Nuveen Exchange-Traded Funds
Providing tax-free income to help you live your dreams
INSURED CALIFORNIA PREMIUM INCOME (NPC)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
CALIFORNIA PREMIUM INCOME (NCU)
ANNUAL REPORT/AUGUST 31, 1996
Photographic image of couple walking on beach.
<PAGE>
Photographic image of financial adviser reviewing financial statements/plans
with older couple.
Tax-informed investing
An important part of any successful investment program is gauging how well
your investments have performed and measuring your progress toward your
long-term goals.
<PAGE>
Taxes dramatically alter the relative returns of the five asset classes shown
at right. Graph showing after-tax returns, 1976-1995.
Municipals 8.26
Treasuries 5.62
Corporates 6.11
Stocks 10.51
Treasury Bills 3.87
Traditionally, the most common way to measure performance has been to compare
pre-tax rates of return for different investments across similar time periods.
The rationale behind this method is that each investor is taxed at a different
rate, making pre-tax comparisons the seemingly logical way to ensure you are
comparing apples to apples.
This, however, is precisely the rationale that can make a pre-tax
performance assessment misleading. When returns are presented on a pre-tax
basis, you may lose sight of the major impact taxes can have on your earnings,
and fail to get the complete picture of your progress toward your investment
goals. At Nuveen, we've built our reputation helping investors realize that
it's not what you earn, it's what you keep.
TAX-INFORMED INVESTING: THE KEY TO MEASURING LONG-TERM RESULTS
The true measure of an investment is its performance on an after-tax basis.
Analyzing after-tax returns gains added significance when you realize that the
taxes you pay can never be regained. Once that money is "lost," it can't be
put to work through compounding, earning additional dollars for you.
To better illustrate the ways that taxes can affect the amount you keep
versus the amount you earn, Nuveen Research recently studied 20 years of
investment returns, both pre-tax and after-tax, to determine the impact of
taxes on various asset classes. We were particularly interested in the results
for municipal bonds, an asset class that is commonly excluded from the top
performance rankings when only pre-tax returns are considered.
MEASURING WHAT YOU KEEP
The study showed that, once the impact of taxes was figured into the equation,
municipal bonds offered a distinct advantage over other fixed income
investments. Over the study period, municipal bonds outperformed both
corporate and Treasury bonds (see accompanying tables), as high tax rates and
the loss of compounding income took their toll on corporate and Treasury
results.
As investors are well aware, performance over the long term--and the
purchasing power of their earnings--can be eroded by inflation as well as
taxes. The study showed that, over the past 20 years, only municipal bonds and
stocks provided significant after-tax gains over the Consumer Price Index, the
most recognized measure of inflation.
ABOUT THE STUDY
The study, "Measuring What You Keep: Historical After-Tax Returns," compared
pre-tax and after-tax total returns over the past 20 years for five asset
classes: municipal bonds, Treasury bonds, Treasury bills, corporate bonds, and
large company stocks. Returns for each asset class were represented by the
returns on commonly used market indexes compiled by Lehman Brothers and
Ibbotson & Associates.
A hypothetical investment of $100,000 was made in each of these asset
classes at the beginning of 1976, with all dividends and interest reinvested
through the end of 1995. In addition, the after-tax proceeds of an assumed
annual 20% turnover rate were reinvested. The study assumed that taxes were
paid annually at the applicable federal income tax rates for an investor
earning the equivalent of $100,000 in 1995. Of course, this hypothetical
investment performance neither reflects past performance nor predicts future
results of any Nuveen investment.
INCORPORATING TAX-INFORMED INVESTING IN YOUR PORTFOLIO
The Nuveen study confirms what many investors have known for years: that
municipal bonds can play a critical role in the long-term financial strategies
of tax-informed investors.
Balancing short-term and long-term investments
Combining shorter- and longer-term tax-free investments may help you manage
cumulative risk in your portfolio while still capturing the potential for
attractive overall rates. Shorter-term investments can help reduce the current
volatility of your portfolio and provide a source of investable funds to take
advantage of additional investment opportunities as they arise. Longer-term
leveraged exchange-traded funds have provided attractive yields and offer
trading flexibility that allows quick and easy portfolio adjustments.
Dividend reinvestment
Studies indicate that weathering market cycles by maintaining an investment
plan with long-term goals can help shield investors in the event of a
declining market. The purchase of additional shares on a regular schedule,
such as through dividend reinvestment, is another strategy for navigating
market changes. Dividend reinvestment is an easy and convenient way to set
aside dollars on a regular basis, helping you take advantage of dollar-cost
averaging while gaining the benefits of tax-free compounding.
CONSISTENT AFTER-TAX PERFORMANCE
For the long-term investor, performance--even after the impact of taxes and
inflation--is the true measure of an investment's merit. While most investors
choose municipal bonds for their tax-free income advantage, the positive news
about their after-tax returns reinforces their potential value as part of a
tax-informed investment strategy designed to meet long-term objectives.
Understanding the impact of taxes can mean that you keep more of what you
earn, and municipal bonds can help you do just that.
<PAGE>
Only municipals and equities generated significant increases in purchasing
power over the twenty-year period, with after-tax and inflation-adjusted
returns in excess of 2.75% annually.
<TABLE>
ANNUAL AFTER-TAX REAL RETURNS, 1976-1995
<CAPTION>
PERIOD MUNICIPALS TREASURIES CORPORATES STOCKS BILLS
<S> <C> <C> <C> <C> <C>
1976-1985 .69% -3.32% -2.14% 2.75% -2.67%
1986-1995 5.15 4.21 3.91 7.31 0.13
1976-1995 2.88% 0.37% 0.84% 5.02% -1.30%
</TABLE>
<PAGE>
Photographic image of couple walking on beach.
CONTENTS
6 Municipal market perspective
7 Dear shareholder
9 Answering your questions
13 Fund performance
15 Commonly used terms
17 Portfolio of investments
27 Statement of net assets
28 Statement of operations
29 Statement of changes in net assets
31 Notes to financial statements
38 Financial highlights
40 Report of independent auditors
41 Nuveen Exchange-Traded Funds
dividend reinvestment program
<PAGE>
Municipal market perspective
This year's bond market has not been easy to categorize. While 1994
represented the worst period in recent bond market history and 1995 the best
in a decade, 1996 has seen a stream of mixed reports on the state of the
economy that have alternately caused investors to view the markets with
enthusiasm, then uncertainty.
Despite this climate, the municipal bond market has rewarded investors with
solid returns, dependable income, and opportunities to purchase bonds with
strong credit quality. Over the past year, municipal bonds have continued to
outperform Treasuries, an indication of the strength and resilience of this
market segment.
A look at the current economy shows a combination of factors that historically
bode well for the bond market. Inflation continues at the same modest pace
that it has demonstrated over the past five years, and the economy continues
to enjoy modest expansion, supported by generally level producer prices, low
wage pressures, and a stable money supply.
<PAGE>
Dear shareholder
Photographic image of head shot of Chairman and Chief Executive Officer of
Nuveen.
"Municipal bonds continue to play an important role in meeting the investment
goals of conservative investors."
As I begin my duties as the new chairman and chief executive officer of John
Nuveen & Co. Incorporated and chairman of the board of the Nuveen
exchange-traded funds, I am pleased to have this opportunity to report to you
on the performance of your funds. My experience at Nuveen over the past 19
years has shaped my commitment to maintaining Nuveen's tradition of value
investing and prudent management. Our goal is to help our shareholders meet
their need for tax-free investment income with a full range of investment
choices. We continue to focus on building shareholder value, providing
research-oriented management, and delivering dependable performance, in the
belief that this focus will contribute to many more years of investment
success for our fund shareholders.
Municipal bonds continue to play an important role in meeting the investment
goals of conservative investors. The performance of the exchange-traded funds
covered in this report demonstrates the ability of quality investments to
provide extremely attractive tax-free income. As of August 31, 1996, the
current annual yield on share price for these funds ranged from 5.84% to
6.21%. To match these yields, an investor in the combined 42% federal and
California income tax bracket would have had to earn at least 10.07% on
taxable alternatives. Without question, taxable yields at this level on
investments of comparable quality can be difficult to achieve in today's
markets. As part of our efforts to enhance call protection and strengthen the
stability of these funds' earnings, Nuveen took advantage of opportunities
during the year to invest in a number of non-callable bonds as well as bonds
priced at a discount from their par value, which are less likely to be called
from our portfolios.
The net asset values of some funds declined slightly over the past year, yet
total returns, representing changes in net asset value and reinvestment of all
dividends and capital gains, if any, ranged from 5.83% to 8.15%, equivalent to
taxable investments with total returns of 9.90% to 12.57%. As fears about the
aftermath of the Orange County bankruptcy and the effect of a potential flat
tax diminished, the share prices of all of these funds rose. This, added to
attractive returns, further improved investors' overall experience for the
year ending August 31, 1996.
I would also like to take this opportunity to share with you the news of
some recent developments that will give Nuveen the flexibility to meet
expanded investor needs for capital preservation, current income, and future
growth.
