A2 168,173
2,250 California Educational Facilities Authority, Student Loan 3/10 at 100.00 Baa1 2,250,765
Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%,
3/01/21 - NPFG Insured (Alternative Minimum Tax)
2,945 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 Aa2 2,991,413
University of California Regents, Trust 1065, 9.306%,
3/01/33 (IF)
620 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 555,501
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 BBB 2,812,770
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 Aa1 2,732,046
Series 2003A, 5.000%, 5/15/33 - AMBAC Insured (UB)
-----------------------------------------------------------------------------------------------------------------------------------
16,530 Total Education and Civic Organizations 16,886,792
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 19.8% (13.6% OF TOTAL INVESTMENTS)
2,000 California Health Facilities Financing Authority, Revenue 4/12 at 100.00 BBB+ 2,026,540
Bonds, Casa Colina Inc., Series 2001, 6.000%, 4/01/22
415 California Health Facilities Financing Authority, Revenue 4/16 at 100.00 A+ 395,462
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
9,260 California Health Facilities Financing Authority, Revenue 11/16 at 100.00 Aa3 8,778,573
Bonds, Sutter Health, Series 2007A, 5.250%, 11/15/46 (UB)
500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 505,570
Bonds, Kaiser Hospital Assistance LLC, Series 2001A,
5.550%, 8/01/31
2,520 California Statewide Communities Development Authority, 3/15 at 100.00 A 2,353,100
Revenue Bonds, Adventist Health System West, Series 2005A,
5.000%, 3/01/35
California Statewide Communities Development Authority, Revenue
Bonds, Saint Joseph Health System, Trust 2554:
998 18.719%, 7/01/47 - AGM Insured (IF) 7/18 at 100.00 AAA 1,046,996
1,325 18.685%, 7/01/47 - AGM Insured (IF) 7/18 at 100.00 AAA 1,390,747
California Statewide Communities Development Authority,
Revenue Bonds, ValleyCare Health System, Series 2007A:
900 4.800%, 7/15/17 No Opt. Call N/R 861,597
2,225 5.125%, 7/15/31 7/17 at 100.00 N/R 1,820,851
2,185 California Statewide Community Development Authority, Health No Opt. Call AA- 2,326,304
Facility Revenue Refunding Bonds, Memorial Health Services,
Series 2003A, 6.000%, 10/01/11
Nuveen Investments 45
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 2,500 California Statewide Community Development Authority, Hospital 6/13 at 100.00 AAA $ 2,714,750
Revenue Bonds, Monterey Peninsula Hospital, Series 2003B,
5.250%, 6/01/18 - AGM Insured
1,755 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 1,639,907
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
425 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 426,364
Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
1,000 California Statewide Community Development Authority, Revenue 8/18 at 100.00 AAA 1,003,400
Bonds, Sutter Health, Series2004D, 5.050%, 8/15/38 - AGM
Insured
6,020 California Statewide Community Development Authority, Revenue 11/15 at 100.00 Aa3 5,508,601
Bonds, Sutter Health, Series 2005A, 5.000%, 11/15/43
2,000 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/17 at 100.00 BBB 2,209,160
University Medical Center, Series 2008A, 8.250%, 12/01/38
1,610 Madera County, California, Certificates of Participation, 3/20 at 100.00 A- 1,588,845
Children's Hospital Central California, Series 2010, 5.375%,
3/15/36
455 Oak Valley Hospital District, Stanislaus Conty, California, 11/20 at 100.00 BBB- 444,103
Revenue Bonds, Series 2010, 6.500%, 11/01/29
5,785 Rancho Mirage Joint Powers Financing Authority, California, 7/17 at 100.00 A3 5,241,094
Revenue Bonds, Eisenhower Medical Center, Series 2007A, 5.000%,
7/01/38
-----------------------------------------------------------------------------------------------------------------------------------
43,878 Total Health Care 42,281,964
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.2% (3.6% OF TOTAL INVESTMENTS)
5,962 California Statewide Community Development Authority, Multifamily 6/11 at 102.00 AAA 6,181,819
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 5/16 at 100.00 N/R 174,998
Home 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+ 995,804
Bonds, Rancho Feliz Mobile Home Park, Series 2003A, 5.750%,
9/15/38
700 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 691,740
Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B,
6.625%, 9/15/38
3,045 Yucaipa Redevelopment Agency, California, Mobile Home Park 5/11 at 102.00 N/R 3,058,094
Revenue Bonds, Rancho del Sol and Grandview, Series 2001A,
6.750%, 5/15/36
-----------------------------------------------------------------------------------------------------------------------------------
10,967 Total Housing/Multifamily 11,102,455
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.5% (1.0% OF TOTAL INVESTMENTS)
325 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 AA- 349,443
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 AA- 2,381,368
Series 2007M, Trust 1021, 7.594%, 8/01/31 (Alternative Minimum
Tax) (IF)
420 California Rural Home Mortgage Finance Authority, Mortgage-Backed 6/11 at 102.00 AAA 434,696
Securities Program Single Family Mortgage Revenue Bonds,
Series 2001A, 5.650%, 12/01/31 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
4,035 Total Housing/Single Family 3,165,507
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.1% OF TOTAL INVESTMENTS)
1,250 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,238,138
Disposal Revenue Bonds, Waste Management Inc., Series 2002A,
5.000%, 1/01/22 (Alternative Minimum Tax)
3,175 California Statewide Communities Development Authority, Revenue No Opt. Call BB 2,130,806
Bonds, EnerTech Regional Biosolids Project, Series 2007A,
5.500%, 12/01/33 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
4,425 Total Industrials 3,368,944
-----------------------------------------------------------------------------------------------------------------------------------
46 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.1% (1.4% OF TOTAL INVESTMENTS)
$ 1,550 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A- $ 1,549,210
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 Ba1 2,903,025
Bonds, Inland Regional Center Project, Series 2007, 5.375%,
12/01/37
-----------------------------------------------------------------------------------------------------------------------------------
5,300 Total Long-Term Care 4,452,235
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 10.7% (7.3% OF TOTAL INVESTMENTS)
10,000 California State, General Obligation Bonds, Series 2006CD, 12/15 at 100.00 AA- 8,426,400
4.600%, 12/01/32 (Alternative Minimum Tax)
3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 A+ 3,901,633
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 3,237,797
3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AA 3,483,810
1,285 Los Angeles Unified School District, Los Angeles County, 7/19 at 100.00 AA- 1,345,498
California, General Obligation Bonds, Series 2009D, 5.000%,
7/01/27
2,000 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call A 2,112,980
Series 2001A, 5.500%, 7/01/20 - NPFG Insured
355 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 367,780
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
23,560 Total Tax Obligation/General 22,875,898
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 18.2% (12.4% 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 605,683
385 5.800%, 9/01/35 9/14 at 102.00 N/R 344,194
1,240 Borrego Water District, California, Community Facilities District 8/17 at 102.00 N/R 1,094,015
2007-1 Montesoro, Special Tax Bonds, Series 2007, 5.750%,
8/01/25
4,900 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 BBB+ 5,185,033
Department of Corrections, Series 2003C, 5.500%, 6/01/16
1,245 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 A+ 1,389,831
5.000%, 7/01/15
1,200 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 1,133,700
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 A 422,755
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
4,845 Encinitas Public Financing Authority, California, Lease Revenue 4/10 at 100.00 AA+ 4,856,531
Bonds, Acquisition Project, Series 2001A, 5.250%, 4/01/31 -
NPFG Insured
750 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 705,195
Facilities District 22, Series 2004, 6.000%, 9/01/34
1,785 Hawthorne Community Redevelopment Agency, California, Project 9/16 at 100.00 A- 1,617,156
Area 2 Tax Allocation Bonds, Series 2006, 5.250%, 9/01/36 -
SYNCORA GTY Insured
1,800 Hesperia Unified School District, San Bernardino County, 2/17 at 100.00 BBB+ 1,550,358
California, 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:
205 5.000%, 9/01/26 9/16 at 100.00 N/R 182,913
470 5.125%, 9/01/36 9/16 at 100.00 N/R 393,982
2,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 2,016,840
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 318,625
Community Facilities District 2002, Mountain House Special Tax
Bonds, Series 2006, 5.125%, 9/01/35
Nuveen Investments 47
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,265 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R $ 1,180,662
Tax 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 694,800
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
495 North Natomas Community Facilities District 4, Sacramento, 9/14 at 102.00 N/R 409,766
California, Special Tax Bonds, Series 2006D, 5.000%, 9/01/33
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 1,806,980
Facilities 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- 338,669
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 AA- 475,280
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
700 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 671,104
Community 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 1,121,230
1,325 8.000%, 8/01/38 8/16 at 102.00 A 1,465,477
1,530 San Marcos Public Facilities Authority, California, Tax 8/15 at 100.00 A- 1,346,094
Allocation 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, 12/17 at 100.00 N/R 758,852
California, Certificates of Participation, Phase 1, Series
2007A, 5.000%, 12/15/30 - AMBAC Insured
415 West Patterson Financing Authority, California, Special Tax 9/14 at 105.00 N/R 440,776
Bonds, Community Facilities District 01-1, Refunding Series
2009A, 8.625%, 9/01/39
1,930 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 1,708,127
Bonds, Community Facilities District 01-1, Series 2003B,
6.750%, 9/01/30
500 West Patterson Financing Authority, California, Special Tax 9/13 at 102.00 N/R 383,705
Bonds, Community Facilities District 01-1, Series 2004B,
6.000%, 9/01/39
850 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 664,182
Bonds, Community Facilities District 2001-1, Series 2004A,
6.125%, 9/01/39
3,715 Western Placer Unified School District, Placer County, 8/18 at 100.00 AAA 3,523,863
California, Certificates of Participation, Series 2008,
5.000%, 8/01/47 - AGC Insured
-----------------------------------------------------------------------------------------------------------------------------------
40,535 Total Tax Obligation/Limited 38,806,378
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 11.4% (7.8% OF TOTAL INVESTMENTS)
1,930 Bay Area Toll Authority, California, Revenue Bonds, San 4/16 at 100.00 AA 1,957,174
Francisco Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31
(UB)
1,430 Bay Area Toll Authority, California, Revenue Bonds, San 4/18 at 100.00 AA 1,638,122
Francisco Bay Area Toll Bridge, Series 2008, Trust 3211,
13.541%, 4/01/39 (IF)
7,000 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 6,878,270
Toll Road Revenue Refunding Bonds, Series 1999, 5.875%,
1/15/27
5,585 Port of Oakland, California, Revenue Bonds, Series 2002N, 11/12 at 100.00 A 5,744,787
5.000%, 11/01/16 - NPFG Insured (Alternative Minimum Tax) 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 A1 2,486,182
2,555 5.250%, 5/01/19 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 A1 2,600,198
1,000 San Francisco Airports Commission, California, Revenue Bonds, 5/13 at 100.00 A1 1,059,100
San Francisco International Airport, Second Series 2003,
Issue 29B, 5.125%, 5/01/17 - FGIC Insured
2,000 San Francisco Airports Commission, California, Revenue 5/12 at 100.00 A1 2,121,500
Refunding Bonds, San Francisco International Airport, Second
Series 2002, Issue 28A, 5.250%, 5/01/17 - NPFG Insured
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
23,930 Total Transportation 24,485,333
-----------------------------------------------------------------------------------------------------------------------------------
48 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 40.3% (27.6% OF TOTAL INVESTMENTS) (4)
$ 9,000 Anitoch Area Public Facilities Financing Agency, 8/11 at 100.00 A (4) $ 9,632,520
California, 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 6,641,160
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) 500,544
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
860 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AAA 999,397
5.000%, 7/01/15 (Pre-refunded 7/01/14)
4,000 Daly City Housing Development Finance Agency, California, Mobile 12/13 at 102.00 N/R (4) 4,777,720
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 5,187,385
Counties, California, Water System Subordinated Revenue Bonds,
Series 2001, 5.000%, 6/01/26 (Pre-refunded 6/01/11) - NPFG
Insured
2,690 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 2,994,938
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 9/13 at 102.00 N/R (4) 1,410,061
Community Facilities District 03-1, Series 2003A, 6.500%,
9/01/25 (Pre-refunded 9/01/13)
885 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R (4) 1,051,371
Community Facilities District 03-1, Series 2004, 6.000%,
9/01/34 (Pre-refunded 9/01/13)
1,530 Los Angeles Unified School District, California, General 7/10 at 100.00 AA- (4) 1,557,708
Obligation Bonds, Series 2000D, 5.375%, 7/01/25
(Pre-refunded 7/01/10) - FGIC Insured
9,510 Los Angeles Unified School District, California, General 7/12 at 100.00 AA- (4) 10,463,758
Obligation 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 3,188,550
Settlement Asset-Backed Bonds, Series 2001A, 5.375%, 6/01/41
(Pre-refunded 6/01/11)
2,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 2,549,620
Appropriation Bonds, Series 2002E,6.000%, 8/01/26 (ETM)
6,000 Riverside County Redevelopment Agency, California, Tax 10/11 at 102.00 A- (4) 6,580,500
Allocation 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, 6/11 at 100.00 AAA 12,813,342
Sales Tax Revenue Bonds, Series 2001A, 5.000%, 6/01/25
(Pre-refunded 6/01/11) - MBIA Insured
4,050 Santa Rosa High School District, Sonoma County, California, 5/11 at 101.00 A+ (4) 4,332,083
General Obligation Bonds, Series 2001, 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) 6,708,462
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, 6/12 at 100.00 AAA 3,089,156
Tobacco Settlement Asset-Backed Bonds, San Diego County
Tobacco Asset Securitization Corporation, Senior Series 2001A,
5.500%, 6/01/36 (Pre-refunded 6/01/12)
1,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 N/R (4) 1,679,835
Presbyterian Intercommunity Hospital, Series 2002, 5.600%,
6/01/22 (Pre-refunded 6/01/12)
-----------------------------------------------------------------------------------------------------------------------------------
78,635 Total U.S. Guaranteed 86,158,110
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.2% (6.3% OF TOTAL INVESTMENTS)
5,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 A+ 5,339,950
Electric Distribution Revenue Bonds, Series 2004, 5.250%,
10/01/21 - NPFG Insured
2,355 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 2,122,020
Purchase Revenue Bonds, Series 2007A, 5.000%, 11/15/35
1,000 Los Angeles Department of Water and Power, California, Power 7/13 at 100.00 AA- 1,052,730
System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/23 -
NPFG Insured
500 Los Angeles Department of Water and Power, California, Power 7/15 at 100.00 AAA 515,210
System Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 -
AGM 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 708,835
1,500 5.250%, 9/01/36 - SYNCORA GTY Insured 9/15 at 100.00 N/R 1,331,670
Nuveen Investments 49
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 2,000 Santa Clara, California, Subordinate Electric Revenue Bonds, 7/13 at 100.00 A1 $ 2,087,680
Series 2003A, 5.250%, 7/01/20 - NPFG Insured
2,500 Southern California Public Power Authority, California, Milford No Opt. Call AA- 2,602,450
Wind Corridor Phase I Revenue Bonds, Series 2010-1, 5.000%,
7/01/28
4,000 Southern California Public Power Authority, Natural Gas Project No Opt. Call A 3,816,080
1 Revenue Bonds, Series 2007A, 5.000%, 11/01/33
------------------------------------------------------------------------------------------------------------------------------------
19,645 Total Utilities 19,576,625
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 10.8% (7.4% OF TOTAL INVESTMENTS)
1,400 Castaic Lake Water Agency, California, Certificates of 8/16 at 100.00 AA- 1,379,742
Participation, Series 2006C, 5.000%, 8/01/36 - NPFG Insured
545 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 539,485
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
1,160 Metropolitan Water District of Southern California, Waterworks 7/19 at 100.00 AAA 1,340,566
Revenue Bonds, Tender Option Bond Trust 09-8B, 17.472%,
7/01/35 (IF)
1,500 Orange County Water District, California, Revenue Certificates 8/19 at 100.00 AAA 1,572,180
of Participation, Tender Option Bond Trust 11782-1, 17.862%,
8/15/41 (IF)
750 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AA 766,935
California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 -
FGIC Insured
1,700 San Buenaventura, California, Wastewater Revenue Certificates 3/14 at 100.00 AA 1,768,850
of Participation, Series 2004, 5.000%, 3/01/24 - NPFG Insured
4,785 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 A+ 5,022,097
Subordinate Lien Water Revenue Bonds, Series 2002, 5.000%,
8/01/21 - NPFG Insured
10,000 San Francisco City and County Public Utilities Commission, 4/13 at 100.00 A+ 10,713,700
California, Clean Water Revenue Refunding Bonds, Series
2003A, 5.250%, 10/01/20 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
21,840 Total Water and Sewer 23,103,555
------------------------------------------------------------------------------------------------------------------------------------
$ 315,890 Total Investments (cost $308,530,282) - 146.1% 312,201,729
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.2)% (8,905,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 4,165,091
---------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (43.9)% (5) (93,775,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 213,686,820
=====================================================================================================================
(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.
