SEMIANNUAL REPORT February 28, 2003
Nuveen
Municipal Closed-End
Exchange-Traded
Funds
CALIFORNIA
NPC
NCL
NCU
NAC
NVX
NZH
NKL
NKX
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DEPENDABLE,
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IT'S NOT WHAT YOU EARN,
IT'S WHAT YOU KEEP.(R)
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Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
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Dear
SHAREHOLDER
Once again, I am pleased to write that during the period covered by this report
your Nuveen California Fund continued to meet its objective of providing
attractive monthly income free from federal income taxes and, where applicable,
state income taxes. Detailed information on your Fund's performance can be found
in the Portfolio Managers' Comments and on the Performance Overview pages within
this report. Please take the time to read them.
In addition to providing regular tax-free income, we believe that a municipal
bond investment like your Nuveen Fund also may offer opportunities to reduce the
risk of your overall investment portfolio. This is because the prices of
municipal bonds may move differently than the prices of the common stocks,
mutual funds or other investments you may own. Since one part of your portfolio
may be going up when another is going down, portfolio diversification may reduce
your overall risk. Your financial advisor can explain the advantages of
portfolio diversification in more detail. I urge you to contact him or her soon
for more information on this important investment strategy.
I also urge you to consider receiving future Fund reports and other Fund
information by e-mail and the Internet. Not only will you be able
to receive the information faster, but this also may help lower your Fund's
expenses. Sign up is quick and easy -- see the inside front cover of this report
for step-by-step instructions.
For more than 100 years, Nuveen has specialized in offering quality investments
such as your Nuveen Fund to those seeking to accumulate and preserve wealth. Our
commitment to careful research, constant surveillance and judicious trading by a
seasoned portfolio management team has never been stronger. Our mission
continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you meet your financial
objectives. We thank you for choosing us as a partner as you work toward that
goal.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 14, 2003
1
Nuveen California Municipal Closed-End Exchange-Traded Funds
(NPC, NCL, NCU, NAC, NVX, NZH, NKL, NKX)
Portfolio Managers'
COMMENTS
Portfolio managers Bill Fitzgerald, Scott Romans and Tom O'Shaughnessy review
U.S. and state economic conditions, key investment strategies, and the recent
performance of the Funds. With 15 years of investment management experience at
Nuveen, Bill has managed NCU since 1998, NAC since 1999, NVX and NZH since 2001,
and NKL and NKX since their inceptions in March and November 2002, respectively.
Scott, who has three years of investment experience at Nuveen, joined Bill in
managing these six Funds in January 2003. Tom, who has 20 years of investment
experience, assumed portfolio management responsibility for NPC and NCL in
January 2003.
WHAT WERE THE MAJOR FACTORS AFFECTING THE U.S. ECONOMY AND THE MUNICIPAL MARKET
DURING THIS REPORTING PERIOD?
Generally, the underlying economic and market conditions have not changed
significantly since our last shareholder report dated August 31, 2002. We
believe the most influential factors shaping the U.S. economy and the municipal
market continued to be the slow pace of economic growth and interest rates that
remained at 40-year lows. At the same time, continued geopolitical uncertainty,
centering on the situation in Iraq and the ongoing threat of terrorism, also had
an economic impact during this reporting period, particularly in terms of
investor sentiment.
In the municipal market, the sluggish economic recovery and general lack of
inflationary pressures created conditions that helped many bonds perform well
during much of the period ended February 28, 2003. In calendar year 2002,
municipal supply nationwide established a new record of $357 billion, an
increase of 25% over 2001. Issuance remained high during January and February
2003, up 23% over the same period in 2002. Demand for municipal bonds stayed
strong over most of this reporting period as institutional investors, including
traditional municipal bond purchasers such as property/casualty insurance
companies were active buyers in the municipal market.
HOW WERE ECONOMIC AND MARKET CONDITIONS IN CALIFORNIA?
Municipal supply continued to be very strong in California during 2002, with $50
billion of new bonds, an increase of 50% over 2001. Issuance in the first two
months of 2003 totaled $11.5 billion, up 136% over January-February 2002. This
dramatic increase in supply has largely been driven by shortfalls in the state
budget, and the low level of interest rates. In November 2002, the state
completed the issuance of nearly $12 billion in electric power bonds. The
proceeds from this issue were used to repay the $6.3 billion loan from
California's general fund that financed purchases for the state's investor-owned
utilities during the power crisis in 2001.
While the proceeds from the power bonds helped to mitigate an eroding credit
outlook, California still faces significant budget problems, due chiefly to
increased expenditures and revenue shortfalls resulting from income tax
collections that fell below projections. In December 2002, Governor Gray Davis
announced a projected budget deficit for the combined fiscal years 2003-2004 of
$35 billion, the highest in the nation. This announcement
2
prompted both Standard & Poor's and Fitch to downgrade the state's credit rating
to A/A from A+/AA, respectively. In February 2003, as it became apparent that
progress toward closing the budget gap was moving very slowly, Moody's also
downgraded the state to A2 from A1.
Job growth in the state during 2002 was negligible, with gains posted by the
government and wholesale/ retail trade sectors largely offset by losses in
manufacturing and business services. Although the state economy continues to
benefit from diversity, we think a solid recovery in California remains largely
dependent on increases in business spending as well as on a strong global
recovery, since exports - mainly to Asia, Canada, and Mexico - represent 12% of
the state's economy. Aided by a generally solid residential real estate market,
the economy of southern California continued to be relatively stable compared
with that of the northern half of the state, where the downturn in technology
continued to restrain economic growth.
At the present time, California appears to be at a low point in the credit
cycle, with the pace of economic improvement to be determined by the pace of
progress in addressing state budget issues. We believe that the current
determination to address the deficit seems to be greater than in the past, but
it may take two to three years for the governor and legislature to find a
resolution for the imbalance between California's revenues and expenditures.
HOW DID THESE FUNDS PERFORM OVER THE TWELVE MONTHS ENDED FEBRUARY 28, 2003?
Individual results for the Funds, as well as appropriate benchmarks, are
presented in the accompanying table.
LEHMAN LIPPER
TOTAL RETURN CALIFORNIA CALIFORNIA
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
----------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
2/28/03 EQUIVALENT3 2/28/03 2/28/03 2/28/03
----------------------------------------------------------------------
NPC 5.66% 8.91% 9.56% 7.13% 7.97%
----------------------------------------------------------------------
NCL 5.88% 9.26% 8.88% 7.13% 7.97%
----------------------------------------------------------------------
NCU 6.43% 10.13% 8.29% 6.70% 8.10%
----------------------------------------------------------------------
NAC 6.55% 10.31% 10.12% 6.70% 8.10%
----------------------------------------------------------------------
NVX 6.53% 10.28% 7.94% 6.70% 8.10%
----------------------------------------------------------------------
NZH 6.58% 10.36% 8.58% 6.70% 8.10%
----------------------------------------------------------------------
NKL 6.21% 9.78% NA - -
----------------------------------------------------------------------
NKX 6.21% 9.78% NA - -
----------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the twelve months ended February 28, 2003, all of the Funds with at least
one year of performance history outperformed their respective unmanaged,
unleveraged Lehman Index, and either outperformed or performed in line with
their respective Lipper peer group averages. When comparing with the Lehman
Indexes, much of the Nuveen Fund outperformance can be attributed to the
leveraged structure of these Funds, which can provide the opportunity for
additional income for common shareholders as well as net asset value
appreciation when short-term interest rates are low or bond prices are falling -
as was the case during much of the measurement period.
In addition to leverage, the relative performances of these Nuveen Funds were
influenced by factors including call exposure, portfolio trading activity, and
the price movement of specific sectors and holdings. For example, NVX held $5.5
million (par value) of bonds backed by United Air Lines that were issued to
support a cargo facility at Los Angeles International Airport. During the year,
the market value of most airline-backed bonds fell, due in part to a decline in
passenger volume and in part to the market's expectation of
1 The total annual returns on common share net asset value (NAV) for NPC and
NCL are compared with the total annual return of the Lehman Brothers
California Insured Tax-Exempt Bond Index, an unleveraged index comprising a
broad range of insured California municipal bonds, while the annual returns
for NCU, NAC, NVX, and NZH are compared with the annual return of the
Lehman California Tax-Exempt Bond Index, an unleveraged index comprising a
broad range of investment-grade California municipal bonds. Results for the
Lehman indexes do not reflect any expenses.
2 The total returns of NPC and NCL are compared with the average annualized
return of the 8 funds in the Lipper California Insured Municipal Debt Funds
category, while the total returns for NCU, NAC, NVX, and NZH are compared
with the return of the 25 funds in the Lipper California Municipal Debt
Funds category. Fund and Lipper returns assume reinvestment of dividends.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a combined federal and state income tax
rate of 36.5%.
3
a bankruptcy filing by United, which took place in December 2002. Over the
twelve months ended February 28, 2003, the NVX position depreciated 70%, costing
the Fund approximately 60 basis points in total return performance.
HOW DID THE MARKET ENVIRONMENT AFFECT THE FUNDS' DIVIDENDS AND SHARE PRICES?
As short-term interest rates remained at historically low levels, the
dividend-paying capabilities of these Funds benefited from their use of
leverage, a strategy that can potentially enhance the dividends paid to common
shareholders. The amount of this benefit is tied in part to the short-term rates
the Funds pay their MuniPreferred(R) shareholders. Low short-term rates can
enable the Funds to reduce the amount of income they pay preferred shareholders,
which can leave more earnings to support common share dividends.
During the twelve months ended February 28, 2003, the low short-term interest
rate environment enabled us to implement three dividend increases in NCL and
NAC, two in NPC and NCU, and one in NVX. NZH and NKL have paid steady,
attractive monthly dividends since their first distributions in November 2001
and May 2002, respectively. NKX declared its first dividend in January 2003.
Over the course of this twelve-month period, the share prices of these Funds
were affected by a general weakening of bond prices during the fourth quarter of
2002, although we saw some recovery by February 2003. Overall, only NCL was
trading on February 28, 2003 at a share price higher than one year earlier. (see
charts on individual Performance Overview pages).
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE NUVEEN FUNDS DURING THE PERIOD
ENDED FEBRUARY 28, 2003?
Over this reporting period, our strategic focus across both the insured and
non-insured Funds continued to be on diversifying the portfolios, enhancing call
protection, and positioning the Funds more defensively in anticipation of
potential changes in the interest rate environment. Given the recent steepness
of the municipal yield curve, we concentrated on finding value in the
long-intermediate part of the curve (i.e., bonds that mature 15 to 20 years from
now). In many cases, bonds in this part of the curve were offering yields
similar to those of longer term bonds but, in our opinion, had less inherent
interest rate risk. The purchase of these long-intermediate bonds helped to
moderate the durations4 of these Funds (with the exception of NPC), making their
portfolios less sensitive to interest rate changes while still allowing them to
provide competitive yields and returns. In NPC, where the proceeds from a number
of bond calls had to be reinvested, the addition of bonds from the 15- to
20-year part of the yield curve actually led to a modest lengthening of
duration.
Given the slow economic growth over the reporting period, we also were taking
into consideration scenarios in which interest rates could stay relatively low
for a number of months. We believe that structuring the portfolios with bonds
offering maturities of 15 to 20 years helps to prepare the Funds for this
eventuality as well.
We sold out of some positions in California GOs in March 2001, with the
exception of some shorter-term bonds that we believed were not at risk.
Recently, however, we have begun to rebuild small positions in these bonds in
several of the
4 Duration is a measure of a Fund's NAV volatility in reaction to interest
rate movements. Fund duration, also known as leverage-adjusted duration,
takes into account the leveraging process for a Fund and therefore is
generally longer than the duration of the actual portfolio of individual
bonds that make up the Fund. References to duration in this commentary are
intended to indicate Fund duration unless otherwise noted.
4
Funds because we believe these bonds represent an opportunity to add attractive
yields at favorable prices.
Over the past year, the heavy issuance in the California market provided us with
increased opportunities to negotiate and obtain the types of bond structures
that we favor, especially as we worked to reduce the Funds' duration's against
the risk of rising inflation or interest rates. We also continued to look for
individual issues that we believed would perform well regardless of the future
direction of interest rates. From a sector perspective, our portfolios continued
to hold positions in healthcare bonds, which were the top performing group among
the Lehman revenue sectors for the twelve months ended February 28, 2003. We
think that credit spreads in this sector have been wider than warranted,
representing an opportunity to purchase uninsured bonds that can support and
potentially enhance the yields of NCU, NAC, NVX, and NZH. We also maintained a
position in uninsured public power bonds, especially those issued by municipal
entities with their own power plants and distribution systems. Such entities
have actually benefited from the increased cost of energy, which we believe
could continue to rise through 2003, and these bonds have performed relatively
well. Based on a general improvement in the credit quality of corporate bonds,
the non-insured Funds also looked for opportunities in the industrial
development sector.
In the current geopolitical and economic climate, we believe that maintaining
strong credit quality remains a vital requirement. As of February 28, 2003, each
of the four non-insured Funds continued to offer excellent credit quality, with
allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 57% to 78%.
Among the four insured Funds, both NPC and NCL were 100% invested in U.S.
guaranteed and/or insured bonds, while NKL and NKX held 90% and 81%,
respectively, of their portfolios in insured securities. In general, our
holdings of insured and higher quality bonds benefited the performance of all of
these Funds during the past year.
In November 2002, we introduced the new Nuveen Insured California Tax-Free
Advantage Municipal Fund (NKX). This Fund is now fully invested. Due to robust
supply in the California municipal market, we were able to structure NKX
entirely with California securities, except for one relatively small position in
Puerto Rico bonds. Although NKX is predominantly invested in insured bonds, the
Fund is allowed to invest up to 20% in uninsured investment-grade quality
securities, with the goal of enhancing the Fund's yield. In addition, NKX cannot
hold any bonds whose income is subject to the federal Alternative Minimum Tax.
As mentioned earlier, NKX paid its first dividend earlier this year, and we
believe the Fund is in an excellent position to pay attractive monthly dividends
going forward.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN GENERAL AND THE NUVEEN
CALIFORNIA FUNDS IN PARTICULAR?
Our outlook for these markets remains generally positive. We continue to believe
the U.S. economy is slowly heading for an eventual recovery, but one that may be
less robust than some originally anticipated. Inflation and interest rates
should remain relatively low over the near term, although inflation could be
temporarily impacted by war-induced increases in oil prices.
5
In the municipal market, we think new issuance volume nationally will remain
strong as issuers continue to take advantage of the low rate environment. Given
California's current budget deficit and the state's continued need for spending
on infrastructure and education, we expect to see significant issuance of new
municipal debt in the state. Over coming months, we will continue to closely
monitor the budgetary situation in California to assess the potential effect of
the balancing process on the state's cities, counties, and agencies and to watch
for any further impact on the state's credit rating.
Looking at the potential for bond calls among these California Funds, the five
newer Funds, all established between 1999 and 2002, do not face any significant
call exposure for several years. Among the three older Funds, we have worked
over the past year to mitigate the number of potential calls. As of February 28,
2003, the percentage of bonds eligible for calls during 2003 and 2004 ranged
from 13% in NPC to 18% in NCL and 22% in NCU. Some of the bonds identified as
callable in NPC and NCL are priced to call dates in 2003 and 2004, but we think
it is unlikely they will all actually be called because in many cases the bonds'
relatively low coupons would not make it economical for the issuer to do so. For
NCU, we believe that the majority of these eligible to be called will, in fact,
be called, and we are systematically reducing our holdings of these shorter
maturity bonds and repositioning the Fund with bonds that mature in 15 to 20
years. By selling the callable bonds in NCU's portfolio before they are called,
we can blend in current interest rates and help to mitigate call risk for
shareholders.
In coming months, we will be closely watching several areas of the market,
including progress toward resolution of the California budget deficit, the
credit environment in the state, areas of supply and demand, and the direction
of interest rates and inflation. We expect the state budget issue to be resolved
very slowly, and we think in the long run this represents an opportunity to add
California GOs to our non-insured portfolios. Because we believe the credit
environment could continue to be difficult, credit will also remain a primary
focus in selecting issues for our non-insured portfolios, with a continued move
toward higher quality securities. In general, we plan to remain focused on
strategies that can add value for our shareholders and provide support for the
Funds' long-term dividend-payment capabilities.
6
Nuveen Insured California Premium Income Municipal Fund, Inc.
Performance
OVERVIEW As of February 28, 2003
NPC
PIE CHART:
CREDIT QUALITY
INSURED 81%
U.S. GUARANTEED 19%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.80
--------------------------------------------------
Common Share Net Asset Value $16.24
--------------------------------------------------
Market Yield 5.66%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.09%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.91%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $104,544
--------------------------------------------------
Average Effective Maturity (Years) 21.20
--------------------------------------------------
Leverage-Adjusted Duration 10.24
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 11/92)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 6.05% 9.56%
--------------------------------------------------
5-Year 6.04% 6.03%
--------------------------------------------------
10-Year 6.50% 6.77%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 23%
--------------------------------------------------
U.S. Guaranteed 19%
--------------------------------------------------
Tax Obligation/Limited 16%
--------------------------------------------------
Water and Sewer 13%
--------------------------------------------------
Healthcare 7%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
3/02 0.0725
4/02 0.0725
5/02 0.0725
6/02 0.0725
7/02 0.0725
8/02 0.0725
9/02 0.0735
10/02 0.0735
11/02 0.0735
12/02 0.0745
1/03 0.0745
2/03 0.0745
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 15.9
15.75
15.25
14.84
14.78
14.83
14.95
15.1
15.23
15.35
15.5
15.49
15.44
15.51
15.77
15.5
15.54
15.6
16.05
16.09
15.95
15.75
16.05
16.05
16
16.2
15.85
16.09
16.21
16.26
16.45
16.35
16.29
15.49
15
15.3
15.15
15.1
15
15
15.4
15.27
15.46
15.72
15.66
15.35
15.3
15.8
15.86
15.95
15.88
15.71
2/28/03 15.8
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2002 of $0.1419 per share.
7
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Performance
OVERVIEW As of February 28, 2003
NCL
PIE CHART:
CREDIT QUALITY
INSURED 89%
INSURED AND U.S. GUARANTEED 8%
U.S. GUARANTEED 3%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.00
--------------------------------------------------
Common Share Net Asset Value $15.23
--------------------------------------------------
Market Yield 5.88%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.40%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 9.26%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $192,826
--------------------------------------------------
Average Effective Maturity (Years) 17.09
--------------------------------------------------
Leverage-Adjusted Duration 7.02
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 3/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 7.40% 8.88%
--------------------------------------------------
5-Year 6.33% 6.56%
--------------------------------------------------
Since Inception 5.87% 6.55%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 36%
--------------------------------------------------
Tax Obligation/General 14%
--------------------------------------------------
U.S. Guaranteed 11%
--------------------------------------------------
Utilities 9%
--------------------------------------------------
Education and Civic Organizations 7%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
3/02 0.07
4/02 0.07
5/02 0.07
6/02 0.0715
7/02 0.0715
8/02 0.0715
9/02 0.0725
10/02 0.0725
11/02 0.0725
12/02 0.0735
1/03 0.0735
2/03 0.0735
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 14.85
14.85
14.21
14.05
13.9
14.09
14.08
14.25
14.45
14.7
14.6
14.7
14.66
14.7
14.85
14.74
14.75
14.93
15.23
15.37
15.47
15.23
15.3
15.32
15.16
14.98
14.8
15.05
15.22
15.26
15.74
15.67
15.58
15
14.48
14.43
14.71
14.52
14.55
14.51
14.73
14.55
14.62
14.99
15.21
14.93
14.86
14.91
15.03
14.93
14.9
15.25
2/28/03 15
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It is
calculated using the current market yield and a federal income tax rate of
30%. The rate shown for federal and state highlights the added value of owning
shares that are also exempt from state income taxes. It is based on a combined
federal and state income tax rate of 36.5%.
8
Nuveen California Premium Income Municipal Fund
Performance
OVERVIEW As of February 28, 2003
NCU
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 63%
AA 10%
A 7%
BBB 6%
NR 7%
BB OR LOWER 7%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $13.35
--------------------------------------------------
Common Share Net Asset Value $14.41
--------------------------------------------------
Market Yield 6.43%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.19%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 10.13%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $83,233
--------------------------------------------------
Average Effective Maturity (Years) 17.15
--------------------------------------------------
Leverage-Adjusted Duration 10.51
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 6/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 1.87% 8.29%
--------------------------------------------------
5-Year 4.91% 6.48%
--------------------------------------------------
Since Inception 4.84% 6.20%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 33%
--------------------------------------------------
Healthcare 14%
--------------------------------------------------
Housing/Multifamily 11%
--------------------------------------------------
Tax Obligation/General 10%
--------------------------------------------------
Utilities 9%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
3/02 0.069
4/02 0.069
5/02 0.069
6/02 0.0705
7/02 0.0705
8/02 0.0705
9/02 0.0715
10/02 0.0715
11/02 0.0715
12/02 0.0715
1/03 0.0715
2/03 0.0715
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 13.98
13.75
13.6
13.25
13.12
13.27
13.3
13.37
13.39
13.68
13.7
13.88
13.5
13.8
14
13.9
13.9
13.83
14
14.13
14.1
14.09
14.15
14.17
14.2
13.85
14
14.17
14.47
14.4
14.54
14.9
14.75
13.8
13.56
13.65
13.82
13.64
13.93
13.72
13.85
13.7
13.59
13.95
14.05
14.05
13.75
13.67
13.31
13.48
13.3
13.4
2/28/03 13.35
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 2002 of $0.0065 per share.