In November, we will introduce the Nuveen Growth and Income Stock Fund. This
fund will be the first of three equity-based mutual funds designed to provide
a high-quality complement to our current municipal bond funds. These new funds
will be offered in affiliation with Institutional Capital Corporation (ICAP),
an institutional equity management firm located in Chicago who shares Nuveen's
values and investment management style. Tailor-made to address the needs of
the Nuveen investor, these funds can play a critical role in achieving a
balanced strategy for investors who expect their investments to provide a core
element of their financial security.
In a move designed to complement the ICAP alliance, Nuveen is acquiring
Flagship Resources, Inc., a fixed income mutual fund specialist based in
Dayton, Ohio. Flagship is a firm that shares our views on the importance of
research and a emphasizes a conservative, value-oriented approach portfolio
management. In February 1997, the tax-exempt mutual fund activities of
Flagship and Nuveen will be merged, resulting in more than 40 municipal bond
funds, the broadest selection available in the U.S.
We are excited about these recent developments, and we are pleased to be
bringing Nuveen investors expanded options for achieving wealth preservation,
dependable income, and long-term asset growth. We thank you for your continued
confidence in Nuveen.
Sincerely,
Timothy R. Schwertfeger
Chairman of the Board
October 15, 1996
<PAGE>
Answering your questions
Photographic image of montage of letters received by Nuveen.
Tom Spalding, head of Nuveen's portfolio management team, discusses the
investment environment and recent factors affecting the municipal market
What has been Nuveen's investment approach over the past year?
Nuveen continues to pursue its value investing strategy, a disciplined
approach to security selection and portfolio construction designed to deliver
above-market performance by identifying individual bonds with current yields,
prices, credit quality, and future prospects that are exceptionally attractive
relative to other bonds in the market. This approach was rewarded over the
past year, as many of our portfolio holdings were upgraded by the national
rating agencies, indicating that our Research Department's judgments about
credit quality were on target.
As opportunity allowed, we purchased bonds at discounts from their par
value. These bonds, which have coupon rates slightly below market levels, are
less likely to be called from our portfolios, assuring more stable yields for
our investors.
<PAGE>
Photographic image of Tom Spalding, Portfolio Manager at Nuveen.
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market
Some funds' discounts seem to have narrowed over the past few months. What
caused this improvement?
To understand the reasons for this improvement, it may be helpful to remember
that each share has two prices: the net asset value (NAV), which represents
the underlying value of the bonds, and the share price, which is the fund's
price on the stock exchange. As with other securities, share prices for
municipal bond funds change frequently, driven by investors' demand for shares
and the available supply. When a fund's NAV is higher than its share price, we
say that the shares can be purchased at a discount.
In 1995, the recovery of the bond market meant that the net asset values for
some funds appreciated more quickly than their share prices, widening
discounts for a while. This is not unusual, as the market often takes time to
reflect underlying value balanced against the various factors that affect
individual investor decisions, such as the outlook for the direction of
interest rates, inflation forecasts, the relative strength of the stock
market, and legislative and tax outlooks.
As investor worries about tax reform--and the potential effect of a flat tax
proposal on tax-free investments--waned over the first half of the year, the
demand for tax-free products grew. The combination of higher yields, concerns
about the direction of the stock market, and broker recommendations has also
prompted greater demand for municipal bonds and bond funds. In addition,
shareholders find that these funds provide an important level of
diversification in a well structured portfolio. Because inflation and tax
reform appear to present few problems at this point, investors are taking
advantage of the opportunity to lock in current rates. With increased demand,
share prices generally have risen, resulting in narrower discounts. In fact,
some exchange-traded funds are now trading at a premium, that is, their share
prices are higher than their NAVs.
What are some of the factors affecting dividend stability and changes?
All Nuveen funds are structured to provide an attractive stream of tax-free
income. For many investors, stability of income is another important
objective. To help investors satisfy this objective, we set dividends on
Nuveen funds conservatively, seeking a level that we expect will be
sustainable for at least several months. Many of the funds that have seen
dividend reductions over the past year had previously enjoyed prolonged
periods without dividend changes. Still, dividends ultimately depend on the
overall earnings of each fund (which can be reduced by bond calls),
fluctuations in long and short-term interest rates, and other portfolio
changes.
All the funds in this report use leverage as an additional way to enhance
income for common shareholders. The dividends of leveraged funds can be
affected by a sudden or prolonged rise in short-term interest rates. In fact,
short-term rates on average have been higher over the past two years than they
were in the early 1990s. This has resulted in higher rates for preferred
shareholders and less income available for common shareholders. It is
important to remember that leverage can increase NAV volatility as well as
investment potential. Greater stability in both long and short-term interest
rates in 1996 has reduced some of the pressures on dividends and NAVs for many
leveraged funds.
Another factor that can act to lower dividends is bond calls. When the
Federal Reserve Board cut rates between July 1995 and January 1996, long-term
municipal bond yields reacted by declining almost 130 basis points from their
levels at the beginning of 1995. As older, higher-yielding bonds were called
from some portfolios, they were replaced with the bonds available in the
market today, reducing fund earnings. To minimize the effect of bond calls and
protect investors' current income, Nuveen has taken advantage of opportunities
to invest in an increased number of non-callable bonds as well as bonds priced
at a discount from their par value.
<PAGE>
<TABLE>
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NPC
Shareholders enjoyed an increase in the monthly tax-free dividend in June,
reflecting portfolio management's ability to improve the fund's earnings rate.
12 MONTH DIVIDEND HISTORY
<CAPTION>
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
09/13/95 $0.0655
10/11/95 $0.0655
11/13/95 $0.0655
12/13/95 $0.0655
01/10/96 $0.0655
02/13/96 $0.0655
03/13/96 $0.0655
04/11/96 $0.0655
05/13/96 $0.0655
06/12/96 $0.0675
07/11/96 $0.0675
08/13/96 $0.0675
<CAPTION>
FUND HIGHLIGHTS 8/31/96
<S> <C>
Yield 5.84%
Taxable-equivalent yield 10.07%
Annual total return on NAV 5.83%
Taxable-equivalent total return 9.90%
Share price $13.875
NAV $14.46
The price, net asset value and dividend history used in this chart constitute
past performance and do not necessarily predict the future price, net asset
value or dividends of the Fund or of any other Nuveen Fund.
</TABLE>
<PAGE>
<TABLE>
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NCL
In keeping with the Fund's goal of providing attractive, dependable tax-free
income, shareholders enjoyed 12 months of steady dividends.
12 MONTH DIVIDEND HISTORY
<CAPTION>
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
09/13/95 $0.0620
10/11/95 $0.0620
11/13/95 $0.0620
12/13/95 $0.0620
01/10/96 $0.0620
02/13/96 $0.0620
03/13/96 $0.0620
04/11/96 $0.0620
05/13/96 $0.0620
06/12/96 $0.0620
07/11/96 $0.0620
08/13/96 $0.0620
<CAPTION>
FUND HIGHLIGHTS 8/31/96
<S> <C>
Yield 5.95%
Taxable-equivalent yield 10.26%
Annual total return on NAV 7.76%
Taxable-equivalent total return 12.00%
Share price $12.50
NAV $13.27
The price, net asset value and dividend history used in this
chart constitute past performance and do not necessarily predict the future
price, net asset value or dividends of the Fund or of any other Nuveen Fund.
</TABLE>
<PAGE>
<TABLE>
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
NCU
In keeping with the Fund's goal of providing attractive, dependable tax-free
income, shareholders enjoyed 12 months of steady dividends.
12 MONTH DIVIDEND HISTORY
<CAPTION>
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
09/13/95 $0.0615
10/11/95 $0.0615
11/13/95 $0.0615
12/13/95 $0.0615
01/10/96 $0.0615
02/13/96 $0.0615
03/13/96 $0.0615
04/11/96 $0.0615
05/13/96 $0.0615
06/12/96 $0.0615
07/11/96 $0.0615
08/13/96 $0.0615
<CAPTION>
FUND HIGHLIGHTS 8/31/96
<S> <C>
Yield 6.21%
Taxable-equivalent yield 10.71%
Annual total return on NAV 8.15%
Taxable-equivalent total return 12.57%
Share price $11.875
NAV $12.70
The price, net asset value and dividend history used in this chart constitute
past performance and do not necessarily predict the future price, net asset
value or dividends of the Fund or of any other Nuveen Fund.
</TABLE>
<PAGE>
Commonly used terms
Yield
An exchange-traded fund's annualized monthly dividend on a given date (in the
case of this report, August 31, 1996) divided by its closing price per share
on that date.
Taxable equivalent yield
The return an investor subject to a given federal and state income tax rate
would need to obtain from a fully taxable investment to equal the fund's
stated annualized yield on share price. In this report, the combined tax rate
is assumed to be 42% for California shareholders, based on incomes of
$121,300-$263,750 for investors filing singly, $147,700-$263,750 for those
filing jointly.
Net Asset Value (NAV)
The market value of all securities and other assets held by an exchange-traded
fund, minus any liabilities. The NAV per share is the fund's net assets, less
the value of its preferred shares, divided by the total number of common
shares outstanding.
Total return on NAV
The percentage change in a fund's NAV per common share for a given period,
assuming reinvestment of all dividends and capital gains distributions, if
any.
