NUVEEN Exchange-Traded Funds
FEBRUARY 28, 1998
SEMIANNUAL REPORT
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NPC
NCL
NCU
California
Photo of: Family standing by and swimming in pool.
<PAGE>
Highlights
As of February 28, 1998
CONTENTS
1 Dear Shareholder
3 Portfolio Manager's Comments
5 NPC Performance Overview
6 NCL Performance Overview
7 NCU Performance Overview
8 Shareholder Meeting Report
9 Portfolio of Investments
19 Statement of Net Assets
20 Statement of Operations
21 Statement of Changes in Net Assets
22 Notes to Financial Statements
26 Financial Highlights
28 Building Better Portfolios
Fund Information
================================================================================
Nuveen Insured California Premium Income
Municipal Fund, Inc.
PIE CHART:
Insured 69%
Escrowed 31%
o Stable Tax-Free Dividend for 21 Consecutive Months
o Taxable Equivalent Yield of 8.21% for Investors in
Combined 37.4% Federal and State Income Tax Bracket
o 1-Year Total Return on NAV of 13.10% Outperforms Lehman Brothers California
Insured Municipal Index
Nuveen Insured California Premium Income
Municipal Fund 2, Inc.
PIE CHART:
Insured 90%
Escrowed 10%
o Stable Tax-Free Dividend for 31 Consecutive Months
o Taxable Equivalent Yield of 8.13% for Investors in
Combined 37.4% Federal and State Income Tax Bracket
o 1-Year Total Return on NAV of 12.30% Outperforms Lehman Brothers California
Insured Municipal Index
Nuveen California Premium Income Municipal Fund
PIE CHART:
AAA 69%
AA 9%
A 14%
BBB/NR 8%
o Stable Tax-Free Dividend for 34 Consecutive Months
o Taxable Equivalent Yield of 8.39% for Investors in
Combined 37.4% Federal and State Income Tax Bracket
o 1-Year Total Return on NAVof 12.18% Outperforms
Both Lehman Brothers California Municipal Index and Lipper Peer Average
<PAGE>
Dear Shareholder
TIMOTHY R. SCHWERTFEGER
CHAIRMAN OF THE BOARD
PHOTO OF: TIMOTHY R. SCHWERTFEGER
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Over the past 12 months, the California Premium Income funds have performed
exceptionally well, rewarding investors with attractive tax-free income and
above-market returns. As of February 28, 1998, shareholders were receiving
current market yields that ranged from 5.09% to 5.25%. To match these yields,
investors in the combined 37.4% federal and California state income tax bracket
would have had to earn between 8.13% and 8.39% on taxable alternatives. Dividend
stability continues to be a hallmark of the Nuveen exchange-traded funds, as the
dividends for the three funds in this report were declared a total of 36 times
over the past year without a single adjustment.
For the year ended February 28, 1998, the funds posted total returns on share
price that ranged from 17.77% to 21.04%, equivalent to taxable returns of 21.36%
to 24.65% for investors in the combined 37.4% federal and California tax
bracket. For shareholders in higher tax brackets, the tax-adjusted returns were
even more attractive. You will find additional details on the individual
performance of each fund on pages 5-7.
MUNICIPAL MARKET REVIEW
The bond market enjoyed a period of solid performance over the past year, as the
benign inflationary environment provided the ideal backdrop for fixed-income
investments, including municipal issues. A shrinking federal deficit and the
inactivity of the Federal Reserve, which has been on hold since its last
interest rate tightening in March 1997, also contributed to the positive
environment for bonds.
Between the end of February 1997 and February 1998, the yield on 30-year
Treasury bonds dropped from 6.80% to 5.92%, and the municipal market followed
suit, as the yield on the Bond Buyer 40 declined from 5.76% to 5.24%. The
relatively tight spread between tax-free municipal bond yields and taxable
Treasury bond yields, combined with municipals' comparatively low volatility and
dependable tax-free income, continue to make municipal bonds an attractive
opportunity for investors in higher tax brackets.
<PAGE>
MEETING INVESTOR NEEDS
The stable income stream and attractive returns detailed on the following pages
demonstrate that these exchange-traded funds continued to achieve their
investment objectives. In today's market environment, many investors are seeking
conservatively managed investments that enable them to strike the proper balance
between reward and risk in their portfolios. With their focus on consistent
performance and moderated risk, Nuveen's exchange-traded funds can be ideal for
investors who want to build and sustain long-term financial security.
BUILDING BETTER PORTFOLIOS
Nuveen's broad range of leveraged and unleveraged municipal bond funds provide a
variety of choices so that investors can select the risk level appropriate to
their individual needs. Each of these funds is managed with the same value
investing approach that emphasizes in-depth research, quality investments and
careful monitoring. Our exchange-traded funds can also be combined with other
Nuveen investments, creating the foundation for a well-balanced investment
portfolio that offers risk resistance as well as tax efficiency.
As you review the performance of your fund and discuss the results with your
financial adviser, we hope that you continue to think of Nuveen when seeking
quality invest ment solutions that withstand the test of time. Your adviser can
introduce you to a variety of other Nuveen products and services designed to
round out your portfolio of core investments. These include the Nuveen Growth
and Income Stock Fund, our two balanced funds, which emphasize capital
appreciation and stability through a blend of equities and Treasury securities
or municipal bonds, and the new Nuveen Rittenhouse Growth Fund, a blue chip
equity mutual fund that provides a tax-efficient approach to building and
sustaining wealth. We encourage you to talk to your financial adviser about our
additional products and services to determine those that can best complement
your current Nuveen investments.
On behalf of everyone at Nuveen, I thank you for your continued confidence in us
and our family of investments.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
April 15, 1998
"We hope that you continue to think of Nuveen when seeking quality investment
solutions that withstand the test of time."
<PAGE>
Nuveen California Premium Income Funds
Portfolio Manager's Comments
PORTFOLIO MANAGER JOHN GAMBLA DISCUSSES THE PERFORMANCE OF THE CALIFORNIA
PREMIUM INCOME FUNDS, THE CALIFORNIA MUNICIPAL MARKET, AND KEY INVESTMENT
STRATEGIES.
PERFORMANCE REVIEW
The funds covered in this report performed exceptionally well over the past
year, as each fund outperformed its respective benchmark by more than 200 basis
points. For the period, the California Premium Income Fund posted a total return
on net asset value of 12.18% versus an annual return of 9.72% for the Lehman
Brothers California Municipal Bond Index, while the two insured funds produced
total returns on net asset value of 12.30% and 13.10%, outpacing the Lehman
California Insured Municipal Bond Index's 10.27%. Also, as Tim mentioned in his
letter to shareholders, total returns on share price ranged from 17.77% to
21.04% for the year, providing taxable equivalent returns of 21.36% to 24.65%
for investors in the combined 37.4% federal and California tax bracket.
In the current declining interest rate environment, the leveraged structure of
these funds worked to shareholders advantage and helped performance. With
short-term interest rates well below long-term rates, common shareholders
benefited as leverage enabled us to pick up additional yield. During the past
year, the longer duration of these funds also brought greater price
appreciation.
In addition, the funds continued to generate a dependable stream of attractive
tax-free income, which translated to outstanding taxable equivalent yields.
Because of their exemption from both federal and state taxes, California
municipal bond funds offer state residents excellent relative value and
significantly higher taxable equivalent yields than taxable investments of
comparable quality.
CALIFORNIA'S ECONOMIC REBOUND CONTINUES
California continues its strong economic recovery and is building a more
diversified economy. High technology and service industry jobs are replacing
positions lost in the 1990-94 state recession. Although the state's financial
situation is improving, California continues to feel the pressures of mandated
school funding levels (in accordance with Proposition 98), mandatory sentencing
laws, and a required two-thirds legislative majority approval for budget
passage. The supply of municipal bonds has been heavy and is expected to
continue as the state enjoys rapid economic and population growth.
