NUVEEN Exchange-Traded Funds
February 28, 1999
Semiannual Report
Dependable, tax-free income to help you keep more of what you earn.
NPC
NCL
NCU
California
Photo of:
<PAGE>
Highlights
As of February 28, 1999
Credit Quality Performance Highlights
================================================================================
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
1) Taxable-equivalent yield of 8.21% *
2) Paralleled the Lehman Brothers
Insured California Municipal Bond
Index and Lipper Peer Group total
returns for one-year period **
3) Dividend increase in February 1999
Pie Chart:
Insured 77%
Insured and U.S. Guaranteed 5%
U.S. Guaranteed 18%
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
1) Taxable-equivalent yield of 8.18% *
2) Outperformed Lehman Brothers Insured
California Municipal Bond Index and
Lipper Peer Group total returns for
one-year period **
3) Dividend increase in February 1999
Pie Chart:
Insured 85%
Insured and U.S. Guaranteed 12%
U.S. Guaranteed 3%
Nuveen California Premium Income Municipal Fund (NCU)
1) Taxable-equivalent yield of 8.51% *
2) Outperformed Lehman Brothers
California Municipal Bond Index and
Lipper Peer Group total returns for
one-year period **
3) Dividend increase in November 1998
Pie Chart:
AAA/U.S. Guaranteed 64%
AA 5%
A 11%
BBB/NR 19%
* For investors in the combined 37.5% federal and state income tax bracket.
** The Lehman Brothers California Municipal Bond Index and the Lehman Brothers
California Insured Municipal Bond Index are unleveraged indices comprising
a broad range of investment grade or insured municipal bonds and do not
reflect any initial or ongoing expenses. The Lipper Peer Group return
represents the average annualized returns of the 10 funds in the Lipper
California Insured Non-Leveraged or Leveraged Municipal Debt category and
the 17 funds in the Lipper California Non-Leveraged or Leveraged Municipal
Debt category. The returns assume reinvestment of dividends and do not
reflect any applicable sales charge.
Contents
1 Dear Shareholder
3 Portfolio Manager Roundtable
5 NPC Performance Overview
6 NCL Performance Overview
7 NCU Performance Overview
8 Shareholder Meeting Report
10 Portfolio of Investments
18 Statement of Net Assets
19 Statement of Operations
20 Statement of Changes in Net Assets
21 Notes to Financial Statements
25 Financial Highlights
28 Building a Better Portfolio
29 Fund Information
<PAGE>
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sidebar: Wealth takes a lifetime to build. Once achieved, it should
be preserved.
Dear Shareholder
I'm pleased to announce that over the past 12 months, the Nuveen Exchange-Traded
Funds covered in this report have continued to meet their primary objectives of
providing you with attractive levels of tax-free income and after-tax total
returns. The combination of these two factors demonstrates once again that
Nuveen's municipal bond funds can serve as excellent investment options for
income oriented investors.
The Year in Review
The past 12 months were marked by periods of market volatility both at home and
abroad, as the financial crisis that began in Asia spread to emerging markets
and impacted economies around the globe. Investors responded to market
uncertainties by seeking a haven in more conservative investments, such as
municipal bond funds. Finally, to avert a potential domestic credit crunch and
bring some stability to global markets, the Federal Reserve stepped in and eased
short-term interest rates for the first time in almost three years. Between the
end of September and mid-November 1998, three successive rate cuts brought the
federal funds rate to 4.75%.
As interest rates declined, the competitive yields offered by our
exchange-traded municipal bond funds attracted investor interest and demand.
These funds continued to represent bright spots among fixed-income investments,
offering attractive income in a market that places a high premium on yield. In
addition, the funds have generally maintained good levels of call protection,
resulting in relatively stable income streams for shareholders.
Throughout 1998, the U.S. economy exhibited more strength than had been
expected. Current conditions indicate that this momentum could continue. One of
the chief factors in achieving today's peaceful coexistence of economic growth
and low inflation has been improved productivity. In the months ahead, we will
continue to watch this and other factors that affect the economy's future,
including corporate earnings reports, wage and employment statistics, the
strength of the U.S. dollar, events in international markets, and any further
interest rate indications from the Federal Reserve. We believe these key
components will influence the outlook for fixed-income markets well into the
next century.
Municipal Bonds: A Compelling Value
During the past year, rising bond prices, spurred in part by demand from
international and conservative investors, drove yields on 30-year Treasuries to
historic lows, even below 5% at times. Over this period, the yield on the Bond
Buyer Revenue Bond Index, an unmanaged index of long-term municipal revenue
bonds, fell seven basis points - from 5.36% to 5.29% - versus the 34-point drop
in Treasury yields. At the end of February 1999, the ratio of long-term
municipal yields measured against 30-year Treasury yields stood at 95%, compared
with the more typical range of 86-87%. Over the past eight months, this ratio
reached as high as 104%. For investors, this meant that quality long-term
municipal bonds offered almost the same yield as Treasury bonds with comparable
maturities even before the tax advantages of municipal bonds were taken into
account. On an after-tax basis, municipal bonds presented an exceptionally
attractive investment option relative to Treasuries.