(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 30.0%
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50 Nuveen Investments
NZH | Nuveen California Dividend Advantage Municipal Fund 3
| Portfolio of Investments
February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 8.0% (5.3% OF TOTAL INVESTMENTS)
$ 995 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 935,837
Settlement 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 5,530,275
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 18,870,878
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
38,155 Total Consumer Staples 25,336,990
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 4.2% (2.8% OF TOTAL
INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 277,092
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 209,544
270 5.000%, 11/01/25 11/15 at 100.00 A2 275,192
1,500 California Educational Facilities Authority, Student Loan 3/10 at 100.00 Baa1 1,500,510
Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%,
3/01/21 - NPFG Insured (Alternative Minimum Tax)
6,000 California State University, Systemwide Revenue Bonds, Series 11/15 at 100.00 Aa3 6,209,340
2005C, 5.000%, 11/01/27 - NPFG Insured
615 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 551,022
Bonds, Notre Dame de Namur University, Series 2003, 6.500%,
10/01/23
4,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 Aa1 4,225,680
Projects, Series 2003A, 5.000%, 5/15/23 - AMBAC Insured (UB)
-----------------------------------------------------------------------------------------------------------------------------------
12,875 Total Education and Civic Organizations 13,248,380
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 27.7% (18.4% OF TOTAL INVESTMENTS)
California Health Facilities Financing Authority, Revenue
Bonds, Casa Colina Inc., Series 2001:
4,000 6.000%, 4/01/22 4/12 at 100.00 BBB+ 4,053,080
2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 2,001,220
670 California Health Facilities Financing Authority, Revenue 4/16 at 100.00 A+ 638,456
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
2,000 California Health Facilities Financing Authority, Revenue 1 1/16 at 100.00 Aa3 1,837,500
Bonds, Sutter Health, Series 2007A, 5.000%, 11/15/42 - NPFG
Insured
5,125 California Health Facilities Financing Authority, Revenue 1 1/16 at 100.00 Aa3 5,268,756
Bonds, Sutter Health, Tender Option Bond Trust 3175, 14.217%,
11/15/46 (IF)
9,000 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 9,100,260
Bonds, 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 2,353,100
Bonds, Adventist Health System West, Series 2005A, 5.000%,
3/01/35
1,650 California Statewide Communities Development Authority, Revenue 3/18 at 100.00 AAA 1,642,724
Bonds, Adventist Health System West, Series 2007B, 5.000%,
3/01/37 - AGC Insured
1,594 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 1,672,569
Bonds, Saint Joseph Health System, Trust 2554, 18.719%,
7/01/47 - AGM Insured (IF)
California Statewide Communities Development Authority, Revenue
Bonds, ValleyCare Health System, Series 2007A:
900 4.800%, 7/15/17 No Opt. Call N/R 861,597
3,435 5.125%, 7/15/31 7/17 at 100.00 N/R 2,811,067
6,525 California Statewide Community Development Authority, Health No Opt. Call AA- 7,170,910
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 7,004,055
Revenue Bonds, Monterey Peninsula Hospital, Series 2003B,
5.250%, 6/01/18 - AGM Insured
Nuveen Investments 51
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 4,500 California Statewide Community Development Authority, Insured 7/17 at 100.00 AAA $ 4,586,760
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2008K, 5.500%, 7/01/41 - AGC Insured
7,665 California Statewide Community Development Authority, Insured 5/10 at 102.00 A- 7,707,387
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+ 11,610,169
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
645 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 647,070
Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
6,720 California Statewide Community Development Authority, Revenue 11/16 at 100.00 Aa3 5,557,709
Bonds, Sutter Health, Tender Option Bond Trust 3102, 15.732%,
11/15/46 (IF)
2,950 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/17 at 100.00 BBB 3,258,511
University Medical Center, Series 2008A, 8.250%, 12/01/38
695 Oak Valley Hospital District, Stanislaus Conty, California, 11/20 at 100.00 BBB- 678,355
Revenue Bonds, Series 2010, 6.500%, 11/01/29
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 5,245,624
2,500 5.000%, 7/01/47 7/17 at 100.00 A3 2,207,100
-----------------------------------------------------------------------------------------------------------------------------------
89,759 Total Health Care 87,913,979
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.4% (2.3% OF TOTAL INVESTMENTS)
325 Independent Cities Lease Finance Authority, California, Mobile 5/16 at 100.00 N/R 277,436
Home 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+ 1,637,649
Bonds, Rancho Feliz Mobile Home Park, Series 2003A, 5.750%,
9/15/38
1,125 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,111,725
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 3,781,186
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 N/R 1,270,200
2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 N/R 2,896,272
-----------------------------------------------------------------------------------------------------------------------------------
10,925 Total Housing/Multifamily 10,974,468
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.4% (2.9% OF TOTAL INVESTMENTS)
2,655 California Housing Finance Agency, California, Home Mortgage 2/17 at 100.00 AA- 2,790,007
Revenue Bonds, Series 2008, Trust 3137, 15.580%, 8/01/37
(Alternative Minimum Tax) (IF)
540 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 AA- 580,613
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 AA- 10,499,009
Series 2007M, Trust 1021, 7.594%, 8/01/31 (Alternative
Minimum Tax) (IF)
-----------------------------------------------------------------------------------------------------------------------------------
17,700 Total Housing/Single Family 13,869,629
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,981,020
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 3,493,180
Bonds, EnerTech Regional Biosolids Project, Series 2007A,
5.500%, 12/01/33 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
7,205 Total Industrials 5,474,200
-----------------------------------------------------------------------------------------------------------------------------------
52 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.9% (1.3% OF TOTAL INVESTMENTS)
$ 2,450 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A- $ 2,448,751
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- 1,499,325
1,315 5.250%, 3/01/32 3/12 at 101.00 A- 1,198,333
1,000 California Municipal Finance Authority, Revenue Bonds, Harbor 11/19 at 100.00 Ba1 1,016,020
Regional Center Project, Series 2009, 8.000%, 11/01/29
-----------------------------------------------------------------------------------------------------------------------------------
6,265 Total Long-Term Care 6,162,429
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 20.0% (13.3% OF TOTAL INVESTMENTS)
9,335 California, General Obligation Bonds, Series 2002, 6.000%, No Opt. Call AAA 10,804,702
2/01/16 - AGM Insured
California, General Obligation Bonds, Various Purpose Series
2009:
3,040 6.000%, 11/01/39 11/19 at 100.00 A- 3,145,701
3,500 5.500%, 11/01/39 11/19 at 100.00 A- 3,400,040
14,300 California, General Obligation Veterans Welfare Bonds, Series 6/10 at 100.00 AA- 14,301,144
2001BZ, 5.350%, 12/01/21 - NPFG Insured (Alternative Minimum
Tax)
1,960 California, Various Purpose General Obligation Bonds, Series 6/17 at 100.00 A- 1,768,626
2007, 5.000%, 6/01/37
3,000 Contra Costa County Community College District, California, 8/12 at 100.00 AA 3,145,830
General Obligation Bonds, Series 2002, 5.000%, 8/01/23 - FGIC
Insured
2,500 Fullerton Joint Union High School District, Orange County, 8/12 at 100.00 Aa3 2,611,550
California, General Obligation Bonds, Series 2002A, 5.000%,
8/01/23 - AGM Insured
2,260 Jurupa Unified School District, Riverside County, California, 8/11 at 101.00 A 2,319,596
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 876,029
Series 2001, 5.000%, 7/01/24 - AGM Insured
575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 595,700
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 11,603,454
General Obligation Bonds, Election of 1998, Series 2001C,
5.000%, 7/01/26 - AGM Insured
4,000 San Diego Unified School District, San Diego County, California, 7/12 at 101.00 AA 4,418,600
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 9/15 at 100.00 Aa2 2,848,144
County, California, General Obligation Bonds, Series 2005A,
5.000%, 9/01/25 - NPFG Insured
1,630 West Contra Costa Unified School District, Contra Costa County, 8/11 at 101.00 A 1,658,427
California, General Obligation Bonds, Series 2003C, 5.000%,
8/01/22 - FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
60,495 Total Tax Obligation/General 63,497,543
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 37.9% (25.2% OF TOTAL INVESTMENTS)
2,040 Borrego Water District, California, Community Facilities 8/17 at 102.00 N/R 1,799,831
District 2007-1 Montesoro, Special Tax Bonds, Series 2007,
5.750%, 8/01/25
7,135 Brentwood Infrastructure Financing Authority, Contra Costa 11/11 at 100.00 AAA 7,286,191
County, California, Capital Improvement Revenue Bonds, Series
2001, 5.000%, 11/01/25 - AGM Insured
8,210 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 BBB+ 8,687,576
Department of Corrections, Series 2003C, 5.500%, 6/01/16
4,000 California State Public Works Board, Lease Revenue Bonds, 3/12 at 100.00 BBB+ 3,763,960
Department of General Services, Series 2002B, 5.000%, 3/01/27
- AMBAC Insured
4,510 California State Public Works Board, Lease Revenue Bonds, 12/11 at 102.00 BBB+ 4,312,282
Department of Mental Health, Hospital Addition, Series 2001A,
5.000%, 12/01/26 - AMBAC Insured
1,000 California State Public Works Board, Lease Revenue Bonds, 10/19 at 100.00 BBB+ 999,940
Various Capital Projects, Series 2009G-1, 5.750%, 10/01/30
Nuveen Investments 53
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
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 $ 1,764,035
550 6.000%, 9/01/33 9/13 at 100.00 N/R 519,613
715 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 A 694,873
Special Tax Bonds, Community Facilities District, Series
2005, 5.000%, 9/01/24 - FGIC Insured
2,160 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 1,869,329
Redevelopment Project Area Tax Allocation Bonds, Series
2006, 5.000%, 9/01/38 - AMBAC Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,057,793
Facilities District 22, Series 2004,
6.000%, 9/01/34
1,000 Fullerton Community Facilities District 1, California, Special 9/12 at 100.00 N/R 1,012,260
Tax Bonds, Amerige Heights, Series 2002, 6.100%, 9/01/22
Irvine, California, Unified School District, Community
Facilities District Special Tax Bonds, Series 2006A:
330 5.000%, 9/01/26 9/16 at 100.00 N/R 294,446
760 5.125%, 9/01/36 9/16 at 100.00 N/R 637,078
3,000 Lake Elsinore Public Finance Authority, California, Local 10/13 at 102.00 N/R 3,025,260
Agency Revenue Refunding Bonds, Series 2003H, 6.000%,
10/01/20
685 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 525,922
Community Facilities District 2002, Mountain House Special
Tax Bonds, Series 2006, 5.125%, 9/01/35
5,250 Lammersville School District, San Joaquin County, California, 9/12 at 101.00 N/R 5,104,260
Special Tax Bonds, Community Facilities District of Mountain
House, Series 2002, 6.300%, 9/01/24
2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 1,866,660
Tax Bonds, Community Facilities District 1 of Sycamore
Creek, Series 2003, 6.500%, 9/01/24
1,000 Lindsay Redevelopment Agency, California, Project 1 Tax 8/17 at 100.00 BBB+ 794,130
Allocation Bonds, Series 2007, 5.000%, 8/01/37 - RAAI Insured
5,425 Lodi, California, Certificates of Participation, Public 10/12 at 100.00 A 5,475,995
Improvement Financing Project, Series 2002, 5.000%, 10/01/26
- NPFG Insured
1,310 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 1,137,735
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
1,675 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,711,599
California, Certificates of Participation, Series 2005,
5.000%, 3/01/26 - AGM 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 483,671
250 5.000%, 9/01/33 9/14 at 102.00 N/R 206,953
3,000 Oakland Redevelopment Agency, California, Subordinate Lien Tax 3/13 at 100.00 A 3,084,510
Allocation Bonds, Central District Redevelopment Project,
Series 2003, 5.500%, 9/01/19 - FGIC Insured
4,520 Ontario Redevelopment Financing Authority, California, Lease 8/11 at 101.00 A+ 4,573,743
Revenue Bonds, Capital Projects, Series 2001, 5.000%,
8/01/24 - AMBAC Insured
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 1,806,980
Facilities District 02-1 of Ladera Ranch, Series 2003A,
5.550%, 8/15/33
11,165 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 A 10,231,491
Revenue Refunding Bonds, Project Area 1, Series 2002,
5.100%, 4/01/30 - NPFG Insured
3,250 Pomona Public Financing Authority, California, Revenue 2/11 at 100.00 A 3,103,328
Refunding Bonds, Merged Redevelopment Projects, Series
2001AD, 5.000%, 2/01/27 - NPFG Insured
6,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call BBB 5,706,960
Revenue Bonds, Series 2007N, 5.250%, 7/01/39 - FGIC Insured
625 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 549,788
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA
GTY Insured
54 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 780 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AA- $ 780,460
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,145 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 1,097,734
Community Facilities District 4, Series 2003C, 6.000%, 9/01/33
14,505 San Diego Redevelopment Agency, California, Subordinate Lien Tax 9/11 at 101.00 AAA 14,833,248
Allocation Bonds, Centre City Project, Series 2001, 5.000%,
9/01/26 - AGM Insured (UB)
2,300 San Francisco Bay Area Rapid Transit District, California, Sales 7/11 at 100.00 AA+ 2,360,214
Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 - AMBAC
Insured
1,345 San Mateo Union High School District, San Mateo County, 12/17 at 100.00 N/R 1,237,158
California, Certificates of Participation, Phase 1, Series
2007A, 5.000%, 12/15/30 - AMBAC Insured
8,710 South Orange County Public Financing Authority, California, 8/15 at 100.00 BBB+ 7,861,123
Special Tax Revenue Bonds, Ladera Ranch, Series 2005A,
5.000%, 8/15/32 - AMBAC Insured
600 West Patterson Financing Authority, California, Special Tax 9/14 at 105.00 N/R 637,266
Bonds, Community Facilities District 01-1, Refunding Series
2009A, 8.625%, 9/01/39
2,810 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 2,473,615
Bonds, Community Facilities District 01-1, Series 2003B,
7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, Special Tax 9/13 at 102.00 N/R 1,534,820
Bonds, Community Facilities District 01-1, Series 2004B,
6.000%, 9/01/39
1,375 West Patterson Financing Authority, California, Special Tax 9/13 at 103.00 N/R 1,074,411
Bonds, 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 A 2,417,750
County, California, General Obligation Refunding Bonds,
Series 2001A, 5.000%, 10/01/26 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
125,055 Total Tax Obligation/Limited 120,395,991
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.2% (4.8% OF TOTAL INVESTMENTS)
1,690 Bay Area Toll Authority, California, Revenue Bonds, San 4/16 at 100.00 AA 1,713,795
Francisco Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31
(UB)
11,750 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 11,476,108
Toll 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 A1 4,352,901
5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 A1 5,374,898
------------------------------------------------------------------------------------------------------------------------------------
22,690 Total Transportation 22,917,702
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.2% (14.8% OF TOTAL INVESTMENTS) (4)
4,000 Beaumont Financing Authority, California, Local Agency Revenue 9/12 at 102.00 N/R (4) 4,653,640
Bonds, Series 2002A, 6.750%, 9/01/25 (Pre-refunded 9/01/12)
10,140 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 (4) 10,847,265
Settlement Asset-Backed Bonds, Merced County Tobacco Funding
Corporation, Series 2002A, 5.500%, 6/01/33 (Pre-refunded
6/01/12)
California Department of Water Resources, Power Supply Revenue
Bonds, Series 2002A:
3,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - SYNCORA GTY Insured 5/12 at 101.00 Aaa 3,892,945
9,000 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 9,961,740
720 California Statewide Community Development Authority, Revenue 10/15 at 100.00 N/R (4) 800,870
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
2,000 Daly City Housing Development Finance Agency, California, Mobile 12/13 at 102.00 N/R (4) 2,385,140
Home Park Revenue Bonds, Franciscan Mobile Home Park Project,
Series 2002A, 5.800%, 12/15/25 (Pre-refunded 12/15/13)
5,130 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,711,537
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 9/13 at 102.00 N/R (4) 2,338,049
Community Facilities District 03-1, Series 2003A, 6.500%,
9/01/25 (Pre-refunded 9/01/13)
Nuveen Investments 55
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of Investments February 28, 2010
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 9/13 at 102.00 N/R (4) $ 1,585,967
Community 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) 1,799,454
California, General Obligation Bonds, Series 2004A, 5.250%,
8/01/22 (Pre-refunded 8/01/14) - FGIC Insured
5,500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 6,056,105
Revenue 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) 5,023,006
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 A (4) 8,197,359
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 4,633,734
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, 6/12 at 101.00 N/R (4) 2,799,725
Presbyterian Intercommunity Hospital, Series 2002, 5.600%,
6/01/22 (Pre-refunded 6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
63,810 Total U.S. Guaranteed 70,686,536
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.5% (2.4% OF TOTAL INVESTMENTS)
3,815 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 3,437,582
Purchase 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 1,152,979
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 4,509,050
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- 2,178,585
Series 2002, 5.125%, 8/01/22 - AMBAC Insured (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
12,350 Total Utilities 11,278,196
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.1% (5.4% OF TOTAL INVESTMENTS)
1,070 Burbank, California, Wastewater System Revenue Bonds, Series 6/14 at 100.00 AA+ 1,117,305
2004A, 5.000%, 6/01/22 - AMBAC Insured
7,000 Carmichael Water District, Sacramento County, California, Water 3/10 at 102.00 AA- 7,038,850
Revenue Certificates of Participation, Series 1999, 5.125%,
9/01/29 - NPFG Insured
1,125 Fortuna Public Finance Authority, California, Water Revenue 10/16 at 100.00 AAA 1,105,448
Bonds, Series 2006, 5.000%, 10/01/36 - AGM Insured
890 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 880,993
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
850 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 A+ 851,292
of Participation, Series 2006, 5.000%, 6/01/31 - NPFG Insured
1,000 Pico Rivera Water Authority, California, Revenue Bonds, Series 12/11 at 102.00 N/R 929,010
2001A, 6.250%, 12/01/32
1,000 San Buenaventura, California, Wastewater Revenue Certificates of 3/14 at 100.00 AA 1,040,500
Participation, Series 2004, 5.000%, 3/01/24 - NPFG Insured
56 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
$ 2,500 5.000%, 8/01/23 - NPFG Insured 8/12 at 100.00 A+ $ 2,590,900
6,260 5.000%, 8/01/24 - NPFG Insured 8/12 at 100.00 A+ 6,439,537
3,315 San Francisco City and County Public Utilities Commission, 4/13 at 100.00 A+ 3,640,931
California, Clean Water Revenue Refunding Bonds, Series
2003A, 5.250%, 10/01/18 - NPFG Insured
------------------------------------------------------------------------------------------------------------------------------------
25,010 Total Water and Sewer 25,634,766
------------------------------------------------------------------------------------------------------------------------------------
$ 492,294 Total Investments (cost $484,402,035) - 150.2% 477,390,809
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (3.5)% (11,100,000)
--------------------------------------------------------------------------------------------------------------------
MuniFund Term Preferred Shares, at Liquidation Value - (27.1)% (5) (86,250,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.3% 7,319,335
--------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (21.9)% (5) (69,500,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 317,860,144
====================================================================================================================
(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.