FINDING VALUE IN TODAY'S MARKET
The performance of the California Premium Income funds continues to be
influenced by the longer duration and call protection that is characteristic of
funds assembled in late 1992 and 1993. Duration measures a fund's price
volatility, or reaction to interest rate movements. In a year that saw municipal
bond yields, as measured by the Bond Buyer 40, fall more than 50 basis points,
the longer durations of these funds - ranging from 6.09 to 8.41 years - proved
to be beneficial. Their longer call protection also contributed to the
exceptional performance of the past 12 months. During a market rally, such as
that we have experienced over the past year, longer-maturity bonds are priced to
their call dates rather than to their maturities. Therefore, bonds with the
longest call protection maintain a longer duration helping the price
appreciation of the fund.
Another element that contributed to the performance of these funds was the
improving credit quality of the state of California, as the economy continues to
rebound. The stronger economic environment - as evidenced by employment growth
and diversification into high technology, service, and export-related industries
- - has benefited individual issues and brought about credit rating upgrades for
the state. This move is consistent with the larger trend of credit upgrades in
the overall municipal market, as upgrades outnumbered downgrades by a margin of
approximately 17 to 1 among the 2,879 credit rating revisions issued by Moody's
in 1997.
We currently favor the tax allocation/special assessment sector of the
California municipal market, which uses the bond proceeds to develop real
estate, especially housing for seniors. Because these projects are often small
in nature, the bonds are typically non-rated, adding attractive yields to the
portfolio. An additional benefit is their favorable risk profile since they
involve little or no construction risk. We expect the quality ratings of these
bonds to continue to improve in line with the improving value of California real
estate, resulting in further price appreciation.
<PAGE>
PORTFOLIO CHANGES
Over the past few years, we took advantage of consolidation and deregulation in
the utilities and healthcare sectors to selectively purchase bonds that we
anticipated would add quality, income, and stability to the portfolio. We now
believe that we have maximized our opportunities and have begun to sell bonds
from both sectors. The proceeds realized from the sale of the utilities bonds,
which were purchased at a deep discount, are being re-deployed to General
Obligation bonds and defined revenue streams.
In healthcare, the bonds we selected for purchase three years ago were issued by
organizations with strong competitive positions and healthy financial operations
that were then being penalized by the turmoil surrounding healthcare reform.
Since that time, spreads have narrowed, and many of these bonds have been
pre-refunded, enhancing the credit quality of the portfolio and ensuring greater
price stability and income.
STRATEGIES FOR THE FUTURE
In the coming months, we will continue to focus on the selection of undervalued
securities that provide attractive income and the opportunity for price
appreciation relative to the market, while maintaining our objective of capital
preservation. If the yield curve continues to remain flat, we believe the
portfolio will benefit from the addition of maturities in the 20-year range.
Finally, with credit premiums (the difference between yields of BBB-rated and
AAA-rated bonds) at historically tight spreads, we believe there is little
compensation for assuming the additional risk associated with the lower quality
categories. Given this situation, we continue to favor the high end of the
credit quality spectrum, which enables us to improve the quality of our
portfolio by purchasing high quality bonds at yields similar to those of bonds
with lower credit ratings. The research-intensive bond selection process in
which Nuveen excels will help us identify those issues that are well prepared to
thrive in the current environment.
"The funds covered in this report performed exceptionally well over the past
year, as each fund outperformed its respective benchmark by more than 200
basis points."
<PAGE>
Nuveen Insured California Premium Income Municipal Fund, Inc.
Performance Overview
As of February 28, 1998
NPC
PORTFOLIO STATISTICS
=============================================
Inception Date 11/92
- ---------------------------------------------
Share Price 15 3/4
- ---------------------------------------------
Net Asset Value $16.12
- ---------------------------------------------
Current Market Yield 5.14%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal Only)(1) 7.45%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal and State)(1) 8.21%
- ---------------------------------------------
Fund Net Assets ($000) $148,231
- ---------------------------------------------
Average Weighted Maturity (Years) 21.29
- ---------------------------------------------
Average Weighted Duration (Years) 8.41
- ---------------------------------------------
ANNUALIZED TOTAL RETURN
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 21.04% 13.10%
- ---------------------------------------------
3-Year 13.67% 10.63%
- ---------------------------------------------
5-Year 6.96% 7.52%
- ---------------------------------------------
Since Inception 6.84% 8.35%
- ---------------------------------------------
TAXABLE EQUIVALENT TOTAL RETURN(2)
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 24.65% 16.40%
- ---------------------------------------------
3-Year 17.35% 13.96%
- ---------------------------------------------
5-Year 10.59% 10.93%
- ---------------------------------------------
Since Inception 10.34% 11.67%
- ---------------------------------------------
TOP 5 SECTORS
=============================================
U.S. Guaranteed 31%
- ---------------------------------------------
Water & Sewer 20%
- ---------------------------------------------
Tax Obligation (Limited) 16%
- ---------------------------------------------
Utilities 10%
- ---------------------------------------------
Tax Obligation (General) 6%
- ---------------------------------------------
1997-1998 Monthly Tax-Free Dividends(3)
BAR CHART:
Mar 0.0675
Apr 0.0675
May 0.0675
Jun 0.0675
Jul 0.0675
Aug 0.0675
Sep 0.0675
Oct 0.0675
Nov 0.0675
Dec 0.0675
Jan 0.0675
Feb 0.0675
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. The
federal only rate is based on the current market yield and a federal tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state taxes. It is based on a combined
federal and state tax rate of 37.40%.
2 Taxable equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 37.4%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
3 The fund paid shareholders a capital gains distribution in December of
$0.0032.