In the municipal market, low interest rates and the strong economy combined to
generate high levels of new issuance and a dramatic increase in the refinancing
of existing bonds. Municipal issuance in 1998 reached $284 billion, up 29% over
1997. In terms of total municipal issuance, 1998 ranked as the second largest
year on record, next to 1993's $292 billion. Year to date, municipal bonds have
continued to outperform Treasuries on a yield basis in 1999. There are two
reasons for this. For starters, municipal supply declined 30% in the first
quarter of 1999 when compared to the first quarter of 1998, which made the bonds
that were brought to market very attractive. The second factor involved a
drop-off in demand for Treasuries by foreign investors. As the global economic
turmoil subsided during the first quarter of 1999, so did the interest in the
U.S. Treasury market.
The continued strength of the U.S. economy also produced improvements in the
fundamental health of many municipalities and boosted the overall credit quality
of municipal bonds. In 1998, issues upgraded by Moody's outnumbered downgrades
by a margin of 4 to 1, while the comparable ratio at Standard & Poor's was more
than 2 to 1.
Nuveen Expertise is Key
The solid track record of a proven investment manager is one key to taking
advantage of the exceptional values currently available in the municipal market.
The near-record level of municipal issuance in 1998, for example, highlighted
the value of Nuveen's in-depth knowledge of the municipal market, as our
portfolio management teams carefully analyzed the flood of issues to select
those securities best suited to help the funds achieve their investment
objectives.
As a further enhancement to our management capabilities, Nuveen has assembled a
strong group of investment managers - experts in their particular areas of the
market - to provide investors with the advantage of their experience and
insights. In addition to Nuveen Advisory Services for tax-free investing, you
and your adviser can rely on Institutional Capital Corporation for
value-oriented equity investing and Rittenhouse Financial Services, Inc. for
growth-oriented equity investing. For more information on these funds, contact
your financial adviser for a prospectus, or call Nuveen at (800) 621-7227.
Please read the prospectus carefully before you invest or send money.
We encourage you to talk with your financial adviser about Nuveen's expanding
array of investments and the ways they can help you establish a diversified
portfolio designed to build and sustain long-term financial security. We are
grateful for the confidence you have placed in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
April 15, 1999
Sidebar: "Year to date, municipal bonds have continued to outperform Treasuries
on a yield basis in 1999."
<PAGE>
Nuveen California Premium Income Municipal Funds
Portfolio Manager Roundtable
Portfolio managers Mike Davern and Bill Fitzgerald discuss the California
market, recent fund performance, and key investment strategies for the Nuveen
California Premium Income funds.The two assumed management responsibility for
these funds in July 1998 as part of Nuveen's efforts to maximize the efficient
use of staff resources and portfolio manager expertise. Mike, who manages NPC
and NCL, has 16 years of experience as an investment professional, including
eight years with Nuveen, while Bill, who manages NCU as well as several other
California municipal funds, has more than 10 years of investment experience at
Nuveen.
What economic factors have affected the municipal market in California?
Over the past 12 months, the California economy as a whole continued to expand,
although economic conditions in southern California - bolstered by growth in the
service sector, motion picture industry, and construction, both residential and
commercial - are currently stronger than those in the northern half of the
state. This disparity is due in part to the impact of the Asian financial crisis
on the high-technology sector, particularly in Silicon Valley. Job growth in the
state has also continued to expand, but at a more moderate pace than in the
previous year. Fewer new jobs resulted in a statewide unemployment rate of 5.8%,
compared with the national average of 4.5%.
In 1998, California, which derives most of its revenue from sales and personal
income taxes, saw sales tax revenues rise 5%. This increase is expected to rise
at the same percentage increment (5%) for the next few years. At the same time,
growth in personal income, driven by gains in the real estate and equity
markets, produced tax revenues that far exceeded budget expectations, as income
from capital gains taxes more than doubled. With increased state revenues,
California is now working to position itself strategically in order to reduce
the potential impact of any future economic downturn, such as the statewide
recession of 1990-94. The state's improving economy is reflected in its ratings
of Aa3 from Moody's, A+ from Standard & Poor's, and AA- from Fitch.
The issuance of municipal bonds in California increased substantially in 1998,
up 22% over 1997, compared with the national average of 29%. The new supply was
fairly diverse across issuer sectors, with some heavier emphasis on the state's
continuing need for infrastructure financing and educational improvements. With
a few exceptions, insured bonds made up the predominant share of the new
issuance. The strong increase in supply was met with exceptionally high demand,
especially from individual investors who looked to tax-free municipal bonds for
relief from California's high taxes. Expectations for municipal issuance in 1999
are to continue following the recent trends.
How did the Nuveen California Premium Income funds perform over the past year?
For the 12 months ended February 28, 1999, the Nuveen California Exchange-Traded
Funds produced total returns on net asset value (NAV) ranging from 6.46% to
7.37%, as shown in the accompanying table. For comparison purposes, the total
returns on the Lehman Brothers California Municipal Bond and California Insured
Municipal Bond Indexes and the averages for the Lipper California Municipal Debt
category are also provided.