(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) MuniFund Term Preferred Shares and Auction Rate Preferred Shares, at
Liquidation Value as a percentage of Total Investments are 18.1% and
14.6%, respectively.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 57
NKL | Nuveen Insured California Dividend Advantage Municipal Fund
| Portfolio of Investments
February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.0% (2.7% OF TOTAL INVESTMENTS)
$ 14,155 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB $ 9,005,977
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 4.9% (3.2% OF TOTAL
INVESTMENTS)
1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,691,080
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 9,203,850
2002A, 5.125%, 11/01/26 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
10,675 Total Education and Civic Organizations 10,894,930
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 6.4% (4.3% OF TOTAL INVESTMENTS)
5,000 ABAG Finance Authority for Non-Profit Corporations, California, 4/12 at 100.00 A- 5,016,550
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 2,900,717
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 1,834,211
Bonds, Saint Joseph Health System, Trust 2554, 18.719%,
7/01/47 - AGM Insured (IF)
5,000 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 4,672,100
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
-----------------------------------------------------------------------------------------------------------------------------------
14,563 Total Health Care 14,423,578
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.3% (0.9% OF TOTAL INVESTMENTS)
1,000 California Statewide Community Development Authority, Student 8/12 at 100.00 Baa1 1,005,820
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 1,965,179
Multifamily Housing Revenue Bonds, Park Plaza West Senior
Apartments, Series 2001B, 5.300%, 1/20/21 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
2,905 Total Housing/Multifamily 2,970,999
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.2% (0.1% OF TOTAL INVESTMENTS)
350 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 AA- 376,324
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.1% (0.7% OF TOTAL INVESTMENTS)
2,435 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB 2,470,137
Disposal Revenue Bonds, Republic Services Inc., Series 2002C,
5.250%, 6/01/23 (Mandatory put 12/01/17) (Alternative Minimum
Tax)
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.3% (0.9% OF TOTAL INVESTMENTS)
3,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A- 3,005,010
Insured Senior Living Revenue Bonds, Odd Fellows Home of
California, Series 2003A, 5.200%, 11/15/22
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.7% (18.5% OF TOTAL INVESTMENTS)
5,920 Cajon Valley Union School District, San Diego County, 8/10 at 102.00 AA- 6,027,270
California, General Obligation Bonds, Series 2002B, 5.125%,
8/01/32 - NPFG Insured
900 California, General Obligation Bonds, Series 2003, 5.000%, 8/13 at 100.00 A- 924,291
2/01/21
8,250 California, General Obligation Refunding Bonds, Series 2002, 2/12 at 100.00 A 8,344,380
5.000%, 2/01/22 - NPFG Insured
3,375 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA 2,870,066
General Obligation Bonds, Series 2006C, 0.000%, 8/01/31 - AGM
Insured
230 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 AAA 233,301
California, General Obligation Bonds, Series 2003A, 5.000%,
6/01/28 - AGM Insured
2,730 Fontana Unified School District, San Bernardino County, 8/18 at 100.00 AAA 3,010,589
California, General Obligation Bonds, Trust 2668, 9.329%,
8/01/28 - AGM Insured (IF)
58 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 10,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 Aa3 $ 10,313,800
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FGIC Insured
1,000 Los Rios Community College District, Sacramento, El Dorado and 8/14 at 102.00 AAA 1,093,820
Yolo Counties, California, General Obligation Bonds, Series
2006C, 5.000%, 8/01/25 - AGM Insured (UB)
1,500 Madera Unified School District, Madera County, California, 8/12 at 100.00 AAA 1,506,075
General Obligation Bonds, Series 2002, 5.000%, 8/01/28 - AGM
Insured
2,000 Murrieta Valley Unified School District, Riverside County, 9/17 at 100.00 AAA 1,917,180
California, General Obligation Bonds, Series 2007, 4.500%,
9/01/30 - AGM Insured
2,500 Oakland Unified School District, Alameda County, California, 8/12 at 100.00 A 2,529,375
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- 388,500
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 3,488,550
General Obligation Bonds, Election of 1998, Series 2001C,
5.000%, 7/01/22 - AGM Insured
1,500 San Juan Capistano, California, General Obligation Bonds, Open 8/19 at 100.00 AAA 1,711,980
Space Program, Tender Option Bond Trust 3646, 17.931%,
8/01/40 (IF)
3,500 San Mateo County Community College District, California, General 9/12 at 100.00 Aa1 3,593,765
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 10,243,800
General Obligation Bonds, Series 2002A, 5.000%, 8/01/23 - AGM
Insured
3,905 West Kern Community College District, California, General 11/17 at 100.00 A+ 3,883,874
Obligation Bonds, Election 2004, Series 2007C, 5.000%,
10/01/32 - SYNCORA GTY Insured
-----------------------------------------------------------------------------------------------------------------------------------
60,935 Total Tax Obligation/General 62,080,616
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 47.2% (31.6% OF TOTAL INVESTMENTS)
1,450 Baldwin Park Public Financing Authority, California, Sales Tax 8/13 at 102.00 BBB 1,455,960
and Tax Allocation Bonds, Puente Merced Redevelopment
Project, Series 2003, 5.250%, 8/01/21
6,895 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 7,124,190
California, Certificates of Participation Refunding, Series
2002A, 5.125%, 8/01/26 - AGM Insured
2,200 California Infrastructure Economic Development Bank, Los Angeles 9/13 at 101.00 N/R 2,080,562
County, Revenue Bonds, Department of Public Social Services,
Series 2003, 5.000%, 9/01/28 - AMBAC Insured
3,100 California State Public Works Board, Lease Revenue Bonds, 11/15 at 100.00 BBB+ 2,813,622
Department of Health 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 A 451,910
Special Tax Bonds, Community Facilities District, Series
2005, 5.000%, 9/01/24 - FGIC Insured
1,400 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 1,211,602
Redevelopment Project Area Tax Allocation Bonds, Series 2006,
5.000%, 9/01/38 - AMBAC Insured
7,035 Corona-Norco Unified School District, Riverside County, 9/13 at 100.00 A 7,116,184
California, Special Tax Bonds, Community Facilities District
98-1, Series 2003, 5.000%, 9/01/28 - NPFG Insured
3,145 Culver City Redevelopment Agency, California, Tax Allocation 5/11 at 101.00 A 2,891,576
Revenue Bonds, Redevelopment Project, Series 2002A, 5.125%,
11/01/25 - NPFG Insured
8,170 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 A3 8,236,994
Department of Public Services Facility Phase II, Series 2001,
5.000%, 1/01/21 - AMBAC Insured
4,000 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 N/R 4,004,280
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured
7,700 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 6,505,730
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust
2091, 9.613%, 6/01/45 - AGC Insured (IF)
8,780 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 BBB+ 7,419,363
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45 - AMBAC Insured
1,300 Hesperia Public Financing Authority, California, Redevelopment 9/17 at 100.00 Baa2 1,062,984
and Housing Projects Tax Allocation Bonds, Series 2007A,
5.000%, 9/01/37 - SYNCORA GTY Insured
Nuveen Investments 59
NKL | Nuveen Insured California Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,115 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call N/R $ 2,098,566
Refunding Bonds, Merged Area Redevelopment Project, Series
1998A, 5.250%, 5/01/23 - AMBAC Insured
3,500 La Quinta Redevelopment Agency, California, Tax Allocation 9/11 at 102.00 A+ 3,266,130
Bonds, Redevelopment Project Area 1, Series 2001, 5.100%,
9/01/31 - AMBAC Insured
3,400 La Quinta Redevelopment Agency, California, Tax Allocation 9/12 at 102.00 A+ 3,423,562
Bonds, 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 733,883
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
1,460 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 A+ 1,465,125
Municipal 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 A+ 7,074,340
2002, 5.200%, 4/01/27 - AMBAC Insured
8,470 Ontario Redevelopment Financing Authority, California, Lease 8/11 at 101.00 A+ 8,661,083
Revenue Bonds, Capital Projects, Series 2001, 5.200%, 8/01/29
- AMBAC Insured
5,000 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 A 4,795,050
Revenue Refunding Bonds, Project Area 1, Series 2002, 5.000%,
4/01/25 - NPFG Insured
3,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call BBB 2,853,480
Revenue Bonds, Series 2007N, 5.250%, 7/01/39 - FGIC Insured
405 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 356,262
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 A 4,526,507
Revenue Bonds, Riverside County Hospital Project, Series
1997B, 5.000%, 6/01/19 - NPFG Insured
505 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AA- 505,298
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
3,175 San Buenaventura, California, Certificates of Participation, 2/11 at 101.00 N/R 2,986,723
Series 2001C, 5.250%, 2/01/31 - AMBAC Insured
3,730 San Diego Redevelopment Agency, California, Subordinate Lien Tax 9/10 at 100.50 Baa2 3,582,702
Increment and Parking Revenue Bonds, Centre City Project,
Series 2003B, 5.250%, 9/01/26
4,000 San Jose Financing Authority, California, Lease Revenue 9/11 at 100.00 AA+ 4,222,560
Refunding Bonds, Convention Center Project, Series 2001F,
5.000%, 9/01/19 - NPFG Insured
1,000 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 A 929,360
Merged Project Area, Series 2005A, 5.000%, 8/01/28 - NPFG
Insured
2,160 Temecula Redevelopment Agency, California, Tax Allocation 8/10 at 100.00 A 2,090,988
Revenue Bonds, Redevelopment Project 1, Series 2002, 5.125%,
8/01/27 - NPFG Insured
-----------------------------------------------------------------------------------------------------------------------------------
109,880 Total Tax Obligation/Limited 105,946,576
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.3% (3.6% OF TOTAL INVESTMENTS)
7,500 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 7,279,050
Toll Road Revenue Refunding Bonds, Series 1999, 5.875%,
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 A1 2,285,881
2,300 5.250%, 5/01/17 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 A1 2,373,830
-----------------------------------------------------------------------------------------------------------------------------------
11,985 Total Transportation 11,938,761
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 20.9% (14.0% OF TOTAL INVESTMENTS) (4)
6,000 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 6,641,160
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 39,209
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 2,634,345
Revenue Bonds, San Francisco Bay Area Toll Bridge, Series
2003A, 5.000%, 7/01/36 (Pre-refunded 1/01/28) - AMBAC Insured
60 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 8,900 Eastern Municipal Water District, California, Water and Sewerage 7/11 at 100.00 AA (4) $ 9,465,061
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) 1,178,879
1,190 5.125%, 8/01/24 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,236,005
1,245 5.125%, 8/01/25 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,293,132
1,255 5.125%, 8/01/26 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,303,518
2,070 Fresno Unified School District, Fresno County, California, 8/10 at 102.00 AAA 2,150,937
General Obligation Bonds, Series 2002G, 5.125%, 8/01/26 - AGM
Insured (ETM)
4,500 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,450,625
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 7/12 at 100.00 AA- (4) 5,516,000
Obligation Bonds, Series 2002E, 5.125%, 1/01/27 (Pre-refunded
7/01/12) - MBIA Insured
3,380 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 (4) 4,052,857
Revenue 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) 3,213,781
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 2,648,608
General Obligation Bonds, Series 2002, 5.000%, 8/01/26
(Pre-refunded 8/01/11) - AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
42,400 Total U.S. Guaranteed 46,824,117
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.7% (9.9% OF TOTAL INVESTMENTS)
9,000 Anaheim Public Finance Authority, California, Revenue Bonds, 10/12 at 100.00 AAA 9,091,170
Electric System Distribution Facilities, Series 2002A,
5.000%, 10/01/27 - AGM Insured
10,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 A 10,352,500
Revenue Bonds, Pacific Gas and Electric Company, Series
1996A, 5.350%, 12/01/16 - NPFG Insured (Alternative Minimum
Tax)
2,490 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 2,243,664
Purchase Revenue Bonds, Series 2007A, 5.000%, 11/15/35
830 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 744,726
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 A 1,774,805
Hydroelectric Project 1, Series 1998A, 5.200%, 7/01/32 - NPFG
Insured
3,000 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 A+ 3,013,020
Revenue Bonds, Series 2001N, 5.000%, 8/15/28 - NPFG Insured
5,630 Southern California Public Power Authority, Subordinate Revenue 7/12 at 100.00 AAA 5,808,865
Refunding Bonds, Transmission Project, Series 2002A, 4.750%,
7/01/19 - AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
32,725 Total Utilities 33,028,750
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.4% (9.6% OF TOTAL INVESTMENTS)
2,965 California Department of Water Resources, Water System Revenue 12/12 at 100.00 AAA 3,198,049
Bonds, Central Valley Project, Series 2002X, 5.150%, 12/01/23
- FGIC Insured
750 Fortuna Public Finance Authority, California, Water Revenue 10/16 at 100.00 AAA 736,965
Bonds, Series 2006, 5.000%, 10/01/36 - AGM Insured
570 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 564,232
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
4,500 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA 4,759,695
California, Senior Revenue Bonds, Capital Projects, Series
2003A, 5.000%, 10/01/23 - AGM Insured
2,085 Manteca Financing Authority, California, Sewerage Revenue Bonds, 12/13 at 100.00 A2 2,006,312
Series 2003B, 5.000%, 12/01/33 - NPFG Insured
500 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 A+ 500,760
of Participation, Series 2006, 5.000%, 6/01/31 - NPFG Insured
Nuveen Investments 61
NKL | Nuveen Insured California Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 9,185 Orange County Sanitation District, California, Certificates of 8/13 at 100.00 AAA $ 9,383,396
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 8,112,080
Certificates of Participation, Series 2008A, 5.000%, 5/01/38
- AGM 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 AA 1,411,666
1,415 5.500%, 12/01/21 - SYNCORA GTY Insured 12/14 at 100.00 AA 1,515,012
------------------------------------------------------------------------------------------------------------------------------------
31,285 Total Water and Sewer 32,188,167
------------------------------------------------------------------------------------------------------------------------------------
$ 337,293 Total Investments (cost $329,464,833) - 149.4% 335,153,942
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (3.3)% (7,385,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 4,781,612
---------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (48.3)% (5) (108,250,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 224,300,554
=====================================================================================================================
At least 80% of the Fund's net assets 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
whose insurer has experienced downgrades as of the end of the reporting
period. Please see the Portfolio Manager's Comments 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 during the period.
(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 32.3%.
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. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62 Nuveen Investments
NKX | Nuveen Insured California Tax-Free Advantage Municipal Fund
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.7% (3.2% OF TOTAL INVESTMENTS)
$ 6,070 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB $ 3,861,977
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-2, 0.000%, 6/01/37
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.0% (14.6% OF TOTAL INVESTMENTS)
1,800 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 1,820,052
Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%,
8/01/31
662 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 694,324
Bonds, Saint Joseph Health System, Trust 2554, 18.719%,
7/01/47 - AGM Insured (IF)
4,000 California Statewide Community Development Authority, Insured 7/17 at 100.00 AAA 4,077,120
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+ 1,695,972
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
5,020 California Statewide Community Development Authority, Revenue 3/16 at 100.00 AA+ 5,030,291
Bonds, Kaiser Permanente System, 5.000%, 3/01/41 - BHAC
Insured (UB)
4,060 California Statewide Community Development Authority, Revenue No Opt. Call A- 4,053,139
Bonds, Sherman Oaks Health System, Series 1998A, 5.000%,
8/01/22 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
17,357 Total Health Care 17,370,898
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.4% (1.0% OF TOTAL INVESTMENTS)
1,165 Poway, California, Housing Revenue Bonds, Revenue Bonds, 5/13 at 102.00 AA- 1,172,840
Poinsettia Mobile Home Park, Series 2003, 5.000%, 5/01/23
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.6% (2.5% OF TOTAL INVESTMENTS)
1,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A- 1,001,670
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- 1,961,920
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 2,963,590
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.0% (12.5% OF TOTAL INVESTMENTS)
2,000 Butte-Glenn Community College District, Butte and Glenn 8/12 at 101.00 A1 2,031,400
Counties, California, General Obligation Bonds, Series
2002A, 5.000%, 8/01/26 - NPFG Insured
1,030 Fontana Unified School District, San Bernardino County, 8/18 at 100.00 AAA 1,135,863
California, General Obligation Bonds, Trust 2668, 9.329%,
8/01/28 - AGM Insured (IF)
450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 Aa3 464,121
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FGIC Insured
2,000 Los Angeles, California, General Obligation Bonds, Series 9/12 at 100.00 Aa2 2,124,260
2002A, 5.000%, 9/01/22 - NPFG Insured
1,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 A+ 1,023,580
California, General Obligation Bonds, Series 2003A, 5.000%,
9/01/26 - FGIC Insured
1,000 Murrieta Valley Unified School District, Riverside County, 9/17 at 100.00 AAA 958,590
California, General Obligation Bonds, Series 2007, 4.500%,
9/01/30 - AGM Insured
140 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 145,040
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
3,000 San Diego Unified School District, California, General 7/10 at 100.00 AA 3,043,680
Obligation Bonds, Election of 1998, Series 2000B, 5.125%,
7/01/22 - NPFG Insured
3,855 San Rafael City High School District, Marin County, California, 8/12 at 100.00 AAA 3,927,474
General Obligation Bonds, Series 2003A, 5.000%, 8/01/28 -
AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
14,475 Total Tax Obligation/General 14,854,008
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 63
NKX | Nuveen Insured California Tax-Free Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 45.6% (31.6% OF TOTAL INVESTMENTS)
$ 550 Baldwin Park Public Financing Authority, California, Sales Tax 8/13 at 102.00 BBB $ 552,261
and Tax Allocation Bonds, Puente Merced Redevelopment
Project, Series 2003, 5.250%, 8/01/21
1,165 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 A 1,179,213
Refunding Bonds, Golden State Redevelopment Project, Series
2003A, 5.250%, 12/01/22 - AMBAC Insured
4,000 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 BBB+ 3,757,480
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 A 165,215
Special Tax Bonds, Community Facilities District, Series
2005, 5.000%, 9/01/24 - FGIC Insured
525 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 BBB 454,351
Redevelopment Project Area Tax Allocation Bonds, Series
2006, 5.000%, 9/01/38 - AMBAC Insured
1,610 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 N/R 1,611,723
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured
2,905 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 2,454,435
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust
2091, 9.613%, 6/01/45 (IF)
3,285 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 BBB+ 2,775,924
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45 - AMBAC Insured
1,000 Hesperia Public Financing Authority, California, Redevelopment 9/17 at 100.00 Baa2 817,680
and Housing Projects Tax Allocation Bonds, Series 2007A,
5.000%, 9/01/37 - SYNCORA GTY Insured
5,540 Irvine Public Facilities and Infrastructure Authority, 9/13 at 100.00 N/R 5,541,715
California, 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 273,578
Revenue Bonds, Manchester Social Services Project, Series
2005, 5.000%, 9/01/37 - AMBAC Insured
1,770 Los Angeles Unified School District, California, Certificates 10/12 at 100.00 A+ 1,785,346
of Participation, Administration Building Project II, Series
2002C, 5.000%, 10/01/27 - AMBAC Insured
2,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 A+ 2,007,020
Municipal Improvement Corporation, Series 2003AW, 5.000%,
6/01/33 - AMBAC Insured
1,500 Los Angeles, California, Municipal Improvement Corporation, 1/17 at 100.00 A+ 1,446,045
Lease 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 A 1,310,535
Wastewater Assessment District 1, Series 2002, 5.000%,
9/02/33 - NPFG Insured
150 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 131,949
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 AA- 190,112
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- 3,019,620
3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AA- 3,301,089
1,200 San Diego Redevelopment Agency, California, Subordinate Lien 9/10 at 100.50 Baa2 1,152,612
Tax Increment and Parking Revenue Bonds, Centre City
Project, Series 2003B, 5.250%, 9/01/26
2,770 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AA+ 2,791,606
Refunding Bonds, Civic Center Project, Series 2002B, 5.000%,
6/01/32 - AMBAC Insured
1,000 San Jose Redevelopment Agency, California, Tax Allocation 8/15 at 100.00 A 929,360
Bonds, Merged Project Area, Series 2005A, 5.000%, 8/01/28 -
NPFG Insured
-----------------------------------------------------------------------------------------------------------------------------------
39,445 Total Tax Obligation/Limited 37,648,869
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.0% (6.9% OF TOTAL INVESTMENTS)
5,480 Bay Area Governments Association, California, BART SFO 8/12 at 100.00 N/R 5,208,630
Extension, Airport Premium Fare Revenue Bonds, Series 2002A,
5.000%, 8/01/26 - AMBAC Insured
2,000 Foothill/Eastern Transportation Corridor Agency, California, 7/10 at 100.00 BBB- 1,708,880
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
1,300 San Francisco Airports Commission, California, Revenue Bonds, 5/10 at 101.00 A1 1,314,131
San Francisco International Airport, Second Series 2000,
Issue 26B, 5.000%, 5/01/25 - FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
8,780 Total Transportation 8,231,641
-----------------------------------------------------------------------------------------------------------------------------------
64 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 19.4% (13.5% OF TOTAL INVESTMENTS) (4)
$ 1,000 Berryessa Union School District, Santa Clara County, 8/12 at 100.00 AAA $ 1,103,320
California, General Obligation Bonds, Series 2003C, 5.000%,
8/01/21 (Pre-refunded 8/01/12) - AGM 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 1,407,687
2,945 5.250%, 4/01/30 (Pre-refunded 4/01/12) - SYNCORA GTY Insured 4/12 at 100.00 Baa1 (4) 3,228,986
500 California, General Obligation Bonds, Series 2004, 5.250%, 4/14 at 100.00 AAA 584,545
4/01/34 (Pre-refunded 4/01/14)
1,625 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 1,968,281
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 2,312,901
California, General Obligation Bonds, Series 2003B, 5.000%,
8/01/27 (Pre-refunded 8/01/13) - AGM Insured
1,260 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 (4) 1,510,828
Revenue 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 8/10 at 101.00 A (4) 1,257,600
Bonds, 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, 11/12 at 100.00 AA- (4) 2,670,443
Series 2002, 5.250%, 11/01/24 (Pre-refunded 11/01/12) - MBIA
Insured
-----------------------------------------------------------------------------------------------------------------------------------
14,260 Total U.S. Guaranteed 16,044,591
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.1% (2.1% OF TOTAL INVESTMENTS)
1,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 A+ 1,067,990
Electric Distribution Revenue Bonds, Series 2004, 5.250%,
10/01/21 - NPFG Insured
945 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A 913,626
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- 296,247
System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - NPFG
Insured
310 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 278,151
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
-----------------------------------------------------------------------------------------------------------------------------------
2,530 Total Utilities 2,556,014
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.8% (9.6% OF TOTAL INVESTMENTS)
1,000 Castaic Lake Water Agency, California, Certificates of 8/16 at 100.00 AA- 985,530
Participation, Series 2006C, 5.000%, 8/01/36 - NPFG Insured
750 Fortuna Public Finance Authority, California, Water Revenue 10/16 at 100.00 AAA 736,965
Bonds, Series 2006, 5.000%, 10/01/36 - AGM Insured
215 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 212,824
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - NPFG Insured
770 Manteca Financing Authority, California, Sewerage Revenue 12/13 at 100.00 A2 740,940
Bonds, Series 2003B, 5.000%, 12/01/33 - NPFG Insured
170 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 A+ 170,258
of Participation, Series 2006, 5.000%, 6/01/31 - NPFG Insured
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
3,000 5.000%, 8/01/22 - NPFG Insured 8/12 at 100.00 A+ 3,137,850
2,500 5.000%, 8/01/23 - NPFG Insured 8/12 at 100.00 A+ 2,590,900
1,180 South Feather Water and Power Agency, California, Water Revenue 4/13 at 100.00 A 1,185,770
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 1,643,440
Revenue Bonds, Series 2001, 5.000%, 10/01/26 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
11,185 Total Water and Sewer 11,404,477
-----------------------------------------------------------------------------------------------------------------------------------
$ 118,267 Total Long-Term Investments (cost $116,327,682) - 140.6% 116,108,905
=============----------------------------------------------------------------------------------------------------------------------
Nuveen Investments 65
NKX | Nuveen Insured California Tax-Free Advantage Municipal Fund (continued)
| Portfolio of Investments February 28, 2010
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.6% (2.5% OF TOTAL INVESTMENTS)
HEALTH CARE - 3.6% (2.5% OF TOTAL INVESTMENTS)
$ 3,000 California Statewide Communities Development Authority, Revenue 5/10 at 100.00 A-1+ $ 3,000,000
Bonds, Adventist Health System West, Variable Rate Demand
Obligations, Series 2007A, 0.150%, 3/01/37 (5)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $3,000,000) 3,000,000
---------------------------------------------------------------------------------------------------------------------
Total Investments (cost $119,327,682) - 144.2% 119,108,905
---------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.1)% (3,360,000)
---------------------------------------------------------------------------------------------------------------------
Variable Rate Demand Preferred Shares, at Liquidation Value - (43.0)% (6) (35,500,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.9% 2,329,627
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 82,578,532
=====================================================================================================================
At least 80% of the Fund's net assets 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
whose insurer has experienced downgrades as of the end of the reporting
period. Please see the Portfolio Manager's Comments 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 during the period.