<PAGE>
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Performance Overview
As of February 28, 1998
NCL
PORTFOLIO STATISTICS
=============================================
Inception Date 3/93
- ---------------------------------------------
Share Price 14 5/8
- ---------------------------------------------
Net Asset Value $14.64
- ---------------------------------------------
Current Market Yield 5.09%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal Only)(1) 7.38%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal and State)(1) 8.13%
- ---------------------------------------------
Fund Net Assets ($000) $279,152
- ---------------------------------------------
Average Weighted Maturity (Years) 18.68
- ---------------------------------------------
Average Weighted Duration (Years) 6.09
- ---------------------------------------------
ANNUALIZED TOTAL RETURN
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 20.00% 12.30%
- ---------------------------------------------
3-Year 13.23% 10.55%
- ---------------------------------------------
Since Inception 5.40% 6.53%
- ---------------------------------------------
TAXABLE EQUIVALENT TOTAL RETURN(2)
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 23.54% 15.62%
- ---------------------------------------------
3-Year 16.92% 13.97%
- ---------------------------------------------
Since Inception 8.87% 9.85%
- ---------------------------------------------
TOP 5 SECTORS
=============================================
Tax Obligation (Limited) 29%
- ---------------------------------------------
Education and Civic Organizations 15%
- ---------------------------------------------
Water and Sewer 13%
- ---------------------------------------------
Tax Obligation (General) 12%
- ---------------------------------------------
U.S. Guaranteed 10%
- ---------------------------------------------
1997-1998 Monthly Tax-Free Dividends
BAR CHART:
Mar 0.062
Apr 0.062
May 0.062
Jun 0.062
Jul 0.062
Aug 0.062
Sep 0.062
Oct 0.062
Nov 0.062
Dec 0.062
Jan 0.062
Feb 0.062
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. The
federal only rate is based on the current market yield and a federal tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state taxes. It is based on a combined
federal and state tax rate of 37.40%
2 Taxable equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 37.4%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
<PAGE>
Nuveen California Premium Income Municipal Fund
Performance Overview
As of February 28, 1998
NCU
PORTFOLIO STATISTICS
=============================================
Inception Date 6/93
- ---------------------------------------------
Share Price 14 1/16
- ---------------------------------------------
Net Asset Value $14.06
- ---------------------------------------------
Current Market Yield 5.25%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal Only)(1) 7.61%
- ---------------------------------------------
Taxable Equivalent Yield
(Federal and State)(1) 8.39%
- ---------------------------------------------
Fund Net Assets ($000) $123,665
- ---------------------------------------------
Average Weighted Maturity (Years) 16.70
- ---------------------------------------------
Average Weighted Duration (Years) 6.36
- ---------------------------------------------
ANNUALIZED TOTAL RETURN
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 17.77% 12.18%
- ---------------------------------------------
3-Year 13.95% 11.38%
- ---------------------------------------------
Since Inception 4.76% 5.91%
- ---------------------------------------------
TAXABLE EQUIVALENT TOTAL RETURN(2)
=============================================
ON SHARE PRICE ON NAV
- ---------------------------------------------
1-Year 21.36% 15.60%
- ---------------------------------------------
3-Year 17.71% 14.93%
- ---------------------------------------------
Since Inception 8.28% 9.32%
- ---------------------------------------------
TOP 5 SECTORS
=============================================
Water and Sewer 14%
- ---------------------------------------------
Utilities 14%
- ---------------------------------------------
Education and Civic Organizations 13%
- ---------------------------------------------
Tax Obligation (Limited) 13%
- ---------------------------------------------
Multifamily Housing 12%
- ---------------------------------------------
1997-1998 Monthly Tax-Free Dividends
BAR CHART:
Mar 0.0615
Apr 0.0615
May 0.0615
Jun 0.0615
Jul 0.0615
Aug 0.0615
Sep 0.0615
Oct 0.0615
Nov 0.0615
Dec 0.0615
Jan 0.0615
Feb 0.0615
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. The
federal only rate is based on the current market yield and a federal tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state taxes. It is based on a
combined federal and state tax rate of 37.40%.
2 Taxable equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 37.4%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
<PAGE>
<TABLE>
<CAPTION>
Shareholder Meeting Report
Annual Meeting Date: October 15, 1997
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
- ---------------------------------------------------------------------------------------------------------------------
Preferred Preferred Preferred Preferred
Common Shares Common Shares Shares Common Shares
Shares Series-T Shares Series-T Series-Th Shares Series-M
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
APPROVAL OF THE DIRECTORS
WAS REACHED AS FOLLOWS:
ROBERT P. BREMNER
For 5,777,591 1,779 11,499,809 1,650 1,860 5,437,769 1,686
Withhold 75,585 18 192,844 -- 32 45,099 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
LAWRENCE H. BROWN
For 5,777,591 1,779 11,499,809 1,650 1,860 5,436,153 1,686
Withhold 75,585 18 192,844 -- 32 46,715 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
ANTHONY T. DEAN
For 5,777,591 1,779 11,499,809 1,650 1,860 5,436,153 1,686
Withhold 75,585 18 192,844 -- 32 46,715 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
ANNE E. IMPELLIZZERI
For 5,776,978 1,779 11,499,309 1,650 1,860 5,437,761 1,686
Withhold 76,198 18 193,344 -- 32 45,107 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
PETER R. SAWERS
For 5,777,591 1,779 11,499,809 1,650 1,860 5,436,153 1,686
Withhold 75,585 18 192,844 -- 32 46,715 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
JUDITH M. STOCKDALE
For 5,770,219 1,779 11,497,888 1,650 1,860 5,437,294 1,686
Withhold 82,957 18 194,765 -- 32 45,574 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
WILLIAM J. SCHNEIDER
For -- 1,779 -- 1,650 1,860 -- 1,686
Withhold -- 18 -- -- 32 -- --
- ---------------------------------------------------------------------------------------------------------------------
Total -- 1,797 -- 1,650 1,892 -- 1,686
TIMOTHY R. SCHWERTFEGER
For -- 1,779 -- 1,650 1,860 -- 1,686
Withhold -- 18 -- -- 32 -- --
- ---------------------------------------------------------------------------------------------------------------------
Total -- 1,797 -- 1,650 1,892 -- 1,686
RATIFICATION OF AUDITORS
WAS REACHED AS FOLLOWS:
For 5,756,777 1,766 11,535,333 1,647 1,881 5,421,013 1,686
Against 20,134 -- 51,023 3 4 27,033 --
Abstain 76,265 31 106,297 -- 7 34,822 --
- ---------------------------------------------------------------------------------------------------------------------
Total 5,853,176 1,797 11,692,653 1,650 1,892 5,482,868 1,686
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN INSURED CALIFORNIA PREMIUM INCOME
MUNICIPAL FUND, INC. (NPC)
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION AND CIVIC ORGANIZATIONS - 1.7%
$2,670,000 The Regents of the University of California, Refunding Revenue Bonds (Multiple Purpose
Projects), Series B, 4.750%, 9/01/21 9/03 at 102 Aaa $ 2,525,339
- -----------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 4.9%
3,000,000 California Health Facilities Financing Authority, Insured Revenue Bonds (Sutter Health),