Lehman California Lipper California
Total Return on NAV Total Return(1) Average(2)
- --------------------------------------------------------------
1 Year Ended Taxable- 1 Year Ended 1 Year Ended
2/28/99 Equivalent(3) 2/28/99 2/28/99
- --------------------------------------------------------------
NPC 6.46% 9.58% 6.57% 6.79%
- --------------------------------------------------------------
NCL 7.37% 10.54% 6.57% 6.79%
- --------------------------------------------------------------
NCU 7.12% 10.38% 6.49% 6.43%
- --------------------------------------------------------------
In the low interest rate environment of the past six months, good call
protection helped support the dividends of NPC, NCL, and NCU and shield the
income of these funds from erosion. In addition, excellent dividend management
strategies enabled us to increase the dividends of all three funds, enhancing
the competitiveness of their market yields. In fact, the dividends of both NPC
and NCL were increased twice over the past 12 months, once in August 1998 and
again in February 1999. As of February 28, 1999, NPC and NCL had each provided
shareholders with 43 consecutive months of steady or increasing income, while
NCU had produced steady or increasing dividends for 46 consecutive months.
As interest rates fell over the past year, active demand for Nuveen
Exchange-Traded Funds such as the California Premium Income funds - boosted by
their outstanding dividend records - resulted in solid share price performance.
At the same time, strong bond market performance increased the funds' NAVs. Over
the year, both NPC and NCL moved from discounts (percentage of market price
below NAV) to premiums (percentage of market price over NAV), while NCU saw its
premium widen slightly.
Share price Share price NAV NAV
(as of 2/28/98) (as of 2/28/99) (as of 2/28/98) (as of 2/28/99)
- -------------------------------------------------------------------------
NPC $15.75 $16.375 $16.12 $16.32
- -------------------------------------------------------------------------
NCL $14.625 $15.25 $14.64 $14.93
- -------------------------------------------------------------------------
NCU $14.0625 $14.3125 $14.06 $14.29
- -------------------------------------------------------------------------
Market Premium/ Total Return
Yield Discount4 on Share Price
- ------------------------------------------------------------------------------
Taxable- 1 Year Ended Taxable-
2/28/99 Equivalent(3) 2/28/98 2/28/99 2/28/99 Equivalent(3)
- ------------------------------------------------------------------------------
NPC 5.13% 8.21% -2.30% 0.34% 9.43% 12.62%
- ------------------------------------------------------------------------------
NCL 5.11% 8.18% -0.10% 2.14% 9.88% 13.06%
- ------------------------------------------------------------------------------
NCU 5.32% 8.51% 0.02% 0.16% 7.29% 10.55%
- ------------------------------------------------------------------------------
For additional information, see the individual Performance Overview for your
fund in this report.
<PAGE>
What key strategies were used to manage the Nuveen California Premium Income
funds during the past year?
The focus of our management strategies in all three funds continued to be on
supporting the highest level of tax-exempt dividends consistent with capital
preservation. Enhancing the funds' after-tax total returns was also a priority.
For the two insured funds, NPC and NCL, we also implemented strategies designed
to extend the funds' call protection. During the past six months, market
conditions provided us with the opportunity to sell selected high-coupon bonds
that had been pre-refunded (U.S. guaranteed bonds) and reinvest the proceeds in
long-term bonds offering above-market yields. The bonds we sold commanded
excellent prices, while the bonds we added to the portfolio enabled the funds to
maintain their long-term focus. All of the purchased bonds were assessed in
terms of coupon, call protection, maturity, and credit quality to determine that
their structure would enhance the funds' position.
With no scheduled bond calls in 1999 and 2000 and less than 7% of its portfolio
subject to calls in 2001 and 2002, NCL offers outstanding call protection, which
should provide additional stability for its dividend. NPC, which has less than
2% of its portfolio callable between now and the end of 2001, is scheduled to
face a more significant number of calls in 2002. To minimize the impact of these
calls, we are already at work on strategies for managing through this period.
For NCU, one of our more significant purchases over the past year involved BBB
rated bonds issued by the California Statewide Communities Development Authority
for the Irvine Apartment Communities, a planned community that provides
affordable housing built with tax-exempt financing backed by a successful real
estate company. These bonds, which offered a yield 75 basis points higher than
the market average, showcase the types of purchases we made to support the
fund's dividend. The purchase of these bonds also enables us to participate in
the opportunities we anticipate over the next year in the multifamily housing
sector. As California property values continue to improve, we expect that the
quality ratings on these bonds should also improve, resulting in price
appreciation. We continue to add to our holdings in paper secured by both
residential and commercial properties.
We also found value in the healthcare sector, where non-insured issuance for
hospitals was made more attractive by widening credit spreads, as changes in
federal reimbursement policies took effect. A credit spread represents the
difference between lower-rated and higher-rated securities. In both the real
estate and healthcare sectors, Nuveen's exceptional research capabilities played
a key role in helping us find the seasoned real estate developments and
financially healthy hospitals that should thrive in today's environment. With no
scheduled bond calls until 2003, NCU continues to offer outstanding call
protection. The credit quality of NCU also remained high, with 70% of the fund
invested in bonds rated AAA and AA, as of February 28, 1999.
What is Nuveen's outlook for the future?