Taxable equivalent total return
The total return an investor subject to a given state and federal income tax
rate would need to obtain from a fully taxable investment to equal the Fund's
stated total return on NAV.
Leverage
A technique used to enhance the income produced for common shareholders by a
long-term municipal bond fund through the issuance of short-term preferred
shares. The proceeds from the sale of the preferred shares can be used to
purchase additional long-term bonds, thus increasing the portfolio's income
stream. Changes in net asset value per share, both up and down, are also
magnified by leverage.
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 12-month period ended August 31, 1996. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC. (NPC)
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 3,725,000 California Housing Finance Agency, Multi-Unit Rental Housing Revenue
Bonds, 1992 Series A, 6.625%, 2/01/24 (Alternative Minimum Tax) A1 2/03 at 102 $ 3,793,168
4,000,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (Southern California Edison Company), 1992 Series B,
6.400%, 12/01/24 (Alternative Minimum Tax) Aaa 12/02 at 102 4,135,320
4,000,000 California Statewide Communities Development Authority, Sutter Health
Obligated Group, Certificates of Participation, 6.125%, 8/15/22 Aaa 8/02 at 102 4,027,360
4,000,000 City of Chula Vista Industrial Development Revenue Bonds (San Diego
Gas and Electric Company), 1992 Series A, 6.400%, 12/01/27
(Alternative Minimum Tax) A1 12/02 at 102 4,055,720
2,000,000 Cucamonga County Water District (San Bernardino County, California),
Certificates of Participation (1992 Water Facilities Refinancing),
6.300%, 9/01/12 Aaa 9/01 at 102 2,093,720
3,000,000 Culver City Redevelopment Financing Authority, 1993 Tax Allocation
Refunding Revenue Bonds, 4.600%, 11/01/20 Aaa 11/03 at 102 2,472,450
6,000,000 Huntington Park Redevelopment Agency, Single Family Residential
Mortgage Revenue Refunding Bonds, 1986 Series A, 8.000%, 12/01/19 Aaa No Opt. Call 7,568,760
4,000,000 The City of Los Angeles (California), Tax-Exempt Mortgage Revenue
Refunding Bonds, Series 1993A (FHA Insured Mortgage Loans-
Section 8 Assisted Projects), 6.300%, 1/01/25 Aaa 7/02 at 102 4,052,680
4,000,000 The City of Los Angeles, California, Wastewater System Revenue Bonds,
Series 1991-A, 7.100%, 2/01/21 (Pre-refunded to 2/01/99) Aaa 2/99 at 102 4,335,920
The City of Los Angeles, California, Wastewater System Revenue Bonds,
Series 1993-D:
3,250,000 4.700%, 11/01/17 Aaa 11/03 at 102 2,773,030
11,000,000 4.700%, 11/01/19 Aaa 11/03 at 102 9,251,880
3,750,000 City of Los Angeles, California, Wastewater System Revenue Bonds, Series
1991-D, 6.700%, 12/01/21 (Pre-refunded to 12/01/00) Aaa 12/00 at 102 4,133,813
4,000,000 Los Angeles County Metropolitan Transportation Authority (California),
Proposition A, Sales Tax Revenue Refunding Bonds, Series 1993-A,
5.000%, 7/01/21 Aaa 7/03 at 100 3,516,960
5,000,000 Los Angeles County Metropolitan Transit Authority, Proposition C Sales
Tax Revenue Second Senior Bonds, Series 1993-B, 4.750%, 7/01/13 Aaa 7/03 at 102 4,364,600
3,315,000 Los Angeles County Public Works Financing Authority, Lease Revenue
Refunding Bonds (County of Los Angeles 1996 Master Refunding
Project), Series B, 5.250%, 9/01/12 Aaa 9/06 at 102 3,144,742
4,000,000 Norco Redevelopment Agency, Norco Redevelopment Project Area
No. One 1992 Refunding Tax Allocation Bonds, 6.250%, 3/01/19 Aaa 3/02 at 102 4,125,680
5,135,000 Community Redevelopment Agency of the City of Palmdale, Restructured
Single Family Mortgage Revenue Bonds, Series 1986A (Escrowed to
Maturity), 8.000%, 3/01/16 (Alternative Minimum Tax) Aaa No Opt.Call 6,503,940
4,450,000 County of Riverside Asset Leasing Corporation, Leasehold Revenue Bonds,
1989 Series A (County of Riverside Hospital Project), 7.200%, 6/01/10
(Pre-refunded to 6/01/99) Aaa 6/99 at 102 4,854,950
6,220,000 County of Riverside, California, Single Family Mortgage Revenue Bonds
(GNMA Mortgage-Backed Securities Program), Issue A of 1987,
9.000%, 5/01/21 (Alternative Minimum Tax) Aaa No Opt.Call 8,610,781
2,000,000 Sacramento Municipal Utility District (California), Electric Revenue
Refunding Bonds, 1992 Series A, 5.750%, 8/15/13 Aaa 8/02 at 100 1,983,920
5,000,000 Sacramento Municipal Utility District (California), Electric Revenue
Refunding Bonds, 1993 Series G, 4.750%, 9/01/21 Aaa 9/03 at 100 4,210,100
2,135,000 City of San Buenaventura, California, 1993 Refunding Certificates of
Participation (Capital Improvements Project), 5.500%, 1/01/17 Aaa 1/03 at 100 2,013,946
4,000,000 Airports Commission, City and County of San Francisco, California,
San Francisco International Airport, Second Series Refunding Revenue
Bonds, Issue 3 Bonds, 6.200%, 5/01/20 (Alternative Minimum Tax) Aaa 5/03 at 102 4,043,640
1,000,000 Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport,
Second Series Revenue Bonds, Issue 8B, 6.000%, 5/01/15 Aaa 5/04 at 101 1,010,330
<PAGE>
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 1,000,000 City and County of San Francisco, General Purpose Sewer Revenue
Bonds, Series 1991, 6.500%, 10/01/21 (Pre-refunded to 10/01/99) Aaa 10/99 at 102 $ 1,080,590
4,375,000 San Francisco Bay Area Rapid Transit District, Sales Tax Revenue
Bonds, Series 1995, 5.500%, 7/01/15 Aaa 7/05 at 101 4,203,631
9,500,000 Redevelopment Agency of the City of San Jose, Merged Area
Redevelopment Project, Tax Allocation Bonds, Series 1993,
4.750%, 8/01/24 Aaa 2/04 at 102 7,973,350
1,485,000 City of San Jose, California, Single Family Mortgage Revenue Bonds,
1985 Series A (Escrowed to Maturity), 9.500%, 10/01/13 Aaa No Opt. Call 2,070,684
5,440,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion
Project), 1993 Refunding Series, 4.500%, 1/01/15 Aaa 1/04 at 102 4,595,930
2,000,000 Redevelopment Agency of the City of Suisun City, Suisun City
Redevelopment Project, 1993 Tax Allocation Refunding Bonds (County
of Solano, California), 5.500%, 10/01/23 Aaa 10/03 at 102 1,898,820
2,670,000 The Regents of the University of California, Refunding Revenue Bonds
(Multiple Purpose Projects), Series B, 4.750%, 9/01/21 Aaa 9/03 at 102 2,248,192
5,000,000 Wheeler Ridge-Maricopa Water Storage District (Kern County,
California), 1996 Water Refunding Bonds,
5.700%, 11/01/15 Aaa 11/06 at 102 4,860,500
3,425,000 City of Woodland (Yolo County, California), Certificates of
Participation (1992 Wastewater System Refunding
Project), 5.500%, 3/01/18 Aaa 3/03 at 100 3,225,527
$133,875,000 Total Investments - (cost $126,391,409) - 96.8% 133,234,634
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.8%
$ 1,400,000 California Pollution Control Financing Authority, Pollution Control
Refunding Revenue Bonds (Shell Oil Company Project), 1991 Series C,
Variable Rate Demand Bonds, 3.700%, 11/01/00+ VMIG-1 1,400,000
1,100,000 California Pollution Control Financing Pollution Control Refunding
Revenue (Pacific Gas and Electric Company), 1996-F Variable Rate
Demand Bonds, 3.650%, 11/01/26+ A-1+ 1,100,000
$ 2,500,000 Total Temporary Investments - 1.8% 2,500,000
============
Other Assets Less Liabilities - 1.4% 1,875,250
Net Assets - 100% $137,609,884
============
<PAGE>
<CAPTION>
NUMBER OF MARKET MARKET
STANDARD & POOR'S MOODY'S SECURITIES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 31 $125,385,746 94%
RATINGS* A+ A1 2 7,848,888 6
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
TOTAL 33 $133,234,634 100%
<FN>
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.
* Ratings (not covered by the report of independent auditors): Using
the higher of Standard & Poor's or Moody's rating.
** Optional Call Provisions (not covered by the report of independent auditors):
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.