Series 1998A, 5.000%, 8/15/37 (DD) 8/08 at 101 Aaa 2,904,660
4,000,000 California Statewide Communities Development Authority, Sutter Health Obligated Group,
Certificates of Participation, 6.125%, 8/15/22 8/02 at 102 Aaa 4,347,960
- -----------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.4%
3,650,000 California Housing Finance Agency, Multi-Unit Rental Housing Revenue Bonds, 1992
Series A, 6.625%, 2/01/24 (Alternative Minimum Tax) 2/03 at 102 A1 3,838,705
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 7/02 at 102 Aaa 4,149,840
- -----------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.6%
2,300,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 1997 Series A,
6.000%, 8/01/20 (Alternative Minimum Tax) 2/07 at 102 Aaa 2,422,383
- -----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 5.7%
3,000,000 State of California, Various Purpose General Obligation Bonds,
6.500%, 9/01/06 No Opt. Call Aaa 3,484,830
1,225,000 Fresno Unified School District (Fresno County, California), 1998 General Obligation
Refunding Bonds, Series A, 6.550%, 8/01/20 2/13 at 103 Aaa 1,442,021
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, Series 1997-A,
6.500%, 8/01/19 8/11 at 103 Aaa 3,528,180
- -----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.4%
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 7/03 at 100 Aaa 3,908,160
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 7/03 at 102 Aaa 4,908,900
4,000,000 Norco Redevelopment Agency, Norco Redevelopment Project Area No. One, 1992
Refunding Tax Allocation Bonds, 6.250%, 3/01/19 3/02 at 102 Aaa 4,348,920
2,135,000 City of San Buenaventura, California, 1993 Refunding Certificates of Participation
(Capital Improvements Project), 5.500%, 1/01/17 1/03 at 100 Aaa 2,183,038
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 2/04 at 102 Aaa 8,954,225
- -----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.6%
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) 5/03 at 102 Aaa 4,314,400
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - CONTINUED
$ 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 5/04 at 101 Aaa $1,074,210
- -----------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 30.7%
6,000,000 Huntington Park Redevelopment Agency, Single Family Residential Mortgage Revenue
Refunding Bonds, 1986 Series A, 8.000%, 12/01/19 No Opt. Call Aaa 8,325,180
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) 2/99 at 102 Aaa 4,205,480
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) 12/00 at 102 Aaa 4,103,438
4,015,000 Los Angeles County Transportation Commission (California), Sales Tax Revenue Bonds,
Series 1991-A, 6.750%, 7/01/18 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 4,438,823
5,135,000 Community Redevelopment Agency of the City of Palmdale, Restructured Single Family
Mortgage Revenue Bonds, Series 1986A, 8.000%. 3/01/16
(Alternative Minimum Tax) No Opt. Call Aaa 6,998,748
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) 6/99 at 102 Aaa 4,725,856
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) No Opt. Call Aaa 9,431,386
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) 10/99 at 102 Aaa 1,062,270
1,485,000 City of San Jose, California, Single Family Mortgage Revenue Bonds,
1985 Series A, 9.500%, 10/01/13 No Opt. Call Aaa 2,109,814
- -----------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.5%
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) 12/02 at 102 Aaa 4,388,640
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)12/02 at 102 A1 4,306,360
2,000,000 Sacramento Municipal Utility District (California), Electric Revenue Refunding Bonds, 1992
Series A, 5.750%, 8/15/13 8/02 at 100 Aaa 2,115,840
5,000,000 Sacramento Municipal Utility District (California), Electric Revenue Refunding Bonds, 1993
Series G, 4.750%, 9/01/21 9/03 at 100 Aaa 4,729,100
- -----------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 20.0%
2,000,000 Cucamonga County Water District (San Bernardino County, California), Certificates of
Participation (1992 Water Facilities Refinancing), 6.300%, 9/01/129/01 at 102 Aaa 2,160,780
The City of Los Angeles, California, Wastewater System Revenue Bonds, Series 1993-D:
3,250,000 4.700%, 11/01/17 11/03 at 102 Aaa 3,093,382
11,000,000 4.700%, 11/01/19 11/03 at 102 Aaa 10,426,130
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - CONTINUED
WATER AND SEWER - CONTINUED
$5,440,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion Project), 1993
Refunding Series, 4.500%, 1/01/15 1/04 at 102 Aaa $ 5,150,266
5,000,000 Wheeler Ridge-Maricopa Water Storage District (Kern County, California), 1996 Water
Refunding Bonds, 5.700%, 11/01/15 11/06 at 102 Aaa 5,397,350
3,425,000 City of Woodland (Yolo County, California), Certificates of Participation (1992 Wastewater
System Refunding Project), 5.500%, 3/01/18 3/03 at 100 Aaa 3,486,410
- -----------------------------------------------------------------------------------------------------------------------
$137,650,000 Total Investments - (cost $131,752,811) - 100.5% 148,991,024
============-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.5%) (759,747)
---------------------------------------------------------------------------------------------------------
Net Assets - 100% $148,231,277
=========================================================================================================
All of the bonds in the portfolio 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.
* 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.
(DD) Security purchased on a delayed delivery basis (note 1).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN INSURED CALIFORNIA PREMIUM
INCOME MUNICIPAL FUND 2, INC. (NCL)
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - CONTINUED
EDUCATION AND CIVIC ORGANIZATIONS - 14.7%
$ 5,000,000 California Educational Facilities Authority, Revenue Bonds (University of San Francisco),
Series 1996, 6.000%, 10/01/26 10/06 at 102 Aaa $ 5,424,250
10,050,000 California Educational Facilities Authority, Revenue Bonds (Santa Clara University),
Series 1991, 5.750%, 9/01/21 9/06 at 102 Aaa 10,702,647
2,655,000 California State University, Housing System Revenue Bonds,
Series 1996, 5.700%, 11/01/13 11/05 at 102 Aaa 2,867,506
3,000,000 The Regents of the University of California, Refunding Revenue Bonds (1989 Multiple
Purpose Projects), Series C, 10.000%, 9/01/02 No Opt. Call Aaa 3,736,230
5,000,000 Regents of the University of California, Revenue Bonds (Multiple Purpose Projects),
Series A, 9.250%, 9/01/05 No Opt. Call Aaa 6,583,750
4,900,000 The Regents of the University of California, University of
California Housing System Revenue Bonds, Series A, 5.500%,
11/01/18 11/03 at 102 Aaa 5,051,116
6,350,000 The Regents of the University of California, Refunding Revenue Bonds (Multiple Purpose
Projects), Series C, 5.000%, 9/01/12 9/03 at 102 Aaa 6,417,310
- ----------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 3.6%
California Health Facilities Financing Authority, Insured Health
Facility Refunding Revenue Bonds (Mark Twain St. Joseph's
HealthCare Corporation), 1996 Series A:
1,450,000 6.000%, 7/01/19 7/06 at 102 Aaa 1,558,620
5,000,000 6.000%, 7/01/25 7/06 at 102 Aaa 5,374,550
3,110,000 California Health Facilities Financing Authority, Hospital Revenue Refunding Bonds
(Sutter Health), Series 1989A, 6.700%, 1/01/13 1/99 at 101 Aaa 3,208,121
- ----------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.7%
4,860,000 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 6/05 at 105 AAA 5,589,049
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 5/03 at 102 Aaa 7,663,218
- ----------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLEFAMILY - 2.8%
6,000,000 California Housing Finance Agency, Single Family Mortgage Bonds II 1997 Series C-2,
5.625%, 8/01/20 (Alternative Minimum Tax) 8/07 at 101 1/2 Aaa 6,191,280