(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 29.8%.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66 Nuveen Investments
| Statement of
| Assets & Liabilities
February 28, 2010
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA PREMIUM CALIFORNIA DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $133,461,573,
$266,116,665, $117,531,503 and $481,010,647,
respectively) $ 137,598,303 $ 269,638,479 $ 117,994,420 $ 482,310,078
Cash -- -- 537,777 516,939
Receivables:
Interest 2,368,935 3,604,578 1,521,032 7,983,839
Investments sold 9,384,525 10,680,525 -- 975,238
Deferred offering costs -- -- -- --
Other assets 15,238 61,353 20,337 129,951
------------------------------------------------------------------------------------------------------------------------------------
Total assets 149,367,001 283,984,935 120,073,566 491,916,045
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 2,736,416 6,864,407 -- --
Floating rate obligations -- 17,880,000 6,650,000 28,545,000
Payables:
Investments purchased 6,185,626 1,185,262 -- --
Auction Rate Preferred share dividends 2,160 2,963 2,565 6,521
Common share dividends 373,140 808,180 355,402 1,627,919
Interest -- -- -- --
Offering costs -- -- -- --
MuniFund Term Preferred shares, at liquidation
value -- -- -- --
Variable Rate Demand Preferred shares, at
liquidation value -- -- -- --
Accrued expenses:
Management fees 68,192 131,022 58,273 238,359
Other 57,908 118,886 51,161 182,723
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 9,423,442 26,990,720 7,117,401 30,600,522
------------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation
value 45,000,000 79,825,000 34,375,000 135,525,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 94,943,559 $ 177,169,215 $ 78,581,165 $ 325,790,523
====================================================================================================================================
Common shares outstanding 6,442,132 12,662,870 5,733,088 23,480,254
====================================================================================================================================
Net asset value per Common share outstanding (net
assets applicable to Common shares, divided by
Common shares outstanding) $ 14.74 $ 13.99 $ 13.71 $ 13.88
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 64,421 $ 126,629 $ 57,331 $ 234,803
Paid-in surplus 89,211,429 175,755,244 77,894,732 334,306,843
Undistributed (Over-distribution of) net
investment income 1,341,479 2,990,818 1,156,186 4,761,516
Accumulated net realized gain (loss) 189,500 (5,225,290) (990,001) (14,812,070)
Net unrealized appreciation (depreciation) 4,136,730 3,521,814 462,917 1,299,431
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 94,943,559 $ 177,169,215 $ 78,581,165 $ 325,790,523
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited Unlimited
Auction Rate Preferred 1,000,000 1,000,000 Unlimited Unlimited
MuniFund Term Preferred -- -- -- --
Variable Rate Demand Preferred -- -- -- --
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 67
| Statement of
| Assets & Liabilities (continued)
February 28, 2010
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND INSURED CALIFORNIA INSURED CALIFORNIA
ADVANTAGE 2 ADVANTAGE 3 DIVIDEND ADVANTAGE TAX-FREE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $308,530,282,
$484,402,035, $329,464,833 and $119,327,682,
respectively) $ 312,201,729 $ 477,390,809 $ 335,153,942 $ 119,108,905
Cash -- -- 1,885,608 762,924
Receivables:
Interest 4,610,110 7,551,894 4,195,515 1,500,756
Investments sold 1,504,725 1,003,150 -- --
Deferred offering costs -- 1,596,445 -- 506,617
Other assets 64,700 137,908 67,032 437
------------------------------------------------------------------------------------------------------------------------------------
Total assets 318,381,264 487,680,206 341,302,097 121,879,639
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 626,791 358,724 -- --
Floating rate obligations 8,905,000 11,100,000 7,385,000 3,360,000
Payables:
Investments purchased -- -- -- --
Auction Rate Preferred share dividends 6,306 7,440 6,388 --
Common share dividends 1,130,393 1,740,020 1,099,211 375,723
Interest -- 159,180 -- --
Offering costs -- 345,000 -- --
MuniFund Term Preferred shares, at liquidation
value -- 86,250,000 -- --
Variable Rate Demand Preferred shares, at
liquidation value -- -- -- 35,500,000
Accrued expenses:
Management fees 130,638 176,916 124,832 52,181
Other 120,316 182,782 136,112 13,203
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 10,919,444 100,320,062 8,751,543 39,301,107
------------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation
value 93,775,000 69,500,000 108,250,000 --
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 213,686,820 $ 317,860,144 $ 224,300,554 $ 82,578,532
====================================================================================================================================
Common shares outstanding 14,746,722 24,119,434 15,253,305 5,886,667
====================================================================================================================================
Net asset value per Common share outstanding (net
assets applicable to Common shares, divided by
Common shares outstanding) $ 14.49 $ 13.18 $ 14.71 $ 14.03
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES
CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 147,467 $ 241,194 $ 152,533 $ 58,867
Paid-in surplus 209,634,495 342,638,123 216,675,642 83,077,682
Undistributed (Over-distribution of) net
investment income 3,224,000 4,465,685 3,373,091 782,603
Accumulated net realized gain (loss) (2,990,589) (22,473,632) (1,589,821) (1,121,843)
Net unrealized appreciation (depreciation) 3,671,447 (7,011,226) 5,689,109 (218,777)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 213,686,820 $ 317,860,144 $ 224,300,554 $ 82,578,532
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Auction Rate Preferred Unlimited Unlimited Unlimited Unlimited
MuniFund Term Preferred -- Unlimited -- --
Variable Rate Demand Preferred -- -- -- Unlimited
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68 Nuveen Investments
| Statement of
| Operations
Year Ended February 28, 2010
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA PREMIUM CALIFORNIA DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 7,300,881 $ 14,560,642 $ 6,404,686 $ 27,258,508
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 885,199 1,667,023 747,112 2,972,815
Auction fees 75,390 133,735 64,319 227,050
Dividend disbursing agent fees 10,000 20,000 10,000 20,000
Shareholders' servicing agent fees and expenses 7,082 11,422 5,175 3,787
Interest expense and amortization of offering
costs -- 144,588 51,853 226,770
Liquidity fees -- -- -- --
Custodian's fees and expenses 28,112 54,219 29,237 81,298
Directors'/Trustees' fees and expenses 4,496 8,213 3,694 14,495
Professional fees 23,943 33,576 19,017 46,724
Shareholders' reports - printing and mailing
expenses 26,723 43,797 24,679 64,688
Stock exchange listing fees 9,216 9,219 815 9,208
Investor relations expense 8,966 16,229 7,895 24,963
Other expenses 20,694 26,452 20,487 31,234
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 1,099,821 2,168,473 984,283 3,723,032
Custodian fee credit (964) (1,163) (165) (192)
Expense reimbursement -- -- -- (92,690)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,098,857 2,167,310 984,118 3,630,150
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,202,024 12,393,332 5,420,568 23,628,358
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 208,253 905,377 771,424 1,654,622
Forward swaps -- 2,508,000 -- --
Change in net unrealized appreciation
(depreciation) of:
Investments 3,266,189 10,832,050 5,758,190 36,206,667
Forward swaps -- (1,751,141) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 3,474,442 12,494,286 6,529,614 37,861,289
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (160,577) (280,372) (196,230) (466,845)
From accumulated net realized gains (125,550) (219,424) -- (387,199)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common
shares from distributions to Auction Rate
Preferred shareholders (286,127) (499,796) (196,230) (854,044)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations $ 9,390,339 $ 24,387,822 $ 11,753,952 $ 60,635,603
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 69
| Statement of
| Operations (continued)
Year Ended February 28, 2010
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND INSURED CALIFORNIA INSURED CALIFORNIA
ADVANTAGE 2 ADVANTAGE 3 DIVIDEND ADVANTAGE TAX-FREE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 17,876,581 $ 27,087,821 $ 18,155,791 $ 6,196,892
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,979,628 2,977,613 2,097,402 760,363
Auction fees 171,461 242,944 181,355 35,993
Dividend disbursing agent fees 20,000 20,000 20,000 --
Shareholders' servicing agent fees and expenses 1,598 2,775 1,708 871
Interest expense and amortization of offering
costs 67,041 570,141 60,209 172,824
Liquidity fees -- -- -- 277,426
Custodian's fees and expenses 58,086 81,224 66,377 27,882
Directors'/Trustees' fees and expenses 9,947 14,991 10,602 3,464
Professional fees 36,622 49,034 38,302 16,496
Shareholders' reports - printing and mailing
expenses 45,641 63,873 47,532 22,222
Stock exchange listing fees 2,090 3,408 2,159 831
Investor relations expense 17,857 24,851 18,289 7,232
Other expenses 27,228 31,955 26,788 8,890
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 2,437,199 4,082,809 2,570,723 1,334,494
Custodian fee credit (296) (176) (105) (92)
Expense reimbursement (321,801) (607,752) (510,442) (165,014)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,115,102 3,474,881 2,060,176 1,169,388
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 15,761,479 23,612,940 16,095,615 5,027,504
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (224,116) (1,481,783) 53,877 (4,642)
Forward swaps -- (1,938,000) -- --
Change in net unrealized appreciation
(depreciation) of:
Investments 21,083,029 37,608,511 15,219,178 6,385,845
Forward swaps -- 2,841,843 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 20,858,913 37,030,571 15,273,055 6,381,203
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (520,453) (747,503) (548,107) --
From accumulated net realized gains -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common
shares from distributions to Auction Rate
Preferred shareholders (520,453) (747,503) (548,107) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations $ 36,099,939 $ 59,896,008 $ 30,820,563 $ 11,408,707
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70 Nuveen Investments
| Statement of
| Changes in Net Assets
INSURED CALIFORNIA PREMIUM INCOME (NPC) INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,202,024 $ 3,021,939 $ 6,128,739 $ 12,393,332 $ 5,606,923 $ 12,102,624
Net realized gain (loss) from:
Investments 208,253 78,582 328,360 905,377 (7,018,034) 1,445,377
Forward swaps -- -- 863,429 2,508,000 -- 856,758
Futures contracts -- -- -- -- (913,786) --
Change in net unrealized
appreciation (depreciation) of:
Investments 3,266,189 (4,835,228) (1,420,724) 10,832,050 (8,290,218) (7,171,193)
Forward swaps -- -- (364,728) (1,751,141) 1,751,141 (656,230)
Distributions to Auction Rate
Preferred shareholders:
From net investment income (160,577) (684,653) (1,447,316) (280,372) (1,221,762) (3,061,483)
From accumulated net realized
gains (125,550) (157,410) (25,344) (219,424) (278,398) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common
shares from operations 9,390,339 (2,576,770) 4,062,416 24,387,822 (10,364,134) 3,515,853
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,841,052) (2,344,919) (4,689,975) (9,927,691) (4,271,704) (8,125,762)
From accumulated net realized gains -- (934,738) (86,562) -- (1,819,712) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (4,841,052) (3,279,657) (4,776,537) (9,927,691) (6,091,416) (8,125,762)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- -- -- -- -- --
Repurchased and retired (137,066) (74,494) -- (122,212) (446,744) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common
shares from capital share
transactions (137,066) (74,494) -- (122,212) (446,744) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares 4,412,221 (5,930,921) (714,121) 14,337,919 (16,902,294) (4,609,909)
Net assets applicable to Common
shares at the beginning of period 90,531,338 96,462,259 97,176,380 162,831,296 179,733,590 184,343,499
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $ 94,943,559 $ 90,531,338 $ 96,462,259 $ 177,169,215 $ 162,831,296 $ 179,733,590
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of period $ 1,341,479 $ 141,089 $ 149,112 $ 2,990,818 $ 813,804 $ 707,293
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 71
| Statement of
| Changes in Net Assets (continued)
CALIFORNIA PREMIUM INCOME (NCU) CALIFORNIA DIVIDEND ADVANTAGE (NAC)
------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,420,568 $ 2,462,997 $ 5,317,766 $ 23,628,358 $ 11,393,398 $ 24,047,246
Net realized gain (loss) from:
Investments 771,424 (1,743,990) 118,683 1,654,622 (16,935,690) 4,832,689
Forward swaps -- -- 239,634 -- -- 4,168,843
Futures contracts -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments 5,758,190 (5,711,715) (2,804,244) 36,206,667 (31,383,162) (18,634,531)
Forward swaps -- -- 1,018 -- -- (2,275,676)
Distributions to Auction Rate
Preferred shareholders:
From net investment income (196,230) (599,218) (1,399,028) (466,845) (2,075,909) (5,502,755)
From accumulated net realized
gains -- (13,364) -- (387,199) (449,153) (260,925)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common
shares from operations 11,753,952 (5,605,290) 1,473,829 60,635,603 (39,450,516) 6,374,891
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,156,357) (1,923,138) (3,707,671) (19,065,967) (8,875,536) (17,328,427)
From accumulated net realized
gains -- (35,229) -- -- (6,184,699) (838,245)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (4,156,357) (1,958,367) (3,707,671) (19,065,967) (15,060,235) (18,166,672)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- -- -- -- --
Repurchased and retired (276,239) (142,381) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares
from capital share transactions (276,239) (142,381) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares 7,321,356 (7,706,038) (2,233,842) 41,569,636 (54,510,751) (11,791,781)
Net assets applicable to Common
shares at the beginning of period 71,259,809 78,965,847 81,199,689 284,220,887 338,731,638 350,523,419
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $ 78,581,165 $ 71,259,809 $ 78,965,847 $ 325,790,523 $ 284,220,887 $ 338,731,638
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of period $ 1,156,186 $ 88,253 $ 150,354 $ 4,761,516 $ 675,633 $ 234,601
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
72 Nuveen Investments
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 15,761,479 $ 7,567,859 $ 14,898,561 $ 23,612,940 $ 12,039,038 $ 24,759,707
Net realized gain (loss) from:
Investments (224,116) (2,624,444) (313,737) (1,481,783) (10,532,016) (978,786)
Forward swaps -- -- 1,314,381 (1,938,000) -- (1,478,000)
Futures contracts -- -- -- -- (1,011,691) (291,364)
Change in net unrealized
appreciation (depreciation) of:
Investments 21,083,029 (19,142,795) (6,006,208) 37,608,511 (37,615,750) (14,054,312)
Forward swaps -- -- (396,451) 2,841,843 (2,246,298) 57,314
Distributions to Auction Rate
Preferred shareholders:
From net investment income (520,453) (1,602,421) (3,691,110) (747,503) (2,211,134) (6,076,255)
From accumulated net realized
gains -- (186,582) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common
shares from operations 36,099,939 (15,988,383) 5,805,436 59,896,008 (41,577,851) 1,938,304
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (12,903,633) (5,371,458) (10,247,217) (20,091,489) (8,904,831) (17,085,692)
From accumulated net realized
gains -- (517,910) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (12,903,633) (5,889,368) (10,247,217) (20,091,489) (8,904,831) (17,085,692)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- -- -- -- -- --
Repurchased and retired (333,589) (188,113) -- -- (120,362) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares
from capital share transactions (333,589) (188,113) -- -- (120,362) --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares 22,862,717 (22,065,864) (4,441,781) 39,804,519 (50,603,044) (15,147,388)
Net assets applicable to Common
shares at the beginning of period 190,824,103 212,889,967 217,331,748 278,055,625 328,658,669 343,806,057
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $213,686,820 $ 190,824,103 $212,889,967 $ 317,860,144 $ 278,055,625 $ 328,658,669
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of period $ 3,224,000 $ 886,607 $ 265,440 $ 4,465,685 $ 1,629,645 $ 718,052
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 73
| Statement of
| Changes in Net Assets (continued)
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
------------------------------------------- -----------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 16,095,615 $ 7,640,002 $ 15,678,470 $ 5,027,504 $ 2,267,947 $ 5,733,820
Net realized gain (loss) from:
Investments 53,877 (1,321,731) 1,337,028 (4,642) (1,135,147) 1,101,623
Forward swaps -- -- 731,015 -- -- 128,891
Futures contracts -- -- -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments 15,219,178 (14,959,271) (6,994,006) 6,385,845 (6,558,916) (3,013,642)
Forward swaps -- -- (24,419) -- -- (12,888)
Distributions to Auction Rate
Preferred
shareholders:
From net investment income (548,107) (1,586,640) (3,886,043) -- (13,824) (1,400,428)
From accumulated net realized
gains -- (201,085) (116,419) -- (42,336) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations 30,820,563 (10,428,725) 6,725,626 11,408,707 (5,482,276) 2,537,376
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (12,835,656) (5,686,357) (10,952,422) (4,491,527) (2,083,880) (4,167,394)
From accumulated net realized
gains -- (568,639) (340,878) -- (303,752) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (12,835,656) (6,254,996) (11,293,300) (4,491,527) (2,387,632) (4,167,394)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- -- -- -- -- 17,615
Repurchased and retired (151,512) (204,888) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (151,512) (204,888) -- -- -- 17,615
Net increase (decrease) in net assets
applicable to Common shares 17,833,395 (16,888,609) (4,567,674) 6,917,180 (7,869,908) (1,612,403)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the beginning of period 206,467,159 223,355,768 227,923,442 75,661,352 83,531,260 85,143,663
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $224,300,554 $ 206,467,159 $223,355,768 $ 82,578,532 $ 75,661,352 $ 83,531,260
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of period $ 3,373,091 $ 662,312 $ 310,679 $ 782,603 $ 249,837 $ 51,473
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
74 Nuveen Investments
| Statement of
| Cash Flows
Year ended February 28, 2010
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME 2 TAX-FREE ADVANTAGE
(NCL) (NKX)
-----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS $ 24,387,822 $ 11,408,707
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 (22,161,540) (1,051,668)
Proceeds from sales and maturities of investments 19,255,737 53,924
Proceeds from (Purchases of) short-term investments, net -- 1,000,000
Proceeds from (Payments for) terminated forward swaps 2,508,000 --
Amortization (Accretion) of premiums and discounts, net (445,557) (208,131)
(Increase) Decrease in receivable for interest (120,493) (18,352)
(Increase) Decrease in receivable for investments sold (10,505,525) --
(Increase) Decrease in other assets (36,703) (11)
Increase (Decrease) in payable for investments purchased 1,185,262 --
Increase (Decrease) in payable for Auction Rate Preferred share dividends (286,005) --
Increase (Decrease) in accrued management fees 10,200 10,139
Increase (Decrease) in accrued other liabilities 16,379 (2,435)
Net realized (gain) loss from investments (905,377) 4,642
Net realized (gain) loss from forward swaps (2,508,000) --
Change in net unrealized (appreciation) depreciation of investments (10,832,050) (6,385,845)
Change in net unrealized (appreciation) depreciation of forward swaps 1,751,141 --
Taxes paid on undistributed capital gains (113,258) (3,184)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 1,200,033 4,807,786
-----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in cash overdraft balance 6,864,407 --
Increase (Decrease) in floating rate obligations (2,180,000) --
Cash distributions paid to Common shareholders (9,772,333) (4,450,950)
Cost of Common shares repurchased and retired (122,212) --
(Increase) Decrease in deferred offering costs -- 13,415
Increase (Decrease) in payable for offering costs -- (83,263)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (5,210,138) (4,520,798)
-----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (4,010,105) 286,988
Cash at the beginning of year 4,010,105 475,936
-----------------------------------------------------------------------------------------------------------------------------------
CASH AT THE END OF YEAR $ -- $ 762,924
===================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME 2 TAX-FREE ADVANTAGE
(NCL) (NKX)
-----------------------------------------------------------------------------------------------------------------------------------
Cash paid for interest (excluding amortization of offering costs, where applicable) $ 144,588 $ 155,162
===================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 75
| 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 (NYSE) 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 Amex. 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 portfolio of municipal obligations issued by state and
local government authorities within the state of California or certain U.S.
territories.