+ The 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC. (NCL)
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 5,000,000 California Educational Facilities Authority Revenue Bonds
(University of San Francisco), Series 1996, 6.000%, 10/01/26 Aaa 10/06 at 102 $5,048,900
3,110,000 California Health Facilities Financing Authority, Hospital Revenue
Refunding Bonds (Sutter Health), Series 1989A, 6.700%, 1/01/13 Aaa 1/99 at 101 3,259,995
1,800,000 California Public School District Financing Authority, Lease Revenue
Bonds (Richgrove Elementary School District Projects), Series 1996B,
5.800%, 9/01/16 Aaa 9/06 at 102 1,784,232
3,000,000 State Public Works Board of the State of California Lease Revenue
Bonds (Department of Corrections), 1990 Series A (State Prison-Madera
County), 7.000%, 9/01/09 (Pre-refunded to 9/01/00) Aaa 9/00 at 102 3,326,220
2,100,000 State of California, General Obligation Bonds, Veterans Bonds,
Series BA, 7.000%, 8/01/02 Aaa No Opt.Call 2,346,393
5,500,000 State of California, Various Purpose General Obligation Bonds,
5.750%, 11/01/17 Aaa 11/02 at 102 5,423,385
3,000,000 State of Public Works Board of the State of California, Lease Revenue
Refunding Bonds (Department of Corrections), 1993 Series A (Various
State Prisons), 5.000%, 12/01/19 Aaa No Opt.Call 2,722,080
4,000,000 Certificates of Participation (1991 Financing Project), County
of Alameda, California, Alameda County Public Facilities Corporation,
6.000%, 9/01/21 (WI) Aaa 9/06 at 102 3,999,960
7,985,000 County of Alameda, California, 1993 Refunding Certificates of
Participation (Santa Rita Jail Project), 5.700%, 12/01/14 Aaa 12/03 at 102 7,837,757
2,000,000 City of Barstow, California, Certificates of Participation (1994
Wastewater Reclamation Improvement Project), 5.250%, 10/01/18 Aaa 10/04 at 102 1,846,340
2,575,000 Calipatria Unified School District, Imperial County, California, 1996
Series A, General Obligation Bonds, 5.625%, 8/01/13 Aaa 8/06 at 102 2,526,693
3,530,000 Castaic Lake Water Agency (California), Refunding
Revenue Certificates of Participation (Water System Improvement
Projects), Series 1994A, 8.000%, 8/01/04 Aaa No Opt.Call 4,223,010
3,000,000 Central Unified School District (Fresno County, California), General
Obligation Bonds, Election 1992, 5.625%, 3/01/18 Aaa 3/03 at 102 2,849,490
1,925,000 China Basin Regional Financing Authority Revenue Bonds, Series 1994
(Chino Basin Municipal Water District Sewer System Project),
6.000%, 8/01/16 Aaa 8/04 at 102 1,950,006
5,000,000 Community Redevelopment Agency of the City of Compton, California,
Compton Redevelopment Project, Refunding Tax Allocation Bonds,
Series 1995A (Project Tax Revenues, Subventions and Housing Tax
Revenues), 6.500%, 8/01/13 Aaa 8/05 at 102 5,378,450
6,000,000 Contra Costa Water Authority (Contra Costa County, California), Water
Treatment Revenue Refunding Bonds, 1993 Series A, 5.750%, 10/01/20 Aaa 10/02 at 102 5,828,400
8,000,000 Galt Community Facility District, Special Tax #88-1, 7.700%, 9/01/19
(Pre-refunded to 9/01/98) Aaa 9/98 at 102 8,698,160
1,000,000 City of Industry, California, General Obligation Refunding Bonds, Issue
of 1993, 5.500%, 7/01/15 Aaa 7/03 at 101 1/2 971,940
1,000,000 Kern High School District (County of Kern, California), General
Obligation Bonds, Election of 1990, Series D, 5.600%, 8/01/15
(Pre-refunded to 8/01/03) Aaa 8/03 at 102 990,170
2,000,000 Liberty Union High School District (Contra Costa County, California),
General Obligation Bonds, 1994 Election, Series B, 5.500%, 8/01/20 Aaa 8/05 at 102 1,911,600
5,020,000 The Community Redevelopment Agency of the City of Los Angeles,
California, Multifamily Housing Revenue Refunding Bonds, 1995
Series A (Angelus Plaza Project), 7.400%, 6/15/10 AAA 6/05 at 105 5,513,466
5,250,000 The City of Los Angeles, California, Wastewater System Revenue Bonds,
Refunding Series 1993-A, 5.800%, 6/01/21 Aaa 6/03 at 102 5,158,125
5,000,000 The City of Los Angeles (California), Wastewater System Revenue Bonds,
Series 1993-B, 5.700%, 6/01/23 Aaa 6/03 at 102 4,842,900
4,400,000 Los Angeles County Metropolitan Transportation Authority (California),
Proposition A, Sales Tax Revenue Refunding Bonds, Series 1993-A,
5.000%, 7/01/21 Aaa 7/03 at 100 3,868,656
<PAGE>
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 6,750,000 Los Angeles County Metropolitan Transit Authority, Proposition
C Sales Tax Revenue Second Senior Bonds, Series 1993-B,
5.250%, 7/01/23 Aaa 7/03 at 102 $ 6,132,510
5,585,000 Los Angeles County Transportation Commission (California), Sales Tax
Revenue Refunding Bonds, Series 1991-B, 6.500%, 7/01/13 Aaa 7/01 at 102 5,952,605
14,150,000 The Metropolitan Water District of Southern California, Water Revenue
Bonds, 1995 Series A, 5.750%, 7/01/21 Aaa 7/05 at 102 13,882,848
3,215,000 Modesto Irrigation District Financing Authority, Refunding Revenue
Bonds, Series A, 6.000%, 10/01/15 Aaa 10/06 at 102 3,268,369
4,000,000 Northern California Power Agency, Hydroelectric Project Number One,
Revenue Bonds, 1993 Refunding Series A, 5.500%, 7/01/16 Aaa 7/03 at 102 3,820,800
2,000,000 Transmission Agency of Northern California, California-Oregon
Transmission Project, Revenue Bonds, 1990 Series A, 7.000%, 5/01/24
(Pre-refunded to 5/01/00) Aaa 5/00 at 101 1/2 2,195,200
2,690,000 Norwalk Community Facilities Financing Authority (Los Angeles County,
California), Tax Allocation Refunding Revenue Bonds, 1995 Series A,
6.000%, 9/01/15 Aaa 9/05 at 102 2,715,394
3,575,000 County of Orange, California, Airport Revenue Refunding Bonds, Series
1993, 5.500%, 7/01/18 (Alternative Minimum Tax) Aaa 7/03 at 102 3,336,083
4,900,000 County of Orange, California, Airport Revenue Bonds, Series 1987,
6.625%, 7/01/18 (Alternative Minimum Tax) A 7/97 at 100 4,922,687
2,500,000 City of Oxnard Financing Authority, Wastewater Revenue Refunding
Bonds, Series 1993, 5.500%, 6/01/14 Aaa 6/03 at 100 2,410,600
9,000,000 City of Redlands, California, Certificates of Participation
(1993 Refunding of 1986 and 1987 Projects), 5.800%, 9/01/17 Aaa 9/03 at 102 8,844,570
4,280,000 Redlands Unified School District, County of San Bernardino,
California, 1993 General Obligation Bonds, Series A, 5.500%, 7/01/14 Aaa 7/03 at 101 4,126,605
4,320,000 County of Riverside, California, Single Family Mortgage Revenue Bonds
(GNMA Mortgage-Backed Securities Program), Issue B of 1987,
8.625%, 5/01/16 (Alternative Minimum Tax) AAA No Opt.Call 5,737,046
5,000,000 Riverside County Transportation Commission, Sales Tax Revenue Bonds,
1991 Series A (California), 6.500%, 6/01/09 (Pre-refunded to 6/01/01) Aaa 6/01 at 102 5,493,950
5,500,000 Sacramento Municipal Utility District (California), Electric
Revenue Bonds,1993 Series E, 5.750%, 5/15/22 Aaa 5/03 at 102 5,373,225
6,290,000 City and County of San Francisco, Various Purpose General Obligation
Bonds, 5.500%, 6/15/11 Aaa 6/01 at 102 6,204,959
9,000,000 Airports Commission of the City and County of San Francisco,
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 8B, 6.100%, 5/01/20 Aaa 5/04 at 101 9,129,060
2,500,000 City and County of San Francisco, General Purpose Sewer Revenue Bonds,
Series 1991, 6.500%, 10/01/21 (Pre-refunded to 10/01/99) Aaa 10/99 at 102 2,701,475
2,900,000 City and County of San Francisco, Sewer Revenue Refunding Bonds,