9
Nuveen California Dividend Advantage Municipal Fund
Performance
OVERVIEW As of February 28, 2003
NAC
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 51%
AA 6%
A 20%
BBB 16%
NR 7%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.11
--------------------------------------------------
Common Share Net Asset Value $15.45
--------------------------------------------------
Market Yield 6.55%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.36%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 10.31%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $361,822
--------------------------------------------------
Average Effective Maturity (Years) 20.13
--------------------------------------------------
Leverage-Adjusted Duration 10.79
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 5/99)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 4.40% 10.12%
--------------------------------------------------
Since Inception 4.48% 8.21%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 24%
--------------------------------------------------
Transportation 16%
--------------------------------------------------
Healthcare 10%
--------------------------------------------------
Housing/Multifamily 10%
--------------------------------------------------
Tax Obligation/General 10%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
3/02 0.0725
4/02 0.0725
5/02 0.0725
6/02 0.0735
7/02 0.0735
8/02 0.0735
9/02 0.0755
10/02 0.0755
11/02 0.0755
12/02 0.077
1/03 0.077
2/03 0.077
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 14.3
14.25
13.93
13.58
13.72
13.85
14.1
13.94
14.18
14.56
14.55
14.58
14.29
14.37
14.48
14.24
14.11
14.44
14.58
14.85
14.63
14.74
14.77
14.8
14.65
14.42
14.55
14.88
15
14.83
14.95
14.99
14.89
14.4
14.33
14.3
14.35
14.12
13.98
14.16
14.37
14.17
14.41
14.55
14.67
14.3
14.1
14.04
14.11
14.35
14.07
14.09
2/28/03 14.11
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
10
Nuveen California Dividend Advantage Municipal Fund 2
Performance
OVERVIEW As of February 28, 2003
NVX
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 78%
A 15%
BBB 4%
NR 3%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $13.59
--------------------------------------------------
Common Share Net Asset Value $14.88
--------------------------------------------------
Market Yield 6.53%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.33%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 10.28%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $220,045
--------------------------------------------------
Average Effective Maturity (Years) 21.65
--------------------------------------------------
Leverage-Adjusted Duration 11.40
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 3/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 0.75% 7.94%
--------------------------------------------------
Since Inception 0.79% 8.05%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 26%
--------------------------------------------------
Tax Obligation/General 18%
--------------------------------------------------
Education and Civic Organizations 13%
--------------------------------------------------
Water and Sewer 12%
--------------------------------------------------
Healthcare 10%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
3/02 0.073
4/02 0.073
5/02 0.073
6/02 0.073
7/02 0.073
8/02 0.073
9/02 0.074
10/02 0.074
11/02 0.074
12/02 0.074
1/03 0.074
2/03 0.074
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 14.39
14.1
13.79
13.64
13.91
13.69
13.77
13.93
13.95
14
14.25
13.85
14.14
14.24
14.05
13.91
13.81
14.15
14.14
14.49
14.42
14.32
14.27
14.44
14.54
14.35
14.28
14.62
14.64
14.46
14.63
14.87
14.45
13.95
13.74
13.8
14.2
13.68
13.54
13.74
13.75
13.36
13.32
13.73
13.75
13.42
13.44
13.49
13.64
13.47
13.51
13.58
2/28/03 13.59
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2002 of $0.0291 per share.
11
Nuveen California Dividend Advantage Municipal Fund 3
Performance
OVERVIEW As of February 28, 2003
NZH
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 71%
AA 3%
A 19%
BBB 4%
NR 3%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $13.14
--------------------------------------------------
Common Share Net Asset Value $14.41
--------------------------------------------------
Market Yield 6.58%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.40%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 10.36%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $347,496
--------------------------------------------------
Average Effective Maturity (Years) 21.78
--------------------------------------------------
Leverage-Adjusted Duration 11.89
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 9/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 1.18% 8.58%
--------------------------------------------------
Since Inception -3.35% 6.36%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 31%
--------------------------------------------------
Tax Obligation/General 21%
--------------------------------------------------
Healthcare 10%
--------------------------------------------------
Water and Sewer 9%
--------------------------------------------------
Education and Civic Organizations 8%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
3/02 0.072
4/02 0.072
5/02 0.072
6/02 0.072
7/02 0.072
8/02 0.072
9/02 0.072
10/02 0.072
11/02 0.072
12/02 0.072
1/03 0.072
2/03 0.072
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/02 13.95
13.95
13.85
13.1
13.49
13.65
13.5
13.82
13.6
13.75
13.75
13.84
13.6
13.76
13.66
13.51
13.65
13.58
13.95
13.9
14.05
13.93
14
13.98
13.91
13.79
14
14.13
14.23
14.08
14
14.25
13.94
13.45
13.31
13.7
13.64
13.35
13.26
13.3
13.37
13.02
13.1
13.12
13.5
13.14
13.05
13.07
13.2
13.15
13
13.04
2/28/03 13.14
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
12
Nuveen Insured California Dividend Advantage Municipal Fund
Performance
OVERVIEW As of February 28, 2003
NKL
PIE CHART:
CREDIT QUALITY
INSURED 90%
AAA (UNINSURED) 1%
AA (UNINSURED) 4%
A (UNINSURED) 5%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.68
--------------------------------------------------
Common Share Net Asset Value $15.36
--------------------------------------------------
Market Yield 6.21%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.87%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 9.78%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $234,344
--------------------------------------------------
Average Effective Maturity (Years) 20.38
--------------------------------------------------
Leverage-Adjusted Duration 11.44
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 3/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception 3.37% 13.10%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 28%
--------------------------------------------------
Tax Obligation/General 27%
--------------------------------------------------
Utilities 12%
--------------------------------------------------
Education and Civic Organizations 9%
--------------------------------------------------
Water and Sewer 9%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
5/02 0.076
6/02 0.076
7/02 0.076
8/02 0.076
9/02 0.076
10/02 0.076
11/02 0.076
12/02 0.076
1/03 0.076
2/03 0.076
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/28/02 15.15
15
15.05
15.05
15
15.05
15.11
15.08
15.05
15.05
15
14.9
14.84
14.99
14.95
15.22
15.05
14.9
15.1
15.01
15.18
15.1
15
15.14
15.25
15.05
15.32
15.25
15.17
14.3
14.2
14.64
14.59
14.6
14.63
14.7
14.8
14.31
14.3
14.3
14.45
14.6
14.24
14.3
14.45
14.59
14.4
14.6
2/28/03 14.68
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
2 The Fund also paid shareholders a capital gains distribution in December
2002 of $0.0515 per share.
13
Nuveen Insured California Tax-Free Advantage Municipal Fund
Performance
OVERVIEW As of February 28, 2003
NKX
PIE CHART:
CREDIT QUALITY
INSURED 81%
AAA (UNINSURED) 6%
AA (UNINSURED) 2%
A (UNINSURED) 8%
BBB (UNINSURED) 2%
NR (UNINSURED) 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.60
--------------------------------------------------
Common Share Net Asset Value $14.49
--------------------------------------------------
Market Yield 6.21%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.87%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 9.78%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $85,249
--------------------------------------------------
Average Effective Maturity (Years) 22.67
--------------------------------------------------
Leverage-Adjusted Duration 12.39
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 11/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception -1.66% 2.19%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 40%
--------------------------------------------------
Tax Obligation/General 15%
--------------------------------------------------
Transportation 12%
--------------------------------------------------
Education and Civic Organizations 12%
--------------------------------------------------
Utilities 10%
--------------------------------------------------
Bar Chart:
MONTHLY TAX-FREE DIVIDENDS PER SHARE
1/02 0.0755
2/03 0.0755
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
11/22/02 15.1
15.05
15
15
15
14.94
14.85
14.9
14.9
14.75
14.7
14.2
14.28
2/28/03 14.6
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36.5%.
14
Shareholder
MEETING REPORT
The Shareholder Meeting was held in Chicago, Illinois on November 21, 2002.
NPC NCL NCU
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE DIRECTORS
WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred
Common Shares Common Shares Shares Common Shares
Shares Series-T Shares Series-T Series-TH Shares Series-M
====================================================================================================================================
Robert P. Bremner
For 5,910,053 1,688 11,913,600 1,731 1,612 5,403,698 1,544
Withhold 39,885 11 95,502 1 18 63,387 9
------------------------------------------------------------------------------------------------------------------------------------
Total 5,949,938 1,699 12,009,102 1,732 1,630 5,467,085 1,553
====================================================================================================================================
Lawrence H. Brown
For 5,908,170 1,688 11,908,241 1,731 1,612 5,404,747 1,544
Withhold 41,768 11 100,861 1 18 62,338 9
------------------------------------------------------------------------------------------------------------------------------------
Total 5,949,938 1,699 12,009,102 1,732 1,630 5,467,085 1,553
====================================================================================================================================
Anne E. Impellizzeri
For 5,906,970 1,688 11,910,041 1,731 1,612 5,399,929 1,544
Withhold 42,968 11 99,061 1 18 67,156 9
------------------------------------------------------------------------------------------------------------------------------------
Total 5,949,938 1,699 12,009,102 1,732 1,630 5,467,085 1,553
====================================================================================================================================
Peter R. Sawers
For 5,908,270 1,688 11,908,141 1,731 1,612 5,404,747 1,544
Withhold 41,668 11 100,961 1 18 62,338 9
------------------------------------------------------------------------------------------------------------------------------------
Total 5,949,938 1,699 12,009,102 1,732 1,630 5,467,085 1,553
====================================================================================================================================
Judith M. Stockdale
For 5,908,753 1,688 11,917,350 1,731 1,612 5,401,698 1,544
Withhold 41,185 11 91,752 1 18 65,387 9
------------------------------------------------------------------------------------------------------------------------------------
Total 5,949,938 1,699 12,009,102 1,732 1,630 5,467,085 1,553
====================================================================================================================================
William J. Schneider
For -- 1,688 -- 1,731 1,612 -- 1,544
Withhold -- 11 -- 1 18 -- 9
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,699 -- 1,732 1,630 -- 1,553
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,688 -- 1,731 1,612 -- 1,544
Withhold -- 11 -- 1 18 -- 9
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,699 -- 1,732 1,630 -- 1,553
====================================================================================================================================
15
Shareholder
MEETING REPORT (continued)
NAC NVX NZH
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE DIRECTORS
WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Common Shares Shares Common Shares Shares
Shares Series-TH Series-F Shares Series-M Series-F Shares Series-M Series-TH
====================================================================================================================================
Robert P. Bremner
For 23,065,597 3,379 3,138 14,640,718 2,079 2,103 23,765,798 3,681 3,720
Withhold 190,245 31 56 110,021 3 -- 148,330 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total 23,255,842 3,410 3,194 14,750,739 2,082 2,103 23,914,128 3,699 3,729
====================================================================================================================================
Lawrence H. Brown
For 23,058,801 3,379 3,138 14,638,758 2,079 2,103 23,764,123 3,681 3,720
Withhold 197,041 31 56 111,981 3 -- 150,005 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total 23,255,842 3,410 3,194 14,750,739 2,082 2,103 23,914,128 3,699 3,729
====================================================================================================================================
Anne E. Impellizzeri
For 23,058,934 3,379 3,138 14,640,091 2,079 2,103 23,766,798 3,681 3,720
Withhold 196,908 31 56 110,648 3 -- 147,330 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total 23,255,842 3,410 3,194 14,750,739 2,082 2,103 23,914,128 3,699 3,729
====================================================================================================================================
Peter R. Sawers
For 23,060,466 3,379 3,138 14,640,131 2,079 2,103 23,766,798 3,681 3,720
Withhold 195,376 31 56 110,608 3 -- 147,330 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total 23,255,842 3,410 3,194 14,750,739 2,082 2,103 23,914,128 3,699 3,729
====================================================================================================================================
Judith M. Stockdale
For 23,070,769 3,379 3,138 14,640,718 2,079 2,103 23,763,123 3,681 3,720
Withhold 185,073 31 56 110,021 3 -- 151,005 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total 23,255,842 3,410 3,194 14,750,739 2,082 2,103 23,914,128 3,699 3,729
====================================================================================================================================
William J. Schneider
For -- 3,379 3,138 -- 2,079 2,103 -- 3,681 3,720
Withhold -- 31 56 -- 3 -- -- 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,410 3,194 -- 2,082 2,103 -- 3,699 3,729
====================================================================================================================================
Timothy R. Schwertfeger
For -- 3,379 3,138 -- 2,079 2,103 -- 3,681 3,720
Withhold -- 31 56 -- 3 -- -- 18 9
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,410 3,194 -- 2,082 2,103 -- 3,699 3,729
====================================================================================================================================
16
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.1%
$ 2,000 California Educational Facilities Authority, Revenue Bonds, Santa 9/06 at 102.00 AAA $ 2,213,360
Clara University, Series 1996, 5.750%, 9/01/26 - MBIA Insured
5,000 California Educational Facilities Authority, Student Loan Revenue 3/08 at 102.00 Aaa 5,228,150
Bonds, California Loan Program, Series 2001A, 5.400%, 3/01/21
(Alternative Minimum Tax) - MBIA Insured
2,000 The Regents of the University of California, Multiple Purpose 9/10 at 101.00 AAA 2,048,380
Projects Revenue Bonds, 2002 Series O, 5.125%, 9/01/31 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 9.6%
3,000 California Health Facilities Financing Authority, Insured Revenue 8/08 at 101.00 AAA 3,111,720
Bonds, Sutter Health, Series 1998A, 5.375%, 8/15/30 -
MBIA Insured
1,500 California Statewide Communities Development Authority, 8/09 at 101.00 AAA 1,638,270
Certificates of Participation, Members of the Sutter Health
Obligated Group, 5.500%, 8/15/19 - FSA Insured
4,800 The Regents of the University of California, Hospital Revenue Bonds, 7/06 at 101.00 AAA 5,265,312
University of California Davis Medical Center, Series 1996,
5.750%, 7/01/24 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.7%
1,000 ABAG Finance Authority for Nonprofit Corporations, California, 9/09 at 100.00 AAA 1,059,910
Multifamily Housing Revenue Bonds, Civic Center Drive Apartments
Project, 1999 Series A, 5.800%, 9/01/20 (Alternative Minimum
Tax) - FSA Insured
3,865 The City of Los Angeles, California, Tax-Exempt Mortgage Revenue 7/03 at 100.00 AAA 3,884,132
Refunding Bonds, Series 1993A, FHA-Insured Mortgage Loans -
Section 8 Assisted Projects, 6.300%, 1/01/25 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.5%
1,075 California Housing Finance Agency, Single Family Mortgage Bonds II, 2/07 at 102.00 AAA 1,137,662
1997 Series A-1, 6.000%, 8/01/20 (Alternative Minimum Tax) -
MBIA Insured
1,420 California Housing Finance Agency, Home Mortgage Revenue 8/08 at 101.00 AAA 1,486,555
Bonds, Series 1998Q, 5.050%, 8/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 31.9%
State of California, Various Purpose General Obligation Bonds:
7,995 5.750%, 3/01/22 - MBIA Insured 3/10 at 101.00 AAA 8,706,315
2,000 5.750%, 3/01/27 - MBIA Insured 3/10 at 101.00 AAA 2,146,020
2,000 State of California, Veterans General Obligation Bonds, 6/07 at 101.00 AAA 2,034,420
2001 Series BZ, 5.375%, 12/01/24 (Alternative Minimum Tax) -
MBIA Insured
1,225 Fresno Unified School District, Fresno County, California, 1998 2/13 at 103.00 AAA 1,484,896
General Obligation Refunding Bonds, Series A, 6.550%, 8/01/20 -
MBIA Insured
2,500 Fresno Unified School District, Fresno County, California, General 8/09 at 102.00 AAA 2,604,100
Obligation Bonds, Election of 2001, Series 2001A,
5.125%, 8/01/26 - FSA Insured
2,000 Los Angeles Unified School District, California, General 7/08 at 102.00 AAA 2,073,840
Obligation Bonds, 1997 Series A, 5.000%, 7/01/21 -
FGIC Insured
500 Los Angeles Unified School District, California, General Obligation 7/10 at 100.00 AAA 531,950
Bonds, Election of 1997, Series 2000D, 5.375%, 7/01/25 -
FGIC Insured
3,000 Pomona Unified School District, California, General Obligation 8/11 at 103.00 AAA 3,590,310
Refunding Bonds, Series 1997-A, 6.500%, 8/01/19 - MBIA Insured
San Diego Unified School District, San Diego County, California,
General Obligation Bonds, Election of 1998, Series 2001C:
1,335 5.000%, 7/01/21 - FSA Insured 7/11 at 102.00 AAA 1,400,335
3,500 5.000%, 7/01/22 - FSA Insured 7/11 at 102.00 AAA 3,647,630
4,895 5.000%, 7/01/23 - FSA Insured 7/11 at 102.00 AAA 5,072,786
17
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.6%
$ 2,000 State Public Works Board of the State of California, Lease Revenue 11/09 at 101.00 AAA $ 2,150,900
Bonds, California Department of Health Services, 1999 Series A,
Richmond Laboratory Project, 5.750%, 11/01/24 - MBIA Insured
1,835 Corona-Norco Unified School District, California, Special Tax 9/12 at 100.00 AAA 1,874,379
Bonds, Community Facilities District No. 98-1, Series 2002,
5.100%, 9/01/32 - AMBAC Insured
5,000 City of El Monte, California, Department of Public Services Facility 1/11 at 100.00 AAA 5,156,800
Phase II, Certificates of Participation, Senior Lien Series 2001,
5.250%, 1/01/34 - AMBAC Insured
3,890 Santa Clara County Financing Authority, California, Lease Revenue 11/07 at 102.00 AAA 4,004,794
Bonds, VMC Facility Replacement Project, 1994 Series A,
5.000%, 11/15/22 - AMBAC Insured
6,500 Tustin Unified School District, Orange County, California, Community 9/12 at 100.00 AAA 6,567,600
Facilities District No. 97-1, Special Tax Bonds, 2002 Series A,
5.000%, 9/01/32 - FSA Insured
2,805 Yucaipa-Calimesa Joint Union School District, San Bernardino 10/11 at 100.00 AAA 2,835,126
County, California, General Obligation Bonds, Series 2001A
Refunding, 5.000%, 10/01/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 26.6%
6,000 Huntington Park Redevelopment Agency, California, Single Family No Opt. Call AAA 8,736,720
Residential Mortgage Revenue Refunding Bonds, 1986 Series A,
8.000%, 12/01/19
5,135 Community Redevelopment Agency of the City of Palmdale, No Opt. Call AAA 7,154,441
California, Single Family Mortgage Revenue Bonds, Series 1986A
Restructured, 8.000%, 3/01/16 (Alternative Minimum Tax)
6,220 County of Riverside, California, Single Family Mortgage Revenue No Opt. Call AAA 9,674,215
Bonds, GNMA Mortgage-Backed Securities Program, Issue 1987A,
9.000%, 5/01/21 (Alternative Minimum Tax)
1,485 City of San Jose, California, Single Family Mortgage Revenue No Opt. Call AAA 2,237,850
Bonds, 1985 Series A, 9.500%, 10/01/13
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.8%
4,000 California Pollution Control Financing Authority, Pollution Control 6/03 at 102.00 AAA 4,097,000
Revenue Bonds, Southern California Edison Company,
1992 Series B, 6.400%, 12/01/24 (Alternative Minimum Tax) -
MBIA Insured
4,000 City of Chula Vista, California, Industrial Development Revenue 6/03 at 102.00 A+ 4,088,720
Bonds, San Diego Gas and Electric Company, 1992 Series A,
6.400%, 12/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.7%
7,000 The City of Los Angeles, California, Wastewater System Revenue 11/03 at 102.00 AAA 7,070,560
Bonds, Series 1993D, 4.700%, 11/01/19 - FGIC Insured
3,400 Public Facilities Financing Authority of the City of San Diego, 5/07 at 101.00 AAA 3,534,810
California, Sewer Revenue Bonds, Series 1997A,
5.250%, 5/15/22 - FGIC Insured
2,150 Santa Clara Valley Water District, California, Water Utility 6/10 at 100.00 AAA 2,191,581
System Revenue Bonds, Series 2000A, 5.125%, 6/01/31 -
FGIC Insured
5,000 Wheeler Ridge-Maricopa Water Storage District, Kern County, 11/06 at 102.00 AAA 5,713,551
California, 1996 Water Refunding Bonds, 5.700%, 11/01/15 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 123,030 Total Long-Term Investments (cost $124,072,432) - 131.5% 137,455,100
=============-----------------------------------------------------------------------------------------------------------------------
18
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 6.4%
$ 6,700 California Infrastructure and Economic Development Authority, A-1+ $ 6,700,000
Insured Revenue Bonds, The Rand Corporation, Series 2002B,
Variable Rate Demand Obligations, 1.100%, 4/01/42 -
AMBAC Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 6,700 Total Short-Term Investments (cost $6,700,000) 6,700,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.1% 5,389,169
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (43.0)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 104,544,269
====================================================================================================================
All of the bonds in the portfolio, excluding temporary
investments in short-term municipal securities, are either
covered by Original Issue Insurance, Secondary Market
Insurance or Portfolio Insurance, or are backed by an escrow
or trust containing sufficient U.S. Government or U.S.