Looking ahead for the California Premium Income funds, our focus will remain on
supporting the income streams of these funds and on purchasing bonds that
enhance the portfolio structure at attractive prices. We will also look at
positioning the funds' durations so that they are better protected against any
interest rate volatility. For NPC and NCL, we will take advantage of market
conditions to invest in insured bonds with good liquidity and call protection as
opportunities arise. The level of trading activity in these two funds will be
governed by market direction. That is, we believe NPC and NCL are currently well
positioned for participation in a market rally, and these funds would see little
trading activity in that environment. In NCU over the next 12 months, we plan to
sell selected AAA rated and escrowed (U.S. guaranteed) bonds in order to
purchase BBB rated issues that will enhance the fund's yield. Making the
portfolio decisions that help the funds meet these goals is an area where
Nuveen's expertise - as an experienced investment manager knowledgeable about
the unique aspects of the California municipal market - can result in added
value for our investors.
The market environment of the past 12 months - influenced by low interest rates,
benign inflation, strong municipal supply, and the excellent
municipal-to-Treasury ratio (with municipal yields comparable to Treasury yields
even before the tax advantage of municipals is taken into account) - has helped
to position municipal bonds as one of the most compelling values in today's
marketplace. Continued volatility in the equity markets and investors'
increasing awareness of the need for asset allocation rebalancing should result
in growing demand for municipal bond funds. We believe that investors who take
advantage of current opportunities in the municipal market should be rewarded
with healthy returns and attractive yields in the months ahead, as the market
recognizes the value of these quality investments.
1 The two insured funds, NPC and NCL , are compared with the Lehman Brothers
California Insured Municipal Bond Index, an unleveraged index covering a
broad range of insured California municipal bonds. NCU is compared with the
Lehman Brothers California Municipal Bond Index, an unleveraged index
comprising a broad range of California investment-grade municipal bonds.
Results for both Lehman indexes do not reflect any initial or ongoing
expenses.
2 The Lipper California Peer Group returns represent the average annualized
returns of the funds in the Lipper California Municipal Debt category. NPC
and NCL are compared with a peer group of insured funds, while NCU is
compared with other leveraged California funds in the Lipper data base.
Returns assume reinvestment of dividends and do not reflect any applicable
sales charges.
3 Based on a 37.5% combined federal and state income tax rate.
4 A fund's premium or discount represents the percentage difference between
the fund's share price and its NAV.
<PAGE>
Nuveen Insured California Premium Income Municipal Fund, Inc.
Performance Overview
As of February 28, 1999
NPC
Portfolio Statistics
==================================================
Inception Date 11/92
- --------------------------------------------------
Share Price $16 3/8
- --------------------------------------------------
Net Asset Value Per Share $16.32
- --------------------------------------------------
Market Yield 5.13%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.43%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.21%
- --------------------------------------------------
Fund Net Assets ($000) $149,569
- --------------------------------------------------
Average Weighted Maturity (Years) 20.41
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 13.12
==================================================
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 9.43% 6.46%
- --------------------------------------------------
3-Year 11.98% 7.58%
- --------------------------------------------------
5-Year 8.78% 7.61%
- --------------------------------------------------
Since Inception 7.25% 8.05%
==================================================
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 12.62% 9.58%
- --------------------------------------------------
3-Year 15.45% 10.80%
- --------------------------------------------------
5-Year 12.38% 10.95%
- --------------------------------------------------
Since Inception 10.71% 11.35%
==================================================
Top Five Sectors (as a % of total investments)
U.S. Guaranteed 23%
- --------------------------------------------------
Tax Obligation/Limited 21%
- --------------------------------------------------
Water and Sewer 20%
- --------------------------------------------------
Utilities 12%
- --------------------------------------------------
Tax Obligation/General 6%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 37.5%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 37.5%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
Bar Chart:
1998-1999 Monthly Tax-Free Dividends Per Share
3/98 0.0675
4/98 0.0675
5/98 0.0675
6/98 0.0675
7/98 0.0675
8/98 0.0685
9/98 0.0685
10/98 0.0685
11/98 0.0685
12/98 0.0685
1/99 0.0685
2/99 0.07
Line Chart:
Share Price Performance
3/6/98 15.875
15.625
15.875
15.813
15.813
15.5
15.313
15.438
15
15
15.063
15.188
15.5
15.75
15.813
16.125
15.938
16.063
15.75
15.438
15.438
15.5
15.5
15.563
15.938
15.625
15.813
15.813
16.125
16.375
16
16.188
16
16
16.13
16.13
16.13
16.56
16.5
16.81
16.5
16
15.44
15.81
15.56
16
16.31
16.19
2/28/99 16.38
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Performance Overview
As of February 28, 1999
NCL
Portfolio Statistics
==================================================
Inception Date 3/93
- --------------------------------------------------
Share Price $15 1/4
- --------------------------------------------------
Net Asset Value Per Share $14.93
- --------------------------------------------------
Market Yield 5.11%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.41%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.18%
- --------------------------------------------------
Fund Net Assets ($000) $283,061
- --------------------------------------------------
Average Weighted Maturity (Years) 17.67
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 9.71
==================================================
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 9.88% 7.37%
- --------------------------------------------------
3-Year 12.56% 8.22%
- --------------------------------------------------
5-Year 9.14% 7.07%
- --------------------------------------------------
Since Inception 6.14% 6.67%
==================================================
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 13.06% 10.54%
- --------------------------------------------------
3-Year 16.02% 11.49%
- --------------------------------------------------
5-Year 12.77% 10.50%
- --------------------------------------------------
Since Inception 9.58% 9.98%
==================================================
Top Five Sectors (as a % of total investments)
Tax Obligation (Limited) 32%
- --------------------------------------------------
U.S. Guaranteed 15%
- --------------------------------------------------
Education and Civic Organizations 13%
- --------------------------------------------------
Water and Sewer 10%
- --------------------------------------------------
Tax Obligation (General) 9%
- --------------------------------------------------
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 income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 37.5%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 37.5%. 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 also paid shareholders net ordinary income distributions in
December of $0.0077 per share.