Series 1992, 5.500%, 10/01/15 Aaa 10/02 at 102 2,753,724
3,750,000 City of San Jose, California, Airport Revenue Bonds, Series of 1993,
5.700%, 3/01/18 (Alternative Minimum Tax) Aaa 3/03 at 102 3,604,163
7,400,000 Housing Authority of the County of Santa Cruz, Tax-Exempt Multifamily
Housing Revenue Refunding Bonds, Series 1993A (GNMA
Collateralized-Meadowview Apartments), 6.125%, 5/20/28 Aaa 5/03 at 102 7,406,586
1,930,000 Santa Margarita/Dana Point Authority, Orange County, California,
Revenue Bonds Series A (1994 Improvement Districts Nos. 1, 2, 2A
and 8 General Obligation Bond Refinancing), 7.250%, 8/01/05 Aaa No Opt. Call 2,246,115
4,000,000 Santa Monica Community, College District (County of Los Angeles,
California), General Obligation Bonds, 1992 Election, Series B,
5.750%, 7/01/20 Aaa 7/05 at 102 3,925,880
South Orange County, Public Financing Authority, Special
Tax Revenue Bonds, 1994 Series C (Foothill Area):
4,000,000 8.000%, 8/15/08 Aaa No Opt. Call 4,953,480
3,680,000 8.000%, 8/15/09 Aaa No Opt. Call 4,565,371
<PAGE>
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 4,000,000 South San Joaquin Irrigation District (San Joaquin County,
California) 1993 Refunding Revenue Certificates of Participation
(1987 Project and 1992 Project), 5.500%, 1/01/15 Aaa 1/03 at 102 $ 3,806,800
7,500,000 Redevelopment Agency of the City of Suisun City, Suisun City
Redevelopment Project, 1993 Tax Allocation Refunding Bonds (County
of Solano, California), 5.900%, 10/01/23 Aaa 10/03 at 102 7,484,475
1,805,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds (Little
Company of Mary Hospital), 1985 Series A, 7.100%, 12/01/15
(Pre-refunded to 12/01/05) AAA 12/05 at 100 2,003,333
11,750,000 Turlock Irrigation District (California), Revenue Refunding Bonds,
Series 1992-A, 5.750%, 1/01/18 Aaa 7/02 at 100 11,571,635
3,000,000 The Regents of the University of California, Refunding Revenue Bonds
(1989 Multiple Purpose Projects), Series C, 10.000%, 9/01/02 Aaa No Opt.Call 3,802,590
4,900,000 The Regents of the University of California, University of California
Housing System Revenue Bonds, Series A, 5.500%, 11/01/18 Aaa 11/03 at 102 4,592,770
6,350,000 The Regents of the University of California, Refunding Revenue Bonds
(Multiple Purpose Projects), Series C, 5.000%, 9/01/12 Aaa 9/03 at 102 5,834,252
$253,415,000 Total Investments - (cost $255,688,769) - 98.2% 257,105,488
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.1%
$ 800,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (Shell Oil Company Project), 1991 Series A, Variable
Rate Demand Bonds, 3.700%, 10/01/07+ VMIG-1 800,000
1,900,000 California Pollution Control Finance Pollution Control Refunding
Revenue (Pacific Gas and Electric Company), 1996-C, Variable Rate
Demand Bonds, 3.650%, 11/01/26+ A-1+ 1,900,000
810,000 Tri-Modal Variable Rate Revenue Refunding Certificates of
Participation (House Ear Institute), 1993 Series A, Variable Rate
Demand Bonds, 3.650%, 12/01/18+ A-1+ 810,000
100,000 Certificates of Participation, California Statewide Communities
Development Authority, St. Joseph Health System Obligated Group,
Variable Rate Demand Bonds, 3.650%, 7/01/24+ VMIG-1 100,000
2,000,000 California Statewide Community Development Authority Certificates of
Participation Revenue (Sutter Health Obligation Group), Variable Rate
Demand Bonds, 3.750%, 7/01/15+ A-1 2,000,000
$ 5,610,000 Total Temporary Investments - 2.1% 5,610,000
============
Other Assets Less Liabilities - (0.3%) (864,253)
Net Assets - 100% $261,851,235
============
<PAGE>
<CAPTION>
NUMBER OF MARKET MARKET
STANDARD & POOR'S MOODY'S SECURITIES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 55 $252,182,801 98%
RATINGS* A, A- A, A2, A3 1 4,922,687 2
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
TOTAL 56 $257,105,488 100%
<FN>
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.
* Ratings (not covered by the report of independent auditors): Using
the higher of Standard & Poor's or Moody's rating.
** Optional Call Provisions (not covered by the report of independent
auditors): 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.
(WI) Security purchased on a when-issued basis (note 1).
+ The 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND (NCU)
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 3,500,000 California Educational Facilities Authority, Revenue Bonds
(University of Southern California Project), Series
1989B, 6.750%, 10/01/15 Aa 10/99 at 102 $ 3,736,705
3,500,000 California Health Facilities Financing Authority, Hospital Revenue
Bonds (Downey Community Hospital), Series 1993, 5.750%, 5/15/15 A- 5/03 at 102 3,298,960
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds,
1994 Series A, 6.550%, 8/01/26 Aa 8/04 at 102 1,030,060
2,455,000 California Housing Finance Agency, Home Mortgage Revenue Bonds,
Series 1993-C, 5.650%, 8/01/14 Aa 2/04 at 102 2,356,113
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds,
1994 Series F-3, 6.100%, 8/01/15 (Alternative Minimum Tax) Aaa 8/05 at 102 996,610
2,000,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (Pacific Gas and Electric Company), 1993 Series A,
5.875%, 6/01/23 (Alternative Minimum Tax) A 6/03 at 102 1,935,680
1,000,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (Pacific Gas and Electric Company), 1993 Series B,
5.850%, 12/01/23 (Alternative Minimum Tax) A 12/03 at 102 971,400
2,000,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (San Diego Gas and Electric Company), 1993 Series A,
5.850%, 6/01/21 (Alternative Minimum Tax) A1 6/03 at 102 1,943,800
3,000,000 California Rural Home Mortgage Finance Authority, Single Family
Mortgage Revenue Bonds (Mortgage-Backed Securities Program),
1996 Series C, 7.500%, 8/01/27 (Alternative Minimum Tax) AAA No Opt.Call 3,281,940
4,000,000 California State Public Works Board of the State of California, Lease
Revenue Bonds (Regents of the University of California), 1992 Series A
(Various University of California Projects), 6.600%, 12/01/22
(Pre-refunded to 12/01/02) Aaa 12/02 at 102 4,486,320
1,995,000 California State Public Works Board, Lease Revenue Bonds (Various
California Community College PJS), Series 1996A, 5.625%, 3/01/16 Aaa 3/06 at 102 1,947,719
4,000,000 California Statewide Communities Development Authority, Certificates
of Participation (Cedars-Sinai Medical Center), 6.500%, 8/01/15 A1 8/02 at 102 4,105,360
3,200,000 State Public Works Board of the State of California, Lease Revenue
Bonds (The Trustees of the California State University), 1994
Series A (Various California State University Projects),
6.375%, 10/01/14 A 10/04 at 102 3,300,608
2,000,000 State of California, Various Purpose General Obligation Bonds,
6.250%, 9/01/12 A1 No Opt.Call 2,139,500
2,000,000 State of California, Various Purpose General Obligation Refunding Bonds,
5.150%, 10/01/19 A1 10/03 at 102 1,780,940
1,500,000 ABAG Finance Authority for Nonprofit Corporations, Certificates of
Participation (Stanford University Hospital), California, Series 1993,
5.250%, 11/01/20 A1 11/03 at 102 1,340,640
2,000,000 Carson Redevelopment Agency (California), Redevelopment Project Area
No. 2, Refunding Tax Allocation Bonds, Series 1993, 5.875%, 10/01/09 Baa 10/03 at 102 1,974,760
1,760,000 Carson Redevelopment Agency (California), Redevelopment Project Area