Government agency securities, any of which ensure the timely
payment of principal and interest.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
19
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 10.0%
California Educational Facilities Authority, Revenue Bonds,
Santa Clara University, Series 1996:
$ 2,400 5.750%, 9/01/21 - MBIA Insured 9/06 at 102.00 AAA $ 2,707,800
3,000 5.750%, 9/01/26 - MBIA Insured 9/06 at 102.00 AAA 3,320,040
2,000 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa 2,287,940
University of the Pacific, Series 2000, 5.875%, 11/01/20 -
MBIA Insured
6,615 California Educational Facilities Authority, Revenue Bonds, Loyola No Opt. Call Aaa 1,263,597
Marymount University, Series 2001A Refunding,
0.000%, 10/01/33 - MBIA Insured
5,000 California Educational Facilities Authority, Student Loan Revenue 3/08 at 102.00 Aaa 5,228,150
Bonds, California Loan Program, Series 2001A, 5.400%, 3/01/21
(Alternative Minimum Tax) - MBIA Insured
California Infrastructure and Economic Development Bank, Revenue
Bonds, Asian Art Museum of San Francisco Project, Series 2000:
1,295 5.500%, 6/01/19 - MBIA Insured 6/10 at 101.00 AAA 1,429,058
1,000 5.500%, 6/01/20 - MBIA Insured 6/10 at 101.00 AAA 1,097,610
1,900 The Regents of the University of California, University of California 11/03 at 102.00 AAA 1,989,091
Housing System Revenue Bonds, Series A, 5.500%, 11/01/18 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 5.2%
1,450 California Health Facilities Financing Authority, Insured Health 7/06 at 102.00 AAA 1,655,016
Facility Refunding Revenue Bonds, Mark Twain St. Joseph's
Healthcare, 1996 Series A, 6.000%, 7/01/19 - MBIA Insured
5,000 California Health Facilities Financing Authority, Insured Health 7/06 at 102.00 AAA 5,591,800
Facility Refunding Revenue Bonds, Catholic Healthcare
West, 1996 Series A, 6.000%, 7/01/25 - MBIA Insured
2,500 City of Oakland, California, Insured Revenue Bonds, 1800 Harrison 1/10 at 100.00 AAA 2,839,750
Foundation - Kaiser Permanente, Series 1999A,
6.000%, 1/01/29 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.9%
ABAG Finance Authority for Nonprofit Corporations, California,
Multifamily Housing Revenue Bonds, Civic Center Drive Apartments
Project, 1999 Series A:
4,000 5.800%, 9/01/20 (Alternative Minimum Tax) - FSA Insured 9/09 at 100.00 AAA 4,239,640
1,370 5.875%, 3/01/32 (Alternative Minimum Tax) - FSA Insured 9/09 at 100.00 AAA 1,439,391
3,460 The Community Redevelopment Agency of the City of Los Angeles, 6/05 at 105.00 AAA 3,840,254
California, Multifamily Housing Revenue Refunding Bonds,
1995 Series A, Angelus Plaza Project, 7.400%, 6/15/10
7,400 Housing Authority of the County of Santa Cruz, California, 5/03 at 102.00 Aaa 7,567,388
Tax-Exempt Multifamily Housing Revenue Refunding Bonds,
Series 1993A, GNMA Collateralized - Meadowview Apartments,
6.125%, 5/20/28
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.6%
2,845 California Housing Finance Agency, Single Family Mortgage 8/07 at 101.50 AAA 2,987,165
Bonds II, 1997 Series C-2, 5.625%, 8/01/20 (Alternative
Minimum Tax) - MBIA Insured
35 California Housing Finance Agency, Home Mortgage Revenue 2/06 at 102.00 AAA 35,590
Bonds, 1996 Series E, 6.150%, 8/01/25 (Alternative
Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 16.4%
1,460 ABC Unified School District, Los Angeles County, California, 8/10 at 101.00 AAA 1,669,773
General Obligation Bonds, Election of 1997, Series B,
5.750%, 8/01/16 - FGIC Insured
485 State of California, General Obligation Veterans Welfare Bonds, 12/03 at 102.00 AAA 490,951
Series 1997BH, 5.500%, 12/01/24 (Alternative Minimum Tax) -
FSA Insured
20
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
State of California, Various Purpose General Obligation Bonds:
$ 7,995 5.750%, 3/01/22 - MBIA Insured 3/10 at 101.00 AAA $ 8,706,315
2,500 5.500%, 9/01/24 - FSA Insured 9/09 at 101.00 AAA 2,639,050
2,000 5.750%, 3/01/27 - MBIA Insured 3/10 at 101.00 AAA 2,146,020
3,000 State of California, Veterans General Obligation Bonds, 6/07 at 101.00 AAA 3,051,630
2001 Series BZ, 5.375%, 12/01/24 (Alternative Minimum
Tax) - MBIA Insured
2,575 Calipatria Unified School District, Imperial County, California, 8/06 at 102.00 AAA 2,933,337
General Obligation Bonds, 1996 Series A, 5.625%, 8/01/13 -
AMBAC Insured
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Election of 1995, Series 2001F:
1,065 5.125%, 8/01/21 - FSA Insured 8/09 at 102.00 AAA 1,130,604
1,160 5.125%, 8/01/22 - FSA Insured 8/09 at 102.00 AAA 1,224,624
1,220 5.125%, 8/01/23 - FSA Insured 8/09 at 102.00 AAA 1,276,889
1,500 Hacienda La Puente Unified School District, County of 8/10 at 101.00 AAA 1,565,805
Los Angeles, California, General Obligation Bonds, Election
of 2000, Series A, 5.250%, 8/01/25 - MBIA Insured
1,750 Lake Tahoe Unified School District, El Dorado County, California, 8/09 at 100.00 AAA 1,815,048
General Obligation Bonds, Election of 1999, Series A,
5.250%, 8/01/24 - FGIC Insured
1,125 San Diego Unified School District, California, 1999 General No Opt. Call AAA 447,885
Obligation Bonds, Election of 1998, Series A, 0.000%, 7/01/21 -
FGIC Insured
2,500 San Francisco Community College District, California, General 6/10 at 102.00 Aaa 2,549,175
Obligation Bonds, 2002 Series A, 5.000%, 6/15/26 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 52.5%
Anaheim Public Financing Authority, California, Subordinate
Lease Revenue Bonds, Anaheim Public Improvements Project, 1997
Series C:
5,130 0.000%, 9/01/18 - FSA Insured No Opt. Call AAA 2,441,675
8,000 0.000%, 9/01/21 - FSA Insured No Opt. Call AAA 3,146,960
5,250 State Public Works Board of the State of California, Lease 1/06 at 100.00 AAA 5,592,300
Revenue Bonds, Department of Corrections, 1996 Series A,
California Substance Abuse Treatment Facility and State
Prison At Corcoran, Corcoran II, 5.250%, 1/01/21 -
AMBAC Insured
3,450 State Public Works Board of the State of California, Lease Revenue 11/09 at 101.00 AAA 3,710,303
Bonds, California Department of Health Services, 1999 Series A,
Richmond Laboratory Project, 5.750%, 11/01/24 - MBIA Insured
5,000 Community Redevelopment Agency of the City of Compton, 8/05 at 102.00 AAA 5,662,400
California, Refunding Tax Allocation Bonds, Compton
Redevelopment Project, Series 1995A, Project Tax Revenues,
Subventions and Housing Tax Revenues, 6.500%, 8/01/13 -
FSA Insured
4,000 County of Contra Costa, California, Certificates of Participation, 11/07 at 102.00 AAA 4,330,480
Merrithew Memorial Hospital Replacement Project, Refunding
Series 1997, 5.500%, 11/01/22 - MBIA Insured
1,900 Corona-Norco Unified School District, California, Special 9/12 at 100.00 AAA 1,961,123
Tax Bonds, Community Facilities District No. 98-1, Series 2002,
5.100%, 9/01/25 - AMBAC Insured
6,000 City of El Monte, California, Department of Public Services 1/11 at 100.00 AAA 6,226,140
Facility Phase II, Certificates of Participation, Senior Lien
Series 2001, 5.000%, 1/01/21 - AMBAC Insured
3,000 Galt Schools Joint Powers Authority, Sacramento County, 11/07 at 102.00 AAA 3,364,680
California, 1997 Refunding Revenue Bonds, Series A,
High School and Elementary School Facilities,
5.875%, 11/01/24 - MBIA Insured
5,000 Kern County Board of Education, California, Refunding 5/08 at 102.00 AAA 5,139,100
Certificates of Participation, 1998 Series A,
5.200%, 5/01/28 - MBIA Insured
5,000 La Quinta Redevelopment Agency, California, Project Area 9/07 at 102.00 AAA 5,128,350
No. 1 Tax Allocation Bonds, Series 1998 Refunding,
5.200%, 9/01/28 - AMBAC Insured
3,865 Los Angeles County Metropolitan Transportation Authority, 7/10 at 101.00 AAA 4,005,995
California, Proposition C Sales Tax Revenue Bonds, Second
Senior Lien Series 2000A, 5.250%, 7/01/30 - FGIC Insured
1,980 Menifee Union School District, Riverside County, California, 9/06 at 102.00 AAA 2,238,509
Certificates of Participation, 1996 School Project,
6.125%, 9/01/24 - FSA Insured
2,690 Norwalk Community Facilities Financing Authority, Los Angeles 9/05 at 102.00 AAA 3,016,593
County, California, Tax Allocation Refunding Revenue
Bonds, 1995 Series A, 6.000%, 9/01/15 - FSA Insured
21
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 AAA $ 2,205,340
Bonds, Paguay Redevelopment Project, Series 2000,
5.750%, 6/15/33 - MBIA Insured
9,000 City of Redlands, California, Certificates of Participation, 9/03 at 102.00 AAA 9,376,200
1993 Refunding of 1986 and 1987 Projects, 5.800%, 9/01/17 -
AMBAC Insured
5,000 City of San Bernardino, California, Refunding Certificates of 9/09 at 102.00 AAA 5,492,400
Participation, Police Station, South Valle Refundings and 201
Building Projects, San Bernardino Joint Powers Financing
uthority, 5.500%, 9/01/20 - MBIA Insured
3,500 San Francisco Bay Area Rapid Transit District, California, Sales 7/09 at 101.00 AAA 3,669,925
Tax Revenue Bonds, Series 1999, 5.500%, 7/01/34 - FGIC Insured
1,930 Santa Margarita/Dana Point Authority, Orange County, California, No Opt. Call AAA 2,205,025
Revenue Bonds, Series A, 1994 Improvement Districts Nos. 1, 2,
2A and 8 General Obligation Bond Refinancing, 7.250%,
8/01/05 - MBIA Insured
South Orange County Public Financing Authority, California,
Special Tax Revenue Bonds, 1994 Series C, Foothill Area:
3,000 8.000%, 8/15/08 - FGIC Insured No Opt. Call AAA 3,835,980
6,830 8.000%, 8/15/09 - FGIC Insured No Opt. Call AAA 8,853,661
3,685 Redevelopment Agency of Suisun City, County of Solano, 10/03 at 102.00 AAA 3,854,510
California, 1993 Tax Allocation Refunding Bonds, Suisun City
Redevelopment Project, 5.900%, 10/01/23 - MBIA Insured
5,450 City of Visalia, California, Visalia Public Finance Authority, 12/06 at 102.00 AAA 5,790,843
Refunding Certificates of Participation, Motor Vehicle License
Fee Enhancement, Series 1996A, 5.375%, 12/01/26 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.3%
6,500 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 65.32 AAA 3,004,820
Toll Road Refunding Revenue Bonds, Series 1999,
0.000%, 1/15/18 - MBIA Insured
4,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 AAA 4,031,320
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35 -
MBIA Insured
5,000 Airports Commission of the City and County of San Francisco, 5/11 at 100.00 AAA 5,074,300
California, San Francisco International Airport, Second Series
Revenue Refunding Bonds, Issue 27A, 5.250%, 5/01/31
(Alternative Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.6%
3,525 Alameda County, California, Certificates of Participation, 9/06 at 102.00 AAA 4,146,422
Series 1991, Alameda County Public Facilities Corporation,
6.000%, 9/01/21 (Pre-refunded to 9/01/06) - MBIA Insured
4,485 Alameda County, California, Certificates of Participation, 12/03 at 102.00 AAA 4,733,334
Series 1993 Refunding, Santa Rita Jail Project,
5.700%, 12/01/14 (Pre-refunded to 12/01/03) - MBIA Insured
3,000 Escondido Union High School District, San Diego County, 11/06 at 102.00 AAA 3,337,950
California, General Obligation Bonds, 1996 Election,
5.700%, 11/01/10 - MBIA Insured
4,320 County of Riverside, California, Single Family Mortgage Revenue No Opt. Call AAA 6,275,318
Bonds, GNMA Mortgage-Backed Securities Program,
Issue 1987B, 8.625%, 5/01/16 (Alternative Minimum Tax)
1,850 Sacramento City Unified School District, Sacramento County, 7/09 at 102.00 Aaa 2,227,881
California, General Obligation Bonds, Series 2000A,
5.750%, 7/01/18 (Pre-refunded to 7/01/09) - FGIC Insured
9,000 Airports Commission of the City and County of San Francisco, 5/04 at 101.00 AAA 9,623,070
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 8B, 6.100%, 5/01/20 (Pre-refunded
to 5/01/04) - FGIC Insured
1,450 City of Torrance, California, Hospital Revenue Bonds, 12/05 at 100.00 AAA 1,649,607
Little Company of Mary Hospital, 1985 Series A,
7.100%, 12/01/15 (Pre-refunded to 12/01/05)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.1%
3,740 California Pollution Control Financing Authority, Pollution 9/09 at 101.00 AAA 3,900,035
Control Revenue Refunding Bonds, Southern California Edison
Company, Series 1999B, 5.450%, 9/01/29 - MBIA Insured
3,215 Modesto Irrigation District Financing Authority, California, 10/06 at 102.00 AAA 3,709,821
Refunding Revenue Bonds, Series A, 6.000%, 10/01/15 -
MBIA Insured
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 3,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA $ 3,157,830
2002 Series II, 5.125%, 7/01/26 - FSA Insured
1,790 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 2,041,244
Improvement Revenue Bonds, Series 1999, Solid Waste and
Redevelopment Projects, 5.800%, 12/01/19 - AMBAC Insured
3,500 Sacramento Municipal Utility District, California, Electric Revenue 8/06 at 102.00 AAA 3,845,135
Bonds, 1996 Series J, 5.600%, 8/15/24 - AMBAC Insured
1,950 Salinas Valley Solid Waste Authority, California, Revenue Bonds, 8/12 at 100.00 AAA 1,988,123
Series 2002, 5.250%, 8/01/27 (Alternative Minimum Tax) -
AMBAC Insured
6,650 Turlock Irrigation District, California, Revenue Bonds, 7/03 at 100.00 AAA 6,675,204
Series 1992A Refunding, 5.750%, 1/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 10.0%
3,530 Castaic Lake Water Agency, California, Refunding Revenue No Opt. Call AAA 3,869,586
Certificates of Participation, Water System Improvement Projects,
Series 1994A, 8.000%, 8/01/04 - MBIA Insured
2,975 Chino Basin Regional Financing Authority, California, Revenue 8/04 at 102.00 AAA 3,217,701
Bonds, Series 1994, Chino Basin Municipal Water District
Sewer System Project, 6.000%, 8/01/16 - AMBAC Insured
2,775 Pomona Public Financing Authority, California, 1999 Revenue 5/09 at 101.00 AAA 2,917,218
Bonds, Series AC, Water Facilities Project, 5.500%, 5/01/29 -
FGIC Insured
1,000 Sacramento County Sanitation Districts Financing Authority, 12/10 at 101.00 AAA 1,099,469
California, Revenue Bonds, Series 2000A, Sacramento Regional
County Sanitation District, 5.500%, 12/01/20 - AMBAC Insured
2,000 South San Joaquin Irrigation District, San Joaquin County, 7/03 at 102.00 AAA 2,047,079
California, 1993 Refunding Revenue Certificates of Participation,
1987 Project and 1992 Project, 5.500%, 1/01/15 - AMBAC Insured
5,410 City of Tulare, California, 1996 Sewer Revenue Bonds, 11/06 at 102.00 AAA 6,108,484
5.750%, 11/15/21 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 266,930 Total Long-Term Investments (cost $248,289,977) - 140.6% 271,095,829
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.9%
7,500 Puerto Rico Government Development Bank, Adjustable VMIG-1 7,500,000
Refunding Bonds, Series 1985, Variable Rate Demand Bonds,
0.890%, 12/01/15 - MBIA Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 7,500 Total Short-Term Investments (cost $7,500,000) 7,500,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.8% 9,230,032
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.3)% (95,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 192,825,861
====================================================================================================================
All of the bonds in the portfolio, excluding temporary
investments in short-term municipal securities, are either
covered by Original Issue Insurance, Secondary Market
Insurance or Portfolio Insurance, or are backed by an escrow
or trust containing sufficient U.S. Government or U.S.