During the fiscal period ended February 28, 2009, 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.
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (the "Codification") as the single
source of authoritative accounting principles recognized by the FASB in the
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP). The Codification supersedes existing
non-grandfathered, non-SEC accounting and reporting standards. The Codification
did not change GAAP but rather organized it into a hierarchy where all guidance
within the Codification carries an equal level of authority. The Codification
became effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The Codification did not have a material effect
on the Funds' financial statements.
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, 2010, Insured
California Premium Income (NPC) and Insured California Premium Income 2 (NCL)
had outstanding when-issued/delayed delivery purchase commitments of $3,187,828
and $1,185,262, respectively. There were no such outstanding purchase
commitments in any of the other Funds.
76 Nuveen Investments
INVESTMENT INCOME
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
INCOME TAXES
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all 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 that 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, 2010, 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 -- -- 1,375 --
Series T 1,800 1,597 -- --
Series TH -- 1,596 -- 2,710
Series F -- -- -- 2,711
--------------------------------------------------------------------------------
Total 1,800 3,193 1,375 5,421
================================================================================
INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NVX) (NZH) (NKL)
--------------------------------------------------------------------------------
Number of shares:
Series M 1,875 1,389 --
Series T -- -- 2,165
Series TH -- 1,391 --
Series F 1,876 -- 2,165
--------------------------------------------------------------------------------
Total 3,751 2,780 4,330
================================================================================
Nuveen Investments 77
| Notes to
| Financial Statements (continued)
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. As of February 28,
2010, the aggregate amount of outstanding Auction Rate Preferred shares redeemed
by each Fund is as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
-----------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed, at liquidation value $ -- $ 15,175,000 $8,625,000 $ 39,475,000
=======================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-----------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed, at liquidation value $16,225,000 $ 117,500,000 $9,750,000 $ 45,000,000
=======================================================================================================================
Effective May 1, 2009, auction participation fees with respect to auctions that
have failed have been reduced from 25 bps (annualized) to 15 bps (annualized).
All auction participants have signed new agreements incorporating this change.
MUNIFUND TERM PREFERRED SHARES
California Dividend Advantage 3 (NZH) has issued and outstanding $86,250,000, of
2.95%, Series 2015 MuniFund Term Preferred shares, with a $10 liquidation value
per share. Dividends, which are recognized as interest expense for financial
reporting purposes, will be paid monthly at a fixed annual rate of 2.95%,
subject to adjustment in certain circumstances. Proceeds from the issuance of
MuniFund Term Preferred shares, net of offering expenses, were used to redeem a
portion of the Fund's outstanding Auction Rate Preferred shares.
The Fund is obligated to redeem the MuniFund Term Preferred shares on January 1,
2015, unless earlier redeemed or repurchased by the Fund. MuniFund Term
Preferred shares are subject to optional and mandatory redemption in certain
circumstances. As of January 1, 2011, the MuniFund Term Preferred shares will be
subject to redemption at the option of the Fund, subject to payment of a premium
until December 31, 2011, and at par thereafter. The MuniFund Term Preferred
shares also will be subject to redemption, at the option of the Fund, at par in
the event of certain changes in the credit rating of the MuniFund Term Preferred
shares. The Funds may be obligated to redeem certain of the MuniFund Term
Preferred shares if the Fund fails to maintain certain asset coverage and
leverage ratio 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. The MuniFund Term
Preferred shares trade on NYSE under the symbol "NZH Pr C".
During the period from December 21, 2009 through February 28, 2010, California
Dividend Advantage 3 (NZH) had an average balance of $83,804,348 MuniFund Term
Preferred shares outstanding.
For financial reporting purposes only, the liquidation value of MuniFund Term
Preferred shares is recorded as a liability on the Statement of Assets and
Liabilities. Unpaid dividends on MuniFund Term Preferred shares are recognized
as "Interest payable" on the Statement of Assets and Liabilities. Dividends paid
on MuniFund Term Preferred shares are included as a component of "Interest
expense and amortization of offering costs" on the Statement of Operations.
VARIABLE RATE DEMAND PREFERRED SHARES
Insured California Tax-Free Advantage (NKX) has issued and outstanding 355
Series 1 Variable Rate Demand Preferred shares, $100,000 liquidation value per
share. Variable Rate Demand Preferred shares were issued in a privately
negotiated offering. Proceeds of this offering were used to redeem a portion of
the Fund's outstanding Auction Rate Preferred shares. 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.
78 Nuveen Investments
Insured California Tax-Free Advantage (NKX) had all of its $35,500,000 Variable
Rate Demand Preferred shares outstanding during the fiscal year ended February
28, 2010, with an annualized interest rate of 0.35%.
For financial reporting purposes only, the liquidation value of Variable Rate
Demand Preferred shares is recognized as a liability on the Statement of Assets
and Liabilities. Unpaid dividends on Variable Rate Preferred shares are
recognized as "Interest payable" on the Statement of Assets and Liabilities.
Dividends paid on the Variable Rate Demand Preferred shares are included as a
component of "Interest expense and amortization of offering costs" on the
Statement of Operations. In addition to interest expense, the Fund also pays a
per annum liquidity fee, which is recognized as "Liquidity fees" on the
Statement of Operations.
INSURANCE
Except to the extent that Insured California Premium Income (NPC) invests in
temporary investments, all of the net assets (as defined in Footnote 7
- Management Fees and Other Transactions with Affiliates) of the 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 Standard & Poor's. Municipal
securities backed by an escrow account or trust account will not constitute more
than 20% of the Fund's net assets.
Under normal circumstances, Insured California Premium Income 2 (NCL), Insured
California Dividend Advantage (NKL) and Insured California Tax-Free Advantage
(NKX) invest at least 80% of their net assets (as defined in Footnote 7 -
Management Fees and Other Transactions with Affiliates) in municipal securities
that are covered by insurance guaranteeing the timely payment of principal and
interest. For purposes of this 80%, 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 Premium Income 2 (NCL), Insured
California Dividend Advantage (NKL) and Insured California Tax-Free Advantage
(NKX) invests at least 80% of its net assets in municipal securities that are
rated at least "BBB" 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 are 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. Inverse floating rate securities whose
underlying bonds are covered by insurance are included for purposes of this 80%.
Each of Insured California Premium Income 2 (NCL), Insured California Dividend
Advantage (NKL) and Insured California Tax-Free Advantage (NKX) may also invest
up to 20% of its net assets in municipal securities rated 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.
Nuveen Investments 79
| Notes to
| Financial Statements (continued)
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
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 reflected as a financing transaction," 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 recognized as a component of "Interest expense and
amortization of offering costs" on the Statement of Operations.
During the fiscal year ended February 28, 2010, 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, 2010, the Funds were not invested in 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 for the following Funds
during the fiscal year ended February 28, 2010, were as follows:
INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM DIVIDEND
INCOME 2 INCOME ADVANTAGE
(NCL) (NCU) (NAC)
-----------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations outstanding $18,531,014 $6,969,534 $28,545,000
Average annual interest rate and fees 0.78% 0.74% 0.79%
===================================================================================================================================
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 outstanding $ 8,905,000 $11,861,507 $ 7,459,658 $3,360,000
Average annual interest rate and fees 0.75% 0.73% 0.81% 0.96%
===================================================================================================================================
FORWARD SWAP CONTRACTS
Each Fund is authorized to enter into forward interest rate swap contracts
consistent with their investment objectives and policies to reduce, increase or
otherwise alter its risk profile or to alter its portfolio characteristics (i.e.
duration, yield curve positioning and credit quality).
Each Fund is subject to interest rate risk in the normal course of pursuing its
investment objectives. 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 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
80 Nuveen Investments
termination date increases or decreases. Forward interest rate swap contracts
are valued daily. The net amount recorded on these transactions for each
counterparty is recognized on the Statement of Assets and Liabilities as
"Unrealized appreciation or depreciation on forward swaps" with the change
during the fiscal period recognized on the Statement of Operations as "Change in
net unrealized appreciation (depreciation) of forward swaps."
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. Net realized
gains and losses during the fiscal period are recognized on the Statement of
Operations as "Net realized gain (loss) from forward swaps." 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.
The following Funds invested in forward interest rate swaps transactions during
the fiscal year ended February 28, 2010. The average notional amount of forward
swap contracts outstanding during the fiscal year ended February 28, 2010, were
as follows:
INSURED
CALIFORNIA CALIFORNIA
PREMIUM DIVIDEND
INCOME 2 ADVANTAGE 3
(NCL) (NZH)
-----------------------------------------------------------------------------------------
Average notional amount of forward swap contracts outstanding $2,400,000 $2,600,000
=========================================================================================
Refer to Footnote 3 -- Derivative Instruments and Hedging Activities for further
details on forward swap contract activity.
FUTURES CONTRACTS
Each Fund is subject to interest rate risk in the normal course of pursuing its
investment objectives and is authorized to invest in futures contracts in
attempt to manage such risk. 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." Cash held by the broker to cover initial margin requirements on open
futures contracts, if any, is recognized as "Deposits with brokers for open
futures contracts" on the Statement of Assets and Liabilities. Subsequent
payments ("variation margin") are made or received by a Fund each day, depending
on the daily fluctuation of the value of the contract. Variation margin is
recognized as a receivable or payable for "Variation margin on futures
contracts" on the Statement of Assets and Liabilities, when applicable.
During the period the futures contract is open, changes in the value of the
contract are recorded as an unrealized gain or loss by "marking-to-market" on a
daily basis to reflect the changes in market value of the contract and is
recognized as "Change in net unrealized appreciation (depreciation) of futures
contracts" on the Statement of Operations. 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 and is recognized as "Net realized gain (loss) from
futures contracts" on the Statement of Operations.
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. The Funds did not invest in futures
contracts during the fiscal year ended February 28, 2010.
MARKET AND COUNTERPARTY 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 (counterparty credit risk). The potential loss could
exceed the value of the financial assets recorded on the financial statements.
Financial assets, which potentially expose each Fund to counterparty credit
risk, consist principally of cash due from counterparties on forward, option and
swap transactions, when applicable. The extent of each Fund's exposure to
counterparty credit risk in respect to these financial assets approximates their
carrying value as recorded on the Statement of Assets and Liabilities. Futures
contracts, when applicable, expose a Fund to minimal counterparty credit risk as
they are exchange traded and the exchange's clearinghouse, which is counterparty
to all exchange traded futures, guarantees the futures contracts against
default.
Each Fund helps manage counterparty credit risk by entering into agreements only
with counterparties the Adviser believes have the financial resources to honor
their obligations and by having the Adviser monitor the financial stability of
the 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.
Nuveen Investments 81
| Notes to
| Financial Statements (continued)
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
Cost incurred by California Dividend Advantage 3 (NZH) in connection with its
offering of MuniFund Term Preferred shares ($1,658,750) were recorded as a
deferred charge, which will be amortized over the 5-year life of the shares.
Each Fund's amortized deferred charges are included as a component of "Interest
expense and amortization of offering costs" on the Statement of Operations.
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.
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.
2. 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, 2010:
INSURED CALIFORNIA PREMIUM INCOME (NPC) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $137,598,303 $ -- $137,598,303
=================================================================================================
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $269,638,479 $ -- $269,638,479
=================================================================================================
CALIFORNIA PREMIUM INCOME (NCU) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $117,994,420 $ -- $117,994,420
=================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE (NAC) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $482,310,078 $ -- $482,310,078
=================================================================================================
82 Nuveen Investments
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $312,201,729 $ -- $312,201,729
=================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $477,390,809 $ -- $477,390,809
=================================================================================================
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $335,153,942 $ -- $335,153,942
=================================================================================================
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
-------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds $ -- $116,108,905 $ -- $116,108,905
Short-Term Investments -- 3,000,000 -- 3,000,000
-------------------------------------------------------------------------------------------------
Total $ -- $119,108,905 $ -- $119,108,905
=================================================================================================
3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
During the current fiscal period, the Funds adopted amendments to authoritative
guidance under GAAP on disclosures about derivative instruments and hedging
activities. This guidance is intended to enhance financial statement disclosures
for derivative instruments and hedging activities and enable investors to better
understand: a) how and why a fund uses derivative instruments; b) how derivative
instruments are accounted for; and c) how derivative instruments affect a fund's
financial position, results of operations and cash flows, if any. The Funds
record derivative instruments at fair value, with changes in fair value
recognized on the Statement of Operations, when applicable. Even though the
Funds' investments in derivatives may represent economic hedges, under this
guidance they are considered to be non-hedge transactions for financial
reporting purposes. For additional information on the derivative instruments in
which each Fund was invested during and as of the end of the reporting period,
refer to the Portfolios of Investments, Financial Statements and Footnote 1 -
General Information and Significant Accounting Policies.
The following tables present the amount of net realized gain (loss) and change
in net appreciation (depreciation) recognized for the fiscal year ended February
28, 2010, on derivative instruments, as well as the primary underlying risk
exposure associated with each. The following Funds invested in derivative
instruments during the fiscal year ended February 28, 2010. None of the Funds
had derivative contracts outstanding at February 28, 2010.
INSURED
CALIFORNIA CALIFORNIA
PREMIUM DIVIDEND
INCOME 2 ADVANTAGE 3
NET REALIZED GAIN (LOSS) FROM FORWARD SWAPS (NCL) (NZH)
----------------------------------------------------------------------------------------------------
RISK EXPOSURE
Interest Rate $2,508,000 $(1,938,000)
====================================================================================================
INSURED
CALIFORNIA CALIFORNIA
PREMIUM DIVIDEND
INCOME 2 ADVANTAGE 3
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) OF FORWARD SWAPS (NCL) (NZH)
----------------------------------------------------------------------------------------------------
RISK EXPOSURE
Interest Rate $(1,751,141) $ 2,841,843
====================================================================================================
Nuveen Investments 83
| Notes to
| Financial Statements (continued)
4. FUND SHARES
COMMON SHARES
Transactions in Common shares were as follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC) INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
--------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
----------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- -- -- -- --
Repurchased and retired (11,500) (6,200) -- (11,700) (41,800) --
----------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased and
retired $ 11.90 $ 12.00 -- $ 10.43 $ 10.67 --
Discount per share repurchased and
retired 16.06% 15.30% -- 18.03% 17.79% --
============================================================================================================================
CALIFORNIA PREMIUM INCOME (NCU) CALIFORNIA DIVIDEND ADVANTAGE (NAC)
--------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
----------------------------------------------------------------------------------------------------------------------------
Common shares
Issued to shareholders due
to reinvestment of distributions -- -- -- -- -- --
Repurchased and retired (27,400) (14,700) -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased and
retired $ 10.06 $ 9.67 -- -- -- --
Discount per share repurchased and
retired 19.22% 22.26% -- -- -- --
============================================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
--------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
----------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- -- -- -- --
Repurchased and retired (32,400) (18,300) -- -- (12,900) --
----------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased and
retired $ 10.28 $ 10.26 -- -- $ 9.31 --
Discount per share repurchased and
retired 19.87% 21.40% -- -- 19.85% --
============================================================================================================================
INSURED CALIFORNIA DIVIDEND ADVANTAGE(NKL) INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
------------------------------------------ -------------------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08 2/28/10 2/28/09 8/31/08
-------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- -- -- -- 1,226
Repurchased and retired (13,700) (19,000) -- -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased and
retired $ 11.04 $ 10.76 -- -- -- --
Discount per share repurchased and
retired 18.04% 21.01% -- -- -- --
===============================================================================================================================
84 Nuveen Investments
PREFERRED SHARES
Insured California Premium Income (NPC) did not redeem or notice for redemption
any of their Auction Rate Preferred shares during the fiscal year ended February
28, 2010, the six months ended February 28, 2009, or the fiscal year ended
August 31, 2008. Transactions in Auction Rate Preferred shares were as follows:
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
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
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series M 260 $ 6,500,000 85 $ 2,125,000 -- $ --
========================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
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
========================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series M 325 $ 8,125,000 -- $ -- -- $ --
Series F 324 8,100,000 -- -- -- --
------------------------------------------------------------------------------------------------------------------------
Total 649 $16,225,000 -- $ -- -- $ --
========================================================================================================================
Nuveen Investments 85
| Notes to
| Financial Statements (continued)
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series M 1,692 $42,300,000 117 $ 2,925,000 542 $ 13,550,000
Series TH 1,691 42,275,000 117 2,925,000 541 13,525,000
------------------------------------------------------------------------------------------------------------------------
Total 3,383 $84,575,000 234 $ 5,850,000 1,083 $ 27,075,000
========================================================================================================================
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
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
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series TH N/A N/A N/A N/A 1,800 $ 45,000,000
========================================================================================================================
N/A - All $45,000,000 of the Fund's outstanding Auction Rate Preferred shares
were redeemed during the fiscal year ended August 31, 2008.
Transactions in MuniFund Term Preferred shares were as follows:
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
MuniFund Term Preferred shares issued:
Series 2015 8,625,000 $86,250,000 N/A N/A N/A N/A
========================================================================================================================
N/A - The Fund was not authorized to issue MuniFund Term Preferred shares during
the six months ended February 28, 2009 or the fiscal year ended August 31, 2008.
Transactions in Variable Rate Demand Preferred shares were as follows:
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
2/28/10 2/28/09 8/31/08
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------
Variable Rate Demand Preferred shares
issued:
Series 1 -- $ -- -- $ -- 355 $ 35,500,000
========================================================================================================================
86 Nuveen Investments
5. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended February 28, 2010,
were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
-------------------------------------------------------------------------------------------------------------------------
Purchases $ 14,634,849 $ 22,161,540 $ 14,559,996 $ 21,925,256
Sales and maturities 13,702,950 19,255,737 11,305,358 20,645,357
=========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------
Purchases $ 12,579,889 $ 29,068,881 $ 4,555,030 $ 1,051,668
Sales and maturities 21,084,568 28,801,623 2,946,467 53,924
=========================================================================================================================
6. 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
securities reflected as financing transactions, 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, 2010, the cost of investments was as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
-------------------------------------------------------------------------------------------------------------------------
Cost of investments $ 133,373,380 $ 247,857,643 $ 110,794,441 $ 452,002,560
=========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------
Cost of investments $ 299,631,823 $ 473,162,952 $ 321,760,165 $ 115,923,379
=========================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 2010, 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 $ 6,758,407 $ 9,738,967 $ 4,362,299 $ 20,305,322
Depreciation (2,533,484) (5,838,645) (3,812,779) (18,535,639)
-------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of $ 4,224,923 $ 3,900,322 $ 549,520 $ 1,769,683
investments
=========================================================================================================================
Nuveen Investments 87
| Notes to
| Financial Statements (continued)
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 15,552,011 $ 15,563,926 $ 14,417,360 $ 3,741,630
Depreciation (11,876,548) (22,429,905) (8,408,249) (3,913,686)
-------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of $ 3,675,463 $ (6,865,979) $ 6,009,111 $ (172,056)
investments
=========================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at February 28, 2010, 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 * $ 1,674,185 $ 3,564,683 $ 1,427,246 $ 5,997,103
Undistributed net ordinary income ** -- 24,968 5,784 47,938
Undistributed net long-term capital gains 189,500 -- -- --
=========================================================================================================================
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 * $ 4,247,557 $ 6,317,898 $ 4,081,372 $ 1,124,400
Undistributed net ordinary income ** 1,239 5,352 -- --
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 1, 2010, paid on March 1, 2010.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the Funds' tax years ended
February 28, 2010, February 28, 2009, and August 31, 2008, 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
YEAR FEBRUARY 28, 2010 (NPC) (NCL) (NCU) (NAC)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income *** $ 5,137,076 $ 10,331,450 $ 4,307,774 $ 19,787,318
Distributions from net ordinary income ** 78,012 18,216 -- 209,009
Distributions from net long-term capital gains **** 47,538 201,208 -- 178,190
=========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
YEAR FEBRUARY 28, 2010 (NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $ 13,349,752 $ 20,781,977 $ 13,395,977 $ 4,573,073
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains**** -- -- -- --
=========================================================================================================================
** 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 fiscal year ended
February 28, 2010, 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 tax year ended February 28, 2010.