No. 1, Tax Allocation Bonds, Series 1993, 5.625%, 10/01/08 Baa1 10/03 at 102 1,694,950
1,000,000 Eastern Municipal Water District (Riverside County, California),
Water and Sewer Revenue Refunding Certificates of Participation,
Series 1991A, 6.300%, 7/01/20 Aaa 7/01 at 101 1,032,360
1,175,000 Certificates of Participation, Elsinore Valley Municipal Water District,
Water and Sewer Facilities Corporation (Riverside County, California),
1992-A, 5.750%, 7/01/19 Aaa 7/02 at 102 1,140,749
2,000,000 Garden Grove Agency for Community Development, Garden Grove
Community Project, Tax Allocation Refunding Bonds, Issue of 1993,
5.875%, 10/01/23 BBB+ 10/03 at 102 1,869,240
4,100,000 Imperial Irrigation District, California, Certificates of Participation
(1994 Electric System Project), 6.000%, 11/01/15 Aaa 11/04 at 102 4,107,339
2,000,000 City of Loma Linda California, Hospital Revenue Bonds (Loma Linda
University Medical Center Projects), Series 1993-A, 6.000%, 12/01/06 BBB 12/03 at 102 1,968,120
<PAGE>
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 2,160,000 Community Redevelopment Financing Authority of the Community
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) Baa1 6/03 at 102 $ 2,012,234
9,000,000 The Community Redevelopment Agency of the City of Los Angeles,
California, Multifamily Housing Revenue Refunding Bonds, 1995
Series A (Angelus Plaza Project), 7.400%, 6/15/10 AAA 6/05 at 105 9,884,700
2,000,000 Los Angeles Convention and Exhibition Center Authority, Lease Revenue
Bonds, 1993 Refunding Series A, The City of Los Angeles (California),
5.375%, 8/15/18 Aaa 8/03 at 102 1,870,440
2,000,000 Department of Water and Power of The City of Los Angeles (California),
Electric Plant Refunding Revenue Bonds, Issue of 1993,
5.375%, 9/01/23 Aaa 9/03 at 102 1,850,180
1,000,000 City of Los Angeles, California, Wastewater System Revenue Bonds,
Series 1992-B, 6.250%, 6/01/12 Aaa 6/02 at 102 1,046,400
Northern California Power Agency, Hydroelectric Project Number One,
Revenue Bonds, 1992 Refunding Series A:
3,560,000 10.000%, 7/01/03 Aaa No Opt.Call 4,599,876
500,000 5.500%, 7/01/23 Aaa 7/02 at 100 467,760
2,000,000 Revenue Certificates of Participation, Series 1993A, Orange County
Water District, 5.000%, 8/15/18 Aa 8/03 at 100 1,736,780
1,355,000 Palomar Pomerado Health System, Insured Revenue Bonds, Series 1993,
5.000%, 11/01/13 Aaa 11/03 at 102 1,242,847
1,500,000 City of Pasadena, Electric Works Revenue Bonds, 1990 Series,
7.000%, 8/01/09 AA- 8/00 at 102 1,632,180
1,000,000 City of Riverside, California, Water Revenue Bonds, Issue of 1991,
9.000%, 10/01/01 Aa No Opt.Call 1,197,210
2,100,000 Sacramento City Finance Authority, Lease Revenue Refunding Bonds,
Series 1993 B, 5.400%, 11/01/20 Aa No Opt.Call 2,003,148
1,370,000 Sacramento, California, Municipal Utility District, Electric Revenue
Refunding Bonds, 1993 Series D, 5.250%, 11/15/20 Aaa 11/03 at 102 1,250,125
1,095,000 Sacramento Municipal Utility District (California), Electric Revenue
Bonds, 1993 Series E, 5.700%, 5/15/12 A 5/03 at 102 1,073,210
2,750,000 Airport Commission, City and County of San Francisco, California,
San Francisco International Airport, Second Series Revenue Bonds,
Issue 5, 6.500%, 5/01/24 (Alternative Minimum Tax) Aaa 5/04 at 102 2,873,063
2,000,000 Airports Commission City and County of San Francisco, California,
San Francisco International Airport, Second Series Revenue Bonds,
Issue 10, 5.700%, 5/01/26 (Alternative Minimum Tax) Aaa 5/06 at 102 1,915,780
3,100,000 City and County of San Francisco, Sewer Revenue Refunding Bonds,
Series 1994, 5.375%, 10/01/16 Aaa 10/02 at 102 2,908,048
3,500,000 Certificates of Participation, County of San Joaquin to the San
Joaquin County Public Facilities Financing Corporation,
Series 1993, 4.750%, 11/15/19 Aaa 11/03 at 102 2,961,245
1,400,000 City of Santa Clara, California, Electric Revenue Bonds, Series 1991A,
6.250%, 7/01/13 Aaa 7/01 at 102 1,459,430
1,005,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion
Project), 1993 Refunding Series, 12.000%, 1/01/04 Aaa No Opt.Call 1,435,140
1,150,000 Santa Monica-Malibu Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 1993 (Public School
Facilities Reconstruction Projects), 5.500%, 8/01/18 Aa 8/03 at 102 1,078,332
1,975,000 Southern California Public Power Authority, Transmission Project
Revenue Bonds, 1992 Subordinate Refunding Series (Southern
Transmission Project), 5.500%, 7/01/20 Aa 7/02 at 100 1,839,811
2,940,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds (Little
Company of Mary Hospital), 1985 Series A, 7.100%, 12/01/15
(Pre-refunded to 12/01/05) AAA 12/05 at 100 3,263,047
1,500,000 The Regents of the University of California, 1993 Refunding Certificates
of Participation (UCLA Central Chiller/Cogeneration Facility),
5.600%, 11/01/20 Aa 11/03 at 102 1,401,195
<PAGE>
<CAPTION>
PRINCIPAL RAT- OPT. CALL MARKET
AMOUNT DESCRIPTION INGS* PROVISIONS** VALUE
<S> <C> <C> <C> <C>
$ 2,225,000 The Regents of the University of California, University of
California Housing System Revenue Bonds, Series A,
5.500%, 11/01/18 Aaa 11/03 at 102 $ 2,085,491
2,000,000 Washington Township Hospital District, Revenue Bonds, Series 1993,
5.250%, 7/01/23 A 7/03 at 102 1,765,940
2,000,000 West and Central Basin Financing Authority, Revenue Bonds (Central
Basin Refunding Project), Series 1993, 5.000%, 8/01/16 Aaa 8/03 at 102 1,789,540
$110,370,000 Total Investments - (cost $111,373,074) - 95.9% 111,083,025
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.2%
695,000 California Health Facilities Financing Authority, Refunding Revenue
Bonds (St. Joseph Health System), Series 1985A, Variable Rate Demand
Bonds, 3.700%, 7/01/13+ VMIG-1 695,000
305,000 California Health Facilities Financing Authority, Refunding Revenue
Bonds (St. Joseph Health System), Series 1985B, Variable Rate Demand
Bonds, 3.650%, 7/01/13+ VMIG-1 305,000
200,000 California Pollution Control Financing Authority, Pollution Control
Revenue Bonds (Shell Oil Company Project), 1991 Series B, Variable
Rate Demand Bonds, 3.700%, 10/01/11+ VMIG-1 200,000
400,000 California Pollution Control Finance Pollution Control Refunding
Revenue (Pacific Gas and Electric Company), 1996-C Variable Rate
Demand Bonds, 3.650%, 11/01/26+ A-1+ 400,000
1,000,000 California Statewide Community Development Authority Certificates of
Participation Revenue (Sutter Health Obligation Group), Variable Rate
Demand Bonds, 3.750%, 7/01/15+ A-1 1,000,000
$ 2,600,000 Total Temporary Investments - 2.2% 2,600,000
============
Other Assets Less Liabilities - 1.9% 2,185,526
Net Assets - 100% $115,868,551
============
<PAGE>
<CAPTION>
NUMBER OF MARKET MARKET
STANDARD & POOR'S MOODY'S SECURITIES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 24 $ 59,896,149 54%
RATINGS* AA+, AA, AA- Aa1, Aa, Aa2, Aa3 10 18,011,534 16
PORTFOLIO OF A+ A1 5 11,310,240 10
INVESTMENTS A, A- A, A2, A3 6 12,345,798 11
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 5 9,519,304 9
TEMPORARY
INVESTMENTS):
TOTAL 50 $111,083,025 100%
<FN>
* Ratings (not covered by the report of independent auditors): Using the
higher of Standard & Poor's or Moody's rating.
** Optional Call Provisions (not covered by the report of independent
auditors): 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.