Government agency securities, any of which ensure the timely
payment of principal and interest.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
23
Nuveen California Premium Income Municipal Fund (NCU)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.0%
$ 1,500 California County Tobacco Securitization Agency, Tobacco Settlement 6/12 at 100.00 A1 $ 1,370,415
Asset-Backed Bonds, Alameda County Tobacco Asset
Securitization Corporation, Series 2002, 5.750%, 6/01/29
4,000 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 A1 3,624,760
Asset-Backed Bonds, Series 2002A, Pooled Tobacco
Securitization Program, 5.625%, 5/01/29
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 19.6%
5,150 California Health Facilities Financing Authority, Hospital 5/03 at 102.00 BB+ 4,650,141
Revenue Bonds, Downey Community Hospital, Series 1993,
5.750%, 5/15/15
1,185 California Statewide Communities Development Authority, 8/03 at 101.00 A3 1,213,499
Hospital Revenue Certificates of Participation, Cedars-Sinai
Medical Center, Series 1992, 6.500%, 8/01/15
8,100 California Statewide Communities Development Authority, No Opt. Call AAA 8,401,806
Revenue Refunding Bonds, Sherman Oaks Project, Series 1998A,
5.000%, 8/01/22 - AMBAC Insured
2,000 City of Loma Linda, California, Hospital Revenue Bonds, Loma 12/03 at 102.00 BB- 1,974,060
Linda University Medical Center Project, Series 1993-A,
6.000%, 12/01/06
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 15.9%
2,000 California Statewide Communities Development Authority, 7/08 at 101.00 BBB 2,096,940
Apartment Development Revenue Refunding Bonds, Irvine
Apartment Communities, L.P., Series 1998A, 5.250%, 5/15/25
(Mandatory put 5/15/13)
6,205 The Community Redevelopment Agency of the City of 6/05 at 105.00 AAA 6,886,929
Los Angeles, California, Multifamily Housing Revenue
Refunding Bonds, 1995 Series A, Angelus Plaza Project,
7.400%, 6/15/10
3,840 City of Stanton, California, Multifamily Housing Revenue 8/07 at 102.00 AAA 4,254,797
Bonds, Continental Gardens Apartments, Series 1997,
5.625%, 8/01/29 (Alternative Minimum Tax) (Mandatory
put 8/01/09)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.6%
2,005 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 2,121,871
Bonds II, 1997 Series A-1, 6.000%, 8/01/20 (Alternative
Minimum Tax) - MBIA Insured
1,000 California Housing Finance Agency, Home Mortgage Revenue 8/04 at 102.00 Aa2 1,041,750
Bonds, 1994 Series A, 6.550%, 8/01/26
1,000 California Housing Finance Agency, Home Mortgage Revenue 8/05 at 102.00 AAA 1,033,130
Bonds, 1994 Series F-3, 6.100%, 8/01/15 (Alternative
Minimum Tax) - MBIA Insured
2,000 California Housing Finance Agency, Home Mortgage Revenue 2/07 at 102.00 AAA 2,115,100
Bonds, 1997 Series B, 6.000%, 8/01/16 (Alternative
Minimum Tax) - MBIA Insured
745 California Rural Home Mortgage Finance Authority, Single No Opt. Call AAA 869,765
Family Mortgage Revenue Bonds, Mortgage-Backed Securities
Program, 1996 Series C, 7.500%, 8/01/27 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 15.6%
4,000 State of California, General Obligation Veterans Welfare Bonds, 6/04 at 101.00 AA- 4,003,040
Series BR, 5.300%, 12/01/29 (Alternative Minimum Tax)
2,250 Los Angeles Unified School District, Los Angeles County, 7/13 at 100.00 AAA 2,341,125
California, General Obligation Bonds, Series 2003A,
5.000%, 7/01/22 - FSA Insured (WI, settling 3/05/03)
3,000 Pomona Unified School District, California, General Obligation 8/11 at 103.00 AAA 3,556,890
Refunding Bonds, Series 1997-A, 6.150%, 8/01/15 -
MBIA Insured
3,000 San Diego Unified School District, California, 2000 General 7/10 at 100.00 AAA 3,122,610
Obligation Bonds, Election of 1998, Series B, 5.125%, 7/01/22 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 49.2%
3,750 Bonita Canyon Public Facilities Financing Authority, California, 3/03 at 103.00 N/R 3,688,613
Community Facilities District No. 98-1 Special Tax Bonds,
Series 1998, 5.375%, 9/01/28
24
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 5,920 State Public Works Board of the State of California, Lease Revenue 11/09 at 101.00 AAA $ 6,463,870
Bonds, Department of Veterans Affairs of the State of California,
Southern California Veterans Home - Chula Vista Facility, 1999
Series A, 5.600%, 11/01/19 - AMBAC Insured
2,355 City of Carlsbad, California, Assessment District No. 96-1, Limited 3/03 at 101.00 N/R 2,296,690
Obligation Improvement Bonds, Rancho Carillo, 5.500%, 9/02/28
185 Carson Redevelopment Agency, California, Redevelopment Project 10/03 at 102.00 BBB 190,924
Area No. 2, Refunding Tax Allocation Bonds, Series 1993,
5.875%, 10/01/09
3,500 City of Livermore Redevelopment Agency, California, Tax Allocation 8/11 at 100.00 AAA 3,558,835
Revenue Bonds, Series 2001A, Livermore Redevelopment
Project Area, 5.000%, 8/01/26 - MBIA Insured
2,030 Community Redevelopment Financing Authority of the Community 6/03 at 102.00 BB 2,017,739
Redevelopment Agency of the City of Los Angeles, California,
Grand Central Square Multifamily Housing Bonds, 1993 Series A,
5.750%, 12/01/13 (Alternative Minimum Tax)
2,000 Redevelopment Agency of the City of Oakland, California, 3/13 at 100.00 AAA 2,274,620
Subordinate Lien Tax Allocation Bonds, Central District
Redevelopment Project, Series 2003, 5.500%, 9/01/15 -
FGIC Insured
1,000 Community Facilities District No. 88-1 of the City of Poway, 8/08 at 102.00 N/R 1,122,210
California, Special Tax Refunding Bonds, Parkway Business
Centre, Series 1998, 6.500%, 8/15/09
5,000 Redevelopment Agency for the County of Riverside, California, 10/11 at 102.00 AAA 5,280,300
2001 Tax Allocation Bonds, Jurupa Valley Project Area,
5.150%, 10/01/21 - AMBAC Insured
6,570 Sacramento City Finance Authority, California, Lease Revenue No Opt. Call AA- 7,254,594
Refunding Bonds, Series 1993B, 5.400%, 11/01/20
San Marcos Public Facilities Authority, California, Refunding
Revenue Bonds, Series 1998:
1,500 5.800%, 9/01/18 9/08 at 101.00 Baa3 1,565,265
1,000 5.800%, 9/01/27 9/08 at 101.00 Baa3 1,028,330
2,050 County of Santa Barbara, California, Certificates of Participation, 12/11 at 102.00 AAA 2,235,525
Series 2001, 5.250%, 12/01/19 - AMBAC Insured
2,000 City of Vista, California, Mobile Home Park Revenue Bonds, Vista 3/09 at 102.00 N/R 1,896,700
Manor Mobile Home Park Project, Series 1999A, 5.750%, 3/15/29
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.1%
2,750 Airports Commission of the City and County of San Francisco, 5/04 at 102.00 AAA 2,955,783
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 5, 6.500%, 5/01/24 (Alternative Minimum
Tax) - FGIC Insured
2,000 Airports Commission of the City and County of San Francisco, 5/06 at 102.00 AAA 2,132,060
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 10A, 5.700%, 5/01/26 (Alternative
Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 7.5%
1,200 State Public Works Board of the State of California, Lease Revenue 10/04 at 102.00 A-*** 1,324,692
Bonds, The Trustees of the California State University,
1994 Series A, Various California State University Projects,
6.375%, 10/01/14 (Pre-refunded to 10/01/04)
815 Carson Redevelopment Agency, California, Redevelopment Project 10/03 at 102.00 BBB*** 854,250
Area No. 2, Refunding Tax Allocation Bonds, Series 1993,
5.875%, 10/01/09 (Pre-refunded to 10/01/03)
3,500 Commonwealth of Puerto Rico, Public Improvement Bonds 7/10 at 100.00 AAA 4,094,650
of 2000, General Obligation Bonds, 5.750%, 7/01/21
(Pre-refunded to 7/01/10) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.7%
1,000 California Pollution Control Financing Authority, Pollution Control 6/03 at 102.00 AAA 1,024,250
Revenue Bonds, Southern California Edison Company,
1992 Series B, 6.400%, 12/01/24 (Alternative Minimum
Tax) - FGIC Insured
2,250 State of California Department of Water Resources, Power 5/12 at 101.00 A3 2,338,493
Supply Revenue Bonds, Series 2002A, 5.125%, 5/01/18
3,000 Merced Irrigation District, California, 2001 Electric System 9/05 at 102.00 Baa3 3,148,770
Refunding Revenue Bonds, Electric System Project,
6.500%, 9/01/22
4,580 Sacramento Municipal Utility District, California, Electric 8/12 at 100.00 AAA 4,924,508
Revenue Bonds, 2002 Series Q Refunding,
5.250%, 8/15/20 - FSA Insured
25
Nuveen California Premium Income Municipal Fund (NCU) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.6%
$ 5,000 Culver City, California, Wastewater Facilities Refunding 9/09 at 102.00 AAA $ 5,524,850
Revenue Bonds, 1999 Series A, 5.700%, 9/01/29 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 117,935 Total Long-Term Investments (cost $118,148,481) - 148.8% 123,875,149
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.2%
1,000 California Statewide Communities Development Authority, A-1 1,000,000
Revenue Bonds, Fremont-Rideout Health Group, Variable Rate
Demand Bonds, Series 2001A, 1.050%, 1/01/31 -
AMBAC Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 1,000 Total Short-Term Investments (cost $1,000,000) 1,000,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 1,358,201
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.7)% (43,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 83,233,350
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
26
Nuveen California Dividend Advantage Municipal Fund (NAC)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.7%
$ 5,000 California Statewide Communities Development Authority, 11/09 at 102.00 N/R $ 5,191,350
Certificates of Participation, Pride Industries and Pride One,
Inc., 7.250%, 11/01/29
5,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 A1 5,031,572
Tobacco Settlement Asset-Backed Bonds, Series 2003-A1,
6.250%, 6/01/33
Tobacco Securitization Authority of Northern California, Tobacco
Settlement Asset-Backed Bonds, Series 2001A:
2,500 5.250%, 6/01/31 6/11 at 100.00 A1 2,173,275
4,500 5.375%, 6/01/41 6/11 at 100.00 A1 3,768,975
4,485 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 A1 4,525,230
Settlement Asset-Backed Bonds, Senior Series 2001A,
San Diego County Tobacco Asset Securitization Corporation,
5.250%, 6/01/27
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.3%
3,000 Long Beach Bond Finance Authority, California, Lease Revenue 11/11 at 100.00 AAA 3,335,070
Refunding Bonds, The Aquarium of the South Pacific,
5.500%, 11/01/17 - AMBAC Insured
700 The Regents of the University of California, Certificates of 1/10 at 101.00 Aa2 734,265
Participation, 2002 Series A, San Diego Campus and
Sacramento Projects, 5.250%, 1/01/22
6,000 The Regents of the University of California, Multiple Purpose 9/08 at 101.00 AA 6,482,820
Project Revenue Bonds, Series K, 5.000%, 9/01/12
The Regents of the University of California, Multiple Purpose
Projects Revenue Bonds, 2002 Series O:
10,770 5.000%, 9/01/20 - FGIC Insured 9/10 at 101.00 AAA 11,309,900
11,305 5.000%, 9/01/21 - FGIC Insured 9/10 at 101.00 AAA 11,812,481
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 15.3%
8,400 California Health Facilities Financing Authority, Kaiser 10/08 at 101.00 A 8,822,436
Permanente, Revenue Bonds, Series 1998B, 5.250%, 10/01/14
(Optional put 10/01/08)
15,000 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 15,929,250
Cedars-Sinai Medical Center, Series 1999A, 6.125%, 12/01/30
6,000 California Statewide Communities Development Authority, No Opt. Call AAA 6,223,560
Revenue Refunding Bonds, Sherman Oaks Project, Series 1998A,
5.000%, 8/01/22 - AMBAC Insured
8,000 Central California Joint Powers Health Financing Authority, 2/10 at 101.00 BBB+ 8,179,680
Certificates of Participation, Community Hospitals of Central
California Obligated Group Project, Series 2000, 6.000%, 2/01/30
10,500 Duarte, California, Certificates of Participation, City of Hope 4/09 at 101.00 BBB 10,060,995
National Medical Center, Series 1999A, 5.250%, 4/01/31
3,415 City of Upland, California, Certificates of Participation, 1/04 at 102.00 A 3,537,701
1993 Series, San Antonio Community Hospital, 5.250%, 1/01/08
2,500 City of Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A- 2,546,825
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.7%
15,000 California Statewide Communities Development Authority, 7/08 at 101.00 BBB 16,244,850
Apartment Development Revenue Refunding Bonds, Irvine
Apartment Communities, L.P., Series 1998A, 4.900%, 5/15/25
(Mandatory put 5/15/08)
10,000 California Statewide Communities Development Authority, No Opt. Call BBB+ 10,747,700
Multifamily Housing Refunding Bonds, Archstone Pelican
Point Apartments, Issue 1999H, Archstone Communities
Trust, 5.300%, 6/01/29 (Mandatory put 6/01/08)
5,250 California Statewide Communities Development Authority, 8/12 at 105.00 Aaa 6,051,780
Housing Revenue Bonds, GNMA Collateralized - Crowne
Pointe Project Refunding, 2002 Series F, 6.750%, 8/20/37
5,000 County of Contra Costa, California, Multifamily Housing 6/09 at 102.00 N/R 4,993,050
Revenue Bonds, Delta View Apartments, Series 1999C,
6.750%, 12/01/30 (Alternative Minimum Tax)
27
Nuveen California Dividend Advantage Municipal Fund (NAC) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 15,000 Housing Authority of the County of San Bernardino, California, No Opt. Call A3 $ 15,191,550
Multifamily Housing Revenue Refunding Bonds, Equity
Residential/Redlands Lawn and Tennis Apartments,
Issue 1999A, 5.200%, 6/15/29 (Mandatory put 6/15/09)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.5%
7,920 California Housing Finance Agency, Single Family Mortgage 2/09 at 31.14 AAA 1,778,753
Bonds II, 1999 Series D2, 0.000%, 2/01/29 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.3%
8,500 Riverside County Public Financing Authority, California, Certificates 5/09 at 101.00 BBB- 8,461,665
of Participation, Air-Force Village West, Inc., 5.800%, 5/15/29
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 14.4%
8,000 State of California, General Obligation Bonds, Series 2002 No Opt. Call A 8,617,040
Refunding, 5.000%, 2/01/12
6,435 State of California, General Obligation Bonds, Series 2002, No Opt. Call AAA 7,703,660
6.000%, 4/01/16 - AMBAC Insured
3,000 Contra Costa Community College District, California, General 8/12 at 100.00 AAA 3,120,960
Obligation Bonds, Series 2002, 4.900%, 8/01/20 -
FGIC Insured
18,500 Los Angeles Unified School District, California, General Obligation 7/09 at 101.00 AAA 19,270,155
Bonds, Election of 1997, Series 1999C, 5.250%, 7/01/24 -
MBIA Insured
10,845 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,478,999
Obligation Bonds, Election of 1997, 2002 Series E,
5.000%, 7/01/19 - MBIA Insured
1,750 Oakland Unified School District, Alameda County, California, 8/08 at 101.00 AAA 1,815,818
General Obligation Bonds, Series 2001, 5.125%, 8/01/21 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 35.0%
8,665 Bonita Canyon Public Facilities Financing Authority, California, 3/03 at 103.00 N/R 8,523,154
Community Facilities District No. 98-1 Special Tax Bonds,
Series 1998, 5.375%, 9/01/28
Brentwood Infrastructure Financing Authority, Contra Costa
County, California, Capital Improvement Revenue Bonds, Series
2001:
1,110 5.375%, 11/01/18 - FSA Insured 11/11 at 100.00 AAA 1,215,339
1,165 5.375%, 11/01/19 - FSA Insured 11/11 at 100.00 AAA 1,269,337
1,990 Brentwood Infrastructure Financing Authority, California, 9/12 at 100.00 AAA 2,061,202
Infrastructure Revenue Refunding Bonds, Series 2002A,
5.125%, 9/02/24 - FSA Insured
3,515 Dinuba Redevelopment Agency, California, Tax Allocation Bonds, 9/11 at 102.00 AAA 3,637,814
Redevelopment Project 2 Refunding, Series 2001,
4.875%, 9/01/21 - MBIA Insured
3,490 City of Fontana, California, Community Facilities District No. 2, 9/08 at 102.00 AAA 3,797,574
Village of Heritage, Senior Special Tax Refunding Bonds,
1998 Series A, 5.250%, 9/01/17 - MBIA Insured
3,980 Garden Grove, California, Certificates of Participation, Financing 3/12 at 101.00 AAA 4,334,260
Project, Series 2002A, 5.500%, 3/01/22 - AMBAC Insured
5,500 County of Los Angeles, California, Certificates of Participation, 9/08 at 101.00 AAA 5,543,175
1998 Disney Parking Refunding Project, 4.750%, 3/01/23 -
MBAC Insured
5,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 5,099,000
California, Proposition C Sales Tax Revenue Bonds, Second
Senior Series 1998A Refunding, 5.000%, 7/01/23 -
AMBAC Insured
10,000 Los Angeles County Public Works Finance Authority, California, 10/07 at 101.00 AA 10,649,000
Revenue Bonds, Series 1997A, Los Angeles County Regional
Park and Open Space District, 5.000%, 10/01/16
9,200 Norco Redevelopment Agency, California, Project Area No. 1 3/11 at 102.00 AAA 9,753,840
Tax Allocation Bonds, Series 2001 Refunding,
5.000%, 3/01/19 - MBIA Insured
4,670 City of Oakland Joint Powers Financing Authority, California, No Opt. Call AAA 5,420,469
Lease Revenue Refunding Bonds, Series 2001, Oakland
Convention Centers, 5.500%, 10/01/14 - AMBAC Insured
3,290 Redevelopment Agency of the City of Oakland, California, 3/13 at 100.00 AAA 3,709,640
Central District Redevelopment Project, Subordinate Lien Tax
Allocation Bonds, Series 2003, 5.500%, 9/01/16 - FGIC Insured
4,000 Orange County Local Transportation Authority, California, No Opt. Call AAA 4,611,160
Measure M Sales Tax Revenue Refunding Bonds, Limited
Tax Bonds, Second Senior Bonds, Series 1997A,
5.700%, 2/15/08 - AMBAC Insured
28
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 5,600 City of Palm Springs Financing Authority, California, Lease 11/11 at 101.00 AAA $ 5,842,200
Revenue Refunding Bonds, Convention Center Project,
Series 2001A, 5.000%, 11/01/22 - MBIA Insured
8,100 Poway Redevelopment Agency, California, Paguay 12/10 at 102.00 AAA 8,931,627
Redevelopment Project, Tax Allocation Refunding Bonds,
Series 2000, 5.750%, 6/15/33 - MBIA Insured
2,000 Puerto Rico Public Finance Corporation, Commonwealth 8/11 at 100.00 AAA 2,219,500
Appropriation Bonds, Series 2001A, 5.500%, 8/01/19 -
MBIA Insured
10,215 Riverside County Public Financing Authority, California, No Opt. Call N/R 11,024,743
Reassessment Revenue Bonds, Rancho Village Project/AD
No. 159, 1999 Series B, Junior Lien Bonds, 6.000%, 9/02/07
2,500 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AAA 2,829,550
Bonds, Series 1993A Refunding, 5.400%, 11/01/20 -
AMBAC Insured
1,205 City and County of San Francisco, California, Certificates of 9/09 at 101.00 AAA 1,235,282
Participation, Series 2001A, 30 Van Ness Avenue Property,
4.600%, 9/01/18 - MBIA Insured
24,060 Redevelopment Agency of the City of San Jose, California, 8/08 at 102.00 A 24,660,778
Merged Area Redevelopment Project, Tax Allocation Bonds,
Series 1998, 5.250%, 8/01/29
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 23.6%
21,150 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 101.00 BBB- 21,627,990
Toll Road Refunding Revenue Bonds, Series 1999,
5.750%, 1/15/40
8,515 Harbor Department of the City of Los Angeles, California, 8/11 at 100.00 AAA 9,146,472
Revenue Refunding Bonds, Series 2001B, 5.500%, 8/01/18
(Alternative Minimum Tax) - AMBAC Insured
23,000 Port of Oakland, California, Revenue Bonds, 2000 Series K, 5/10 at 100.00 AAA 24,911,760
5.750%, 11/01/29 (Alternative Minimum Tax) - FGIC Insured
5,000 Airports Commission of the City and County of San Francisco, 5/06 at 101.00 AAA 5,168,350
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 13B, 5.625%, 5/01/21 (Alternative
Minimum Tax) - MBIA Insured
23,275 Airports Commission of the City and County of San Francisco, 5/10 at 101.00 AAA 24,702,223
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 25, 5.750%, 5/01/30 (Alternative
Minimum Tax) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 2.8%
3,600 Los Angeles Unified School District, California, General Obligation 7/10 at 100.00 AAA 4,246,992
Bonds, Election of 1997, Series 2000D, 5.625%, 7/01/14
(Pre-refunded to 7/01/10)
5,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 2000, 7/10 at 100.00 AAA 5,849,500
General Obligation Bonds, 5.750%, 7/01/16 (Pre-refunded
to 7/01/10) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.9%
9,750 State of California Department of Water Resources, Power Supply 5/12 at 101.00 A3 10,133,468
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
7,000 Department of Water and Power of Los Angeles, California, 7/11 at 100.00 AAA 7,438,900
Power System Revenue Bonds, 2001 Series A1,
5.250%, 7/01/21 - FSA Insured
8,370 Department of Water and Power of Los Angeles, California, 7/11 at 100.00 AAA 9,083,208
Power System Revenue Refunding Bonds, Series 2001A2,
5.375%, 7/01/19 - MBIA Insured
10,000 Merced Irrigation District, California, 2001 Electric System 9/05 at 102.00 Baa3 10,550,200
Refunding Revenue Bonds, Electric System Project,
6.750%, 9/01/31
5,630 Southern California Public Power Authority, Transmission Project 7/12 at 100.00 AAA 5,825,136
Revenue Bonds, 2002A Subordinate Refunding Series,
Southern Transmission Project, 4.750%, 7/01/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.1%
11,000 California Department of Water Resources, Water System 12/11 at 100.00 AAA 11,652,190
Revenue Bonds, Central Valley Project, Series 2001W,
5.250%, 12/01/22 - FSA Insured
14,000 Orange County Water District, California, Revenue Certificates 8/09 at 101.00 AA+ 14,741,020
of Participation, Series 1999A, 5.375%, 8/15/29
8,250 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 8,392,478
2001 Series A, 6.250%, 12/01/32
29
Nuveen California Dividend Advantage Municipal Fund (NAC) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 5,115 Public Utilities Commission of the City and County of 11/12 at 100.00 AAA $ 5,451,975
San Francisco, California, Water Revenue Bonds, Series 2002A,
5.000%, 11/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 510,385 Total Long-Term Investments (cost $502,210,852) - 146.6% 530,431,871
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 6,390,560
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.4)% (175,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 361,822,431
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
See accompanying notes to financial statements.