1998-1999 Monthly Tax-Free Dividends Per Share(3)
3/98 0.062
4/98 0.062
5/98 0.062
6/98 0.062
7/98 0.062
8/98 0.0635
9/98 0.0635
10/98 0.0635
11/98 0.0635
12/98 0.0635
1/99 0.0635
2/99 0.065
Share Price Performance
3/6/98 14.75
14.688
14.188
14
14
13.875
13.625
13.938
13.938
13.813
13.5
13.875
14.25
14.188
14.125
13.875
13.938
14
14.063
14.063
14
14.25
14.375
14.438
14.875
14.75
14.813
14.813
15
15.188
14.75
15.375
15.13
15.06
15
15
15
15.06
15.19
15.44
15.31
14.94
14.38
14.31
14.5
14.81
15
15.06
2/28/99 15.25
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen California Premium Income Municipal Fund
Performance Overview
As of February 28, 1999
NCU
==================================================
Portfolio Statistics
Inception Date 6/93
- --------------------------------------------------
Share Price $14 5/16
- --------------------------------------------------
Net Asset Value Per Share $14.29
- --------------------------------------------------
Market Yield 5.32%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.71%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.51%
- --------------------------------------------------
Fund Net Assets ($000) $125,074
- --------------------------------------------------
Average Weighted Maturity (Years) 17.75
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 11.28
==================================================
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 7.29% 7.12%
- --------------------------------------------------
3-Year 11.05% 8.35%
- --------------------------------------------------
5-Year 8.56% 7.03%
- --------------------------------------------------
Since Inception 5.20% 6.12%
==================================================
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 10.55% 10.38%
- --------------------------------------------------
3-Year 14.56% 11.73%
- --------------------------------------------------
5-Year 12.26% 10.56%
- --------------------------------------------------
Since Inception 8.69% 9.51%
==================================================
Top Five Sectors (as a % of total investments)
Tax Obligation (Limited) 24%
- --------------------------------------------------
Healthcare 17%
- --------------------------------------------------
Housing (Multifamily) 13%
- --------------------------------------------------
U.S. Guaranteed 11%
- --------------------------------------------------
Housing (Single family) 9%
- --------------------------------------------------
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 income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 37.5%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 37.5%. 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 also paid shareholders net ordinary
income distributions in December of $0.0029 per share.
3 The Fund also paid shareholders net ordinary income distributions in
December of $0.0029 per share.
Bar Chart:
1998-1999 Monthly Tax-Free Dividends Per Share(3)
3/98 0.0615
4/98 0.0615
5/98 0.0615
6/98 0.0615
7/98 0.0615
8/98 0.0615
9/98 0.0615
10/98 0.0615
11/98 0.0635
12/98 0.0635
1/99 0.0635
2/99 0.0635
Share Price Performance
3/6/98 14.25
13.875
13.938
14
13.625
13.75
13.625
13.563
13.438
13.438
13.625
13.563
13.813
14.375
14.25
14.25
14.375
14.125
13.875
13.625
13.563
13.75
13.875
13.938
14.063
14
14.125
14.063
14.188
14.438
14.063
14.563
14.63
14.69
14.69
14.94
14.94
15.06
14.88
14.88
14.63
14.38
14.06
13.94
14
14.38
14.31
14.5
2/28/99 14.31
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
<TABLE>
Shareholder Meeting Report
The annual shareholder meeting was held in Chicago, Illinois on October 14,
1998.