1,500,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1996 Series E,
6.150%, 8/01/25 (Alternative MinimumTax) 2/06 at 102 Aaa 1,584,330
- ----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.6%
5,000,000 State of California Veterans General Obligation Bonds, Series BH, 5.500%, 12/01/24
(Alternative Minimum Tax) 12/03 at 102 Aaa 5,067,900
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/GENERAL - CONTINUED
$2,100,000 State of California, General Obligation Bonds, Veterans Bonds, Series BA, 7.000%, 8/01/02
(Alternative Minimum Tax) No Opt. Call Aaa $ 2,361,408
State of California, Various Purpose General Obligations Bonds:
3,000,000 6.500%, 9/01/06 No Opt. Call Aaa 3,484,830
5,500,000 5.750%, 11/01/17 11/02 at 102 Aaa 5,779,070
2,575,000 Calipatria Unified School District, Imperial County, California, 1996 Series A, General
Obligation Bonds, 5.625%, 8/01/13 8/06 at 102 Aaa 2,765,087
3,000,000 Central Unified School District (Fresno County, California), General Obligation Bonds,
Election 1992, 5.625%, 3/01/18 3/03 at 102 Aaa 3,100,770
3,000,000 Escondido Union High School District, San Diego County, California, General Obligation
Bonds (1996 Election), 5.700%, 11/01/10 11/06 at 102 Aaa 3,293,640
1,000,000 City of Los Angeles, California, Unified School District, General Obligation Bonds, 1997
Series A, 6.000%, 7/01/15 No Opt. Call Aaa 1,133,760
3,000,000 City and County of San Francisco, General Obligation Bonds, Various Purpose Bonds,
Series 1993, 5.500%, 6/15/11 6/01 at 102 Aaa 3,124,050
2,250,000 Santa Monica Community, College District (County of Los Angeles, California), General
Obligation Bonds, 1992 Election, Series B, 5.750%, 7/01/20 7/05 at 102 Aaa 2,383,200
- ----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 28.9%
1,800,000 California Public School District Financing Authority, Lease Revenue Bonds (Richgrove
Elementary School District Projects), Series 1996B, 5.800%, 9/01/169/06 at 102 Aaa 1,951,236
3,935,000 Certificates of Participation (1991 Financing Project), County of Alameda, California,
Alameda County Public Facilities Corporation, 6.000%, 9/01/21 9/06 at 102 Aaa 4,251,020
7,985,000 County of Alameda, California, 1993 Refunding Certificates of Participation (Santa Rita
Jail Project), 5.700%, 12/01/14 12/03 at 102 Aaa 8,617,891
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 8/05 at 102 Aaa 5,683,500
4,000,000 County of Contra Costa, California (Merrithew Memorial Hospital Replacement Project),
Refunding Series of 1997, 5.500%, 11/01/22 11/07 at 102 Aaa 4,142,720
3,000,000 Galt Schools Joint Powers Authority (Sacramento County, California), 1997 Refunding
Revenue Bonds, Series A (High School and Elementary School Facilities),
5.875%, 11/01/24 11/07 at 102 Aaa 3,232,590
5,585,000 Los Angeles County Transportation Commission (California), Sales Tax Revenue Refunding
Bonds, Series 1991-B, 6.500%, 7/01/13 7/01 at 102 Aaa 6,071,398
2,135,000 Menifee Union School District (Riverside County, California), Certificates of Participation,
(1996 School Project), 6.125%, 9/01/24 9/06 at 102 Aaa 2,372,903
2,690,000 Norwalk Community Facilities Financing Authority (Los Angeles County, California), Tax
Allocation Refunding Revenue Bonds, 1995 Series A, 6.000%, 9/01/159/05 at 102 Aaa 2,939,928
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/LIMITED - CONTINUED
$5,000,000 City of Pasadena, Community Facilities District No. 1 (Civic Center West Public
Improvements), 1997 Special Tax Bonds, 5.250%, 12/01/25 12/08 at 101 Aaa $ 5,025,750
9,000,000 City of Redlands, California, Certificates of Participation (1993 Refunding of 1986 and 1987
Projects), 5.800%, 9/01/17 9/03 at 102 Aaa 9,511,920
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 No Opt. Call Aaa 2,302,876
South Orange County, Public Financing Authority, Special Tax
Revenue Bonds, 1994 Series C (Foothill Area):
4,000,000 8.000%, 8/15/08 No Opt. Call Aaa 5,187,560
7,330,000 8.000%, 8/15/09 No Opt. Call Aaa 9,627,735
4,075,000 Redevelopment Agency of the City of Suisin City, Suisin City Redevelopment Project,
1993 Tax Allocation Refunding Bonds (County of
Solano, California), 5.900%, 10/01/23 10/03 at 102 Aaa 4,344,561
5,450,000 City of Visalia, California (Motor Vehicle License Fee Enhancement), Fisalia Public Finance
Authority, Series 1996A, 5.375%, 12/01/26 12/06 at 102 Aaa 5,540,852
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.9%
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 5/04 at 101 Aaa 9,750,780
3,750,000 City of San Jose, California, Airport Revenue Bonds, Series of 1993, 5.700%, 3/01/18
(Alternative Minimum Tax) 3/03 at 102 Aaa 3,892,388
- ----------------------------------------------------------------------------------------------------------------------
U.S.GUARANTEED - 9.9%
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) 9/00 at 102 Aaa 3,283,560
7,300,000 Galt Community Facility District, Special Tax No. 88-1, 7.700%, 9/01/19 (Pre-refunded
to 9/01/98) 9/98 at 102 Aaa 7,596,891
1,000,000 Kern High School District (County of Kern, California), General Obligation Bonds, Election
of 1990, Series D, 5.600%, 8/01/15 8/03 at 102 Aaa 1,093,090
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) 5/00 at 101 1/2 Aaa 2,160,700
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 MinimumTax) No Opt. Call Aaa 6,150,298
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) 6/01 at 102 Aaa 5,479,850
1,720,000 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)12/05 at 100 AAA 1,950,170
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 4.2%
$ 3,215,000 Modesto Irrigation District Financing Authority, Refunding Revenue Bonds, Series A,
6.000%, 10/01/15 10/06 at 102 Aaa $ 3,541,065
1,205,000 Sacramento, California, Municipal Utility District, Electric Revenue Refunding Bonds,
1993 Series D, 5.250%, 11/15/12 11/03 at 102 Aaa 1,243,452
6,750,000 Turlock Irrigation District (California), Revenue Refunding Bonds, Series 1992-A,
5.750%, 1/01/18 7/02 at 100 Aaa 6,968,903
- ----------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.0%
2,000,000 City of Barstow, California, Certificates of Participation (1994 Wastewater Reclamation
Improvement Project), 5.250%, 10/01/18 10/04 at 102 Aaa 2,005,380
3,530,000 Castaic Lake Water Agency (California), Refunding Revenue Certificates of Participation
(Water System Improvement Projects), Series 1994A, 8.000%, 8/01/04No Opt. Call Aaa 4,251,072
2,975,000 Chino Basin Regional Financing Authority, Revenue Bonds, Series 1994 (Chino Basin
Municipal Water District Sewer System Project), 6.000%, 8/01/16 8/04 at 102 Aaa 3,221,061
13,000,000 The Metropolitan Water District of Southern California, Water Revenue Bonds,
1995 Series A, 5.750%, 7/01/21 7/05 at 102 Aaa 13,769,600
2,900,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, Series 1992,
5.500%, 10/01/15 10/02 at 102 Aaa 2,998,541
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 1/03 at 102 Aaa 4,140,200
5,410,000 City of Tulare, California, 1996 Sewer Revenue Bonds,
5.750%, 11/15/21 11/06 at 102 Aaa 5,766,140
- ----------------------------------------------------------------------------------------------------------------------
$251,690,000 Total Investments - (cost $256,674,104) - 98.3% 274,513,273
=============---------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.4%
$1,000,000 Orange County Irvine Coast Assessment District No. 88-1
============= Variable Rate Demand Bonds, VMIG-1 1,000,000
3.600%, 9/02/18+
--------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 3,638,334
--------------------------------------------------------------------------------------------------------
Net Assets - 100% $279,151,607
========================================================================================================
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.
* 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.