+ The 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $133,234,634 $257,105,488 $111,083,025
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 2,500,000 5,610,000 2,600,000
Cash 327,128 10,445 10,935
Receivables:
Interest 2,138,009 4,169,834 1,802,793
Investments sold -- -- 929,819
Other assets 16,021 14,006 15,309
----------- ----------- -----------
Total assets 138,215,792 266,909,773 116,441,881
----------- ----------- -----------
LIABILITIES
Payable for investments purchased -- 4,000,000 --
Accrued expenses:
Management fees (note 6) 76,778 144,470 64,666
Other 86,905 110,625 134,051
Preferred share dividends payable 9,864 23,625 21,850
Common share dividends payable 432,361 779,818 352,763
----------- ----------- -----------
Total liabilities 605,908 5,058,538 573,330
----------- ----------- -----------
Net assets (note 7) $137,609,884 $261,851,235 $115,868,551
============ ============ ============
Preferred shares, at liquidation value $ 45,000,000 $ 95,000,000 $ 43,000,000
============ ============ ============
Preferred shares outstanding 1,800 3,800 1,720
============ ============ ============
Common shares outstanding 6,405,350 12,577,707 5,735,977
============ ============ ============
Net asset value per Common share outstanding (net assets less
Preferred shares at liquidation value, divided by Common
shares outstanding) $ 14.46 $ 13.27 $ 12.70
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended August 31, 1996
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $7,927,076 $14,693,125 $6,676,292
---------- ----------- ----------
Expenses:
Management fees (note 6) 908,457 1,699,274 760,332
Preferred shares--auction fees 112,423 237,337 107,427
Preferred shares--dividend disbursing agent fees 16,518 29,980 13,697
Shareholders' servicing agent fees and expenses 15,810 20,850 8,609
Custodian's fees and expenses 43,668 57,176 43,955
Directors'/Trustees' fees and expenses (note 6) 920 1,169 1,837
Professional fees 15,223 19,299 35,185
Shareholders' reports--printing and mailing expenses 24,326 42,885 13,367
Stock exchange listing fees 16,230 28,526 7,047
Investor relations expense 8,861 16,059 4,489
Portfolio insurance expense 19,289 13,225 --
Other expenses 15,076 20,055 34,924
---------- ----------- ----------
Total expenses 1,196,801 2,185,835 1,030,869
---------- ----------- ----------
Net investment income 6,730,275 12,507,290 5,645,423
---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from investment transactions, net of
taxes, if applicable (notes 1 and 3) (563,462) (1,714,194) (1,120,843)
Net change in unrealized appreciation or depreciation
of investments 662,762 4,801,344 2,668,037
---------- ----------- ----------
Net gain from investments 99,300 3,087,150 1,547,194
---------- ----------- ----------
Net increase in net assets from operations $6,829,575 $15,594,440 $7,192,617
========== =========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
NPC NCL
Year ended Year ended Year ended Year ended
8/31/96 8/31/95 8/31/96 8/31/95
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 6,730,275 $ 6,740,617 $ 12,507,290 $ 12,793,319
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (notes 1 and 3) (563,462) (269,095) (1,714,194) (3,934,343)
Net change in unrealized appreciation or depreciation
of investments 662,762 4,914,208 4,801,344 7,676,617
------------- ------------- ------------- -------------
Net increase in net assets from operations 6,829,575 11,385,730 15,594,440 16,535,593
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income:
Common shareholders (5,073,040) (5,302,260) (9,357,813) (9,896,794)
Preferred shareholders (1,470,134) (1,644,081) (3,013,164) (3,358,809)
------------- ------------- ------------- -------------
Decrease in net assets from distributions to
shareholders (6,543,174) (6,946,341) (12,370,977) (13,255,603)
------------- ------------- ------------- -------------
Capital Share Transactions (note 2)
Net proceeds from shares issued in acquisition of NCV,
as applicable (note 1) -- -- -- --
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions -- 78,498 -- 103,296
------------- ------------- ------------- -------------
Net increase in net assets derived from capital share
transactions -- 78,498 -- 103,296
------------- ------------- ------------- -------------
Net increase in net assets 286,401 4,517,887 3,223,463 3,383,286
Net assets at beginning of year 137,323,483 132,805,596 258,627,772 255,244,486
------------- ------------- ------------- -------------
Net assets at end of year $ 137,609,884 $ 137,323,483 $ 261,851,235 $ 258,627,772
============= ============= ============= =============
Balance of undistributed net investment income at end of year $ 308,613 $ 121,512 $ 467,389 $ 331,076
============= ============= ============= =============
See accompanying notes to financial statements
<PAGE>
<CAPTION>
NCU
Year ended Year ended
8/31/96 8/31/95
<S> <C> <C>
OPERATIONS
Net investment income $ 5,645,423 $ 5,208,244
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (notes 1 and 3) (1,120,843) (2,548,807)
Net change in unrealized appreciation or depreciation
of investments 2,668,037 9,505,079
------------- -------------
Net increase in net assets from operations 7,192,617 12,164,516
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income:
Common shareholders (4,233,153) (3,968,924)
Preferred shareholders (1,394,718) (1,443,761)
------------- -------------
Decrease in net assets from distributions to
shareholders (5,627,871) (5,412,685)
------------- -------------
CAPITAL SHARE TRANSACTIONS (note 2)
Net proceeds from shares issued in acquisition of NCV,
as applicable (note 1) -- 37,803,999
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions -- 37,810
------------- -------------
Net increase in net assets derived from capital share
transactions -- 37,841,809
------------- -------------
Net increase in net assets 1,564,746 44,593,640
Net assets at beginning of year 114,303,805 69,710,165
------------- -------------
Net assets at end of year $ 115,868,551 $ 114,303,805
============= =============
Balance of undistributed net investment income at end of year $ 184,087 $ 166,535
============= =============
See accompanying notes to financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
At August 31, 1996, the California Funds (the "Funds") covered in this
report and their corresponding stock exchange symbols are Nuveen Insured
California Premium Income Municipal Fund, Inc. (NPC), Nuveen Insured
California Premium Income Municipal Fund 2, Inc. (NCL) and Nuveen California
Premium Income Municipal Fund (NCU). NPC and NCL are traded on the New York
Stock Exchange while NCU is traded on the American Stock Exchange.
Each Fund invests primarily in a diversified portfolio of municipal
obligations issued by state and local government authorities within the state
of California. The Funds are registered under the Investment Company Act of
1940 as closed-end, diversified management investment companies.
On November 7, 1994, NCU acquired all of the net assets of Nuveen California
Premium Income Municipal Fund 2 (NCV) pursuant to a plan of reorganization
approved by the shareholders of both Funds on October 21, 1994. The
acquisition was accomplished by a tax-free exchange of 2,175,061shares of NCU
for the 2,233,987 shares of NCV outstanding on November 7, 1994. NCV's net
assets at that date of $37,803,999 included $7,676,463 of net unrealized
depreciation and $16,000,000 of preferred shares at liquidation value which
were combined with that of NCU. The combined net assets of NCU immediately
after the acquisition were $100,464,481.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors/Trustees. Temporary
investments in securities that have variable rate and demand features
qualifying them as short-term securities are traded and valued at amortized
cost.
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 be settled a month or more after the transaction date. 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 their purchase
commitments. At August 31, 1996, NCL had outstanding purchase commitments that
amounted to $4,000,000. There were no such purchase commitments in either NPC
or NCU.
<PAGE>
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt
securities when required for federal income tax purposes.
Income Taxes
The Funds intend to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies by distributing to shareholders
all of their tax-exempt net investment income, in addition to any significant
amounts of net realized capital gains and/or market discount realized from
investment transactions. The Funds currently consider significant net realized
capital gains and/or market discount as amounts in excess of $.01 per Common
share. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal and
California state personal income taxes, to retain such tax-exempt status when
distributed to shareholders of the Funds. All regular monthly income dividends
paid during the year ended August 31, 1996, have been designated Exempt
Interest Dividends which are exempt from regular federal personal income tax.
Net realized capital gain and market discount distributions are subject to
federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts after month-end.
Net realized capital gains and/or market discount from investment transactions
are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryovers.
Distributions to shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount are recorded on the ex-dividend
date. The amount and timing of such distributions are determined in accordance
with federal income tax regulations, which may differ from generally accepted
accounting principles. 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 ordinary taxable income from investment
transactions, where applicable.
<PAGE>
<TABLE>
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 by the Auction Agent.
The number of shares outstanding, by Series and in total, at August 31, 1996,
for each Fund is as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Number of shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series Th -- 1,900 --
----- ----- -----
Total 1,800 3,800 1,720
===== ===== =====
</TABLE>
Insurance
NPC and NCL invest in municipal securities which are either covered by
insurance or are backed by an escrow or trust account containing sufficient
U.S. Government or U.S. Government agency securities, both of which ensure the
timely payment of principal and interest. 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' 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 net asset value of the Funds' shares 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.
Derivative Financial Instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119, Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments,
which prescribes disclosure requirements for transactions 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
fiscal year ended August 31, 1996.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period.
<PAGE>
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
<TABLE>
<CAPTION>
NPC NCL
Year ended Year ended Year ended Year ended
8/31/96 8/31/95 8/31/96 8/31/95
<S> <C> <C> <C> <C>
Common shares:
Shares issued in acquisition of NCV, as applicable (note 1) -- -- -- --
Shares issued to shareholders due to reinvestment of distributions -- 6,408 -- 9,285
------ ----- ------ -----
Net increase -- 6,408 -- 9,285
====== ===== ====== =====
Preferred shares acquired from NCV, as applicable (note 1) -- -- -- --
====== ===== ====== =====
<CAPTION>
NCU
Year ended Year ended
8/31/96 8/31/95
<S> <C> <C>
Common shares:
Shares issued in acquisition of NCV as applicable (note 1) -- 2,175,061
Shares issued to shareholders due to reinvestment of distributions -- 3,601
------ ---------
Net increase -- 2,178,662
====== =========
Preferred shares acquired from NCV, as applicable (note 1) -- 640
====== =========
</TABLE>
<PAGE>
<TABLE>
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the year ended August
31, 1996, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $15,145,205 $71,746,257 $28,212,983
Temporary municipal investments 16,010,000 47,065,000 27,810,000
SALES AND MATURITIES
Investments in municipal securities 12,820,358 68,891,640 29,899,002
Temporary municipal investments 18,310,000 44,455,000 27,210,000
=========== =========== ===========
At August 31, 1996, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes
for each Fund.
At August 31, 1996, the Funds had unused capital loss carryovers available for
federal income tax purposes to be applied against future capital gains, if
any. If not applied, the carryovers will expire as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Expiration year:
2001 $ 10,001 $ -- $ --
2002 -- -- 1,175,783
2003 2,373,250 3,896,131 1,893,938
2004 228,384 4,345,091 2,742,449
---------- ---------- ----------
Total $2,611,635 $8,241,222 $5,812,170
========== ========== ==========
4. DISTRIBUTIONS TO COMMON SHAREHOLDERS
On September 3, 1996, the Funds declared Common share dividend distributions
from their tax-exempt net investment income which were paid October 1, 1996,
to shareholders of record on September 15, 1996, as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Dividend per share $.0675 $.0620 $.0615
====== ====== ======
</TABLE>
<PAGE>
<TABLE>
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 1996, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Gross unrealized:
Appreciation $7,027,733 $2,888,666 $ 1,677,757
Depreciation (184,508) (1,471,947) (1,967,806)
---------- ---------- -----------
Net unrealized appreciation (depreciation) $6,843,225 $1,416,719 $ (290,049)
========== ========== ===========
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each
Fund pays to the Adviser an annual management fee, payable monthly, at the
rates set forth below, which are based upon the average daily net asset value
of each Fund:
<CAPTION>
Average daily net asset value Management fee
<S> <C>
For the first $125,000,000 .65 of 1%
For the next $125,000,000 .6375 of 1
For the next $250,000,000 .625 of 1
For the next $500,000,000 .6125 of 1
For the next $1,000,000,000 .6 of 1
For net assets over $2,000,000,000 .5875 of 1
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those 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.