30
Nuveen California Dividend Advantage Municipal Fund 2 (NVX)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.5%
$ 4,625 California County Tobacco Securitization Agency, Stanislaus 6/12 at 100.00 A1 $ 4,135,675
County Tobacco Funding Corporation, Tobacco Settlement
Asset-Backed Bonds, Series 2002A, 5.500%, 6/01/33
3,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 A1 3,096,352
Tobacco Settlement Asset-Backed Bonds, Series 2003-A1,
6.250%, 6/01/33
3,000 Tobacco Securitization Authority of Northern California, 6/11 at 100.00 A1 2,512,650
Tobacco Settlement Asset-Backed Bonds, Series 2001A,
5.375%, 6/01/41
2,800 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 A 2,355,836
Settlement Asset-Backed Bonds, Senior Series 2001A,
San Diego County Tobacco Asset Securitization
Corporation, 5.500%, 6/01/36
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 19.0%
5,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 5,203,000
Stanford University, Series Q, 5.250%, 12/01/32
15,000 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 15,684,450
Revenue Bonds, California Loan Program, Series 2001A,
5.400%, 3/01/21 (Alternative Minimum Tax) - MBIA Insured
10,570 State Public Works Board of the State of California, Lease 10/12 at 100.00 AAA 11,581,126
Revenue Bonds, Regents of the University of California,
2002 Series A, UCLA Replacement Hospitals,
5.375%, 10/01/18 - FSA Insured
9,000 Long Beach Bond Finance Authority, California, Lease Revenue 11/11 at 101.00 AAA 9,348,750
Refunding Bonds, The Aquarium of the South Pacific,
5.250%, 11/01/30 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 15.3%
5,000 California Health Facilities Financing Authority, Kaiser 5/03 at 102.00 A 5,033,600
Permanente, Revenue Bonds, 1993 Series C, 5.600%, 5/01/33
7,000 California Infrastructure and Economic Development Bank, 8/11 at 102.00 A 7,141,260
Revenue Bonds, Kaiser Hospital Assistance I-LLC, Series 2001A,
5.550%, 8/01/31
6,000 California Statewide Communities Development Authority, No Opt. Call AAA 6,223,560
Revenue Refunding Bonds, Sherman Oaks Project,
Series 1998A, 5.000%, 8/01/22 - AMBAC Insured
5,355 California Statewide Communities Development Authority, No Opt. Call A 5,692,365
Revenue Bonds, Kaiser Permanente, Series 2002E,
4.700%, 11/01/36 (Mandatory put 6/01/09)
2,185 California Statewide Communities Development Authority, No Opt. Call A- 2,477,921
Health Facility Revenue Bonds, Memorial Health Services,
Series 2003A Refunding, 6.000%, 10/01/11
3,000 Central California Joint Powers Health Financing Authority, 2/10 at 101.00 BBB+ 3,067,380
Certificates of Participation, Community Hospitals of Central
California Obligated Group Project, Series 2000, 6.000%, 2/01/30
2,500 City of Torrance, California, Revenue Bonds, Torrance Memorial 6/11 at 101.00 A+ 2,549,750
Medical Center, Series 2001A, 5.500%, 6/01/31
1,500 City of Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A- 1,528,095
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.0%
5,962 California Statewide Communities Development Authority, 6/11 at 102.00 AAA 6,452,196
Multifamily Housing Revenue Refunding Bonds, Claremont
Village Apartments, Series 2001D, 5.500%, 6/01/31 (Alternative
Minimum Tax) (Mandatory put 6/01/16)
3,500 California Statewide Communities Development Authority, 8/12 at 105.00 Aaa 4,034,520
Housing Revenue Bonds, GNMA Collateralized - Crowne
Pointe Project Refunding, 2002 Series F, 6.750%, 8/20/37
4,650 Redevelopment Agency of the City and County of San Francisco, 10/11 at 100.00 Aaa 4,841,999
California, Multifamily Housing Revenue Bonds, GNMA
Collateralized - Kokoro Assisted Living Facility, 2001 Series A,
5.675%, 4/20/43
31
Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.8%
$ 5,845 California Rural Home Mortgage Finance Authority, Single Family 6/11 at 102.00 AAA $ 6,076,988
Mortgage Revenue Bonds, Mortgage-Backed Securities Program,
2001 Series A, 5.650%, 12/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7%
1,550 California Health Facilities Financing Authority, Revenue Bonds, 1/13 at 100.00 A 1,559,424
Northern California Retired Officers Community
Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.1%
5,000 State of California, General Obligation Bonds, Series 2002 No Opt. Call A 5,385,650
Refunding, 5.000%, 2/01/12
7,225 State of California, Veterans General Obligation Bonds, 6/06 at 101.00 AAA 7,391,609
Series BV, 5.600%, 12/01/32 - FSA Insured
3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 AAA 3,977,259
California, General Obligation Bonds, Series 2002A,
5.500%, 8/01/22 - FGIC Insured
Contra Costa Community College District, California, General
Obligation Bonds, Series 2002:
3,005 5.000%, 8/01/21 - FGIC Insured 8/12 at 100.00 AAA 3,141,607
3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AAA 3,429,360
8,330 Los Angeles Unified School District, California, General Obligation 7/10 at 100.00 AAA 8,862,287
Bonds, Election of 1997, Series 2000D, 5.375%, 7/01/25 -
FGIC Insured
10,840 Los Angeles Unified School District, California, General Obligation 7/12 at 100.00 AAA 11,473,706
Bonds, Election of 1997, Series 2002E, 5.000%, 7/01/19 -
MBIA Insured
2,250 Los Angeles Unified School District, Los Angeles County, 7/13 at 100.00 AAA 2,427,773
California, General Obligation Bonds, Series 2003A,
5.250%, 7/01/20 - FSA Insured (WI, settling 3/05/03)
4,050 Santa Rosa High School District, Sonoma County, California, 5/11 at 101.00 AAA 4,247,924
General Obligation Bonds, Series 2001, 5.300%, 5/01/26 -
FGIC Insured
1,160 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,212,734
General Obligation Bonds, Series 2002A, 5.000%, 8/01/21 -
FGIC Insured
7,600 Southwestern Community College District, San Diego County, 8/11 at 101.00 AAA 8,061,016
California, General Obligation Bonds, Series 2001,
5.375%, 8/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.3%
9,000 Anitoch Area Public Facilities Financing Agency, California, 8/11 at 100.00 AAA 9,375,750
Special Tax Bonds, Community Facilities District No. 1989-1,
Series 2001, 5.250%, 8/01/25 - MBIA Insured
3,070 State Public Works Board of the State of California, Lease 12/12 at 100.00 AAA 3,363,032
Revenue Bonds, Department of General Services, Capital
East End, Series 2002A, 5.250%, 12/01/16 - AMBAC Insured
4,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 4,152,040
Mobile Home Park Revenue Bonds, Franciscan Mobile Home
Park, Series 2002A, 5.850%, 12/15/32
4,845 City of Encinitas Public Financing Authority, California, Lease 4/08 at 102.00 AAA 5,054,982
Revenue Bonds, Acquisition Project, Series 2001A,
5.250%, 4/01/31 - MBIA Insured
5,000 Industry Urban Development Agency, California, Civic, 5/07 at 101.50 AAA 5,513,200
Recreational and Industrial Redevelopment Project No. 1,
Tax Allocation Refunding Bonds, Series 2002,
5.500%, 5/01/19 - MBIA Insured
2,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 1,983,800
Revenue Bonds, Series 2003H Refunding, 6.000%, 10/01/20
8,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 8,158,400
California, Proposition C Sales Tax Revenue Bonds, Second
Senior Series 1998A Refunding, 5.000%, 7/01/23 -
AMBAC Insured
32
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 3,295 Redevelopment Agency of the City of Oakland, California, 3/13 at 100.00 AAA $ 3,715,277
Central District Redevelopment Project, Subordinate Lien
Tax Allocation Bonds, Series 2003, 5.500%, 9/01/16 -
FGIC Insured
4,400 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB+ 5,154,864
Appropriation Bonds, 2002 Series E, 6.000%, 8/01/26
9,000 Redevelopment Agency for the County of Riverside, California, 10/11 at 102.00 AAA 9,346,410
Jurupa Valley Project Area, 2001 Tax Allocation Bonds,
5.250%, 10/01/35 - AMBAC Insured
Santa Clara Valley Transportation Authority, California, Sales
Tax Revenue Bonds, Series 2001A:
16,090 5.000%, 6/01/25 - MBIA Insured 6/11 at 100.00 AAA 16,432,717
4,000 5.000%, 6/01/26 - MBIA Insured 6/11 at 100.00 AAA 4,071,480
3,045 Redevelopment Agency of the City of Yucaipa, California, Mobile 5/11 at 102.00 N/R 3,071,400
Home Park Revenue Bonds, Rancho del Sol and Grandview,
Series 2001A, 6.750%, 5/15/36
5,100 Community Facilities District No. 98-1, Chapman Heights of 9/09 at 102.00 N/R 4,960,566
the City of Yucaipa, County of San Bernardino, State
of California, 1998 Special Tax Bonds, 6.000%, 9/01/28
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.9%
5,500 California Statewide Communities Development Authority, 10/11 at 100.00 Ca 845,625
Special Facility Revenue Bonds, Series 2001, United Air
Lines, Inc. - Los Angeles International Airport Cargo Project,
6.250%, 10/01/35 (Alternative Minimum Tax)#
3,840 Sacramento-Yolo Port District, Counties of Sacramento 7/08 at 101.00 Baa2 3,974,131
and Yolo, California, Port Facilities Refunding and Improvement
Revenue Bonds, Series 2001, 5.125%, 7/01/14
3,000 Airports Commission of the City and County of San Francisco, 5/10 at 101.00 AAA 3,048,900
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 26A, 5.250%, 5/01/30 (Alternative
Minimum Tax) - FGIC Insured
2,000 Airports Commission of the City and County of San Francisco, 5/12 at 100.00 AAA 2,106,220
California, San Francisco International Airport, Second Series
Revenue Refunding, Issue 28A, 5.250%, 5/01/17
(Alternative Minimum Tax) - MBIA Insured
Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 29A:
2,430 5.250%, 5/01/18 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,554,003
2,555 5.250%, 5/01/19 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,666,398
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.2%
10,000 California Pollution Control Financing Authority, Pollution Control 4/11 at 102.00 AAA 10,814,500
Refunding Revenue Bonds, Pacific Gas and Electric Company,
1996A Series Remarketed, 5.350%, 12/01/16 (Alternative
Minimum Tax) - MBIA Insured
6,000 State of California Department of Water Resources, Power 5/12 at 101.00 A3 6,235,980
Supply Revenue Bonds, Series 2002A, 5.125%, 5/01/18
1,000 Merced Irrigation District, California, 2002 Revenue Certificates 9/05 at 103.00 Baa3 1,058,030
of Participation, Electric System Project, 6.500%, 9/01/34
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.2%
2,740 California Department of Water Resources, Central Valley 12/12 at 100.00 AAA 2,917,223
Project Water System Revenue Bonds, Series 2002Z,
5.000%, 12/01/18 - FGIC Insured
11,000 East Bay Municipal Utility District, Alameda and Contra 6/11 at 100.00 AAA 11,196,570
Costa Counties, California, Water System Subordinated
Revenue Bonds, Series 2001, 5.000%, 6/01/26 - MBIA Insured
33
Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 6,885 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 AAA $ 7,197,992
Water Revenue Bonds, Series 2002 Subordinate Lien,
5.000%, 8/01/21 - MBIA Insured
5,375 Public Utilities Commission of the City and County of 11/12 at 100.00 AAA 5,698,306
San Francisco, California, Water Revenue Bonds,
Series 2002A, 5.000%, 11/01/19 - MBIA Insured
10,000 Public Utilities Commission of the City and County of 4/13 at 100.00 AAA 10,791,999
San Francisco, California, Clean Water Revenue Bonds,
Series 2003A Refunding, 5.250%, 10/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 316,787 Total Long-Term Investments (cost $318,796,402) - 148.0% 325,667,617
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 4,376,888
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.0)% (110,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 220,044,505
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
# On December 9, 2002, UAL Corporation, the holding company of
United Air Lines, Inc., filed for federal bankruptcy
protection. In December 2002, the Adviser determined that it
was likely United would not remain current on its interest
payment obligations with respect to these bonds and thus
stopped accruing interest. At the same time, accrued
interest dating back to October 1, 2002 was written off. On
April 1, 2003, UAL failed to meet its interest payment
obligation.
See accompanying notes to financial statements.
34
Nuveen California Dividend Advantage Municipal Fund 3 (NZH)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 1.4%
$ 4,715 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB $ 4,838,722
Disposal Revenue Bonds, Waste Management Inc. Project,
Series 2002B, 4.450%, 7/01/27 (Alternative Minimum Tax)
(Mandatory put 7/01/05)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.6%
11,240 California County Tobacco Securitization Agency, Merced 6/12 at 100.00 A1 10,050,808
County Tobacco Funding Corporation, Tobacco Settlement
Asset-Backed Bonds, Series 2002A, 5.500%, 6/01/33
6,100 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 A1 5,902,421
Tobacco Settlement Asset-Backed Bonds, Series 2003-A1,
6.250%, 6/01/33
4,200 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 A 3,533,754
Settlement Asset-Backed Bonds, Senior Series 2001A,
San Diego County Tobacco Asset Securitization Corporation,
5.500%, 6/01/36
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.2%
9,000 California Educational Facilities Authority, Student Loan Revenue 3/08 at 102.00 Aaa 9,410,670
Bonds, California Loan Program, Series 2001A, 5.400%, 3/01/21
(Alternative Minimum Tax) - MBIA Insured
3,600 State Public Works Board of the State of California, Lease Revenue 10/12 at 100.00 AAA 3,959,352
Bonds, Regents of the University of California, 2002 Series A,
UCLA Replacement Hospitals, 5.375%, 10/01/17 - FSA Insured
7,595 San Francisco State University Foundation Inc., California, 9/11 at 100.00 AAA 7,747,660
Auxiliary Organization Revenue Bonds, Student Housing,
Series 2001, 5.000%, 9/01/26 - MBIA Insured
2,990 The Regents of the University of California, Multiple Purpose 9/08 at 101.00 AA 3,058,531
Project Revenue Bonds, Series K, 5.000%, 9/01/23
8,720 The Regents of the University of California, Multiple Purpose 9/09 at 101.00 AAA 8,919,078
Projects, Revenue Bonds, Series 2001M, 5.125%, 9/01/30 -
FGIC Insured
The Regents of the University of California, Research Facilities
Revenue Bonds, 2001 Series E:
3,820 5.000%, 9/01/26 - AMBAC Insured 9/09 at 101.00 AAA 3,882,190
5,360 5.000%, 9/01/27 - AMBAC Insured 9/09 at 101.00 AAA 5,448,386
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 14.5%
4,650 California Health Facilities Financing Authority, Revenue Bonds, 11/08 at 101.00 AAA 4,677,760
USCF - Stanford Health Care, 1998 Series A, 5.000%, 11/15/31 -
FSA Insured
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+ 4,108,240
2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 2,047,420
10,550 California Health Facilities Financing Authority, Kaiser 5/03 at 102.00 A 10,620,896
Permanente, Revenue Bonds, 1993 Series C, 5.600%, 5/01/33
9,000 California Infrastructure and Economic Development Bank, 8/11 at 102.00 A 9,181,620
Revenue Bonds, Kaiser Hospital Assistance I-LLC, Series 2001A,
5.550%, 8/01/31
7,665 California Statewide Communities Development Authority, 11/09 at 102.00 A 7,922,007
Insured Mortgage Hospital Revenue Bonds, Mission
Community Hospital, Series 2001, 5.375%, 11/01/21
6,525 California Statewide Communities Development Authority, No Opt. Call A- 7,392,890
Health Facility Revenue Bonds, Memorial Health Services,
Series 2003A Refunding, 6.000%, 10/01/12
1,740 Central California Joint Powers Health Financing Authority, 2/10 at 101.00 BBB+ 1,779,080
Certificates of Participation, Community Hospitals of Central
California Obligated Group Project, Series 2000, 6.000%, 2/01/30
2,500 City of Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A- 2,546,825
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.2%
5,250 California Statewide Communities Development Authority, 8/12 at 105.00 Aaa 6,051,780
Housing Revenue Bonds, GNMA Collateralized - Crowne
Pointe Project Refunding, 2002 Series F, 6.750%, 8/20/37
35
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 3,610 Housing Authority of the County of San Bernardino, California, 11/11 at 105.00 Aaa $ 4,169,947
Multifamily Mortgage Revenue Bonds, Series 2001A, GNMA
Collateralized - Pacific Palms Mobile Home Park,
6.700%, 12/20/41
San Jose, California, Multifamily Housing Revenue Bonds, GNMA
Mortgage-Backed Securities Program - Lenzen Housing, Series
2001B:
1,250 5.350%, 2/20/26 (Alternative Minimum Tax) 8/11 at 102.00 AAA 1,291,713
2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 AAA 2,971,382
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.9%
3,000 California Housing Finance Agency, Home Mortgage Revenue 2/08 at 101.50 AAA 3,119,880
Bonds, 1998 Series B, 5.150%, 2/01/18 (Alternative Minimum
Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.5%
California Health Facilities Financing Authority, Insured Senior
Living Revenue Bonds, Aldersly, 2002 Series A:
1,500 5.125%, 3/01/22 3/12 at 101.00 A 1,509,330
1,315 5.250%, 3/01/32 3/12 at 101.00 A 1,305,506
2,450 California Health Facilities Financing Authority, Revenue Bonds, 1/13 at 100.00 A 2,464,896
Northern California Retired Officers Community Corporation -
Paradise Valley Estates, Series 2002, 5.125%, 1/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 31.2%
8,500 State of California, General Obligation Veterans Welfare Bonds, 12/03 at 102.00 AA- 8,652,405
Series 1997BH, 5.500%, 12/01/18 (Alternative Minimum Tax)
10 State of California, Veterans General Obligation Bonds, Series BJ, 12/06 at 102.00 AA- 10,394
5.500%, 12/01/18 (Alternative Minimum Tax)
State of California, General Obligation Bonds,
Series 2002 Refunding:
8,450 5.000%, 2/01/12 No Opt. Call A 9,101,748
10,000 5.250%, 2/01/30 2/12 at 100.00 A 10,081,100
State of California, General Obligation Bonds, Series 2002:
9,335 6.000%, 2/01/16 - FSA Insured No Opt. Call AAA 11,157,565
2,780 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 3,328,077
5,000 5.000%, 4/01/21 - AMBAC Insured 4/12 at 100.00 AAA 5,186,550
14,300 State of California, Veterans General Obligation Bonds, 6/07 at 101.00 AAA 14,611,311
2001 Series BZ, 5.350%, 12/01/21 (Alternative Minimum
Tax) - MBIA Insured
2,050 Centinela Valley Union High School District, Los Angeles County, No Opt. Call AAA 2,242,085
California, General Obligation Bonds, Series 2002A,
5.250%, 2/01/26 - MBIA Insured
3,000 Contra Costa Community College District, California, General 8/12 at 100.00 AAA 3,101,280
Obligation Bonds, Series 2002, 5.000%, 8/01/23 - FGIC Insured
2,500 Fullerton Joint Union High School District, Orange County, 8/12 at 100.00 Aaa 2,577,025
California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/23 - FSA Insured
2,260 Jurupa Unified School District, Riverside County, California, 8/11 at 101.00 AAA 2,373,655
General Obligation Bonds, Series 2002, 5.125%, 8/01/22 -
FGIC Insured
Los Angeles Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2003A:
3,750 5.250%, 7/01/20 - FSA Insured (WI, settling 3/05/03) 7/13 at 100.00 AAA 4,046,288
7,200 5.000%, 7/01/22 - FSA Insured (WI, settling 3/05/03) 7/13 at 100.00 AAA 7,491,600
3,000 Commonwealth of Puerto Rico, General Obligation Bonds, 7/11 at 100.00 AAA 3,104,250
Public Improvement Refunding Series 2001,
5.000%, 7/01/24 - FSA Insured
5,000 Riverside Unified School District, Riverside County, California, 2/12 at 101.00 AAA 5,102,200
General Obligation Bonds, Series 2002A, 5.000%, 2/01/27 -
FGIC Insured
10,810 San Diego Unified School District, San Diego County, California, 7/11 at 102.00 AAA 11,041,442
General Obligation Bonds, Election of 1998, Series 2001C,
5.000%, 7/01/26 - FSA Insured
4,000 San Diego Unified School District, San Diego County, California, 7/12 at 101.00 AAA 4,302,080
General Obligation Bonds, Election of 1998, Series 2002D,
5.250%, 7/01/21 - FGIC Insured
1,000 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,027,580
General Obligation Bonds, Series 2002A, 5.000%, 8/01/24 -
FGIC Insured
36
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 46.6%
$ 4,000 Beaumont Financing Authority, California, Local Agency Revenue 9/12 at 102.00 N/R $ 4,054,240
Bonds, Series 2002A, 6.750%, 9/01/25
7,135 Brentwood Infrastructure Financing Authority, Contra Costa 11/11 at 100.00 AAA 7,293,254
County, California, Capital Improvement Revenue Bonds,
Series 2001, 5.000%, 11/01/25 - FSA Insured
3,620 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 3,915,102
Bonds, Golden State Redevelopment Project, Series 2003A
Refunding, 5.250%, 12/01/20 - AMBAC Insured
3,350 State Public Works Board of the State of California, Lease 12/12 at 100.00 AAA 3,644,398
Revenue Bonds, Department of General Services, Capital East
End, Series 2002A, 5.250%, 12/01/17 - AMBAC Insured
4,510 State Public Works Board of the State of California, Lease 12/11 at 102.00 AAA 4,575,305
Revenue Bonds, Department of Mental Health, Hospital
Addition, Series 2001A, 5.000%, 12/01/26 - AMBAC Insured
15,000 State Public Works Board of the State of California, Lease 3/12 at 100.00 AAA 15,182,250
Revenue Bonds, Department of General Services, Series 2002B,
5.000%, 3/01/27 - AMBAC Insured
1,270 Coalinga Public Financing Authority, California, Local Obligation No Opt. Call AAA 1,544,536
Revenue Refunding Bonds, Senior Lien Series A,
6.000%, 9/15/18 - AMBAC Insured
2,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 2,076,980
Mobile Home Park Revenue Bonds, Franciscan Mobile Home
Park, Series 2002A, 5.800%, 12/15/25
1,000 Fullerton, California, Special Tax Bonds, Community Facilities 9/12 at 100.00 N/R 1,027,050
District No. 001, Amerige Heights, Series 2002, 6.100%, 9/01/22
7,945 La Quinta Redevelopment Agency, California, Project Area No. 1 9/11 at 102.00 AAA 8,120,743
Tax Allocation Bonds, Series 2001, 5.100%, 9/01/31 -
AMBAC Insured
3,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 2,975,700
Revenue Bonds, Series 2003H Refunding, 6.000%, 10/01/20
5,250 Lammersville School District, San Joaquin County, California, 9/12 at 101.00 N/R 5,275,988
Community Facilities District of Mountain House, Special
Tax Bonds, Series 2002, 6.300%, 9/01/24
5,425 Lodi, California, Certificates of Participation, Series 2002, 10/12 at 100.00 AAA 5,526,176
Public Improvement Financing Project, 5.000%, 10/01/26 -
MBIA Insured
13,515 Norco Redevelopment Agency, California, Project Area No. 1 3/11 at 102.00 AAA 13,844,631
Tax Allocation Bonds, Series 2001 Refunding, 5.125%, 3/01/30 -
MBIA Insured
1,000 Norco, California, Special Tax Bonds, Community Facilities District 9/12 at 102.00 N/R 1,001,580
No. 01-1, Series 2002, 6.750%, 9/01/22
3,000 Redevelopment Agency of the City of Oakland, California, 3/13 at 100.00 AAA 3,327,630
Subordinate Lien Tax 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 AAA 4,647,464
Revenue Bonds, Capital Projects, Series 2001,
5.000%, 8/01/24 - AMBAC Insured
11,165 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 11,431,620
Revenue Bonds, Project Area No. 1, Series 2002 Refunding,
5.100%, 4/01/30 - MBIA Insured
5,000 Pomona Public Finance Authority, California, Revenue Bonds, 2/11 at 100.00 AAA 5,075,300
Merged Redevelopment Projects Refunding, Series 2001AD,
5.000%, 2/01/27 - MBIA Insured
2,925 Pomona Valley Educational Joint Power Authority, California, 8/09 at 102.00 AAA 2,949,014
Lease Revenue Bonds, Pomona Unified School District
Financing, Series 2001, 4.875%, 8/01/26 - AMBAC Insured
6,500 Puerto Rico Highway and Transportation Authority, Transportation 7/12 at 100.00 A 6,721,390
Revenue Bonds, Series D, 5.375%, 7/01/36
4,400 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB+ 5,154,864
Appropriation Bonds, 2002 Series E, 6.000%, 8/01/26
2,385 City of San Buenaventura, California, San Buenaventura Public 2/11 at 101.00 AAA 2,395,232
Facilities Financing Authority, 2001 Certificates of
Participation, Series C, 4.750%, 2/01/24 - AMBAC Insured
14,505 Redevelopment Agency of the City of San Diego, California, 9/11 at 101.00 AAA 14,796,115
Subordinate Tax Allocation Bonds, Centre City Redevelopment
Project, Series 2001A, 5.000%, 9/01/26 - FSA Insured