+ 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.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
NUVEEN CALIFORNIA PREMIUM
INCOME MUNICIPAL FUND (NCU)
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION AND CIVIC ORGANIZATIONS - 12.6%
$3,500,000 California Educational Facilities Authority, Revenue Bonds (University of Southern
California Project), Series 1989B, 6.750%, 10/01/15 10/99 at 102 AA $ 3,705,520
1,995,000 California State Public Works Board, Lease Revenue Bonds (Various California Community
College PJS), Series 1996A, 5.625%, 3/01/16 3/06 at 102 Aaa 2,119,707
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 10/04 at 102 A 3,543,424
3,020,000 Regents of the University of California, Revenue Bonds (Multiple Purpose Projects), Series A,
9.250%, 9/01/05 No Opt. Call Aaa 3,976,585
2,225,000 The Regents of the University of California, University of
California Housing System Revenue Bonds, Series A,
5.500%, 11/01/18 11/03 at 102 Aaa 2,293,619
- -----------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 7.5%
4,000,000 California Statewide Communities Development Authority, Revenue Certificates of
Participation (Cedars-Sinai Medical Center), 6.500%, 8/01/15 8/02 at 102 A1 4,348,080
1,500,000 ABAG Finance Authority for Nonprofit Corporations, Certificates
of Participation (Stanford University Hospital), California,
Series 1993, 5.250%, 11/01/20 11/03 at 102 A1 1,488,090
2,000,000 City of Loma Linda California, Hospital Revenue Bonds (Loma Linda University Medical
Center Project), Series 1993-A, 6.000%, 12/01/06 12/03 at 102 BBB 2,126,500
1,355,000 Palomar Pomerado Health System, Insured Revenue Bonds, Series 1993,
5.000%, 11/01/13 11/03 at 102 Aaa 1,363,496
- -----------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 11.5%
8,715,000 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 6/05 at 105 AAA 10,022,337
4,000,000 City of Stanton Multifamily Housing Revenue Bonds (Continental Garden Apartments),
Series 1997, 5.625%, 8/01/29 (Alternative Minimum Tax)
(Mandatory put 8/01/09) 8/07 at 102 AAA 4,208,360
- -----------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 9.1%
4.305,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 1997 Series A,
6.000%, 8/01/20 (Alternative Minimum Tax) 2/07 at 102 Aaa 4,534,069
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1994 Series A,
6.550%, 8/01/26 8/04 at 102 Aa 1,072,520
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1994 Series F-3,
6.100%, 8/01/15 (Alternative Minimum Tax) 8/05 at 102 Aaa 1,054,160
2,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1997 Series B,
6.000%, 8/01/16 (Alternative Minimum Tax) 2/07 at 102 Aaa 2,113,220
2,185,000 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) No Opt. Call AAA 2,505,408
- -----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 7.8%
State of California, Various Purpose General Obligation Bonds:
2,000,000 6.500%, 9/01/06 No Opt. Call Aaa 2,323,220
2,380,000 6.250%, 9/01/12 No Opt. Call A1 2,767,631
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/GENERAL - CONTINUED
$1,025,000 Calipatria Unified School District, Imperial County, California, 1996 Series A, General
Obligation Bonds, 5.800%, 8/01/20 8/06 at 102 Aaa $ 1,096,125
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, Series 1997-A,
6.150%, 8/01/15 8/11 at 103 Aaa 3,477,630
- -----------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 12.3%
2,000,000 Carson Redevelopment Agency (California), Redevelopment Project Area No. 2, Refunding
Tax Allocation Bonds, Series 1993, 5.875%, 10/01/09 10/03 at 102 Baa 2,105,480
1,760,000 Carson Redevelopment Agency (California), Redevelopment Project Area No. 1, Tax
Allocation Bonds, Series 1993, 5.625%, 10/01/08 10/03 at 102 Baa1 1,867,501
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) 6/03 at 102 Ba 2,144,318
1,000,000 Los Angeles County Metropolitan Transportation Authority (California), Proposition C Sales
Tax Revenue Bonds, Second Senior Bonds, Series 1995-A, 5.900%, 7/01/08No Opt. Call Aaa 1,123,070
1,500,000 City of Richmond, Limited Obligation Refunding Improvement Bonds, Reassessment District
No. 855 (Atlas Road West and Interchange), 6.600%, 9/02/19 3/98 at 103 N/R 1,552,380
2,100,000 Sacramento City Finance Authority, Lease Revenue Refunding Bonds, Series 1993 B,
5.400%, 11/01/20 No Opt. Call A1 2,195,508
2,000,000 Redevelopment Agency of the City of San Jose, Merged Area Redevelopment Project Tax
Allocation Bonds, Series 1993, 5.000%, 8/01/21 2/04 at 102 Aaa 1,954,040
2,000,000 Santa Clara County Financing Authority, Lease Revenue Bonds (VMC Facility Replacement
Project), 1994 Series A, 6.000%, 11/15/12 No Opt. Call Aaa 2,269,220
- -----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.2%
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) 5/04 at 102 Aaa 3,030,390
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) 5/06 at 102 Aaa 2,102,300
- -----------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 6.2%
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) 12/02 at 102 Aaa 4,515,520
2,805,000 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) 12/05 at 100 AAA 3,180,365
- -----------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.3%
1,000,000 California Pollution Control Financing Authority, Pollution Control Revenue Bonds (Southern
California Edison Company), 1992 Series B, 6.400%, 12/01/24
(Alternative Minimum Tax) 12/02 at 102 Aaa 1,097,160
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - CONTINUED
$ 4,100,000 Imperial Irrigation District, California, Certificates of Participation (1994 Electric System
Project), 6.000%, 11/01/15 11/04 at 102 Aaa $ 4,440,136
2,000,000 Department of Water and Power of The City of Los Angeles, Electric Plant Refunding
Revenue Bonds, Issue of 1993, 5.375%, 9/01/23 9/03 at 102 Aaa 2,033,960
3,560,000 Northern California Power Agency, Hydroelectric Project Number One, Revenue Bonds,
1992 Refunding Series A, 10.000%, 7/01/03 No Opt. Call Aaa 4,562,496
1,500,000 City of Pasadena, Electric Works Revenue Bonds, 1990 Series,
7.000%, 8/01/09 8/00 at 102 A1 1,625,580
1,095,000 Sacramento Municipal Utility District (California), Electric Revenue Bonds, 1993 Series E,
5.700%, 5/15/12 5/03 at 102 A 1,146,268
1,400,000 City of Santa Clara, California, Electric Revenue Bonds,
Series 1991A, 6.250%, 7/01/13 7/01 at 102 Aaa 1,511,132
- -----------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.9%
4,705,000 State of California, Department of Water Resources, Central Valley Project, Water System
Revenue Bonds, Series L, 5.750%, 12/01/13 6/03 at 101 1/2 AA 4,957,329
1,000,000 Eastern Municipal Water District (Riverside County, California), Water and Sewer Revenue
Refunding Certificates of Participation, Series 1991A, 6.300%, 7/01/207/01 at 101 Aaa 1,069,640
1,000,000 City of Los Angeles, California, Wastewater System Revenue Bonds, Series 1992-B,
6.250%, 6/01/12 6/02 at 102 Aaa 1,092,200
3,515,000 City of Riverside, California, Sewer Refunding Revenue Bonds,
Series 1993, 7.000%, 8/01/07 No Opt. Call Aaa 4,235,013
1,000,000 City of Riverside, California, Water Revenue Bonds,
Issue of 1991, 9.000%, 10/01/01 No Opt. Call Aa 1,167,620
3,100,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, Series 1994,
5.375%, 10/01/16 10/02 at 102 Aaa 3,160,977
1,005,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion Project), 1993
Refunding Series, 12.000%, 1/01/04 No Opt. Call Aaa 1,406,759
- -----------------------------------------------------------------------------------------------------------------------
$110,460,000 Total Investments - (cost $114,068,390) - 98.4% 121,686,063
============-----------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.3%
$ 300,000 California Health Facilities Financing Authority (Sutter/CHS), Insured
Revenue 1996B, Variable Rate Demand Bonds, 3.650%, 7/01/12+ VMIG-1 300,000
100,000 Santa Clara County Transit District Refunding Equipment Trust
Certificates, Variable Rate Demand Bonds, 4.050%, 6/01/15+ VMIG-1 100,000
- -----------------------------------------------------------------------------------------------------------------------
$ 400,000 Total Temporary Investments - 0.3% 400,000
===========------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 1,578,676
---------------------------------------------------------------------------------------------------------
Net Assets - 100% $123,664,739
=========================================================================================================
* 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.