<CAPTION>
NPC NCL
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Trustees was reached as follows:
Preferred Preferred Preferred
Common Shares Common Shares Shares
Shares Series-T Shares Series-T Series-TH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Bremner
For 5,788,455 1,755 11,641,770 1,575 1,743
Withhold 65,859 14 79,906 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown
For 5,791,405 1,755 11,641,770 1,575 1,743
Withhold 62,909 14 79,906 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony T. Dean
For 5,791,505 1,755 11,641,770 1,575 1,743
Withhold 62,809 14 79,906 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri
For 5,786,388 1,755 11,634,408 1,575 1,743
Withhold 67,926 14 87,268 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers
For 5,790,005 1,755 11,640,790 1,575 1,743
Withhold 64,309 14 80,886 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,313 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider
For -- 1,755 -- 1,575 1,743
Withhold -- 14 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,769 -- 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger
For -- 1,755 -- 1,575 1,743
Withhold -- 14 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,769 -- 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale
For 5,790,188 1,755 11,636,800 1,575 1,743
Withhold 64,126 14 84,876 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
Ratification of auditors was reached as follows:
For 5,761,864 1,748 11,578,016 1,575 1,735
Against 22,342 -- 41,553 -- 5
Abstain 70,108 21 102,107 -- 3
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,854,314 1,769 11,721,676 1,575 1,743
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
NCU
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Trustees was reached as follows:
Preferred
Common Shares
Shares Series-M
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert P. Bremner
For 5,468,213 1,696
Withhold 22,524 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown
For 5,467,106 1,696
Withhold 23,631 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony T. Dean
For 5,468,213 1,696
Withhold 22,524 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri
For 5,468,105 1,696
Withhold 22,632 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers
For 5,468,213 1,696
Withhold 22,524 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider
For -- 1,696
Withhold -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger
For -- 1,696
Withhold -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale
For 5,466,706 1,696
Withhold 24,031 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
Ratification of auditors was reached as follows:
For 5,419,541 1,696
Against 13,679 --
Abstain 57,517 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,490,737 1,696
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
February 28, 1999
(Unaudited)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations - 1.2%
California Educational Facilities Authority, Revenue Bonds (University of
San Diego), Series 1998:
$ 1,750,000 0.000%, 10/01/16 No Opt. Call Aaa $ 734,493
1,000,000 5.000%, 10/01/28 10/09 at 101 Aaa 994,600
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 4.9%
3,000,000 California Health Facilities Financing Authority, Insured Revenue Bonds 8/08 at 101 AAA 2,962,050
(Sutter Health), Series 1998A, 5.000%, 8/15/37
4,000,000 California Statewide Communities Development Authority, Sutter Health 8/02 at 102 AAA 4,352,680
Obligated Group, Certificates of Participation, 6.125%, 8/15/22
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.4%
3,650,000 California Housing Finance Agency, Multi-Unit Rental Housing Revenue 2/03 at 102 Aa2 3,848,195
Bonds, 1992 Series A, 6.625%, 2/01/24 (Alternative Minimum Tax)
4,000,000 The City of Los Angeles (California), Tax-Exempt Mortgage Revenue 7/02 at 102 AAA 4,199,000
Refunding Bonds, Series 1993A (FHA - Insured Mortgage Loans -
Section 8 Assisted Projects), 6.300%, 1/01/25
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 4.8%
2,240,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 2/07 at 102 AAA 2,379,306
1997 Series A, 6.000%, 8/01/20 (Alternative Minimum Tax)
California Housing Finance Agency, Home Mortgage Revenue Bonds,
1998 Series E Remarketed:
3,190,000 5.150%, 8/01/19 2/09 at 101 1/2 AAA 3,226,781
1,500,000 5.250%, 2/01/33 (Alternative Minimum Tax) 2/09 at 101 1/2 AAA 1,522,545
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 5.7%
3,000,000 State of California, Various Purpose General Obligation Bonds, No Opt. Call AAA 3,494,220
6.500%, 9/01/06
1,225,000 Fresno Unified School District (Fresno County, California), 1998 General 2/13 at 103 AAA 1,453,622
Obligation Refunding Bonds, Series A, 6.550%, 8/01/20
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, 8/11 at 103 AAA 3,509,100
Series 1997-A, 6.500%, 8/01/19
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 21.1%
17,630,000 Anaheim Public Financing Authority, Lease Revenue Bonds (Anaheim Public No Opt. Call AAA 5,836,412
Improvements Project), Senior Lease Revenue Bonds, 1997
Series C, 0.000%, 9/01/20
4,000,000 Los Angeles County Metropolitan Transportation Authority (California), 7/03 at 100 AAA 3,965,200
Proposition A Sales Tax Revenue Refunding Bonds, Series 1993-A,
5.000%, 7/01/21
5,000,000 Los Angeles County Metropolitan Transit Authority, Proposition C Sales 7/03 at 102 AAA 5,041,950