7. COMPOSITION OF NET ASSETS
At August 31, 1996, net assets consisted of:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Preferred shares, $25,000 stated value per share, at liquidation value $ 45,000,000 $ 95,000,000 $ 43,000,000
Common shares, $.01 par value per share 64,054 125,777 57,360
Paid-in surplus 88,572,854 174,386,018 79,656,172
Balance of undistributed net investment income 308,613 467,389 184,087
Accumulated net realized gain (loss) from investment transactions (3,178,862) (9,544,668) (6,739,019)
Net unrealized appreciation (depreciation) of investments 6,843,225 1,416,719 (290,049)
------------- ------------- -------------
Net assets $ 137,609,884 $ 261,851,235 $ 115,868,551
============= ============= =============
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
============= ============= =============
</TABLE>
<PAGE>
<TABLE>
8. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At August 31, 1996, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Revenue Bonds:
Water / Sewer Facilities 20% 18% 11%
Housing Facilities 6 5 16
Electric Utilities 5 9 15
Health Care Facilities 3 1 12
Educational Facilities 2 8 11
Lease Rental Facilities 4 10 6
Transportation 4 8 4
Pollution Control Facilities 6 -- 4
Other 21 17 9
General Obligation Bonds -- 12 5
Escrowed Bonds 29 12 7
----- ----- -----
100% 100% 100%
===== ===== =====
</TABLE>
<PAGE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed
by an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest
in the event of default (100% for NPC, 100% for NCL and 42% for NCU). Such
insurance or escrow, however, does not guarantee the market value of the
municipal securities or the value of any of the Funds' shares.
All of the temporary investments in short-term municipal securities have
credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
<CAPTION>
Dividends from tax-exempt
Operating performance net investment income
Net
realized and
Net asset unrealized
value Net gain (loss)
beginning investment from To Common To Preferred
of period income investments** shareholders shareholders++
NPC
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 $14.410 $1.051 $.021 $(.792) $(.230)
1995 13.720 1.053 .722 (.828) (.257)
1994 15.310 1.066 (1.609) (.847) (.200)
11/19/92 to
8/31/93 14.050 .640 1.445 (.500) (.108)
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 13.010 .995 .249 (.744) (.240)
1995 12.750 1.017 .297 (.787) (.267)
1994 14.570 1.020 (1.851) (.817) (.172)
3/18/93 to
8/31/93 14.050 .247 .655 (.192) (.023)
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 12.430 .984 .267 (.738) (.243)
1995 12.010 1.002 .460 (.766) (.276)
1994 14.470 .973 (2.259) (.815) (.168)
6/18/93 to
8/31/93 14.050 .080 .438 -- --
<PAGE>
<CAPTION>
Distributions from capital gains
Organization Per
and offering Common
costs and share
Preferred share Net asset market
To Common To Preferred underwriting value end value end
shareholders shareholders++ discounts of period of period
NPC
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 $ -- $ -- $ -- $14.460 $13.875
1995 -- -- -- 14.410 12.750
1994 -- -- -- 13.720 13.000
11/19/92 to
8/31/93 -- -- (.217) 15.310 15.500
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 -- -- -- 13.270 12.500
1995 -- -- -- 13.010 11.500
1994 -- -- -- 12.750 11.875
3/18/93 to
8/31/93 -- -- (.167) 14.570 14.875
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 -- -- -- 12.700 11.875
1995 -- -- -- 12.430 10.750
1994 (.023) (.004) (.164) 12.010 11.125
6/18/93 to
8/31/93 -- -- (.098) 14.470 14.875
<PAGE>
<CAPTION>
Ratio/Supplemental data
Ratio
Total of net
investment Total Ratio of investment
return return Net assets expenses to income Portfolio
on market on net asset end of period average net to average turnover
value+ value+ (in thousands) assets*** net assets*** rate
NPC
<S> <C> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 15.39% 5.83% $137,610 .85% 4.81% 9%
1995 4.67 11.68 137,323 .89 5.10 24
1994 (10.88) (4.99) 132,806 .85 4.94 29
11/19/92 to
8/31/93 6.80 12.73 142,812 .88* 4.45* 20
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 15.36 7.76 261,851 .83 4.73 27
1995 3.55 8.80 258,628 .84 5.11 24
1994 (15.01) (7.07) 255,244 .84 4.80 24
3/18/93 to
8/31/93 .49 5.11 277,948 .86* 3.46* --
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C> <C>
Year ended 8/31,
1996 17.51 8.15 115,869 .88 4.83 25
1995 3.65 10.53 114,304 1.05 5.08 26
1994 (20.07) (11.51) 69,710 .95 4.79 40
6/18/93 to
8/31/93 (.83) 2.99 51,487 1.19* 3.33* --
<FN>
* Annualized.
** Net of taxes, if applicable (note 1).
*** Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
+ Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distribution, if any, and changes
in stock price per share. Total Return on Net Asset Value is the combination
of reinvested dividend income, reinvested capital gains distributions, if any,
and changes in net asset value per share.
++ The amounts shown are based on Common share equivalents.
</FN>
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Boards of Directors, Trustees and Shareholders
Nuveen Insured California Premium Income Municipal Fund, Inc.
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Nuveen California Premium Income Municipal Fund
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Insured California Premium Income
Municipal Fund, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc. and Nuveen California Premium Income Municipal Fund as of August 31,
1996, and the related statements of operations, changes in net assets and the
financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of August 31, 1996, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen Insured
California Premium Income Municipal Fund 2, Inc. and Nuveen California Premium
Income Municipal Fund at August 31, 1996, and the results of their operations,
changes in their net assets and financial highlights for the periods indicated
therein in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
October 4, 1996
<PAGE>
Build your wealth automatically
Photographic image of Customer Service Rep at Nuveen.
Managing your portfolio takes skill, experience, and informed judgment, but
our efforts to help you build your wealth don't stop there. At Nuveen, we
offer a number of convenient ways to add to your tax-free portfolio and earn
the tax-free income you need to achieve your financial goals.
NUVEEN EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen exchange-traded fund allows you to conveniently reinvest dividends
and/or capital gains distributions in additional fund shares. If you do not
elect to reinvest distributions, all distributions are paid by check, or can
be deposited directly into your bank or brokerage account.
By choosing to reinvest, you'll be able to set aside money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. You'll also benefit from dollar-cost averaging, a technique of
investing at regular intervals, which allows you to build a high-quality,
tax-free portfolio conveniently and cost effectively over time. All
reinvestments are invested in full and fractional shares and are kept in
non-certificated form by the Plan Agent, Chase Manhattan Bank.
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. Income or capital gains taxes may be payable on dividends
or distributions that are reinvested.
The shares you acquire by reinvesting will either be purchased on the open
market or be 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 be invested within 30 days of 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.
<PAGE>
You may, of course, 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 also can reinvest if your shares are registered in the name of a
brokerage firm, bank, or other nominee. Just ask your investment adviser if
the firm will participate on your behalf. If not, it's easy to have the shares
registered in your name and to apply for a reinvestment account directly.
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 adviser or
call us toll-free at 1.800.257.8787.
Photographic image of Customer Service Rep at Nuveen.
"When it comes to financial planning, your investment adviser knows your
situation best. Nuveen is pleased to provide the account information you and
your adviser need to plan effectively."
Photographic image of Customer Service Rep at Nuveen.
"At Nuveen, we make reinvesting easy. A phone call is all it takes to set
up your reinvestment account."
<PAGE>
Photographic image of Customer Service Rep at Nuveen.
"When questions come up about your investment, we're happy to provide the
up-to-date information you and your adviser need."
More than just a number
If you've ever called our toll-free customer service line, you've spoken with
one of Nuveen's customer service representatives. These reps are ready to
assist you with answers to your questions about current account balances,
yields, and previous transactions on your accounts. They can also supply
additional information about any of Nuveen's tax-free unit trusts and mutual
funds.
If you have a question about your account, or whenever you need help, just
call 800.257.8787. Our customer service reps are available Monday through
Friday from 8:00 a.m. to 8:00 p.m. Eastern time.
Photographic image of woman seated and man standing behind her
representing Nuveen investors.
<PAGE>
Your investment partner
Photographic image of John Nuveen, Sr., founder of Nuveen.
For nearly 100 years, Nuveen has earned its reputation as a tax-free income
specialist by focusing on municipal bonds.
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships with these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their
needs in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent
financial planners, to bring the benefits of tax-free investing to you. These
advisers are experts at identifying your needs and recommending the best
solutions for your situation. Together we make a powerful team, helping you
create a successful investment plan that meets your needs today and in the
future.
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
FAN-6-8.96