8,725 San Francisco Bay Area Rapid Transit District, California, 7/11 at 100.00 AAA 8,864,251
Sales Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 -
AMBAC Insured
37
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 10,000 San Diego Redevelopment Agency, California, Merged Area 8/10 at 101.00 AAA $ 10,152,100
Redevelopment Project Tax Allocation Bonds, Series 2002,
5.000%, 8/01/27 - MBIA Insured
2,115 San Marcos Public Facilities Authority, California, Special Tax 9/07 at 102.00 N/R 2,142,284
Revenue Bonds, Series 2002, 6.300%, 9/01/20
1,595 Santa Clara Valley Transportation Authority, California, Sales 6/11 at 100.00 AAA 1,651,064
Tax Revenue Bonds, Series 2001A, 5.000%, 6/01/22 -
MBIA Insured
2,500 Yucaipa-Calimesa Joint Union School District, San Bernardino 10/11 at 100.00 AAA 2,542,675
County, California, General Obligation Bonds, Series 2001A
Refunding, 5.000%, 10/01/26 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.8%
1,500 Port of Oakland, California, Refunding Revenue Bonds, 11/07 at 102.00 AAA 1,674,630
1997 Series I, 5.600%, 11/01/19 - MBIA Insured
1,000 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 AAA 1,076,530
5.250%, 11/01/20 - FGIC Insured
1,420 Airports Commission of the City and County of San Francisco, 5/09 at 101.00 AAA 1,448,400
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 23B, 5.125%, 5/01/30 - FGIC Insured
5,950 Airports Commission of the City and County of San Francisco, 5/10 at 101.00 AAA 6,021,638
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 26B, 5.000%, 5/01/30 - FGIC Insured
Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 29B:
10,625 5.125%, 5/01/18 - FGIC Insured 5/13 at 100.00 AAA 11,463,313
5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 AAA 5,514,655
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.5%
15,000 California Pollution Control Financing Authority, Pollution Control 4/11 at 102.00 AAA 16,221,750
Refunding Revenue Bonds, Pacific Gas and Electric Company,
1996A Series Remarketed, 5.350%, 12/01/16 (Alternative
Minimum Tax) - MBIA Insured
9,000 State of California Department of Water Resources, Power 5/12 at 101.00 A3 9,353,970
Supply Revenue Bonds, Series 2002A, 5.125%, 5/01/18
1,600 Merced Irrigation District, California, 2002 Revenue Certificates 9/05 at 103.00 Baa3 1,692,848
of Participation, Electric System Project, 6.500%, 9/01/34
2,250 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,295,428
Bonds, Series 2002, 5.125%, 8/01/22 (Alternative Minimum
Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.3%
6,080 California Department of Water Resources, Central Valley Project 12/12 at 100.00 AAA 6,508,518
Water System Revenue Bonds, Series 2002Z,
5.000%, 12/01/17 - FGIC Insured
7,000 Carmichael Water District, Sacramento County, California, 9/09 at 102.00 AAA 7,154,910
1999 Water Revenue Certificates of Participation,
5.125%, 9/01/29 - MBIA Insured
2,475 The Metropolitan Water District of Southern California, 7/08 at 101.00 AA 2,497,003
Water Revenue Refunding Bonds, 1998 Series A, 4.750%, 7/01/22
San Diego Public Facilities Financing Authority, California,
Water Revenue Bonds, Series 2002 Subordinate Lien:
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,584,400
8,910 5.000%, 8/01/24 - MBIA Insured 8/12 at 100.00 AAA 9,155,738
38
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
Public Utilities Commission of the City and County of San
Francisco, California, Clean Water Revenue Bonds, Series 2003A
Refunding:
$ 3,315 5.250%, 10/01/18 - MBIA Insured 4/13 at 100.00 AAA $ 3,623,063
12,000 5.250%, 10/01/19 - MBIA Insured 4/13 at 100.00 AAA 13,053,000
1,600 Sunnyvale Financing Authority, California, Water and Wastewater 10/11 at 100.00 AAA 1,629,568
Revenue Bonds, Series 2001, 5.000%, 10/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 494,890 Total Long-Term Investments (cost $503,949,894) - 147.7% 513,329,677
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.6%
$ 2,400 ABAG Finance Authority for Non-Profit Corporations, California, A-1+ 2,400,000
Certificates of Participation, American Baptist Homes West,
Variable Rate Demand Bonds, Series 1997C(98B),
1.050%, 10/01/27+
1,500 California Infrastructure and Economic Development Authority, A-1+ 1,500,000
Insured Revenue Bonds, The Rand Corporation, Series 2002B,
Variable Rate Demand Obligations, 1.100%, 4/01/42 -
AMBAC Insured+
1,755 California Statewide Communities Development Authority, A-1 1,755,000
Revenue Bonds, Fremont-Rideout Health Group, Variable Rate
Demand Bonds, Series 2001A, 1.050%, 1/01/31 -
AMBAC Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 5,655 Total Short-Term Investments (cost $5,655,000) 5,655,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.5% 15,510,825
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.8)% (187,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 347,495,502
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
39
Nuveen Insured California Dividend Advantage Municipal Fund (NKL)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.2%
$ 3,070 California Educational Facilities Authority, Revenue Bonds, 3/09 at 101.00 Aa3 $ 3,298,377
Claremont University Center, Series 1999B, 5.250%, 3/01/18
1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,725,183
University of San Diego, Series 2002A, 5.250%, 10/01/30
8,880 State Public Works Board of the State of California, Lease 10/12 at 100.00 AAA 9,825,809
Revenue Bonds, Regents of the University of California,
2002 Series A, UCLA Replacement Hospitals,
5.375%, 10/01/16 - FSA Insured
9,000 Trustees of the California State University, Systemwide Revenue 11/12 at 100.00 AAA 9,269,280
Bonds, Series 2002A, 5.125%, 11/01/26 - AMBAC Insured
9,000 The Regents of the University of California, Multiple Purpose 9/08 at 101.00 AA 9,258,570
Project Revenue Bonds, Series K, 5.300%, 9/01/30
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 4.9%
5,000 ABAG Finance Authority for Nonprofit Corporations, California, 4/12 at 100.00 A 5,164,750
Insured Revenue Bonds, Sansum-Santa Barbara Medical
Foundation Clinic, Series 2002A, 5.600%, 4/01/26
4,000 California Statewide Communities Development Authority, No Opt. Call AAA 4,149,040
Revenue Refunding Bonds, Sherman Oaks Project,
Series 1998A, 5.000%, 8/01/22 - AMBAC Insured
2,145 California Statewide Communities Development Authority, No Opt. Call A 2,280,135
Revenue Bonds, Kaiser Permanente, Series 2002E,
4.700%, 11/01/36 (Mandatory put 6/01/09)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 0.9%
1,905 The City of Los Angeles, California, Multifamily Housing 7/11 at 102.00 AAA 2,024,786
Revenue Bonds, GNMA Mortgage-Backed Securities Program,
Park Plaza West Senior Apartments Project, Series 2001B,
5.300%, 1/20/21 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 5.0%
11,500 California Housing Finance Agency, Home Mortgage Revenue 2/09 at 101.50 AAA 11,738,510
Bonds, Series 1998E, 5.250%, 2/01/33 (Alternative
Minimum Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 40.8%
5,920 Cajon Valley Union School District, San Diego County, 8/10 at 102.00 AAA 6,059,298
California, General Obligation Bonds, Series 2002B,
5.125%, 8/01/32 - MBIA Insured
State of California, General Obligation Bonds,
Series 2002 Refunding:
5,500 5.000%, 2/01/12 No Opt. Call A 5,924,215
9,000 5.000%, 2/01/22 - MBIA Insured 2/12 at 100.00 AAA 9,277,380
1,500 Centinela Valley Union High School District, Los Angeles No Opt. Call AAA 1,640,550
County, California, General Obligation Bonds, Series 2002A,
5.250%, 2/01/26 - MBIA Insured
2,500 Chaffee Joint Union High School District, San Bernardino 5/12 at 101.00 AAA 2,550,200
County, California, General Obligation Bonds, Election of 1998,
Series 2002C, 5.000%, 5/01/27 - FSA Insured
10,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 10,257,100
General Obligation Bonds, Series 2002A,
5.000%, 8/01/25 - FSA Insured
2,070 Fresno Unified School District, Fresno County, California, 8/10 at 102.00 AAA 2,135,495
General Obligation Bonds, Election of 1995, Series 2002G,
5.125%, 8/01/26 - FSA Insured
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Election of 2001, Series 2002B:
1,135 5.125%, 8/01/23 - FGIC Insured 8/10 at 102.00 AAA 1,187,630
1,190 5.125%, 8/01/24 - FGIC Insured 8/10 at 102.00 AAA 1,237,767
1,245 5.125%, 8/01/25 - FGIC Insured 8/10 at 102.00 AAA 1,290,144
1,255 5.125%, 8/01/26 - FGIC Insured 8/10 at 102.00 AAA 1,294,708
40
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 5,000 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA $ 5,145,500
Obligation Bonds, Election of 1997, 2002B Series E,
5.125%, 1/01/27 - MBIA Insured
Los Angeles Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2003A:
2,250 5.250%, 7/01/20 - FSA Insured (WI, settling 3/05/03) 7/13 at 100.00 AAA 2,427,773
4,700 5.000%, 7/01/22 - FSA Insured (WI, settling 3/05/03) 7/13 at 100.00 AAA 4,890,350
7,000 Los Gatos Joint Union High School District, California, Election 6/12 at 101.00 AAA 7,139,720
of 1998, Series 2002C, 5.000%, 6/01/27 - FSA Insured
2,500 Oakland Unified School District, Alameda County, California, 8/12 at 100.00 AAA 2,659,450
General Obligation Bonds, Series 2002, 5.250%, 8/01/21 -
FGIC Insured
3,300 Peralta Community College District, Alameda County, 8/09 at 102.00 AAA 3,339,468
California, General Obligation Bonds, Election 2000, Series A,
5.000%, 8/01/31 - FGIC Insured
3,250 San Diego Unified School District, San Diego County, California, 7/11 at 102.00 AAA 3,387,085
General Obligation Bonds, Election of 1998, Series 2001C,
5.000%, 7/01/22 - FSA Insured
4,000 San Diego Unified School District, San Diego County, California, 7/12 at 101.00 AAA 4,324,480
General Obligation Bonds, Election of 1998, Series 2002D,
5.250%, 7/01/20 - FGIC Insured
3,500 San Mateo County Community College District, California, 9/12 at 100.00 AAA 3,570,350
General Obligation Bonds, Series 2002A, 5.000%, 9/01/26 -
FGIC Insured
2,980 Santa Clarita Community College District, Los Angeles County, 8/11 at 101.00 AAA 3,067,433
California, General Obligation Bonds, Series 2002,
5.125%, 8/01/26 - FGIC Insured
2,460 Vacaville Unified School District, Solano County, California, 8/11 at 101.00 AAA 2,509,003
General Obligation Bonds, Series 2002, 5.000%, 8/01/26 -
FSA Insured
10,000 Vista Unified School District, San Diego County, California, 8/12 at 100.00 AAA 10,337,600
General Obligation Bonds, Series 2002A, 5.000%, 8/01/23 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 42.6%
6,895 Brea Olinda Unified School District, Orange County, California, 8/11 at 101.00 AAA 7,086,750
Certificates of Participation, Series 2002A Refunding,
5.125%, 8/01/26 - FSA Insured
2,290 Burbank Public Financing Authority, California, Revenue Bonds, 12/13 at 100.00 AAA 2,497,314
Golden State Redevelopment Project, Series 2003A Refunding,
5.250%, 12/01/19 - AMBAC Insured
State Public Works Board of the State of California, Lease
Revenue Bonds, Department of General Services, Capital East End,
Series 2002A:
1,535 5.250%, 12/01/16 - AMBAC Insured 12/12 at 100.00 AAA 1,681,516
2,490 5.250%, 12/01/17 - AMBAC Insured 12/12 at 100.00 AAA 2,708,821
3,145 Culver City Redevelopment Agency, California, Redevelopment 5/11 at 101.00 AAA 3,244,665
Project Tax Allocation Bonds, Series 2002A,
5.125%, 11/01/25 - MBIA Insured
1,020 Desert Sands Unified School District, Riverside County, 3/12 at 101.00 AAA 1,073,754
California, Certificates of Participation, Series 2002 Refunding,
5.000%, 3/01/20 - MBIA Insured
8,720 City of El Monte, California, Department of Public Services 1/11 at 100.00 AAA 9,048,657
Facility Phase II, Certificates of Participation, Senior Lien
Series 2001, 5.000%, 1/01/21 - AMBAC Insured
6,615 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 7,263,204
Refunding Bonds, Merged Redevelopment Project,
Series 1998A, 5.250%, 5/01/23 - AMBAC Insured
5,500 La Quinta Redevelopment Agency, California, Project Area 9/11 at 102.00 AAA 5,621,660
No. 1 Tax Allocation Bonds, Series 2001, 5.100%, 9/01/31 -
AMBAC Insured
3,400 La Quinta Redevelopment Agency, California, Project Area No. 1 9/12 at 102.00 AAA 3,549,838
Tax Allocation Bonds, Series 2002, 5.000%, 9/01/22 -
AMBAC Insured
7,000 The City of Los Angeles, California, Certificates of Participation, 4/12 at 100.00 AAA 7,248,920
Real Property Acquisition Program, Series 2002,
5.200%, 4/01/27 - AMBAC Insured
4,690 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 4,782,862
California, Proposition C Sales Tax Revenue Bonds, Second
Senior Series 1998A Refunding, 5.000%, 7/01/23 -
AMBAC Insured
2,000 Redevelopment Agency of the City of Oakland, California, 3/13 at 100.00 AAA 2,241,040
Subordinate Lien Tax Allocation Bonds, Central District
Redevelopment Project, Series 2003, 5.500%, 9/01/17 -
FGIC Insured
41
Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 8,470 Ontario Redevelopment Financing Authority, California, Lease 8/11 at 101.00 AAA $ 8,775,259
Revenue Bonds, Capital Projects, Series 2001,
5.200%, 8/01/29 - AMBAC Insured
5,000 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 5,126,100
Revenue Bonds, Project Area No. 1, Series 2002 Refunding,
5.000%, 4/01/25 - MBIA Insured
4,475 County of Riverside Asset Leasing Corporation, California, 6/12 at 101.00 AAA 4,736,787
Leasehold Revenue Bonds, 1997 Series B, County of Riverside
Hospital Project, 5.000%, 6/01/19 - MBIA Insured
San Bernardino County, California, Certificates of
Participation, Series 2002A, West Valley Detention Center
Refinancing:
3,000 5.250%, 11/01/13 - MBIA Insured 11/11 at 102.00 AAA 3,389,460
2,000 5.250%, 11/01/14 - MBIA Insured 11/11 at 102.00 AAA 2,245,320
6,765 5.250%, 11/01/15 - MBIA Insured 11/11 at 102.00 AAA 7,541,351
3,175 City of San Buenaventura, California, 2001 Certificates of 2/11 at 101.00 AAA 3,300,635
Participation, Series C, San Buenaventura Public Facilities
Financing Authority, 5.250%, 2/01/31 - AMBAC Insured
4,000 City of San Jose Financing Authority, California, Lease Revenue 9/11 at 100.00 AAA 4,216,680
Bonds, Series 2001F, Convention Center Project Refunding,
5.000%, 9/01/19 - MBIA Insured
2,160 Temecula Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 AAA 2,207,131
Revenue Bonds, Temecula Redevelopment Project No. 1,
Series 2002, 5.125%, 8/01/27 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.7%
Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 29A:
2,185 5.250%, 5/01/16 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,329,429
2,300 5.250%, 5/01/17 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,432,710
10,110 Airports Commission of the City and County of San Francisco, 5/13 at 100.00 AAA 10,968,845
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 29B, 5.125%, 5/01/17 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 18.7%
9,000 Anaheim Public Financing Authority, California, Revenue 10/12 at 100.00 AAA 9,147,780
Bonds, Electric System Distribution Facilities, Series 2002A,
5.000%, 10/01/27 - FSA Insured
10,000 California Pollution Control Financing Authority, Pollution 4/11 at 102.00 AAA 10,814,500
Control Refunding Revenue Bonds, Pacific Gas and Electric
Company, 1996A Series Remarketed, 5.350%, 12/01/16
(Alternative Minimum Tax) - MBIA Insured
6,000 State of California Department of Water Resources, Power 5/12 at 101.00 A3 6,235,980
Supply Revenue Bonds, Series 2002A, 5.125%, 5/01/18
6,000 Northern California Power Agency, Hydroelectric Project Number 7/08 at 101.00 AAA 6,152,220
One Revenue Bonds, 1998 Refunding Series A,
5.200%, 7/01/32 - MBIA Insured
5,500 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 AAA 5,585,250
Revenue Bonds, Series 2001N, 5.000%, 8/15/28 - MBIA Insured
5,630 Southern California Public Power Authority, Transmission Project 7/12 at 100.00 AAA 5,825,136
Revenue Bonds, 2002A Subordinate Refunding Series, Southern
Transmission Project, 4.750%, 7/01/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.2%
3,000 California Department of Water Resources, Central Valley 12/12 at 100.00 AAA 3,269,340
Project Water System Revenue Bonds, Series 2002Z,
5.000%, 12/01/15 - FGIC Insured
3,000 California Department of Water Resources, Central Valley 12/12 at 100.00 AAA 3,143,970
Project Water System Revenue Bonds, Series X,
5.150%, 12/01/23 - FGIC Insured
9,000 Eastern Municipal Water District, California, Water and 7/11 at 100.00 AAA 9,100,350
Sewer Revenue Certificates of Participation, Series 2001B,
5.000%, 7/01/30 - FGIC Insured
42
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 4,500 The Metropolitan Water District of Southern California, 1/08 at 101.00 AAA $ 4,547,745
Water Revenue Bonds, 1997 Authorization, Series A,
5.000%, 7/01/30 - MBIA Insured
2,000 Pico Rivera Water Authority, California, Water System Project No Opt. Call AAA 2,291,439
Revenue Bonds, Series 1999A Refunding,
5.500%, 5/01/19 - MBIA Insured
10,000 Public Utilities Commission of the City and County of 4/13 at 100.00 AAA 10,929,299
San Francisco, California, Clean Water Revenue Bonds,
Series 2003A Refunding, 5.250%, 10/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 331,000 Total Long-Term Investments (cost $332,303,897) - 148.0% 346,748,856
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 2.8%
6,600 California Health Facilities Financing Authority, Insured Revenue VMIG-1 6,600,000
Bonds, Sutter/CHS, Series 1996B, Variable Rate Demand
Bonds, 1.100%, 7/01/12 - AMBAC Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 6,600 Total Short-Term Investments (cost $6,600,000) 6,600,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.4)% (1,004,365)
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.4)% (118,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 234,344,491
====================================================================================================================
At least 80% of the Fund's net assets are invested in
municipal securities that are either covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio
Insurance which ensures the timely payment of principal and
interest. Up to 20% of the Fund's net assets may be invested
in municipal securities that are (i) either backed by an
escrow or trust containing sufficient U.S. Government or
U.S. Government agency securities (also ensuring the timely
payment of principal and interest), or (ii) municipal bonds
that are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or
Fitch) or unrated but judged to be of comparable quality by
the Adviser.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
43
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX)
Portfolio of
INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 19.1%
$ 3,500 California Educational Facilities Authority, Revenue Bonds, 10/11 at 100.00 AAA $ 3,558,030
California Institute of Technology, Series 2003A,
5.000%, 10/01/32
10,000 California State University, Systemwide Revenue Bonds, 5/13 at 100.00 AAA 10,132,300
Series 2003A, 5.000%, 11/01/32 - FGIC Insured
2,500 California Statewide Communities Development Authority, 8/12 at 100.00 A 2,576,825
Student Housing Revenue Bonds, EAH-East Campus
Apartment LLC, Series 2002A, 5.500%, 8/01/22 - ACA Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 1.8%
1,500 California Health Facilities Financing Authority, Revenue 11/08 at 101.00 AAA 1,508,955
Bonds, USCF - Stanford Health Care, 1998 Series A,
5.000%, 11/15/31 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 7.1%
4,000 ABAG Finance Authority for Nonprofit Corporations, California, 11/12 at 100.00 A 4,054,200
Insured Senior Living Revenue Bonds, Odd Fellows Home
of California, Series 2003A, 5.200%, 11/15/22
2,000 California Health Facilities Financing Authority, Revenue 1/13 at 100.00 A 2,003,660
Bonds, Northern California Retired Officers Community
Corporation - Paradise Valley Estates, Series 2002,
5.250%, 1/01/26
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 24.2%
2,000 Butte-Glenn Community College District, Butte and Glenn 8/12 at 101.00 Aaa 2,043,140
Counties, California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/26 - MBIA Insured
1,500 State of California, General Obligation Bonds, Series 2002 No Opt. Call A 1,615,695
Refunding, 5.000%, 2/01/12
State of California, General Obligation Bonds, Series 2002:
3,750 5.000%, 4/01/27 - AMBAC Insured 4/12 at 100.00 AAA 3,795,188
3,000 5.250%, 4/01/30 - XLCA Insured 4/12 at 100.00 AAA 3,079,470
450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 461,570
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FSA Insured
2,000 The City of Los Angeles, California, General Obligation Bonds, 9/12 at 100.00 AAA 2,079,020
Series 2002A, 5.000%, 9/01/22 - MBIA Insured
4,750 Los Angeles Unified School District, Los Angeles County, 7/13 at 100.00 AAA 4,942,375
California, General Obligation Bonds, Series 2003A,
5.000%, 7/01/22 - FSA Insured (WI, settling 3/05/03)
2,500 City of San Jose, California, General Obligation Bonds, 9/12 at 100.00 AA+ 2,585,075
Series 2002, Library, Park and Public Safety Projects,
5.000%, 9/01/23
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 62.5%
2,025 Burbank Public Financing Authority, California, Revenue Bonds, 12/13 at 100.00 AAA 2,163,065
Golden State Redevelopment Project, Series 2003A Refunding,
5.250%, 12/01/22 - AMBAC Insured
4,000 State Public Works Board of the State of California, Lease 12/12 at 100.00 AAA 4,061,160
Revenue Bonds, Department of General Services, Capital East
End, Series 2002A, 5.000%, 12/01/27 - AMBAC Insured
3,000 Cathedral City Public Financing Authority, California, Tax 8/12 at 102.00 AAA 3,037,680
Allocation Bonds, Merged Project Areas, Series 2002A,
5.000%, 8/01/33 - MBIA Insured
44
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 5,540 Irvine Public Facilities and Infrastructure Authority, California, 9/03 at 103.00 AAA $ 5,706,699
Assessment Revenue Bonds, Series 2003C, 5.000%, 9/02/21 -
AMBAC Insured
1,770 Los Angeles Unified School District, Los Angeles County, 10/12 at 100.00 AAA 1,799,063
California, Certificates of Participation, Series 2002C,
Administration Building Project II, 5.000%, 10/01/27 -
AMBAC Insured
1,500 Los Osos, California, Community Services Wastewater 9/10 at 103.00 AAA 1,519,455
Assessment District No. 1 Improvement Bonds, Series 2002,
5.000%, 9/02/33 - MBIA Insured
1,285 Poway Unified School District, San Diego County, California, 9/10 at 102.00 N/R 1,292,196
Special Tax Bonds, Community Facilities District No. 6,
Series 2002A, 6.050%, 9/01/25
3,350 Puerto Rico Municipal Finance Agency, 2002 Series A, 8/12 at 100.00 AAA 3,636,291
5.250%, 8/01/20 - FSA Insured
4,475 County of Riverside Asset Leasing Corporation, California, 6/12 at 101.00 AAA 4,736,787
Leasehold Revenue Bonds, 1997 Series B, County of
Riverside Hospital Project, 5.000%, 6/01/19 - MBIA Insured
San Buenaventura, California, Certificates of Participation,
Golf Course Financing Project, Series 2002D:
3,000 5.000%, 2/01/27 - AMBAC Insured 2/12 at 100.00 AAA 3,051,960
3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AAA 3,336,333
2,405 San Diego Redevelopment Agency, California, Centre City 9/11 at 101.00 Aaa 2,445,308
Project Subordinate Lien Tax Allocation Bonds, Series 2003A,
5.000%, 9/01/28 - MBIA Insured
2,465 San Diego Redevelopment Agency, California, Centre City Project 9/09 at 101.00 Baa2 2,463,324
Subordinate Tax Increment and Parking Revenue Bonds,
Series 2003B, 5.250%, 9/01/26
1,220 San Diego Redevelopment Agency, California, Merged Area 8/10 at 101.00 AAA 1,232,407
Redevelopment Project Tax Allocation Bonds, Series 2002,
5.000%, 8/01/32 - MBIA Insured
2,770 City of San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA 2,804,819
Bonds, Civic Center Project, Series 2002B Refunding,
5.000%, 6/01/32 - AMBAC Insured
2,390 Solano County, California, Certificates of Participation, 11/12 at 100.00 AAA 2,511,006
Series 2002, 5.250%, 11/01/24 - MBIA Insured