+ 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.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS (UNAUDITED)
FEBRUARY 28, 1998
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $148,991,024 $274,513,273 $121,686,063
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) -- 1,000,000 400,000
Cash 498,034 17,143 289,017
Interest receivable 2,214,392 4,613,060 1,814,314
Other assets 14,335 29,124 9,528
- ----------------------------------------------------------------------------------------------------------------------
Total assets 151,717,785 280,172,600 124,198,922
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 2,898,107 -- --
Accrued expenses:
Management fees (note 6) 73,937 137,887 61,789
Other 67,313 79,870 100,576
Preferred share dividends payable 14,790 23,418 18,963
Common share dividends payable 432,361 779,818 352,855
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 3,486,508 1,020,993 534,183
- ----------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $148,231,277 $279,151,607 $123,664,739
======================================================================================================================
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 5,737,479
======================================================================================================================
Net asset value per Common share outstanding (net assets less Preferred shares
at liquidation value,
divided by Common shares outstanding) $ 16.12 $ 14.64 $ 14.06
======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED FEBRUARY 28, 1998
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<S> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $3,921,459 $ 7,317,921 $3,345,127
EXPENSES
Management fees (note 6) 470,639 879,776 395,314
Preferred shares - auction fees 55,788 117,773 53,308
Preferred shares - dividend disbursing agent fees 4,959 9,917 4,959
Shareholders' servicing agent fees and expenses 7,540 11,458 5,620
Custodian's fees and expenses 20,044 26,799 19,512
Directors'/Trustees' fees and expenses (note 6) 569 1,077 478
Professional fees 8,869 9,052 8,639
Shareholders' reports - printing and mailing expenses 17,668 30,737 17,059
Stock exchange listing fees 8,018 12,031 2,661
Investor relations expense 5,535 10,082 4,610
Portfolio insurance expense 6,860 3,155 --
Other expenses 7,249 10,004 7,907
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 613,738 1,121,861 520,067
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 3,307,721 6,196,060 2,825,060
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investment transactions
(notes 1 and 4) -- 719,668 258,992
Net change in unrealized appreciation or depreciation
of investments 4,679,752 6,561,610 2,369,979
- ----------------------------------------------------------------------------------------------------------------------
Net gain from investments 4,679,752 7,281,278 2,628,971
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $7,987,473 $13,477,338 $5,454,031
======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
2/28/98 8/31/97 2/28/98 8/31/97
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 3,307,721 $ 6,683,785 $ 6,196,060 $ 12,486,504
Net realized gain (loss) from investment transactions
(notes 1 and 4) -- 193,918 719,668 (7,580)
Net change in unrealized appreciation or depreciation
of investments 4,679,752 5,715,236 6,561,610 9,860,840
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 7,987,473 12,592,939 13,477,338 22,339,764
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (2,620,247) (5,188,336) (4,678,788) (9,357,929)
Preferred shareholders (706,667) (1,443,769) (1,529,628) (2,950,385)
- -----------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,326,914) (6,632,105) (6,208,416) (12,308,314)
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets 4,660,559 5,960,834 7,268,922 10,031,450
Net assets at beginning of period 143,570,718 137,609,884 271,882,685 261,851,235
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period $148,231,277 $143,570,718 $279,151,607 $271,882,685
=======================================================================================================================
Balance of undistributed net investment income at
end of period $ 341,100 $ 360,293 $ 633,223 $ 645,579
=======================================================================================================================
<PAGE>
<CAPTION>
CALIFORNIA
PREMIUM INCOME
SIX MONTHS ENDEDYEAR ENDED
2/28/98 8/31/97
<S> <C> <C>
OPERATIONS
Net investment income $ 2,825,060 $ 5,658,432
Net realized gain (loss) from investment transactions (notes 1 and 4) 258,992 (471,163)
Net change in unrealized appreciation or depreciation of investments 2,369,979 5,537,743
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 5,454,031 10,725,012
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (2,116,669) (4,233,151)
Preferred shareholders (688,651) (1,365,049)
- -----------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (2,805,320) (5,598,200)
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Net proceeds from Common shares issued to shareholders due to
reinvestment of distributions 20,665 --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets 2,669,376 5,126,812
Net assets at beginning of period 120,995,363 115,868,551
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period $123,664,739 $120,995,363
=======================================================================================================================
Balance of undistributed net investment income at end of period $ 264,059 $ 244,319
=======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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). Insured California Premium Income and Insured California Premium Income 2
are traded on the New York Stock Exchange while California Premium Income 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.
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
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. 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, 1998, Insured California Premium Income had a delayed delivery
purchase commitment of $2,898,107. There were no such outstanding purchase
commitments in any of the other Funds.
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
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 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 income
taxes, to retain such tax-exempt status when distributed to shareholders of the
Funds. 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 on the first
business day 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 carryforwards.
Distributions to 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 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 of net ordinary taxable income from investment
transactions, where applicable.
<PAGE>
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
may change every seven days, as set by the Auction Agent. The number of shares
outstanding, by Series and in total, for each Fund is as follows:
<TABLE>
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<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
Insured California Premium Income and Insured California Premium Income 2 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
The Funds may invest in 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 six months ended February 28, 1998.
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.
2. FUND SHARES
There were no share transactions during the six months ended February 28, 1998,
except for 1,502 shares issued to shareholders due to reinvestment of
distributions by California Premium Income. There were no share transactions
during the fiscal year ended August 31, 1997.
<PAGE>
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS
On March 2, 1998, the Funds declared Common share dividend distributions from
their tax-exempt net investment income which were paid April 1, 1998, to
shareholders of record on March 15, 1998, as follows:
<TABLE>
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<S> <C> <C> <C>
Dividend per share $.0675 $.0620 $.0615
==========================================================================================================
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the six months ended
February 28, 1998, were as follows:
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<S> <C> <C> <C>
Purchases:
Investments in municipal securities $4,326,182 $23,543,043 $ 9,162,377
Temporary municipal investments 4,300,000 14,400,000 6,600,000
Sales and Maturities:
Investments in municipal securities -- 18,927,166 4,597,108
Temporary municipal investments 6,100,000 18,200,000 11,200,000
==========================================================================================================
At February 28, 1998, 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, 1997, the Funds' last fiscal year end, the 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:
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<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
2005 373,309 1,283,948 1,049,994
- ----------------------------------------------------------------------------------------------------------
Total $2,984,944 $9,525,170 $6,862,164
==========================================================================================================
</TABLE>
<PAGE>
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 1998, were as follows:
<TABLE>
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<S> <C> <C> <C>
Gross unrealized:
appreciation $17,238,213 $17,839,169 $7,636,084
depreciation -- -- (18,411)
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation $17,238,213 $17,839,169 $7,617,673
==========================================================================================================
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
as follows:
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- -------------------------------------------------------
<S> <C>
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .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 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 or its affiliates.