88 Nuveen Investments
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
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
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
=========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
YEAR ENDED AUGUST 31, 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
YEAR ENDED AUGUST 31, 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 --
=========================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At February 28, 2010, 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 INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
INCOME 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NCL) (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
February 28, 2018 5,325,933 881,108 731,149 1,921,563 10,646,251 1,227,051 530,894
---------------------------------------------------------------------------------------------------------------------------
Total $ 5,325,933 $ 969,631 $ 14,868,747 $ 2,848,110 $ 22,193,239 $ 1,467,721 $ 1,121,843
===========================================================================================================================
Nuveen Investments 89
| Notes to
| Financial Statements (continued)
California Dividend Advantage 3 (NZH) elected to defer net realized losses from
investments incurred from November 1, 2009 through February 28, 2010, the Fund's
tax year end, ("post-October losses") in accordance with federal income tax
regulations. Post-October capital losses of $307,631 are treated as having
arisen on the first day of the following fiscal year.
7. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a fund-level fee,
based only on the amount of assets within each individual Fund, and a
complex-level fee, based on the aggregate amount of all fund assets managed by
the Adviser. This pricing structure enables each Fund's shareholders to benefit
from growth in the assets within their respective Fund as well as from growth in
the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee for each Fund, payable monthly, is calculated
according to the following schedule:
INSURED CALIFORNIA PREMIUM INCOME (NPC)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
CALIFORNIA PREMIUM INCOME (NCU)
AVERAGE DAILY NET ASSETS* 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)
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
AVERAGE DAILY NET ASSETS* 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
================================================================================
90 Nuveen Investments
The annual complex-level fee for each Fund, payable monthly, is calculated
according to the following schedule:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL* 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
================================================================================
* The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate daily managed assets of all Nuveen
funds, with such daily managed assets defined separately for each fund in
its management agreement, but excluding assets attributable to investments
in other Nuveen funds. For the complex-level and fund-level fees, daily
managed assets include assets managed by the Adviser that are attributable
to financial leverage. For these purposes, financial leverage includes the
funds' use of preferred stock and borrowings and investments in the
residual interest certificates (also called inverse floating rate
securities) in tender option bond (TOB) trusts, including the portion of
assets held by a TOB trust that has been effectively financed by the
trust's issuance of floating rate securities, subject to an agreement by
the Adviser to limit the amount of such assets for determining managed
assets in certain circumstances. As of February 28, 2010, the
complex-level fee rate was .1874%.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its directors/trustees who are affiliated with
the Adviser or to its officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
directors/trustees that enables directors/trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
funds.
For the first ten years of California Dividend Advantage's (NAC) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets, 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, 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.
Nuveen Investments 91
| Notes to
| Financial Statements (continued)
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, for fees and expenses in the amounts and for the time periods set
forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 3 (NZH)
for any portion of its fees and expenses beyond September 30, 2011.
For the first ten years of Insured California Dividend Advantage's (NKL)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets, 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, 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.
8. NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR TRANSFERS OF FINANCIAL ASSETS
During June 2009, FASB issued changes to the authoritative guidance under GAAP
on accounting for transfers of financial assets. The objective of this guidance
is to improve the relevance, representational faithfulness, and comparability of
the information that a reporting entity provides in its financial statements
about a transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and transferor's continuing
involvement, if any, in transferred financial assets.
This guidance is effective as of the beginning of each reporting entity's first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The recognition and
measurement provisions of this guidance must be applied to transfers occurring
on or after the effective date. Additionally, the disclosure provisions of this
guidance should be applied to transfers that occurred both before and after the
effective date of this guidance. At this time, management is evaluating the
implications of this guidance and the impact it will have on the financial
statement amounts and disclosures, if any.
92 Nuveen Investments
FAIR VALUE MEASUREMENTS
On January 21, 2010, FASB issued changes to the authoritative guidance under
GAAP for fair value measurements. The objective of this guidance is to provide
guidance on how investment assets and liabilities are to be valued and
disclosed. Specifically, the amendment requires reporting entities to disclose
i) the input and valuation techniques used to measure fair value for both
recurring and nonrecurring fair value measurements, for both Level 2 and Level 3
positions, ii) transfers between all levels (including Level 1 and Level 2) on a
gross basis (i.e., transfers out must be disclosed separately from transfers in)
as well as the reason(s) for the transfer and iii) purchases, sales, issuances
and settlements in the Level 3 rollforward must be shown on a gross basis rather
than as one net number. The effective date of the amendment is for interim and
annual periods beginning after December 15, 2009, however, the requirement to
provide the Level 3 activity for purchases, sales, issuances and settlements on
a gross basis will be effective for interim and annual periods beginning after
December 15, 2010. At this time, management is evaluating the implications of
this guidance and the impact it will have to the financial statement amounts and
footnote disclosures, if any.
9. 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, 2010, to shareholders of record
on March 15, 2010, as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Dividend per share $.0690 $.0720 $.0700 $.0720
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Dividend per share $.0790 $.0750 $.0750 $.0660
================================================================================
DISTRIBUTIONS TO MUNIFUND TERM PREFERRED SHAREHOLDERS
California Dividend Advantage 3 (NZH) declared a dividend distribution of
$0.024583, which was paid on April 1, 2010, to shareholders of record on March
15, 2010.
AUCTION RATE PREFERRED SHARES NOTICES FOR REDEMPTION
On March 1, 2010, Insured California Premium Income (NPC), Insured California
Premium Income 2 (NCL) and Insured California Dividend Advantage (NKL) noticed
for redemption $3.25 million, $6.5 million and $4.5 million of their outstanding
Auction Rate Preferred shares, at liquidation value, respectively. The Funds
used tender option bonds (TOBs) to finance the partial redemption of their
Auction Rate Preferred shares, at liquidation value.
On March 31, 2010, Insured California Premium Income (NPC) noticed for
redemption its remaining $41.75 million outstanding Auction Rate Preferred
shares using proceeds from the issuance of Variable Rate Demand Preferred shares
for this redemption.
MUNIFUND TERM PREFERRED SHARES
Subsequent to the reporting period, California Premium Income (NCU), California
Dividend Advantage (NAC), California Dividend Advantage 2 (NVX) and Insured
California Dividend Advantage (NKL) filed with the Securities and Exchange
Commission ("SEC") registration statements seeking to register MuniFund Term
Preferred shares. These registration statements, declared effective by the SEC,
enable the Funds to issue to the public shares of MuniFund Term Preferred to
refinance all or a portion of each Fund's Auction Rate Preferred shares. The
issuance of MuniFund Term Preferred shares by these Funds is subject to market
conditions. There is no assurance that these MuniFund Term Preferred shares will
be issued.
VARIABLE RATE DEMAND PREFERRED SHARES
On March 30, 2010, Insured California Premium Income (NPC) issued $42.7 million
of Variable Rate Demand Preferred shares.
Nuveen Investments 93
| Financial
| Highlights
Selected data for a Common share outstanding throughout each period:
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------------------------- -----------------------------
DISTRIBUTIONS DISTRIBUTIONS
FROM NET FROM NET
BEGINNING INVESTMENT CAPITAL INVESTMENT CAPITAL
COMMON NET INCOME TO GAINS TO INCOME TO GAINS TO
SHARE NET REALIZED/ AUCTION RATE AUCTION RATE COMMON COMMON
NET ASSET INVESTMENT UNREALIZED PREFERRED PREFERRED SHARE- SHARE-
VALUE INCOME GAIN (LOSS) SHAREHOLDERS+ SHAREHOLDERS+ TOTAL HOLDERS HOLDERS TOTAL
----------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $14.03 $.96 $ .55 $(.03) $(.02) $1.46 $(.75) $ -- $(.75)
2009(d) 14.93 .47 (.74) (.11) (.02) (.40) (.36) (.14) (.50)
Year Ended 8/31:
2008 15.04 .95 (.10) (.22) --** .63 (.73) (.01) (.74)
2007 15.58 .90 (.40) (.21) (.02) .27 (.73) (.08) (.81)
2006 16.21 .92 (.38) (.18) (.02) .34 (.83) (.14) (.97)
2005 16.23 .95 .22 (.10) (.01) 1.06 (.92) (.16) (1.08)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 12.85 .98 .99 (.03) (.02) 1.92 (.78) -- (.78)
2009(d) 14.13 .44 (1.12) (.10) (.02) (.80) (.34) (.14) (.48)
Year Ended 8/31:
2008 14.50 .95 (.44) (.24) -- .27 (.64) -- (.64)
2007 14.99 .89 (.46) (.25) -- .18 (.67) -- (.67)
2006 15.33 .90 (.28) (.20) -- .42 (.76) -- (.76)
2005 15.12 .91 .29 (.11) -- 1.09 (.88) -- (.88)
==================================================================================================================================
AUCTION RATE PREFERRED SHARES
AT END OF PERIOD
--------------------------------------
DISCOUNT
FROM
COMMON ENDING
SHARES COMMON AGGREGATE LIQUIDATION
REPURCHASED SHARE ENDING AMOUNT AND MARKET ASSET
AND NET ASSET MARKET OUTSTANDING VALUE COVERAGE
RETIRED VALUE VALUE (000) PER SHARE PER SHARE
--------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
--------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $ --** $14.74 $13.30 $45,000 $25,000 $77,746
2009(d) --** 14.03 12.04 45,000 25,000 75,295
Year Ended 8/31:
2008 -- 14.93 13.89 45,000 25,000 78,590
2007 -- 15.04 14.96 45,000 25,000 78,987
2006 -- 15.58 15.08 45,000 25,000 80,878
2005 -- 16.21 15.90 45,000 25,000 83,061
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
--------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 --** 13.99 12.72 79,825 25,000 80,487
2009(d) --** 12.85 10.89 79,825 25,000 75,996
Year Ended 8/31:
2008 -- 14.13 12.66 87,400 25,000 76,411
2007 -- 14.50 13.71 95,000 25,000 73,511
2006 -- 14.99 14.19 95,000 25,000 75,150
2005 -- 15.33 15.05 95,000 25,000 76,288
============================================================================================
94 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++
--------------------- ------------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT
VALUE(a) VALUE(a) SHARES (000) INTEREST(c) INTEREST INCOME
-----------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
-----------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 17.13% 10.66% $ 94,944 1.19% 1.19% 6.68%
2009(d) (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
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
-----------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 24.41 15.35 177,169 1.27 1.18 7.25
2009(d) (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
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
AFTER REIMBURSEMENT++(b)
--------------------------------------
EXPENSES EXPENSES NET PORTFOLIO
INCLUDING EXCLUDING INVESTMENT TURNOVER
INTEREST(c) INTEREST INCOME RATE
-------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
-------------------------------------------------------------------
Year Ended 2/28:
2010 1.19% 1.19% 6.68% 10%
2009(d) 1.27* 1.27* 6.88* 1
Year Ended 8/31:
2008 1.18 1.18 6.24 17
2007 1.22 1.16 5.85 9
2006 1.16 1.16 5.89 9
2005 1.14 1.14 5.85 9
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------
Year Ended 2/28:
2010 1.27 1.18 7.25 7
2009(d) 1.52* 1.23* 7.15* 9
Year Ended 8/31:
2008 1.23 1.21 6.56 12
2007 1.24 1.18 5.99 19
2006 1.20 1.20 6.05 14
2005 1.17 1.17 6.03 7
===================================================================
* Annualized.
** 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; Net Investment Income ratios reflect income earned
and expenses incurred on assets attributable to Auction Rate Preferred
shares.
(a) 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.
(b) After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
(c) The expense ratios reflect, among other things, the interest expense
deemed to have been paid by the Fund on the floating rate certificates
issued by the special purpose trusts for the self-deposited inverse
floaters held by the Fund, as described in Footnote 1 - Inverse Floating
Rate Securities.
(d) For the six months ended February 28, 2009.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 95
| Financial
| Highlights (continued)
Selected data for a Common share outstanding throughout each period:
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------------------------------- -----------------------------
DISTRIBUTIONS DISTRIBUTIONS
FROM NET FROM NET
BEGINNING INVESTMENT CAPITAL INVESTMENT CAPITAL
COMMON NET INCOME TO GAINS TO INCOME TO GAINS TO
SHARE NET REALIZED/ AUCTION RATE AUCTION RATE COMMON COMMON
NET ASSET INVESTMENT UNREALIZED PREFERRED PREFERRED SHARE- SHARE-
VALUE INCOME GAIN (LOSS) SHAREHOLDERS+ SHAREHOLDERS+ TOTAL HOLDERS HOLDERS TOTAL
----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $12.37 $ .95 $ 1.13 $(.03) $ -- $2.05 $(.72) $ -- $(.72)
2009(d) 13.67 .43 (1.29) (.10) --** (.96) (.33) (.01) (.34)
Year Ended 8/31:
2008 14.06 .92 (.43) (.24) -- .25 (.64) -- (.64)
2007 14.63 .90 (.52) (.24) (.01) .13 (.67) (.03) (.70)
2006 15.03 .89 (.30) (.21) -- .38 (.77) (.01) (.78)
2005 14.51 .90 .60 (.12) -- 1.38 (.86) -- (.86)
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 12.10 1.01 1.63 (.03) (.02) 2.59 (.81) -- (.81)
2009(d) 14.43 .49 (2.07) (.09) (.02) (1.69) (.38) (.26) (.64)
Year Ended 8/31:
2008 14.93 1.02 (.50) (.23) (.01) .28 (.74) (.04) (.78)
2007 15.59 1.00 (.56) (.24) (.01) .19 (.80) (.05) (.85)
2006 15.98 1.01 (.25) (.21) -- .55 (.91) (.03) (.94)
2005 15.59 1.04 .50 (.12) -- 1.42 (.98) (.05) (1.03)
==================================================================================================================================
AUCTION RATE PREFERRED SHARES
AT END OF PERIOD
--------------------------------------
DISCOUNT
FROM
COMMON ENDING
SHARES COMMON AGGREGATE LIQUIDATION
REPURCHASED SHARE ENDING AMOUNT AND MARKET ASSET
AND NET ASSET MARKET OUTSTANDING VALUE COVERAGE
RETIRED VALUE VALUE (000) PER SHARE PER SHARE
--------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
--------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $.01 $13.71 $12.11 $ 34,375 $25,000 $82,150
2009(d) --** 12.37 10.06 40,875 25,000 68,584
Year Ended 8/31:
2008 -- 13.67 12.58 43,000 25,000 70,910
2007 -- 14.06 13.03 43,000 25,000 72,209
2006 -- 14.63 14.01 43,000 25,000 74,109
2005 -- 15.03 14.37 43,000 25,000 75,456
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
--------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 -- 13.88 12.60 135,525 25,000 85,098
2009(d) -- 12.10 10.82 135,525 25,000 77,430
Year Ended 8/31:
2008 -- 14.43 13.44 135,525 25,000 87,485
2007 -- 14.93 14.34 175,000 25,000 75,075
2006 -- 15.59 15.97 175,000 25,000 77,217
2005 -- 15.98 16.07 175,000 25,000 78,466
===========================================================================================
96 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++
--------------------- -------------------------------------
BASED ENDING
BASED ON NET
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT
VALUE(a) VALUE(a) SHARES (000) INTEREST(c) INTEREST INCOME
------------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 28.13% 17.06% $ 78,581 1.30% 1.24% 7.18%
2009(d) (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
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 24.62 21.97 325,791 1.21 1.13 7.63
2009(d) (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
======================================================================================================
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
AFTER REIMBURSEMENT++(b)
-----------------------------------
EXPENSES EXPENSES NET PORTFOLIO
INCLUDING EXCLUDING INVESTMENT TURNOVER
INTEREST(c) INTEREST INCOME RATE
-------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
-------------------------------------------------------------------
Year Ended 2/28:
2010 1.30% 1.24% 7.18% 10%
2009(d) 1.57* 1.37* 7.06* 14
Year Ended 8/31:
2008 1.34 1.23 6.55 5
2007 1.29 1.21 6.14 11
2006 1.23 1.23 6.09 20
2005 1.21 1.21 6.08 13
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
-------------------------------------------------------------------
Year Ended 2/28:
2010 1.18 1.10 7.66 4
2009(d) 1.24* 1.10* 7.99* 14
Year Ended 8/31:
2008 1.11 1.00 6.92 19
2007 .95 .90 6.46 20
2006 .84 .84 6.50 13
2005 .75 .75 6.59 4
===================================================================
* Annualized.
** 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; Net Investment Income ratios reflect income earned
and expenses incurred on assets attributable to Auction Rate Preferred
shares.
(a) 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.
(b) After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
(c) The expense ratios reflect, among other things, the interest expense
deemed to have been paid by the Fund on the floating rate certificates
issued by the special purpose trusts for the self-deposited inverse
floaters held by the Fund, as described in Footnote 1 - Inverse Floating
Rate Securities.