Sweetwater Union High School District, San Diego County,
California, Certificates of Participation, Series 2002:
3,245 5.000%, 9/01/23 - FSA Insured 9/12 at 102.00 AAA 3,367,304
4,015 5.000%, 9/01/24 - FSA Insured 9/12 at 102.00 AAA 4,137,337
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 19.4%
5,480 Bay Area Government Association, California, BART SFO Extension 8/12 at 100.00 AAA 5,580,832
Airport Premium Fare Revenue Bonds, Series 2002A,
5.000%, 8/01/26 - AMBAC Insured
3,135 Airports Commission of the City and County of San Francisco, 5/08 at 101.00 AAA 3,198,202
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 16B, 5.000%, 5/01/24 - FSA Insured
1,300 Airports Commission of the City and County of San Francisco, 5/10 at 101.00 AAA 1,327,248
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 26B, 5.000%, 5/01/25
6,000 Airports Commission of the City and County of San Francisco, 5/13 at 100.00 AAA 6,437,340
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 29B, 5.125%, 5/01/19 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.3%
3,000 Anaheim Public Financing Authority, California, Revenue Bonds, 10/12 at 100.00 AAA 3,035,190
Electric System Distribution Facilities, Series 2002A,
5.000%, 10/01/31 - FSA Insured
3,055 Department of Water and Power of Los Angeles, California, 7/11 at 100.00 AAA 3,229,013
Power System Revenue Bonds, 2001 Series A1,
5.250%, 7/01/22 - FSA Insured
45
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX) (continued)
Portfolio of INVESTMENTS February 28, 2003 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.5%
$ 1,495 The Metropolitan Water District of Southern California, Water 1/08 at 101.00 AAA $ 1,510,862
Revenue Bonds, 1997 Authorization, Series A,
5.000%, 7/01/30 - MBIA Insured
San Diego Public Facilities Financing Authority, California,
Water Revenue Bonds, Series 2002 Subordinate Lien:
3,000 5.000%, 8/01/22 - MBIA Insured 8/12 at 100.00 AAA 3,117,599
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,584,399
------------------------------------------------------------------------------------------------------------------------------------
$ 124,170 Total Long-Term Investments (cost $125,578,246) - 149.9% 127,758,382
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 7.6%
6,500 State of California Department of Water Resources, Power VMIG-1 6,500,000
Supply Revenue Bonds, Series 2002-B5, Variable Rate
Demand Obligations, 1.150%, 5/01/22+
------------------------------------------------------------------------------------------------------------------------------------
$ 6,500 Total Short-Term Investments (cost $6,500,000) 6,500,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (4.7)% (4,009,329)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.8)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $85,249,053
====================================================================================================================
At least 80% of the Fund's net assets are invested in
municipal securities that are either covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio
Insurance which ensures the timely payment of principal and
interest. Up to 20% of the Fund's net assets may be invested
in municipal securities that are (i) either backed by an
escrow or trust containing sufficient U.S. Government or
U.S. Government agency securities (also ensuring the timely
payment of principal and interest), or (ii) municipal bonds
that are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or
Fitch) or unrated but judged to be of comparable quality by
the Adviser.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and prices
of the earliest optional call or redemption. There may be
other call provisions at varying prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's
rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
46
Statement of
ASSETS AND LIABILITIES February 28, 2003 (Unaudited)
INSURED INSURED CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM
PREMIUM INCOME PREMIUM INCOME 2 INCOME
(NPC) (NCL) (NCU)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities, at market value $137,455,100 $271,095,829 $123,875,149
Temporary investments in short-term securities,
at amortized cost, which approximates
market value 6,700,000 7,500,000 1,000,000
Cash -- -- 1,944,649
Receivables:
Interest 2,347,932 4,210,539 1,803,486
Investments sold 3,425,000 11,709,458 46,350
Other assets 9,265 23,584 6,111
------------------------------------------------------------------------------------------------------------------------------------
Total assets 149,937,297 294,539,410 128,675,745
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 234,092 6,466,554 --
Payable for investments purchased -- -- 2,299,005
Accrued expenses:
Management fees 73,654 140,549 62,345
Organization and offering costs -- -- --
Other 82,690 102,475 77,743
Preferred share dividends payable 2,592 3,971 3,302
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 393,028 6,713,549 2,442,395
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 45,000,000 95,000,000 43,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $104,544,269 $192,825,861 $ 83,233,350
====================================================================================================================================
Common shares outstanding 6,438,911 12,661,701 5,774,216
====================================================================================================================================
Net asset value per Common share outstanding (net assets
applicable to Common shares, divided by Common
shares outstanding) $ 16.24 $ 15.23 $ 14.41
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 64,389 $ 126,617 $ 57,742
Paid-in surplus 89,092,270 175,496,208 80,181,422
Undistributed net investment income 1,428,611 2,112,704 874,126
Accumulated net realized gain (loss) from investments 576,331 (7,715,520) (3,606,608)
Net unrealized appreciation of investments 13,382,668 22,805,852 5,726,668
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $104,544,269 $192,825,861 $ 83,233,350
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
47
Statement of
ASSETS AND LIABILITIES February 28, 2003 (Unaudited) (continued)
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities,
at market value $530,431,871 $325,667,617 $513,329,677 $346,748,856 $127,758,382
Temporary investments in short-term securities,
at amortized cost, which approximates
market value -- -- 5,655,000 6,600,000 6,500,000
Cash -- -- 5,607,320 2,364,693 --
Receivables:
Interest 7,621,317 3,922,296 6,778,201 3,960,914 1,274,959
Investments sold 10,200 8,968,885 14,850,478 -- --
Other assets 28,415 6,739 2,587 6,292 9,083
------------------------------------------------------------------------------------------------------------------------------------
Total assets 538,091,803 338,565,537 546,223,263 359,680,755 135,542,424
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 943,664 1,169,964 -- -- 241,463
Payable for investments purchased -- 7,192,226 11,339,916 7,192,226 4,853,455
Accrued expenses:
Management fees 135,709 84,913 135,127 90,404 32,554
Organization and offering costs -- 4,542 180,296 14,074 18,750
Other 178,239 59,883 60,673 30,012 146,408
Preferred share dividends payable 11,760 9,504 11,749 9,548 741
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,269,372 8,521,032 11,727,761 7,336,264 5,293,371
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 175,000,000 110,000,000 187,000,000 118,000,000 45,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $361,822,431 $220,044,505 $347,495,502 $234,344,491 $ 85,249,053
====================================================================================================================================
Common shares outstanding 23,412,013 14,790,660 24,112,833 15,259,759 5,882,009
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common
shares, divided by Common
shares outstanding) $ 15.45 $ 14.88 $ 14.41 $ 15.36 $ 14.49
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 234,120 $ 147,907 $ 241,128 $ 152,598 $ 58,820
Paid-in surplus 332,500,716 210,030,236 342,306,672 216,616,773 82,972,214
Undistributed net investment income 3,806,015 1,508,507 1,225,562 296,686 35,720
Accumulated net realized gain (loss)
from investments (2,939,439) 1,486,640 (5,657,643) 2,833,475 2,163
Net unrealized appreciation of investments 28,221,019 6,871,215 9,379,783 14,444,959 2,180,136
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $361,822,431 $220,044,505 $347,495,502 $234,344,491 $ 85,249,053
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
48
Statement of
OPERATIONS Six Months Ended February 28, 2003 (Unaudited)
INSURED INSURED CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM
PREMIUM INCOME PREMIUM INCOME 2 INCOME
(NPC) (NCL) (NCU)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $3,881,087 $7,477,707 $3,319,239
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 478,316 909,433 405,609
Preferred shares - auction fees 55,788 117,774 53,308
Preferred shares - dividend disbursing agent fees 4,959 9,918 4,959
Shareholders' servicing agent fees and expenses 6,931 10,887 4,670
Custodian's fees and expenses 21,232 35,280 19,608
Directors'/Trustees' fees and expenses 1,077 1,900 955
Professional fees 5,648 7,564 5,269
Shareholders' reports - printing and mailing expenses 5,906 13,059 6,586
Stock exchange listing fees 5,837 8,179 1,073
Investor relations expense 10,344 19,496 9,025
Portfolio insurance expense 6,638 2,351 --
Other expenses 6,965 10,250 7,725
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 609,641 1,146,091 518,787
Custodian fee credit (7,962) (4,276) (3,200)
Expense reimbursement -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 601,679 1,141,815 515,587
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,279,408 6,335,892 2,803,652
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 775,688 863,708 515,386
Change in net unrealized appreciation
(depreciation) of investments 392,092 683,705 (603,282)
------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 1,167,780 1,547,413 (87,896)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (224,366) (502,524) (216,570)
From accumulated net realized gains from investments (42,365) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (266,731) (502,524) (216,570)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $4,180,457 $7,380,781 $2,499,186
====================================================================================================================================
See accompanying notes to financial statements.
49
Statement of
OPERATIONS Six Months Ended February 28, 2003 (Unaudited) (continued)
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)*
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $13,672,948 $8,240,290 $13,169,215 $8,541,589 $1,095,340
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,671,881 1,041,273 1,670,598 1,107,601 174,778
Preferred shares - auction fees 216,952 136,370 231,829 146,288 13,253
Preferred shares - dividend disbursing agent fees 9,918 9,918 9,918 9,918 1,178
Shareholders' servicing agent fees and expenses 5,561 2,455 3,124 1,539 3,912
Custodian's fees and expenses 69,590 62,562 73,603 55,410 8,063
Directors'/Trustees' fees and expenses 2,913 2,101 2,914 2,480 370
Professional fees 9,770 7,323 9,062 7,005 4,307
Shareholders' reports - printing and mailing expenses 17,541 10,551 14,609 9,203 7,916
Stock exchange listing fees 8,186 1,073 1,748 122 61
Investor relations expense 32,350 21,038 11,513 11,755 2,655
Portfolio insurance expense -- -- -- -- --
Other expenses 13,905 10,074 8,967 1,187 486
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 2,058,567 1,304,738 2,037,885 1,352,508 216,979
Custodian fee credit (4,327) (6,068) (14,000) (22,118) (5,266)
Expense reimbursement (792,315) (488,653) (791,686) (520,491) (86,070)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,261,925 810,017 1,232,199 809,899 125,643
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 12,411,023 7,430,273 11,937,016 7,731,690 969,697
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 650,046 2,220,080 811,216 3,219,095 2,163
Change in net unrealized appreciation
(depreciation) of investments 3,552,335 (828,519) 723,944 789,699 2,180,136
------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 4,202,381 1,391,561 1,535,160 4,008,794 2,182,299
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (901,110) (564,814) (1,018,638) (619,864) (45,795)
From accumulated net realized gains from investments -- (49,489) -- (87,519) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (901,110) (614,303) (1,018,638) (707,383) (45,795)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations $15,712,294 $8,207,531 $12,453,538 $11,033,101 $3,106,201
====================================================================================================================================
* For the period November 22, 2002 (commencement of operations) through
February 28, 2003.
See accompanying notes to financial statements.
50
Statement of
CHANGES IN NET ASSETS (Unaudited)
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA PREMIUM
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) INCOME (NCU)
--------------------------------- ---------------------------------- --------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
2/28/03 8/31/02 2/28/03 8/31/02 2/28/03 8/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,279,408 $ 6,729,063 $ 6,335,892 $ 12,715,990 $ 2,803,652 $ 5,735,508
Net realized gain (loss)
from investments 775,688 2,870,032 863,708 92,173 515,386 709,477
Change in net unrealized
appreciation (depreciation)
of investments 392,092 (2,620,683) 683,705 (194,559) (603,282) 10,347
Distributions to Preferred
Shareholders:
From net investment income (224,366) (578,229) (502,524) (1,211,432) (216,570) (583,093)
From accumulated net realized
gains from investments (42,365) -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares
from operations 4,180,457 6,400,183 7,380,781 11,402,172 2,499,186 5,872,239
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,281,838) (5,538,554) (5,544,120) (10,503,880) (2,514,673) (4,728,811)
From accumulated net
realized gains
from investments (490,993) -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
applicable to Common shares
from distributions to
Common shareholders (3,772,831) (5,538,554) (5,544,120) (10,503,880) (2,514,673) (4,728,811)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- -- -- --
Net proceeds from shares issued
to shareholders due to
reinvestment of distributions -- 207,189 119,270 338,627 -- 38,176
Preferred shares offering costs -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 207,189 119,270 338,627 -- 38,176
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares 407,626 1,068,818 1,955,931 1,236,919 (15,487) 1,181,604
Net assets applicable
to Common shares
at the beginning of period 104,136,643 103,067,825 190,869,930 189,633,011 83,248,837 82,067,233
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable
to Common shares at
the end of period $104,544,269 $104,136,643 $192,825,861 $190,869,930 $83,233,350 $83,248,837
====================================================================================================================================
Undistributed net investment
income at the
end of period $ 1,428,611 $ 1,830,679 $ 2,112,704 $ 1,761,555 $ 874,126 $ 830,638
====================================================================================================================================
See accompanying notes to financial statements.
51
Statement of
CHANGES IN NET ASSETS (Unaudited) (continued)
CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND ADVANTAGE (NAC) DIVIDEND ADVANTAGE 2 (NVX) DIVIDEND ADVANTAGE 3 (NZH)
--------------------------------- ---------------------------------- --------------------------------
FOR THE
PERIOD 9/25/01
(COMMENCEMENT
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED OF OPERATIONS
2/28/03 8/31/02 2/28/03 8/31/02 2/28/03 THROUGH 8/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 12,411,023 $ 24,981,916 $ 7,430,273 $ 15,663,509 $ 11,937,016 $ 20,039,962
Net realized gain (loss)
from investments 650,046 3,991,908 2,220,080 351,147 811,216 (6,468,859)
Change in net unrealized
appreciation (depreciation)
of investments 3,552,335 (3,853,349) (828,519) (6,268,122) 723,944 8,660,828
Distributions to
Preferred Shareholders:
From net investment income (901,110) (2,424,510) (564,814) (1,578,722) (1,018,638) (1,962,036)
From accumulated net realized
gains from investments -- -- (49,489) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares
from operations 15,712,294 22,695,965 8,207,531 8,167,812 12,453,538 20,269,895
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (10,710,997) (20,156,545) (6,568,967) (12,867,313) (10,416,744) (17,358,987)
From accumulated net realized
gains from investments -- -- (430,161) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
applicable to
Common shares from
distributions to
Common shareholders (10,710,997) (20,156,545) (6,999,128) (12,867,313) (10,416,744) (17,358,987)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- -- -- 344,509,500
Net proceeds from shares issued
to shareholders due to
reinvestment of distributions -- 84,644 -- 73,486 -- 79,128
Preferred shares offering costs -- -- 21,719 -- (11,253) (2,129,850)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 84,644 21,719 73,486 (11,253) 342,458,778
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to
Common shares 5,001,297 2,624,064 1,230,122 (4,626,015) 2,025,541 345,369,686
Net assets applicable to
Common shares
at the beginning of period 356,821,134 354,197,070 218,814,383 223,440,398 345,469,961 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $361,822,431 $356,821,134 $220,044,505 $218,814,383 $347,495,502 $345,469,961
====================================================================================================================================
Undistributed net investment
income at
the end of period $ 3,806,015 $ 2,840,186 $ 1,508,507 $ 1,221,035 $ 1,225,562 $ 718,939
====================================================================================================================================
See accompanying notes to financial statements.
52
INSURED
CALIFORNIA
TAX-FREE
INSURED CALIFORNIA ADVANTAGE
DIVIDEND ADVANTAGE (NKL) (NKX)
--------------------------------- ---------------
FOR THE FOR THE
PERIOD 3/27/02 PERIOD 11/22/02
(COMMENCEMENT (COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS) OF OPERATIONS)
2/28/03 THROUGH 8/31/02 THROUGH 2/28/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,731,690 $ 5,170,454 $ 969,697
Net realized gain (loss) from investments 3,219,095 486,634 2,163
Change in net unrealized appreciation
(depreciation) of investments 789,699 13,672,712 2,180,136
Distributions to Preferred Shareholders:
From net investment income (619,864) (406,088) (45,795)
From accumulated net realized
gains from investments (87,519) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 11,033,101 18,923,712 3,106,201
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (6,958,450) (4,638,508) (888,182)
From accumulated net realized gains
from investments (784,735) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (7,743,185) (4,638,508) (888,182)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 217,998,750 83,983,125
Net proceeds from shares issued
to shareholders due to
reinvestment of distributions -- 41,170 134
Preferred shares offering costs (7,636) (1,363,188) (1,052,500)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (7,636) 216,676,732 82,930,759
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 3,282,280 230,961,936 85,148,778
Net assets applicable to Common shares
at the beginning of period 231,062,211 100,275 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $234,344,491 $231,062,211 $ 85,249,053
====================================================================================================================================
Undistributed net investment income at
the end of period $ 296,686 $ 125,858 $ 35,720
====================================================================================================================================
See accompanying notes to financial statements.
53
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The California Funds (the "Funds") covered in this report and their
corresponding Common share stock exchange symbols are Nuveen Insured California
Premium Income Municipal Fund, Inc. (NPC), Nuveen Insured California Premium
Income Municipal Fund 2, Inc. (NCL), Nuveen California Premium Income Municipal
Fund (NCU), Nuveen California Dividend Advantage Municipal Fund (NAC), Nuveen
California Dividend Advantage Municipal Fund 2 (NVX), Nuveen California Dividend
Advantage Municipal Fund 3 (NZH), Nuveen Insured California Dividend Advantage
Municipal Fund (NKL) and Nuveen Insured California Tax-Free Advantage Municipal
Fund (NKX). Insured California Premium Income (NPC), Insured California Premium
Income 2 (NCL) and California Dividend Advantage (NAC) are traded on the New
York Stock Exchange while California Premium Income (NCU), California Dividend
Advantage 2 (NVX), California Dividend Advantage 3 (NZH), Insured California
Dividend Advantage (NKL) and Insured California Tax-Free Advantage (NKX) are
traded on the American Stock Exchange. The Funds are registered under the
Investment Company Act of 1940, as amended, as closed-end management investment
companies.
Prior to the commencement of operations of California Dividend Advantage 3
(NZH), Insured California Dividend Advantage (NKL) and Insured California
Tax-Free Advantage (NKX), each Fund had no operations other than those related
to organizational matters, the initial capital contribution of $100,275 by
Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. (formerly, The John Nuveen Company), and the recording of the
organization expenses ($11,500 per Fund) and their reimbursement by Nuveen
Investments, LLC (formerly, Nuveen Investments), also a wholly owned subsidiary
of Nuveen Investments, Inc.
Each Fund seeks to provide current income exempt from both regular federal and
California state income taxes and in the case of Insured California Tax-Free
Advantage (NKX) the alternative minimum tax applicable to individuals, by
investing primarily in a diversified portfolio of municipal obligations issued
by state and local government authorities within the state of California.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers and general
market conditions. If it is determined that market prices for a security are
unavailable or inappropriate, the Board of Directors/Trustees of the Funds or
its designee may establish a fair value for the security. Temporary investments
in securities that have variable rate and demand features qualifying them as
short-term securities are valued at amortized cost, which approximates market
value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
February 28, 2003, 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) had
outstanding when-issued purchase commitments of $2,299,005, $2,389,860,
$11,339,916, $7,192,226 and $4,853,455, respectively. There were no such
outstanding purchase commitments in any of the other Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its net investment
income to its shareholders. Therefore, no federal income tax provision is
required. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal and
California state income taxes, and in the case of Insured California Tax-Free
Advantage (NKX) the alternative minimum tax applicable to individuals, to retain
such tax-exempt status when distributed to shareholders of the Funds.