7. COMPOSITION OF NET ASSETS
At February 28, 1998, net assets consisted of:
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
<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 57,375
Paid-in surplus 88,572,854 174,386,018 79,676,186
Balance of undistributed net investment income 341,100 633,223 264,059
Accumulated net realized gain (loss) from
investment transactions (2,984,944) (8,832,580) (6,950,554)
Net unrealized appreciation of investments 17,238,213 17,839,169 7,617,673
- ----------------------------------------------------------------------------------------------------------
Net assets $148,231,277 $279,151,607 $123,664,739
==========================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
==========================================================================================================
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
Selected data for a Common share
outstanding throughout each period
is as follows:
DIVIDENDS FROM TAX-EXEMPT
OPERATING PERFORMANCE NET INVESTMENT INCOME
----------------------------- ----------------------------------
NET
REALIZED &
NET ASSET NET UNREALIZED
VALUE INVEST- GAIN (LOSS) TO TO
BEGINNING MENT FROM INVEST- COMMON PREFERRED
OF PERIOD INCOME MENTS SHAREHOLDERS SHAREHOLDERS+
<S> <C> <C> <C> <C> <C>
INSURED CALIFORNIA
PREMIUM INCOME
Six months ended
2/28/98 $15.39 $ .51 $ .74 $(.41) $(.11)
Year ended 8/31:
1997 14.46 1.04 .93 (.81) (.23)
1996 14.41 1.05 .02 (.79) (.23)
1995 13.72 1.05 .73 (.83) (.26)
1994 15.31 1.07 (1.61) (.85) (.20)
11/19/92 to
8/31/93 14.05 .64 1.45 (.50) (.11)
<CAPTION>
INSURED CALIFORNIA
PREMIUM INCOME 2
<S> <C> <C> <C> <C> <C>
Six months ended
2/28/98 14.06 .49 .58 (.37) (.12)
Year ended 8/31:
1997 13.27 .99 .77 (.74) (.23)
1996 13.01 1.00 .24 (.74) (.24)
1995 12.75 1.02 .30 (.79) (.27)
1994 14.57 1.02 (1.85) (.82) (.17)
3/18/93 to
8/31/93 14.05 .25 .65 (.19) (.02)
<CAPTION>
CALIFORNIA
PREMIUM INCOME
<S> <C> <C> <C> <C> <C>
Six months ended
2/28/98 13.60 .49 .46 (.37) (.12)
Year ended 8/31:
1997 12.70 .99 .89 (.74) (.24)
1996 12.43 .98 .27 (.74) (.24)
1995 12.01 1.00 .47 (.77) (.28)
1994 14.47 .97 (2.26) (.82) (.17)
6/18/93 to
8/31/93 14.05 .08 .44 -- --
================================================================================================================================
<PAGE>
<CAPTION>
DISTRIBUTIONS FROM CAPITAL GAINS
--------------------------------
PER TOTAL
ORGANIZATION COMMON INVEST-
AND OFFERING SHARE MENT
COSTS AND MARKET RETURN
TO TO PREFERRED SHARE NET ASSET VALUE ON
COMMON PREFERRED UNDERWRITING VALUE END END OF MARKET
SHAREHOLDERS SHAREHOLDERS+ DISCOUNTS OF PERIOD PERIOD VALUE**
<S> <C> <C> <C> <C> <C> <C>
INSURED CALIFORNIA
PREMIUM INCOME
Six months ended
2/28/98 $-- $-- $-- $16.12 $15.7500 11.56%
Year ended 8/31:
1997 -- -- -- 15.39 14.5000 10.69
1996 -- -- -- 14.46 13.8750 15.39
1995 -- -- -- 14.41 12.7500 4.67
1994 -- -- -- 13.72 13.0000 (10.88)
11/19/92 to
8/31/93 -- -- (.22) 15.31 15.5000 6.80
<CAPTION>
INSURED CALIFORNIA
PREMIUM INCOME 2
<S> <C> <C> <C> <C> <C> <C>
Six months ended
2/28/98 -- -- -- 14.64 14.6250 11.25
Year ended 8/31:
1997 -- -- -- 14.06 13.5000 14.36
1996 -- -- -- 13.27 12.5000 15.36
1995 -- -- -- 13.01 11.5000 3.55
1994 -- -- -- 12.75 11.8750 (15.01)
3/18/93 to
8/31/93 -- -- (.17) 14.57 14.8750 .49
<CAPTION>
CALIFORNIA
PREMIUM INCOME
<S> <C> <C> <C> <C> <C> <C>
Six months ended
2/28/98 -- -- -- 14.06 14.0625 10.09
Year ended 8/31:
1997 -- -- -- 13.60 13.1250 17.16
1996 -- -- -- 12.70 11.8750 17.51
1995 -- -- -- 12.43 10.7500 3.65
1994 (.02) -- (.16) 12.01 11.1250 (20.07)
6/18/93 to
8/31/93 -- -- (.10) 14.47 14.8750 (.83)
==============================================================================================================================
<PAGE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------
RATIO OF
NET
TOTAL NET ASSETS RATIO OF INVESTMENT
RETURN ON END OF EXPENSES INCOME PORTFOLIO
NET ASSET PERIOD (IN TO AVERAGE TO AVERAGE TURNOVER
VALUE** THOUSANDS) NET ASSETS++ NET ASSETS++ RATE
<S> <C> <C> <C> <C> <C>
INSURED CALIFORNIA
PREMIUM INCOME
Six months ended
2/28/98 7.46% $148,231 .85%* 4.56%* -- %
Year ended 8/31:
1997 12.30 143,571 .85 4.74 9
1996 5.83 137,610 .85 4.81 9
1995 11.68 137,323 .89 5.10 24
1994 (4.99) 132,806 .85 4.94 29
11/19/92 to
8/31/93 12.73 142,812 .88* 4.45* 20
<CAPTION>
INSURED CALIFORNIA
PREMIUM INCOME 2
<S> <C> <C> <C> <C> <C>
Six months ended
2/28/98 6.83 279,152 .82* 4.52* 7
Year ended 8/31:
1997 11.82 271,883 .83 4.67 24
1996 7.76 261,851 .83 4.73 27
1995 8.80 258,628 .84 5.11 24
1994 (7.07) 255,244 .84 4.80 24
3/18/93 to
8/31/93 5.11 277,948 .86* 3.46* --
<CAPTION>
CALIFORNIA
PREMIUM INCOME
<S> <C> <C> <C> <C> <C>
Six months ended
2/28/98 6.15 123,665 .86* 4.65* 4
Year ended 8/31:
1997 13.20 120,995 .86 4.76 44
1996 8.15 115,869 .88 4.83 25
1995 10.53 114,304 1.05 5.08 26
1994 (11.51) 69,710 .95 4.79 40
6/18/93 to
8/31/93 2.99 51,487 1.19* 3.33* --
=============================================================================================================================
*Annualized.
** 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. Total returns are not annualized.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to
Preferred shareholders.
</TABLE>
<PAGE>
Building Better Portfolios with Nuveen
Reducing the impact of taxes and moderating risk are important goals for many
risk- sensitive investors seeking to build better portfolios. For these
investors, a tax-efficient, risk-resistant investment portfolio often forms the
foundation of a carefully crafted financial plan for building and sustaining
wealth. Nuveen is committed to providing investors and their financial advisers
with a range of products and investment tools to help build better portfolios.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios
of investment-grade quality municipal bonds. The fund shares are listed
and traded on the New York and American stock exchanges. Exchange-
traded funds provide the investment convenience, price visibility and
liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA-rated investment with an
attractive tax-free yield for the cash reserves portion of an investment
portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of
Nuveen dual-class exchange-traded funds and are available for national as well
as a wide variety of state-specific portfolios.
Mutual Funds
Nuveen Mutual Funds offer investors access to the Nuveen family of premier
advisers, including Nuveen Advisory Corp., Institutional Capital Corp. and
Rittenhouse Financial Services. Our equity, balanced and income funds seek to
provide consistent performance, time-tested strategies to reduce risk and
experienced, professional management.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer
comprehensive, customized investment management solutions to investors with
assets of $250,000 or more. A range of actively managed growth, balanced and
municipal income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Unit Trusts
Nuveen Unit Trusts are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance, and daily liquidity at that day's net asset
value for quick access to your assets.
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers a variety of funds designed to help you reach your financial
goals.
GROWTH
Nuveen Rittenhouse
Growth Fund
GROWTH AND INCOME
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
TAX-FREE
INCOME
NATIONAL FUNDS
Long-Term
Insured
Intermediate-Term
Limited Term
STATE FUNDS
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
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Fund Information
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
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
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the 12-month period ended February 28, 1998. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
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Serving Investors for Generations
Photo of: JOHN NUVEEN, SR.
Since our founding in 1898, John Nuveen &Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for risk-sensitive individuals seeking to build and
sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen
to help them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services
to help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 257-8787 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
GRAPHIC:
1898-1998
NUVEEN
OUR SECOND CENTURY helping investors sustain the wealth of a lifetime.(tm)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FSA-2-2.98