(d) For the six months ended February 28, 2009.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 97
| Financial
| Highlights (continued)
Selected data for a Common share outstanding throughout each period:
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------------------------------------- -----------------------------
DISTRIBUTIONS DISTRIBUTIONS
FROM NET FROM NET
BEGINNING INVESTMENT CAPITAL INVESTMENT CAPITAL
COMMON NET INCOME TO GAINS TO INCOME TO GAINS TO
SHARE NET REALIZED/ AUCTION RATE AUCTION RATE COMMON COMMON
NET ASSET INVESTMENT UNREALIZED PREFERRED PREFERRED SHARE- SHARE-
VALUE INCOME GAIN (LOSS) SHAREHOLDERS+ SHAREHOLDERS+ TOTAL HOLDERS HOLDERS TOTAL
---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $12.91 $1.07 $ 1.43 $(.04) $ -- $ 2.46 $(.88) $ -- $(.88)
2009(d) 14.39 .51 (1.47) (.11) (.01) (1.08) (.36) (.04) (.40)
Year Ended 8/31:
2008 14.69 1.01 (.37) (.25) -- .39 (.69) -- (.69)
2007 15.36 .96 (.62) (.25) -- .09 (.76) -- (.76)
2006 15.63 .97 (.19) (.21) -- .57 (.84) -- (.84)
2005 14.97 .98 .71 (.12) -- 1.57 (.91) -- (.91)
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 11.53 .98 1.53 (.03) -- 2.48 (.83) -- (.83)
2009(d) 13.62 .50 (2.13) (.09) -- (1.72) (.37) -- (.37)
Year Ended 8/31:
2008 14.25 1.03 (.70) (.25) -- .08 (.71) -- (.71)
2007 15.03 .98 (.73) (.27) -- (.02) (.76) -- (.76)
2006 15.31 .97 (.20) (.22) -- .55 (.83) -- (.83)
2005 14.65 .97 .68 (.13) -- 1.52 (.86) -- (.86)
=================================================================================================================================
DISCOUNT AUCTION RATE PREFERRED SHARES MUNIFUND TERM PREFERRED SARES
FROM AT END OF PERIOD AT END OF PERIOD
COMMON ENDING ----------------------------- -----------------------------
SHARES COMMON AGGREGATE LIQUIDATION AGGREGATE LIQUIDATION
REPURCHASED SHARE ENDING AMOUNT AND MARKET AMOUNT AND MARKET ASSET
AND NET ASSET MARKET OUTSTANDING VALUE OUTSTANDING VALUE COVERAGE
RETIRED VALUE VALUE (000) PER SHARE (000) PER SHARE PER SHARE
--------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $ --** $14.49 $13.56 $ 93,775 $25,000 $ -- $ -- $81,968
2009(d) --** 12.91 10.51 110,000 25,000 -- -- 68,369
Year Ended 8/31:
2008 -- 14.39 12.67 110,000 25,000 -- -- 73,384
2007 -- 14.69 13.73 110,000 25,000 -- -- 74,394
2006 -- 15.36 14.95 110,000 25,000 -- -- 76,627
2005 -- 15.63 15.19 110,000 25,000 -- -- 77,532
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 -- 13.18 12.67 69,500 25,000 86,250 10*** --****
2009(d) --** 11.53 10.23 154,075 25,000 -- -- 70,117
Year Ended 8/31:
2008 -- 13.62 12.87 159,925 25,000 -- -- 76,377
2007 -- 14.25 13.52 187,000 25,000 -- -- 70,963
2006 -- 15.03 14.84 187,000 25,000 -- -- 73,459
2005 -- 15.31 14.49 187,000 25,000 -- -- 74,367
================================================================================================================================
98 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++ AFTER REIMBURSEMENT++(b)
------------------- ---------------------------------- ----------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET EXPENSES EXPENSES NET PORTFOLIO
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT INCLUDING EXCLUDING INVESTMENT TURNOVER
VALUE(a) VALUE(a) SHARES (000) INTEREST(c) INTEREST INCOME INTEREST(c) INTEREST INCOME RATE
----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended
2/28:
2010 38.29% 19.52% $ 213,687 1.20% 1.16% 7.58% 1.04% 1.01% 7.74% 4%
2009(d) (13.83) (7.40) 190,824 1.37* 1.32* 7.85* 1.14* 1.09* 8.08* 7
Year Ended
8/31:
2008 (2.80) 2.76 212,890 1.25 1.16 6.56 .99 .90 6.83 20
2007 (3.39) .46 217,332 1.25 1.17 5.97 .91 .83 6.31 21
2006 4.19 3.82 227,160 1.16 1.16 5.94 .74 .74 6.35 9
2005 14.98 10.80 231,140 1.16 1.16 5.94 .71 .71 6.39 3
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended
2/28:
2010 32.93 22.17 317,860 1.36 1.17 7.68 1.16 .97 7.88 6
2009(d) (17.58) (12.54) 278,056 1.39* 1.27* 8.50* 1.13* 1.01* 8.75* 9
Year Ended
8/31:
2008 .46 .60 328,659 1.21 1.19 6.96 .90 .88 7.27 23
2007 (4.12) (.32) 343,806 1.22 1.16 6.16 .83 .78 6.54 23
2006 8.50 3.81 362,473 1.16 1.16 6.08 .71 .71 6.53 10
2005 15.75 10.69 369,262 1.17 1.17 6.05 .71 .71 6.50 5
==================================================================================================================================
* Annualized.
** Rounds to less than $.01 per share.
*** For the period December 21, 2009 through February 28, 2010, the average
market value per share was $10.09.
**** Asset coverage per $1 of liquidation preference for Auction Rate Preferred
shares and MuniFund Term Preferred shares equaled $3.04. On a per share
basis, asset coverage is $76,021 and $30.41 for Auction Rate Preferred
shares and MuniFund Term Preferred shares, respectively.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Auction Rate
Preferred shareholders; Net Investment Income ratios reflect income earned
and expenses incurred on assets attributable to Auction Rate Preferred
shares and/or MuniFund Term Preferred shares, where applicable.
(a) 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.
(b) After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
(c) The expense ratios reflect, among other things, payments to MuniFund Term
Preferred shareholders and the interest expense deemed to have been paid
by the Fund on the floating rate certificates issued by the special
purpose trusts for the self-deposited inverse floaters held by the Fund,
both as described in Footnote 1 - MuniFund Term Preferred Shares and
Inverse Floating Rate Securities, respectively.
(d) For the six months ended February 28, 2009.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 99
| Financial
| Highlights (continued)
Selected data for a Common share outstanding throughout each period:
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------------------------------------- -----------------------------
DISTRIBUTIONS DISTRIBUTIONS
FROM NET FROM NET
BEGINNING INVESTMENT CAPITAL INVESTMENT CAPITAL
COMMON NET INCOME TO GAINS TO INCOME TO GAINS TO
SHARE NET REALIZED/ AUCTION RATE AUCTION RATE COMMON COMMON
NET ASSET INVESTMENT UNREALIZED PREFERRED PREFERRED SHARE- SHARE-
VALUE INCOME GAIN (LOSS) SHAREHOLDERS+ SHAREHOLDERS+ TOTAL HOLDERS HOLDERS TOTAL
---------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $ 13.52 $ 1.06 $ 1.01 $ (.04) $ -- $ 2.03 $ (.84) $ -- $(.84)
2009(d) 14.61 .50 (1.07) (.10) (.01) (.68) (.37) (.04) (.41)
Year Ended 8/31:
2008 14.91 1.03 (.33) (.25) (.01) .44 (.72) (.02) (.74)
2007 15.50 1.01 (.57) (.26) --** .18 (.77) --** (.77)
2006 15.81 1.01 (.25) (.22) -- .54 (.85) -- (.85)
2005 15.35 1.01 .52 (.12) -- 1.41 (.90) (.05) (.95)
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 12.85 .85 1.09 -- -- 1.94 (.76) -- (.76)
2009(d) 14.19 .39 (1.32) --** (.01) (.94) (.35) (.05) (.40)
Year Ended 8/31:
2008 14.47 .97 (.30) (.24) -- .43 (.71) -- (.71)
2007 14.92 .96 (.46) (.24) -- .26 (.71) -- (.71)
2006 15.17 .95 (.25) (.21) -- .49 (.74) -- (.74)
2005 14.62 .96 .57 (.13) -- 1.40 (.85) -- (.85)
=================================================================================================================================
DISCOUNT AUCTION RATE PREFERRED SHARES VARIABLE RATE DEMAND PREFERRED SHARES
FROM AT END OF PERIOD AT END OF PERIOD
COMMON ENDING ----------------------------------- --------------------------------------
SHARES COMMON AGGREGATE LIQUIDATION AGGREGATE LIQUIDATION
REPURCHASED SHARE ENDING AMOUNT AND MARKET ASSET AMOUNT AND MARKET ASSET
AND NET ASSET MARKET OUTSTANDING VALUE COVERAGE OUTSTANDING VALUE COVERAGE
RETIRED VALUE VALUE (000) PER SHARE PER SHARE 000) PER SHARE PER SHARE
-------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 $ --** $ 14.71 $13.66 $ 108,250 $ 25,000 $ 76,802 $ -- $ -- $ --
2009(d) --** 13.52 11.16 108,250 25,000 72,683 -- -- --
Year Ended 8/31:
2008 -- 14.61 13.50 118,000 25,000 72,321 -- -- --
2007 -- 14.91 14.24 118,000 25,000 73,289 -- -- --
2006 -- 15.50 15.70 118,000 25,000 75,111 -- -- --
2005 -- 15.81 15.00 118,000 25,000 76,113 -- -- --
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2010 -- 14.03 12.87 -- -- -- 35,500 100,000 332,616
2009(d) -- 12.85 11.75 -- -- -- 35,500 100,000 313,131
Year Ended 8/31:
2008 -- 14.19 13.78 -- -- -- 35,500 100,000 335,299
2007 -- 14.47 14.47 45,000 25,000 72,302 -- -- --
2006 -- 14.92 14.27 45,000 25,000 73,764 -- -- --
2005 -- 15.17 14.38 45,000 25,000 74,595 -- -- --
===============================================================================================================================
100 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++ AFTER REIMBURSEMENT++(b)
---------------------- ---------------------------------- ----------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET EXPENSES EXPENSES NET PORTFOLIO
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT INCLUDING EXCLUDING INVESTMENT TURNOVER
VALUE(a) VALUE(a) SHARES (000) INTEREST(c) INTEREST INCOME INTEREST(c) INTEREST INCOME RATE
------------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended
2/28:
2010 30.55% 15.42% $ 224,301 1.19% 1.16% 7.21% .95% .93% 7.45% 1%
2009(d) (14.22) (4.50) 206,467 1.32* 1.23* 7.36* 1.01* .92* 7.67* 3
Year Ended
8/31:
2008 (.03) 2.98 223,356 1.19 1.19 6.52 .84 .84 6.87 6
2007 (4.64) 1.13 227,923 1.21 1.16 6.12 .79 .74 6.54 12
2006 10.72 3.62 236,525 1.17 1.17 6.12 .71 .71 6.58 3
2005 9.00 9.46 241,254 1.16 1.16 6.06 .72 .72 6.50 4
------------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
Year Ended
2/28:
2010 16.39 15.49 82,579 1.68 1.46 6.11 1.47 1.25 6.32 --***
2009(d) (11.55) (6.42) 75,661 2.57* 1.54* 5.89* 2.27* 1.24* 6.19* 3
Year Ended
8/31:
2008 .12 2.97 83,531 1.33 1.26 6.28 .94 .86 6.67 28
2007 6.35 1.69 85,144 1.27 1.21 5.95 .79 .73 6.43 15
2006 4.56 3.43 87,775 1.22 1.22 5.97 .74 .74 6.45 4
2005 7.46 9.84 89,272 1.21 1.21 5.95 .74 .74 6.42 3
====================================================================================================================================
* Annualized.
** Rounds to less than $.01 per share.
*** Calculates to less than 1%.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Auction Rate
Preferred shareholders; Net Investment Income ratios reflect income earned
and expenses incurred on assets attributable to Auction Rate Preferred
shares and/or Variable Rate Demand Preferred shares, where applicable.
(a) 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.
(b) After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
(c) The expense ratios reflect, among other things, payments to Variable Rate
Demand Preferred shareholders and the interest expense deemed to have been
paid by the Fund on the floating rate certificates issued by the special
purpose trusts for the self-deposited inverse floaters held by the Fund,
both as described in Footnote 1 -Variable Rate Demand Preferred Shares and
Inverse Floating Rate Securities, respectively.
(d) For the six months ended February 28, 2009.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 101
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.
----------------------------------------------------------------------------------------------------------------------------------
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 Consultant;
8/22/40 Chairman of Treasurer and Director, Humanities Council of
333 W. Wacker Drive the Board 1996 199 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 199 1996); Director and Chairman, United Fire
Chicago, IL 60606 Group, a publicly held company; President Pro
Tem of the Board of Regents for the State of
Iowa University System; Director, Gazette
Companies; Life Trustee of Coe College and the
Iowa College Foundation; formerly, Director,
Alliant Energy; formerly, Director, Federal
Reserve Bank of Chicago; formerly, President
and Chief Operating Officer, SCI Financial
Group, Inc., a regional financial services
firm.
o WILLIAM C. HUNTER Dean, Tippie College of Business, University
3/6/48 of Iowa (since 2006); Director (since 2004) of
333 W. Wacker Drive Board Member 2004 199 Xerox Corporation; Director (since 2005), Beta
Chicago, IL 60606 Gamma Sigma International Honor Society;
formerly, Dean and Distinguished Professor 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, 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) as
333 W. Wacker Drive Board Member 2005 199 Chairman, JPMorgan Fleming Asset Management,
Chicago, IL 60606 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 Board of
Directors and member of Investment Committee,
Greater Milwaukee Foundation.
o WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners Ltd., a
9/24/44 real estate investment company; formerly,
333 W. Wacker Drive Board Member 1997 199 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 Association; formerly, member,
Business Advisory Council, Cleveland Federal
Reserve Bank; formerly, Director, Dayton
Development Coalition.
102 Nuveen Investments
----------------------------------------------------------------------------------------------------------------------------------
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 199 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); Director, C2 Options Exchange,
333 W. Wacker Drive Board Member 2007 199 Incorporated (since 2009); Commissioner, New
Chicago, IL 60606 York State Commission on Public Authority
Reform (since 2005); formerly, Chair, New York
Racing Association Oversight Board
(2005-2007).
o TERENCE J. TOTH Director, Legal & General Investment
9/29/59 Management America, Inc. (since 2008);
333 W. Wacker Drive Board Member 2008 199 Managing Partner, Promus Capital (since 2008);
Chicago, IL 60606 formerly, CEO and President, Northern Trust
Global Investments (2004-2007); Executive Vice
President, Quantitative Management &
Securities Lending (2000-2004); 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 Global
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(2) Chief Executive Officer (since July 2007),
6/14/61 Director (since 1999) and Chairman (since
333 W. Wacker Drive Board Member 2008 199 2007) of Nuveen Investments, Inc.; Chief
Chicago, IL 60606 Executive Officer (since 2007) of Nuveen Asset
Management, Nuveen Investments Advisors, Inc.;
President (since 2005) of Nuveen Commodities
Asset Management, LLC.
Nuveen Investments 103
Board Members & Officers (continued)
----------------------------------------------------------------------------------------------------------------------------------
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(3) 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 199 Nuveen Investments, LLC; Managing Director,
Chicago, IL 60606 Officer Associate General Counsel and Assistant
Secretary, of Nuveen Asset Management (since
2002) and of Symphony Asset Management LLC,
(since 2003); Vice President and Assistant
Secretary of NWQ Investment Management
Company, LLC. (since 2002), Nuveen Investments
Advisers Inc. (since 2002), 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.; Managing Director
(since 2005) of Nuveen Commodities Asset
Management, LLC; Chartered Financial Analyst.
o WILLIAM ADAMS IV Executive Vice President of Nuveen
6/9/55 Investments, Inc.; Executive Vice President,
333 W. Wacker Drive Vice President 2007 124 U.S. Structured Products of Nuveen
Chicago, IL 60606 Investments, LLC, (since 1999),; Executive
Vice President (since 2005) of Nuveen
Commodities Asset Management, LLC.
o CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004), previously,
1/11/62 Vice President (1993-2004) of Nuveen
333 W. Wacker Drive Vice President 2007 124 Investments, LLC.
Chicago, IL 60606
o NIZIDA ARRIAGA Senior Vice President of Nuveen Investments,
6/1/68 LLC (since 2010); formerly, Vice President
333 W. Wacker Drive Vice President 2009 199 (2007-2010); previously, Portfolio Manager,
Chicago, IL 60606 Allstate Investments, LLC (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 Nuveen
333 W. Wacker Drive and Assistant 2000 199 Asset Management (since 2005).
Chicago, IL 60606 Secretary
o MARGO L. COOK Executive Vice President (since Oct 2008) of
4/11/64 Nuveen Investments, Inc.; previously, Head of
333 W. Wacker Drive Vice President 2009 199 Institutional Asset Management (2007-2008) of
Chicago, IL 60606 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) of Nuveen
10/24/45 Investments, LLC and Managing Director (since
333 W. Wacker Drive Vice President 1998 199 2005) of Nuveen Asset Management.
Chicago, IL 60606
o STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen Investments,
333 W. Wacker Drive and Controller 1998 199 LLC; Vice President (since 2005) of Nuveen
Chicago, IL 60606 Asset Management; Certified Public Accountant.
o SCOTT S. GRACE Managing Director, Corporate Finance &
8/20/70 Vice President Development, Treasurer (since September 2009)
333 W. Wacker Drive and Treasurer 2009 199 of Nuveen Investments, LLC; Managing Director
Chicago, IL 60606 and Treasurer of Nuveen Asset Management
(since 2009); formerly, Treasurer (2006-2009),
Senior Vice President (2008-2009), previously,
Vice President (2006-2008) of Janus Capital
Group, Inc.; formerly. Senior Associate in
Morgan Stanley's Global Financial Services
Group (2000-2003); Chartered Accountant
Designation.
104 Nuveen Investments
----------------------------------------------------------------------------------------------------------------------------------
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(3) BY OFFICER DURING PAST 5 YEARS
----------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
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 135 Management; previously, Chairman, President
Chicago, IL 60606 and Chief Executive Officer (2002 - 2007) of
Northern Trust Global Advisors, Inc. and Chief
Executive Officer (2007) of Northern Trust
Global Investments Limited; Certified Public
Accountant.
o WALTER M. KELLY Senior Vice President (since 2008), Vice
2/24/70 Chief Compliance President (2006-2008) formerly, Assistant Vice
333 W. Wacker Drive Officer and 2003 199 President and Assistant General Counsel
Chicago, IL 60606 Vice President (2003-2006) of Nuveen Investments, LLC; Senior
Vice President (since 2008), formerly, Vice
President (2006-2008) and Assistant Secretary
(since 2008) of Nuveen Asset Management.
o DAVID J. LAMB Senior Vice President (since 2009), formerly,
3/22/63 Vice President (2000-2009) of Nuveen
333 W. Wacker Drive Vice President 2000 199 Investments, LLC; Vice President (since 2005)
Chicago, IL 60606 of Nuveen Asset Management; Certified Public
Accountant.
o TINA M. LAZAR Senior Vice President (since 2009), formerly,
8/27/61 Vice President of Nuveen Investments, LLC
333 W. Wacker Drive Vice President 2002 199 (1999-2009); Vice President of Nuveen Asset
Chicago, IL 60606 Management (since 2005).
o LARRY W. MARTIN Senior Vice President (since 2010), Assistant
7/27/51 Vice President Secretary and Assistant General Counsel of
333 W. Wacker Drive and Assistant 1988 199 Nuveen 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).
o KEVIN J. MCCARTHY Managing Director (since 2008), formerly, Vice
3/26/66 Vice President President (2007-2008), Nuveen Investments,
333 W. Wacker Drive and Secretary 2007 199 LLC; Managing Director (since 2008), formerly,
Chicago, IL 60606 Vice President, and Assistant Secretary,
Nuveen Asset Management, and Nuveen
Investments Holdings, Inc.; Vice President
(since 2007) and Assistant Secretary, 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).
o JOHN V. MILLER Chief Investment Officer and Managing Director
4/10/67 (since 2007), formerly, Vice President
333 W. Wacker Drive Vice President 2007 135 (2002-2007) of Nuveen Asset Management and
Chicago, IL 60606 Managing Director (since 2007), formerly Vice
President (2002-2007) Nuveen Investments, LLC;
Chartered Financial Analyst.
Nuveen Investments 105
Board Members & Officers (continued)
----------------------------------------------------------------------------------------------------------------------------------
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(3) BY OFFICER DURING PAST 5 YEARS
----------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o GREGORY MINO Senior Vice President (since 2010) of Nuveen
1/4/71 Investments, LLC, formerly Vice President
333 W. Wacker Drive Vice President 2009 199 (2008-2010); previously, Director (2004- 2007)
Chicago, IL 60606 and Executive Director (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 (since
8/1/71 Vice President 2008); Vice President and Assistant Secretary,
333 W. Wacker Drive and Assistant 2008 199 Nuveen Asset Management (since 2008); prior
Chicago, IL 60606 Secretary thereto, Associate, Skadden, Arps, Slate
Meagher & Flom LLP (2002-2008).
o JAMES F. RUANE Vice President, Nuveen Investments, LLC (since
7/3/62 Vice President 2007); prior thereto, Partner, Deloitte &
333 W. Wacker Drive and Assistant 2007 199 Touche USA LLP (2005-2007), formerly, senior
Chicago, IL 60606 Secretary tax manager (2002-2005); Certified Public
Accountant.
o MARK L. WINGET Vice President, Nuveen Investments, LLC (since
12/21/68 Vice President 2008); Vice President and Assistant Secretary,
333 W. Wacker Drive and Assistant 2008 199 Nuveen Asset Management (since 2008); prior
Chicago, IL 60606 Secretary 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) 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.