Tax Revenue, Second Senior Bonds, Series 1993-B, 4.750%, 7/01/13
4,000,000 Norco Redevelopment Agency, Norco Redevelopment Project Area 3/02 at 102 AAA 4,337,840
No. One, 1992 Refunding Tax Allocation Bonds, 6.250%, 3/01/19
2,135,000 City of San Buenaventura, California, 1993 Refunding Certificates 1/03 at 100 AAA 2,213,717
of Participation (Capital Improvements Project), 5.500%, 1/01/17
1,000,000 San Francisco Bay Area Rapid Transit District (California), Sales 7/08 at 101 AAA 994,600
Tax Revenue Bonds, Series 1998, 5.000%, 7/01/28
9,500,000 Redevelopment Agency of the City of San Jose, Merged Area 2/04 at 102 AAA 9,113,730
Redevelopment Project, Tax Allocation Bonds, Series 1993,
4.750%, 8/01/24
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.8%
1,000,000 Alameda Corridor Transportation Authority (California), Tax-Exempt Senior 10/09 at 101 AAA 962,690
Lien Revenue Bonds, Series 1999A, 4.750%, 10/01/25
1,545,000 Airports Commission of San Francisco City and County, California, 5/03 at 101 AAA 1,686,646
San Francisco International Airport, Second Series Refunding Revenue
Bonds, Issue 4, 6.200%, 5/01/20 (Alternative Minimum Tax)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed - 22.4%
$ 6,000,000 Huntington Park Redevelopment Agency, Single Family Residential No Opt. Call AAA $ 8,293,620
Mortgage Revenue Refunding Bonds, 1986 Series A, 8.000%, 12/01/19
2,750,000 City of Los Angeles, California, Wastewater System Revenue Bonds, 12/00 at 102 AAA 2,973,410
Series 1991-D, 6.700%, 12/01/21 (Pre-refunded to 12/01/00)
5,135,000 Community Redevelopment Agency of the City of Palmdale, California, No Opt. Call AAA 6,961,571
Single Family Mortgage Revenue Bonds, Series 1986A Restructured,
8.000%, 3/01/16 (Alternative Minimum Tax)
6,220,000 County of Riverside, California, Single Family Mortgage Revenue Bonds No Opt. Call AAA 9,379,200
(GNMA Mortgage-Backed Securities Program), Issue A of 1987,
9.000%, 5/01/21 (Alternative Minimum Tax)
1,000,000 Airports Commission of the City and County of San Francisco, California, 5/04 at 101 AAA 1,119,500
San Francisco International Airport, Second Series Revenue Bonds,
Issue 8B, 6.000%, 5/01/15 (Pre-refunded to 5/01/04)
2,455,000 Airports Commission of the City and County of San Francisco, California, 5/03 at 102 AAA 2,746,409
San Francisco International Airport, Second Series Refunding Revenue
Bonds, Issue 4, 6.200%, 5/01/20 (Pre-refunded to 5/01/03)
(Alternative Minimum Tax)
1,485,000 City of San Jose, California, Single Family Mortgage Revenue Bonds, No Opt. Call AAA 2,225,570
1985 Series A, 9.500%, 10/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 11.8%
4,000,000 California Pollution Control Financing Authority, Pollution Control Revenue 12/02 at 102 AAA 4,397,280
Bonds (Southern California Edison Company), 1992 Series B,
6.400%, 12/01/24 (Alternative Minimum Tax)
4,000,000 City of Chula Vista, Industrial Development Revenue Bonds (San Diego 12/02 at 102 A-1+ 4,353,240
Gas and Electric Company), 1992 Series A, 6.400%, 12/01/27
(Alternative Minimum Tax)
2,000,000 Northern California Power Agency, Capital Facilities Revenue Bonds, 2/09 at 101 AAA 1,989,760
1999 Refunding Series A, 5.000%, 8/01/25
5,000,000 Sacramento Municipal Utility District (California), Electric Revenue 9/03 at 100 AAA 4,809,350
Refunding Bonds, 1993 Series G, 4.750%, 9/01/21
2,000,000 Sacramento Municipal Utility District (California), Electric Revenue 8/02 at 100 AAA 2,127,300
Refunding Bonds, 1992 Series A, 5.750%, 8/15/13
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 20.1%
2,000,000 Cucamonga County Water District (San Bernardino County, California), 9/01 at 102 AAA 2,158,940
Certificates of Participation (1992 Water Facilities Refinancing),
6.300%, 9/01/12
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 3,158,058
11,000,000 4.700%, 11/01/19 11/03 at 102 AAA 10,542,729
5,440,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion 1/04 at 102 AAA 5,274,732
Project), 1993 Refunding Series, 4.500%, 1/01/15
5,000,000 Wheeler Ridge, Maricopa Water Storage District (Kern County, 11/06 at 102 AAA 5,437,949
California), 1996 Water Refunding Bonds, 5.700%, 11/01/15
3,425,000 City of Woodland (Yolo County, California), Certificates of Participation 3/03 at 100 AAA 3,532,339
(1992 Wastewater System Refunding Project), 5.500%, 3/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
$ 149,525,000 Total Investments - (cost $130,476,937) - 99.2% 148,310,334
============
Other Assets Less Liabilities - 0.8% 1,258,614
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $149,568,948
==================================================================================================================
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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
February 28, 1999
(Unaudited)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations - 12.6%
$ 1,250,000 California Educational Facilities Authority, Revenue Refunding Bonds 10/08 at 101 Aaa $ 1,243,938
(University of San Diego), Series 1998, 5.000%, 10/01/22
10,050,000 California Educational Facilities Authority, Revenue Bonds (Santa Clara 9/06 at 102 AAA 10,824,051
University), Series 1996, 5.750%, 9/01/21
5,000,000 California Educational Facilities Authority, Revenue Bonds (University 10/06 at 102 AAA 5,486,300
of San Francisco), Series 1996, 6.000%, 10/01/26