54
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared and paid monthly.
Net realized capital gains and/or market discount from investment transactions,
if any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States. Accordingly, temporary over-
distributions as a result of these differences may occur and will be classified
as either distributions in excess of net investment income, distributions in
excess of net realized gains and/or distributions in excess of net ordinary
taxable income from investment transactions, where applicable.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend rate
on each Series may change every seven days, as set pursuant to a dutch auction
process by the auction agent, and is payable at or near the end of each rate
period. The number of Preferred shares outstanding, by Series and in total, for
each of the Funds is as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series TH -- 1,900 --
Series F -- -- --
---------------------------------------------------------------------------------------------------------
Total 1,800 3,800 1,720
=========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- 2,200 3,740 -- --
Series T -- -- -- 2,360 --
Series TH 3,500 -- 3,740 -- 1,800
Series F 3,500 2,200 -- 2,360 --
---------------------------------------------------------------------------------------------------------
Total 7,000 4,400 7,480 4,720 1,800
=========================================================================================================
Effective January 17, 2003, Insured California Tax-Free Advantage (NKX) issued
1,800 Series TH, $25,000 stated value Preferred shares.
Insurance
Insured California Premium Income (NPC), Insured California Premium Income 2
(NCL) and Insured California Dividend Advantage (NKL) invest in municipal
securities which are either covered by insurance or are backed by an escrow or
trust account containing sufficient U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest.
Insured California Dividend Advantage (NKL) and Insured California Tax-Free
Advantage (NKX) invest at least 80% of their net assets in municipal securities
that are covered by insurance. Each Fund may also invest up to 20% of its net
assets in municipal securities which are either (i) backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, or
(ii) municipal bonds that are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or Fitch) or unrated but
judged to be of comparable quality by the Adviser.
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 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.
55
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the period ended February 28, 2003.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments, LLC has agreed to pay all offering costs (other than the
sales load) that exceed $.03 per Common share for California Dividend Advantage
3 (NZH), Insured California Dividend Advantage (NKL) and Insured California
Tax-Free Advantage (NKX). California Dividend Advantage 3's (NZH), Insured
California Dividend Advantage's (NKL) and Insured California Tax-Free
Advantage's (NKX) share of offering costs ($723,000, $457,500 and $176,250,
respectively) were recorded as a reduction of the proceeds from the sale of
Common shares.
Costs incurred by California Dividend Advantage 3 (NZH), Insured California
Dividend Advantage (NKL) and Insured California Tax-Free Advantage (NKX) in
connection with their offering of Preferred shares ($2,141,103, $1,370,824 and
$1,052,500, respectively) were recorded as a reduction to paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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. FUND SHARES
Transactions in Common and Preferred shares were as follows:
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) PREMIUM INCOME (NCU)
------------------------- -------------------------- -------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED 2/28/03 8/31/02 ENDED 2/28/03 8/31/02 ENDED 2/28/03 8/31/02
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- --
Shares issued to shareholders
due to reinvestment
of distributions -- 13,079 7,769 22,774 -- 2,696
---------------------------------------------------------------------------------------------------------
-- 13,079 7,769 22,774 -- 2,696
=========================================================================================================
Preferred shares sold -- -- -- -- -- --
=========================================================================================================
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND
ADVANTAGE (NAC) ADVANTAGE 2 (NVX) ADVANTAGE 3 (NZH)
------------------------- --------------------------- --------------------------
FOR THE
PERIOD 9/25/01
(COMMENCEMENT
OF OPERATIONS)
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS THROUGH
ENDED 2/28/03 8/31/02 ENDED 2/28/03 8/31/02 ENDED 2/28/03 8/31/02
-----------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- 24,100,000
Shares issued to shareholders
due to reinvestment
of distributions -- 5,665 -- 3,644 -- 5,833
-----------------------------------------------------------------------------------------------------------
-- 5,665 -- 3,644 -- 24,105,833
===========================================================================================================
Preferred shares sold -- -- -- -- -- 7,480
===========================================================================================================
56
INSURED INSURED
CALIFORNIA DIVIDEND CALIFORNIA TAX-FREE
ADVANTAGE (NKL) ADVANTAGE (NKX)
--------------------------- --------------------
FOR THE FOR THE
PERIOD 3/27/02 PERIOD 11/22/02
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS
SIX MONTHS THROUGH THROUGH
ENDED 2/28/03 8/31/02 2/28/03
----------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- 15,250,000 5,875,000
Shares issued to shareholders
due to reinvestment
of distributions -- 2,759 9
----------------------------------------------------------------------------------------------------------
-- 15,252,759 5,875,009
==========================================================================================================
Preferred shares sold -- 4,720 1,800
==========================================================================================================
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term securities during the six months ended February 28,
2003, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
---------------------------------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $ 1,856,158 $ 2,926,821 $8,623,162
Short-term securities 6,700,000 7,500,000 1,500,000
Sales and maturities:
Long-term municipal securities 12,339,230 16,960,350 9,017,081
Short-term securities 5,000,000 -- 2,000,000
=========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)*
-----------------------------------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $26,774,666 $81,845,059 $171,029,218 $84,908,300 $126,290,473
Short-term securities 1,000,000 3,700,000 28,345,000 6,600,000 26,800,000
Sales and maturities:
Long-term municipal securities 25,639,844 72,840,779 171,087,733 90,520,209 704,991
Short-term securities 1,000,000 13,200,000 30,690,000 -- 20,300,000
===========================================================================================================
* For the period November 22, 2002 (commencement of operations) through
February 28, 2003.
57
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing income on taxable market
discount securities and timing differences in recognizing certain gains and
losses on security transactions.
At February 28, 2003, the cost of investments were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-----------------------------------------------------------------------------------------------------------
Cost of investments $130,489,672 $255,676,027 $119,107,656
===========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)
-----------------------------------------------------------------------------------------------------------
Cost of investments $502,030,065 $318,781,394 $509,600,450 $338,875,772 $132,078,224
===========================================================================================================
Gross unrealized appreciation and gross unrealized depreciation on investments
at February 28, 2003, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-----------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $13,665,428 $22,919,802 $ 6,876,126
Depreciation -- -- (1,108,633)
-----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments $13,665,428 $22,919,802 $ 5,767,493
===========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)
-----------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $29,306,965 $12,869,821 $11,598,941 $14,525,580 $2,180,158
Depreciation (905,159) (5,983,598) (2,214,714) (52,496) --
-----------------------------------------------------------------------------------------------------------
Net unrealized appreciation
on investments $28,401,806 $ 6,886,223 $ 9,384,227 $14,473,084 $2,180,158
===========================================================================================================
58
The tax components of undistributed net investment income and net realized gains
at August 31, 2002, the Funds' last fiscal year end, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
---------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income $1,393,182 $2,577,506 $1,006,594
Undistributed ordinary income * 459,740 -- 40,993
Undistributed net long-term capital gains 334,001 -- --
=========================================================================================================
INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NAC) (NVX) (NZH) (NKL)
---------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income $4,585,890 $2,298,682 $2,477,722 $1,304,269
Undistributed ordinary income * -- -- -- 486,634
Undistributed net long-term capital gains -- -- -- --
=========================================================================================================
The tax character of distributions paid during the period ended August 31, 2002,
the Funds' last fiscal year end, were designated for purposes of the dividends
paid deduction as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
---------------------------------------------------------------------------------------------------------
Distributions from tax-exempt income $6,096,991 $11,644,088 $5,280,680
Distributions from ordinary income * -- -- --
Distributions from net long-term capital gains -- -- --
=========================================================================================================
INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NAC) (NVX) (NZH) (NKL)
---------------------------------------------------------------------------------------------------------
Distributions from tax-exempt income $22,478,680 $14,436,589 $17,562,240 $3,866,185
Distributions from ordinary income * -- -- -- --
Distributions from net long-term capital gains -- -- -- --
=========================================================================================================
* Ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At August 31, 2002, the Funds' last fiscal 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
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM DIVIDEND DIVIDEND
INCOME 2 INCOME ADVANTAGE ADVANTAGE 2
(NCL) (NCU) (NAC) (NVX)
---------------------------------------------------------------------------------------------------------
Expiration year:
2003 $ 323,810 $ 329,551 $ -- $ --
2004 4,345,091 2,742,449 -- --
2005 1,283,948 1,049,994 -- --
2006 -- -- -- --
2007 -- -- -- --
2008 -- -- -- --
2009 2,185,870 -- 3,589,485 --
2010 440,509 -- -- 253,790
---------------------------------------------------------------------------------------------------------
Total $ 8,579,228 $4,121,994 $3,589,485 $253,790
=========================================================================================================
59
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
California Dividend Advantage 3 (NZH) has elected to defer net realized losses
from investments incurred from November 1, 2001 through August 31, 2002
("post-October losses") in accordance with Federal income tax regulations. The
post-October losses of $6,468,859 are treated as having arisen in the following
year.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under Insured California Premium Income's (NPC), Insured California Premium
Income 2's (NCL) and California Premium Income's (NCU) investment management
agreements with the Adviser, each Fund pays an annual management fee, payable
monthly, at the rates set forth below, which are based upon the average daily
net assets (including net assets attributable to Preferred shares) of each Fund
as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
================================================================================
Under California Dividend Advantage's (NAC), California Dividend Advantage 2's
(NVX), California Dividend Advantage 3's (NZH), Insured California Dividend
Advantage's (NKL) and Insured California Tax-Free Advantage (NKX) investment
management agreements with the Adviser, each Fund pays an annual management fee,
payable monthly, at the rates set forth below, which are based upon the average
daily net assets (including net assets attributable to Preferred shares) of each
Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
================================================================================
For the first ten years of California Dividend Advantage's (NAC) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JULY 31, JULY 31,
--------------------------------------------------------------------------------
1999* .30% 2005 .25%
2000 .30 2006 .20
2001 .30 2007 .15
2002 .30 2008 .10
2003 .30 2009 .05
2004 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage (NAC) for
any portion of its fees and expenses beyond July 31, 2009.
60
For the first ten years of California Dividend Advantage 2's (NVX) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 2 (NVX)
for any portion of its fees and expenses beyond March 31, 2011.
For the first ten years of California Dividend Advantage 3's (NZH) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 3 (NZH)
for any portion of its fees and expenses beyond September 30, 2011.
For the first ten years of Insured California Dividend Advantage's (NKL)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts, and for the time periods set
forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Dividend Advantage
(NKL) for any portion of its fees and expenses beyond March 31, 2012.
For the first eight years of Insured California Tax-Free Advantage's (NKX)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts, and for the time periods set
forth below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Tax-Free Advantage
(NKX) for any portion of its fees and expenses beyond November 30, 2010.
61
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid April 1, 2003, to shareholders of record on
March 15, 2003, as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
---------------------------------------------------------------------------------------------------------
Dividend per share $.0760 $.0760 $.0730
=========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NAC) (NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------
Dividend per share $.0800 $.0740 $.0720 $.0760 $.0755
=========================================================================================================
62
Financial
HIGHLIGHTS (Unaudited)
63
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -----------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
===================================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) $16.17 $ .51 $ .19 $(.03) $(.01) $ .66 $(.51) $(.08) $(.59)
2002 16.04 1.05 .03 (.09) -- .99 (.86) -- (.86)
2001 15.08 1.04 .99 (.21) -- 1.82 (.86) -- (.86)
2000 14.81 1.09 .30 (.24) -- 1.15 (.88) -- (.88)
1999 16.31 1.09 (1.56) (.20) -- (.67) (.83) -- (.83)
1998 15.39 1.03 .92 (.22) -- 1.73 (.81) -- (.81)
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) 15.08 .50 .13 (.04) -- .59 (.44) -- (.44)
2002 15.01 1.02 (.02) (.10) -- .90 (.83) -- (.83)
2001 14.09 1.01 .91 (.22) -- 1.70 (.78) -- (.78)
2000 13.70 1.02 .41 (.24) -- 1.19 (.80) -- (.80)
1999 14.82 1.01 (1.14) (.21) -- (.34) (.78) -- (.78)
1998 14.06 .98 .77 (.24) -- 1.51 (.75) -- (.75)
CALIFORNIA PREMIUM
INCOME (NCU)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) 14.42 .49 (.02) (.04) -- .43 (.44) -- (.44)
2002 14.22 .99 .13 (.10) -- 1.02 (.82) -- (.82)
2001 13.34 1.00 .90 (.23) -- 1.67 (.79) -- (.79)
2000 13.19 1.03 .14 (.23) -- .94 (.79) -- (.79)
1999 14.30 1.00 (1.13) (.21) -- (.34) (.77) -- (.77)
1998 13.60 .98 .70 (.24) -- 1.44 (.74) -- (.74)
===================================================================================================================================
Total Returns
----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
--------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) $-- $16.24 $15.8000 3.45% 4.13%
2002 -- 16.17 15.8500 6.73 6.47
2001 -- 16.04 15.6900 14.12 12.43
2000 -- 15.08 14.5625 .84 8.34
1999 -- 14.81 15.3750 1.62 (4.35)
1998 -- 16.31 15.9375 15.85 11.51
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
--------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) -- 15.23 15.0000 4.36 3.96
2002 -- 15.08 14.8000 5.57 6.29
2001 -- 15.01 14.8300 11.99 12.45
2000 -- 14.09 14.0000 3.58 9.21
1999 -- 13.70 14.3750 2.27 (2.50)
1998 -- 14.82 14.8125 15.70 10.95
CALIFORNIA PREMIUM
INCOME (NCU)
--------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) -- 14.41 13.3500 (1.59) 3.00
2002 -- 14.42 14.0000 4.84 7.48
2001 -- 14.22 14.1700 12.84 12.92
2000 -- 13.34 13.3125 5.93 7.63
1999 -- 13.19 13.3750 .81 (2.57)
1998 -- 14.30 14.0000 12.54 10.83
================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
--------------------------- -----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=====================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
---------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) $104,544 1.18%* 6.35%* 1.17%* 6.36%* 1%
2002 104,137 1.21 6.65 1.19 6.66 30
2001 103,068 1.22 6.77 1.21 6.79 21
2000 96,903 1.25 7.65 1.24 7.66 27
1999 95,091 1.22 6.81 1.22 6.82 50
1998 104,478 1.22 6.49 1.22 6.49 2
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
---------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) 192,826 1.21* 6.68* 1.21* 6.69* 1
2002 190,870 1.23 6.83 1.22 6.84 6
2001 189,633 1.24 7.01 1.24 7.02 18
2000 177,977 1.28 7.65 1.26 7.66 26
1999 172,833 1.24 6.86 1.24 6.86 35
1998 186,399 1.25 6.79 1.25 6.79 13
CALIFORNIA PREMIUM
INCOME (NCU)
---------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(a) 83,233 1.26* 6.81* 1.25* 6.82* 7
2002 83,249 1.27 7.07 1.26 7.08 10
2001 82,067 1.32 7.36 1.30 7.38 18
2000 76,878 1.38 8.09 1.36 8.10 19
1999 75,877 1.30 7.08 1.30 7.08 36
1998 82,066 1.32 7.02 1.32 7.02 21
=====================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=====================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
---------------------------------------------------------------------
Year Ended 8/31:
2003(a) $45,000 $25,000 $83,080
2002 45,000 25,000 82,854
2001 45,000 25,000 82,260
2000 45,000 25,000 78,835
1999 45,000 25,000 77,828
1998 45,000 25,000 83,043
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
---------------------------------------------------------------------
Year Ended 8/31:
2003(a) 95,000 25,000 75,744
2002 95,000 25,000 75,229
2001 95,000 25,000 74,903
2000 95,000 25,000 71,836
1999 95,000 25,000 70,482
1998 95,000 25,000 74,052
CALIFORNIA PREMIUM
INCOME (NCU)
---------------------------------------------------------------------
Year Ended 8/31:
2003(a) 43,000 25,000 73,391
2002 43,000 25,000 73,400
2001 43,000 25,000 72,714
2000 43,000 25,000 69,696
1999 43,000 25,000 69,115
1998 43,000 25,000 72,713
=====================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common Share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the six months ended February 28, 2003.
See accompanying notes to financial statements.
64-65 SPREAD
Financial Highlights (Unaudited) (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -----------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
===================================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2002(f) $15.24 $ .53 $ .18 $(.04) $-- $ .67 $(.46) $-- $(.46)
2002 15.13 1.07 -- (.10) -- .97 (.86) -- (.86)
2001 13.82 1.07 1.28 (.23) -- 2.12 (.81) -- (.81)
2000 13.33 1.07 .52 (.26) -- 1.33 (.84) -- (.84)
1999(a) 14.33 .20 (.92) (.03) -- (.75) (.14) -- (.14)
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 14.79 .50 .10 (.04) -- .56 (.44) (.03) (.47)
2002 15.11 1.06 (.40) (.11) -- .55 (.87) -- (.87)
2001(b) 14.33 .34 .90 (.05) -- 1.19 (.29) -- (.29)
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 14.33 .50 .05 (.04) -- .51 (.43) -- (.43)
2002(c) 14.33 .83 .09 (.08) -- .84 (.72) -- (.72)
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 15.14 .51 .27 (.04) (.01) .73 (.46) (.05) (.51)
2002(d) 14.33 .34 .92 (.03) -- 1.23 (.30) -- (.30)
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(e) 14.33 .17 .36 (.01) -- .52 (.15) -- (.15)
===================================================================================================================================
Total Returns
----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
=====================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2002(f) $-- $15.45 $14.1100 .10% 4.45%
2002 -- 15.24 14.5500 3.67 6.75
2001 -- 15.13 14.8900 15.06 15.85
2000 -- 13.82 13.7500 (2.18) 10.80
1999(a) (.11) 13.33 15.0000 .96 (5.99)
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) -- 14.88 13.5900 (1.55) 3.87
2002 -- 14.79 14.2800 (.27) 3.90
2001(b) (.12) 15.11 15.2100 3.40 7.55
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) -- 14.41 13.1400 (3.09) 3.63
2002(c) (.12) 14.33 14.0000 (1.68) 5.32
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) -- 15.36 14.6800 1.29 4.88
2002(d) (.12) 15.14 15.0000 2.05 7.84
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2003(e) (.21) 14.49 14.6000 (1.66) 2.19
=====================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
-------------------------------------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
======================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2002(f) $361,822 1.16%* 6.55%* .71%* 6.99%* 5%
2002 356,821 1.18 6.76 .72 7.22 33
2001 354,197 1.19 7.03 .72 7.50 17
2000 323,326 1.24 7.93 .75 8.43 25
1999(a) 311,367 .93* 5.06* .55* 5.45* 8
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 220,045 1.20* 6.40* .75* 6.85* 22
2002 218,814 1.19 6.82 .73 7.28 32
2001(b) 223,440 1.05* 5.23* .62* 5.65* 40
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 347,496 1.19* 6.50* .72* 6.97* 33
2002(c) 345,470 1.15* 6.01* .69* 6.47* 49
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 234,344 1.18* 6.25* .70* 6.72* 24
2002(d) 231,062 1.10* 4.98* .60* 5.47* 12
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2003(e) 85,249 1.00* 4.06* .58* 4.49* 1
======================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
========================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
------------------------------------------------------------------------
Year Ended 8/31:
2002(f) $175,000 $25,000 $76,689
2002 175,000 25,000 75,974
2001 175,000 25,000 75,600
2000 175,000 25,000 71,189
1999(a) 175,000 25,000 69,481
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 110,000 25,000 75,010
2002 110,000 25,000 74,731
2001(b) 110,000 25,000 75,782
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 187,000 25,000 71,457
2002(c) 187,000 25,000 71,186
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------
Year Ended 8/31:
2003(f) 118,000 25,000 74,649
2002(d) 118,000 25,000 73,954
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------
Year Ended 8/31:
2003(e) 45,000 25,000 72,361
========================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common Share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period May 26, 1999 (commencement of operations) through August 31,
1999.
(b) For the period March 27, 2001 (commencement of operations) through August
31, 2001.
(c) For the period September 25, 2001 (commencement of operations) through
August 31, 2002.
(d) For the period March 27, 2002 (commencement of operations) through August
31, 2002.
(e) For the period November 22, 2002 (commencement of operations) through
February 28, 2003.
(f) For the six months ended February 28, 2003.
See accompanying notes to financial statements.
66-67 SPREAD
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
68
Fund
INFORMATION
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
POLICY CHANGE
On November 14, 2002, the Board adopted a policy that allows these Funds, in
addition to investments in municipal bonds, to invest up to 5% of its net assets
(including assets attributable to preferred shares, if any) in tax-exempt or
taxable fixed-income securities or equity securities for the purpose of
acquiring control of an issuer whose municipal bonds (a) the Fund already owns
and (b) have deteriorated or are expected shortly to deteriorate significantly
in credit quality, provided Nuveen Advisory determines that such investment
should enable the Fund to better maximize the value of its existing investment
in such issuer. This policy is a non-fundamental policy of each Fund which means
that it can be changed at any time by the Board of Directors without vote of the
shareholders.
GLOSSARY OF TERMS USED IN THIS REPORT
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
Average Effective Maturity: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
Leverage-Adjusted Duration: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund
Market Yield (also known as Dividend Yield or Current Yield): An investment's
current annualized dividend divided by its current market price.
Net Asset Value (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
Taxable-Equivalent Yield: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
---------
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the six-month period ended February 28, 2003. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
69
Serving Investors
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
A premier asset management firm managing $80 billion in assets, Nuveen
Investments offers access to a number of different asset classes and investing
solutions through a variety of products. Nuveen Investments markets its
capabilities under four distinct brands: Nuveen, a leader in tax-free
investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in
growth-style equities; and Symphony, a leading institutional manager of
market-neutral alternative investment portfolios
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Distributed by
NUVEEN INVESTMENTS, LLC | 333 West Wacker Drive | Chicago, Illinois 60606 |
www.nuveen.com
ESA-B-0203D