106 Nuveen Investments
Annual Investment Management Agreement Approval Process
The Investment Company Act of 1940, as amended (the "1940 ACT"), provides, in
substance, that each investment advisory agreement between a fund and its
investment adviser will continue in effect from year to year only if its
continuance is approved at least annually by the fund's board members, including
by a vote of a majority of the board members who are not parties to the advisory
agreement or "interested persons" of any parties (the "INDEPENDENT BOARD
MEMBERS"), cast in person at a meeting called for the purpose of considering
such approval. In connection with such approvals, the fund's board members must
request and evaluate, and the investment adviser is required to furnish, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. Accordingly, at a meeting held on May 27-29, 2009 (the "MAY
MEETING"), the Boards of Trustees or Directors (as the case may be) (each a
"BOARD" and each Trustee or Director, a "BOARD MEMBER") of the Funds, including
a majority of the Independent Board Members, considered and approved the
continuation of the advisory agreements (each an "ADVISORY AGREEMENT") between
each Fund and Nuveen Asset Management ("NAM") for an additional one-year period.
In preparation for their considerations at the May Meeting, the Board also held
a separate meeting on April 21-22, 2009 (the "APRIL MEETING"). Accordingly, the
factors considered and determinations made regarding the renewals by the
Independent Board Members include those made at the April Meeting.
In addition, in evaluating the Advisory Agreements, the Independent Board
Members reviewed a broad range of information relating to the Funds and NAM,
including absolute performance, fee and expense information for the Funds as
well as comparative performance, fee and expense information for a comparable
peer group of funds, the performance information of recognized and/or customized
benchmarks (as applicable) of the Funds, the profitability of Nuveen for its
advisory activities (which includes its wholly owned subsidiaries other than
Winslow Capital Management, Inc. ("WINSLOW CAPITAL"), which was recently
acquired in December 2008), and other information regarding the organization,
personnel, and services provided by NAM. The Independent Board Members also met
quarterly as well as at other times as the need arose during the year and took
into account the information provided at such meetings and the knowledge gained
therefrom. Prior to approving the renewal of the Advisory Agreements, the
Independent Board Members reviewed the foregoing information with their
independent legal counsel and with management, reviewed materials from
independent legal counsel describing applicable law and their duties in
reviewing advisory contracts, and met with independent legal counsel in private
sessions without management present. The Independent Board Members considered
the legal advice provided
Nuveen Investments 107
Annual Investment Management Agreement Approval Process (continued)
by independent legal counsel and relied upon their knowledge of NAM, its
services and the Funds resulting from their meetings and other interactions
throughout the year and their own business judgment in determining the factors
to be considered in evaluating the Advisory Agreements. Each Board Member may
have accorded different weight to the various factors in reaching his or her
conclusions with respect to a Fund's Advisory Agreement. The Independent Board
Members did not identify any single factor as all-important or controlling. The
Independent Board Members' considerations were instead based on a comprehensive
consideration of all the information presented. The principal factors considered
by the Board and its conclusions are described below.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering renewal of the Advisory Agreements, the Independent Board Members
considered the nature, extent and quality of NAM's services, including advisory
services and administrative services. The Independent Board Members reviewed
materials outlining, among other things, NAM's organization and business; the
types of services that NAM or its affiliates provide and are expected to provide
to the Funds; the performance record of the applicable Fund (as described in
further detail below); and any initiatives Nuveen had taken for the applicable
fund product line.
In reviewing the services provided and the initiatives undertaken during the
past year, the Independent Board Members recognized the severe market turmoil
experienced in the capital markets during recent periods, including sustained
periods of high volatility, credit disruption and government intervention. The
Independent Board Members considered NAM's efforts, expertise and other actions
taken to address matters as they arose that impacted the Funds. The Independent
Board Members recognized the role of the Investment Services group which, among
other things, monitors the various positions throughout the Nuveen fund complex
to identify and address any systematic risks. In addition, the Capital Markets
Committee of NAM provides a multi-departmental venue for developing new policies
to mitigate any risks. The Independent Board Members further recognized NAM's
continuous review of the Nuveen funds' investment strategies and mandates in
seeking to continue to refine and improve the investment process for the funds,
particularly in light of market conditions. With respect to closed-end funds
that issued auction rate preferred shares ("ARPS") or that otherwise utilize
leverage, the Independent Board Members noted, in particular, NAM's efforts in
refi-nancing the preferred shares of such funds frozen by the collapse of the
auction rate market and managing leverage during a period of rapid market
declines, particularly for the non-equity funds. Such efforts included
negotiating and maintaining the availability of bank loan facilities and other
sources of credit used for investment purposes or to satisfy liquidity needs,
liquidating portfolio securities during difficult times to meet leverage ratios,
and seeking alternative forms of debt and other leverage that may over time
reduce financing costs associated with ARPs and enable the funds that have
issued ARPs to restore liquidity to ARPs holders. The Independent Board Members
also noted Nuveen's continued commitment and efforts to keep investors and
financial advisers
108 Nuveen Investments
informed as to its progress with the ARPs through, among other things,
conference calls, emails, press releases, information posted on its website, and
telephone calls and in-person meetings with financial advisers. In addition to
the foregoing, the Independent Board Members also noted the additional services
that NAM or its affiliates provide to closed-end funds, including, in
particular, Nuveen's continued commitment to supporting the secondary market for
the common shares of its closed-end funds through a variety of programs designed
to raise investor and analyst awareness and understanding of closed-end funds.
These efforts include maintaining an investor relations program to provide
timely information and education to financial advisers and investors; providing
advertising and marketing for the closed-end funds; maintaining websites; and
providing educational seminars.
As part of their review, the Independent Board Members also evaluated the
background, experience and track record of NAM's investment personnel. In this
regard, the Independent Board Members considered any changes in the personnel,
and the impact on the level of services provided to the Funds, if any. The
Independent Board Members also reviewed information regarding portfolio manager
compensation arrangements to evaluate NAM's ability to attract and retain high
quality investment personnel, preserve stability, and reward performance but not
provide an incentive for taking undue risks.
In addition to advisory services, the Independent Board Members considered the
quality of administrative services provided by NAM and its affiliates including
product management, fund administration, oversight of service providers,
shareholder services, administration of Board relations, regulatory and
portfolio compliance and legal support. Given the importance of compliance, the
Independent Board Members considered NAM's compliance program, including the
report of the chief compliance officer regarding the Funds' compliance policies
and procedures.
Based on their review, the Independent Board Members found that, overall, the
nature, extent and quality of services provided (and expected to be provided) to
the respective Funds under the Advisory Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
The Board considered the investment performance of each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives (the "PERFORMANCE PEER GROUP") based on data
provided by an independent provider of mutual fund data as well as recognized
and/or customized benchmarks (as applicable). The Independent Board Members
reviewed performance information including, among other things, total return
information compared with the Fund's Performance Peer Group and recognized
and/or customized benchmarks (as applicable) for the quarter-, one-, three- and
five-year periods (as applicable) ending December 31, 2008 and for the same
periods (as applicable) ending March 31, 2009. The Independent Board Members
also reviewed performance information of the Nuveen municipal funds managed by
NAM in the aggregate ranked by peer group and
Nuveen Investments 109
Annual Investment Management Agreement Approval Process (continued)
the performance of such funds, in the aggregate, relative to their benchmark.
This information supplemented the Fund performance information provided to the
Board at each of its quarterly meetings.
In comparing a fund's performance with that of its Performance Peer Group, the
Independent Board Members took into account that the closest Performance Peer
Group in certain instances may not adequately reflect the respective fund's
investment objectives and strategies thereby hindering a meaningful comparison
of the fund's performance with that of the Performance Peer Group. The
Independent Board Members further considered the performance of the Funds in the
context of the volatile market conditions during the past year, and their impact
on various asset classes and the portfolio management of the Funds.
Based on their review and factoring in the severity of market turmoil in 2008,
the Independent Board Members determined that each Fund's investment performance
over time had been satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
The Board evaluated the management fees and expenses of each Fund
reviewing, among other things, such Fund's gross management fees, net
management fees and total expense ratios (before and after expense
reimbursements and/or waivers) in absolute terms as well as compared to
the fee and expenses of a comparable universe of unaffiliated funds based
on data provided by an independent fund data provider (the "PEER
UNIVERSE") and in certain cases, to a more focused subset of funds in the
Peer Universe (the "PEER GROUP").
The Independent Board Members further reviewed data regarding the
construction of the applicable Peer Universe and Peer Group. In reviewing
the comparisons of fee and expense information, the Independent Board
Members took into account that in certain instances various factors such
as the asset level of a fund relative to peers, the size and particular
composition of the Peer Universe or Peer Group, the investment objectives
of the peers, expense anomalies, changes in the funds comprising the Peer
Universe or Peer Group from year to year, levels of reimbursement and the
timing of information used may impact the comparative data, thereby
limiting the ability to make a meaningful comparison. In addition, the
Independent Board Members also considered, among other things, the
differences in the use and type of leverage compared to the peers. The
Independent Board Members also considered the differences in the states
reflected in the respective Peer Group. In reviewing the fee schedule for
a Fund, the Independent Board Members also considered the fund-level and
complex-wide breakpoint schedules (described in further detail below) and
any fee waivers and reimbursements provided by Nuveen (applicable, in
particular, for certain closed-end funds launched since 1999).
110 Nuveen Investments
Based on their review of the fee and expense information provided, the
Independent Board Members determined that each Fund's management fees and
net total expense ratio were reasonable in light of the nature, extent and
quality of services provided to the Fund.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Independent Board Members further reviewed information regarding the
nature of services and fee rates offered by NAM to other clients. Such
other clients include NAM's municipal separately managed accounts. In
evaluating the comparisons of fees, the Independent Board Members noted
that the fee rates charged to the Funds and other clients vary, among
other things, because of the different services involved and the
additional regulatory and compliance requirements associated with
registered investment companies, such as the Funds. Accordingly, the
Independent Board Members considered the differences in the product types,
including, but not limited to, the services provided, the structure and
operations, product distribution and costs thereof, portfolio investment
policies, investor profiles, account sizes and regulatory requirements.
The Independent Board Members noted, in particular, that the range of
services provided to the Funds (as discussed above) is much more extensive
than that provided to separately managed accounts. Given the inherent
differences in the products, particularly the extensive services provided
to the Funds, the Independent Board Members believe such facts justify the
different levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Independent Board Members also
considered the profitability of Nuveen for its advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers other than
Winslow Capital) and its financial condition. The Independent Board
Members reviewed the revenues and expenses of Nuveen's advisory activities
for the last two years, the allocation methodology used in preparing the
profitability data and an analysis of the key drivers behind the changes
in revenues and expenses that impacted profitability in 2008. In addition,
the Independent Board Members reviewed information regarding the financial
results of Nuveen for 2008 based on its Form 8-K filed on March 31, 2009.
The Independent Board Members noted this information supplemented the
profitability information requested and received during the year to help
keep them apprised of developments affecting profitability (such as
changes in fee waivers and expense reimbursement commitments). In this
regard, the Independent Board Members noted that they had also appointed
an Independent Board Member as a point person to review and keep them
apprised of changes to the profitability analysis and/or methodologies
during the year. The Independent Board Members also considered Nuveen's
revenues for advisory activities, expenses, and profit margin compared to
that of various unaffiliated management firms with similar amounts of
Nuveen Investments 111
Annual Investment Management Agreement Approval Process (continued)
assets under management and relatively comparable asset composition
prepared by Nuveen.
In reviewing profitability, the Independent Board Members recognized the
subjective nature of determining profitability which may be affected by
numerous factors including the allocation of expenses. Further, the
Independent Board Members recognized the difficulties in making
comparisons as the profitability of other advisers generally is not
publicly available and the profitability information that is available for
certain advisers or management firms may not be representative of the
industry and may be affected by, among other things, the adviser's
particular business mix, capital costs, types of funds managed and expense
allocations. Notwithstanding the foregoing, the Independent Board Members
reviewed Nuveen's methodology and assumptions for allocating expenses
across product lines to determine profitability. In reviewing
profitability, the Independent Board Members recognized Nuveen's
investment in its fund business.
Based on their review, the Independent Board Members concluded that
Nuveen's level of profitability for its advisory activities was reasonable
in light of the services provided.
In evaluating the reasonableness of the compensation, the Independent
Board Members also considered other amounts paid to NAM by the Funds as
well as any indirect benefits (such as soft dollar arrangements, if any)
NAM and its affiliates receive, or are expected to receive, that are
directly attributable to the management of the Funds, if any. See Section
E below for additional information on indirect benefits NAM may receive as
a result of its relationship with the Funds. Based on their review of the
overall fee arrangements of each Fund, the Independent Board Members
determined that the advisory fees and expenses of the respective Fund were
reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Independent Board Members have
recognized the potential benefits resulting from the costs of a fund being
spread over a larger asset base, although economies of scale are difficult to
measure and predict with precision, particularly on a fund-by-fund basis. One
method to help ensure the shareholders share in these benefits is to include
breakpoints in the advisory fee schedule. Generally, management fees for funds
in the Nuveen complex are comprised of a fund-level component and a
complex-level component, subject to certain exceptions. Accordingly, the
Independent Board Members reviewed and considered the applicable fund-level
breakpoints in the advisory fee schedules that reduce advisory fees as asset
levels increase. In this regard, the Independent Board Members noted that
although closed-end funds may from time-to-time make additional share offerings,
the growth of their assets will occur primarily through the appreciation of such
funds' investment portfolio.
112 Nuveen Investments
While economies of scale result when costs can be spread over a larger asset
base, the Independent Board Members also recognized that the asset levels
generally declined in 2008 due to, among other things, the market downturn.
Accordingly, for funds with a reduction in assets under management, advisory fee
levels may have increased as breakpoints in the fee schedule were no longer
surpassed.
In addition to fund-level advisory fee breakpoints, the Board also considered
the Funds' complex-wide fee arrangement. Pursuant to the complex-wide fee
arrangement, the fees of the funds in the Nuveen complex generally are reduced
as the assets in the fund complex reach certain levels. The complex-wide fee
arrangement seeks to provide the benefits of economies of scale to fund
shareholders when total fund complex assets increase, even if assets of a
particular fund are unchanged or have decreased. The approach reflects the
notion that some of Nuveen's costs are attributable to services provided to all
its funds in the complex and therefore all funds benefit if these costs are
spread over a larger asset base. Generally, the complex-wide pricing reduces
Nuveen's revenue because total complex fund assets have consistently grown in
prior years. As noted, however, total fund assets declined in 2008 resulting in
a smaller downward adjustment of revenues due to complex-wide pricing compared
to the prior year.
Based on their review, the Independent Board Members concluded that the
breakpoint schedules and complex-wide fee arrangement were acceptable and
reflect economies of scale to be shared with shareholders when assets under
management increase.
E. INDIRECT BENEFITS
In evaluating fees, the Independent Board Members received and considered
information regarding potential "fall out" or ancillary benefits NAM or its
affiliates may receive as a result of its relationship with each Fund. In this
regard, the Independent Board Members considered revenues received by affiliates
of NAM for serving as agent at Nuveen's trading desk.
In addition to the above, the Independent Board Members considered whether NAM
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to NAM in managing the assets of the Funds and other clients. The
Independent Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
Based on their review, the Independent Board Members concluded that any indirect
benefits received by NAM as a result of its relationship with the Funds were
reasonable and within acceptable parameters.
Nuveen Investments 113
Annual Investment Management Agreement Approval Process (continued)
F. OTHER CONSIDERATIONS
The Independent Board Members did not identify any single factor discussed
previously as all-important or controlling. The Board Members, including the
Independent Board Members, unanimously concluded that the terms of the Advisory
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the Advisory Agreements be renewed.
114 Nuveen Investments
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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
Nuveen Investments 115
Reinvest Automatically Easily and Conveniently (continued)
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
116 Nuveen Investments
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 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, also known as inverse
floaters, 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.
Nuveen Investments 117
Glossary of Terms Used in this Report (continued)
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 PRE-REFUNDING: Pre-refunding, also known as advanced refundings or
refinancings, is a procedure used by state and local governments to
refinance municipal bonds to lower interest expenses. The issuer sells new
bonds with a lower yield and uses the proceeds to buy U.S. Treasury
securities, the interest from which is used to make payments on the
higher-yielding bonds. Because of this collateral, pre-refunding generally
raises a bond's credit rating and thus its value.
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.
118 Nuveen Investments
Notes
Nuveen Investments 119
Notes
120 Nuveen Investments
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, 2009, 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 SEC 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 SHARES
FUND REPURCHASED REDEEMED
NPC 11,500 --
NCL 11,700 --
NCU 27,400 260
NAC -- --
NVX 32,400 649
NZH -- 3,383
NKL 13,700 --
NKX -- --
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
Nuveen Investments 121
Nuveen Investments:
Serving Investors for Generations
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions through continued
adherence to proven, longterm investing principles. Today, we offer a range of
high quality equity and fixed-income solutions designed to be integral
components of a well-diversified core portfolio.
FOCUSED ON MEETING INVESTOR 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. We market our growing
range of specialized investment solutions under the high-quality brands of
HydePark, NWQ, Nuveen, Santa Barbara, Symphony, Tradewinds and Winslow Capital.
In total, Nuveen Investments managed approximately $145 billion of assets on
December 31, 2009.
FIND OUT HOW WE CAN HELP YOU.
To learn more about how the products and services of Nuveen Investments may be
able to help you meet your financial goals, talk to your financial advisor, or
call us at (800) 257-8787. Please read the information provided carefully before
you invest. Investors should consider the investment objective and policies,
risk considerations, charges and expenses of any investment carefully. Where
applicable, be sure to obtain a prospectus, which contains this and other
relevant information. To obtain 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
o Share prices
o Fund details
o Daily financial news
o Investor education
o Interactive planning tools
Distributed by
Nuveen Investments, LLC
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com
EAN-B-0210D
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, 2010 $ 11,198 $ 0 $ 0 $ 0
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
February 28, 2009 (5) $ 11,059 $ 0 $ 0 $ 850
------------------------------------------------------------------------------------------------------------------------------------
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, 2010 $ 0 $ 0 $ 0
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
February 28, 2009 (1) $ 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, 2010 $ 0 $ 0 $ 0 $ 0
February 28, 2009 (1) $ 850 $ 0 $ 0 $ 850
"Non-Audit Fees billed to Fund" for both fiscal year ends represent "Tax Fees"
and "All Other Fees" billed to Fund 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.
a) See Portfolio of Investments in Item 1.
b) Not applicable.
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:
NUMBER OF
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS*
--------------------------------------------------------------------------------
Scott R. Romans Registered Investment Company 29 $5.663 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 6 $1.6 million
* Assets are as of February 28, 2010. 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 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, 2010, the
S&P/Investortools Municipal Bond index was comprised of 54,637 securities with
an aggregate current market value of $1,176 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 lead 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. In
addition, in July 2009, Nuveen Investments created and funded a trust, as part
of a newly-established incentive program, which purchased shares of certain
Nuveen Mutual Funds and awarded such shares, subject to vesting, to certain
employees, including portfolio managers.
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, 2010, 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
DOLLAR BENEFICIALLY OWNED
RANGE OF IN THE REMAINDER OF
EQUITY NUVEEN FUNDS
SECURITIES MANAGED BY 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 $0
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 30 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
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By (Signature and Title) /s/ Kevin J. McCarthy
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Kevin J. McCarthy
Vice President and Secretary
Date: May 6, 2010
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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
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: May 6, 2010
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By (Signature and Title) /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: May 6, 2010
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