2,655,000 California State University, Housing System Revenue Bonds, 11/05 at 102 AAA 2,889,357
Series 1996, 5.700%, 11/01/13
5,000,000 Regents of the University of California (Multiple Purpose Projects), No Opt. Call AAA 6,525,650
Series A, 9.250%, 9/01/05
4,900,000 The Regents of the University of California, University of California 11/03 at 102 AAA 5,078,115
Housing System Revenue Bonds, Series A, 5.500%, 11/01/18
3,000,000 The Regents of the University of California, Refunding Revenue Bonds No Opt. Call AAA 3,631,170
(1989 Multiple Purpose Projects), Series C, 10.000%, 9/01/02
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 2.5%
1,450,000 California Health Facilities Financing Authority, Insured Health Facility 7/06 at 102 AAA 1,578,441
Refunding Revenue Bonds (Mark Twain St. Joseph's Healthcare),
1996 Series A, 6.000%, 7/01/19
5,000,000 California Health Facilities Financing Authority, Insured Health Facility 7/06 at 102 AAA 5,442,900
Refunding Revenue Bonds (Catholic Healthcare West), 1996 Series A,
6.000%, 7/01/25
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.6%
4,620,000 The Community Redevelopment Agency of the City of Los Angeles, 6/05 at 105 AAA 5,324,227
California, Multifamily Housing Revenue Refunding Bonds,
1995 Series A (Angelus Plaza Project), 7.400%, 6/15/10
7,400,000 Housing Authority of the County of Santa Cruz, Tax-Exempt Multifamily 5/03 at 102 Aaa 7,699,848
Housing Revenue Refunding Bonds, Series 1993A (GNMA
Collateralized - Meadowview Apartments), 6.125%, 5/20/28
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.9%
6,000,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 8/07 at 101 1/2 AAA 6,227,520
1997 Series C-2, 5.625%, 8/01/20 (Alternative Minimum Tax)
1,500,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/06 at 102 AAA 1,595,190
1996 Series E, 6.150%, 8/01/25 (Alternative Minimum Tax)
3,190,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/09 at 101 AAA 3,189,872
1998 Series N, 5.250%, 8/01/29
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 9.2%
5,000,000 State of California, Veterans General Obligation Bonds, Series BH, 12/03 at 102 AAA 5,130,050
5.500%, 12/01/24 (Alternative Minimum Tax)
2,130,000 State of California, Various Purpose General Obligation Bonds, 11/02 at 102 AAA 2,240,760
5.750%, 11/01/17
2,575,000 Calipatria Unified School District, Imperial County, California, 8/06 at 102 AAA 2,800,853
1996 Series A, General Obligation Bonds, 5.625%, 8/01/13
3,000,000 Central Unified School District (Fresno County, California), General 3/03 at 102 AAA 3,149,490
Obligation Bonds, Election 1992, 5.625%, 3/01/18
3,000,000 Escondido Union School District, San Diego County, California, General 11/06 at 102 AAA 3,411,660
Obligation Bonds (1966 Election), 5.700%, 11/01/10
City of Los Angeles, California, Unified School District,
General Obligation Bonds, 1997 Series A:
2,500,000 5.000%, 7/01/21 7/08 at 102 AAA 2,488,172
1,000,000 6.000%, 7/01/15 No Opt. Call AAA 1,144,000
3,000,000 City and County of San Francisco, General Obligation Bonds, Various 6/01 at 102 AAA 3,190,320
Purpose Bonds, Series 1993, 5.500%, 6/15/11
2,250,000 Santa Monica Community College District (County of Los Angeles, 7/05 at 102 AAA 2,405,813
California), General Obligation Bonds, 1992 Election, Series B,
5.750%, 7/01/20
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited - 31.5%
$ 3,865,000 Certificates of Participation (1991 Financing Project), County of Alameda, 9/06 at 102 AAA $ 4,251,307
California, Alameda County Public Facilities Corporation, 6.000%, 9/01/21
7,985,000 County of Alameda, California, 1993 Refunding Certificates of 12/03 at 102 AAA 8,672,908
Participation (Santa Rita Jail Project), 5.700%, 12/01/14
1,500,000 Anaheim Public Financing Authority, Lease Revenue Bonds (Anaheim No Opt. Call AAA 446,340
Public Improvements Project), Senior Lease Revenue Bonds,
1997 Series C, 0.000%, 9/01/22
1,800,000 California Public School District Financing Authority, Lease Revenue 9/06 at 102 AAA 1,945,332
Bonds (Richgrove Elementary School District Projects), Series 1996B,
5.800%, 9/01/16
5,000,000 Community Redevelopment Agency of the City of Compton, California, 8/05 at 102 AAA 5,738,400
Compton Redevelopment Project, Refunding Tax Allocation Bonds,
Series 1995A (Project Tax Revenues, Subventions and Housing Tax
Revenues) (Insured/Tax-Exempt) 6.500%, 8/01/13
4,000,000 County of Contra Costa, California, Certificates of Participation 11/07 at 102 AAA 4,209,320
(Merrithew Memorial Hospital Replacement Project), Refunding
Series of 1997, 5.500%, 11/01/22
3,000,000 Galt Schools Joint Powers Authority (Sacramento County, California), 11/07 at 102 AAA 3,292,140
1997 Refunding Revenue Bonds, Series A (High School and Elementary
School Facilities), 5.875%, 11/01/24
2,500,000 Lancaster Housing Authority (California), Lease Refunding Revenue Bonds 4/08 at 102 AAA 2,450,825
(Brierwood Mobile Home Park Project), Issue of 1999, 5.000%, 4/01/24
5,585,000 Los Angeles County Transportation Commission (California), Sales Tax 7/01 at 102 AAA 6,045,539
Revenue Refunding Bonds, Series 1991-B, 6.500%, 7/01/13
2,135,000 Menifee Union School District (Riverside County, California), Certificates 9/06 at 102 AAA 2,373,800
of Participation (1996 School Project), 6.125%, 9/01/24
2,690,000 Norwalk Community Facilities Financing Authority (Los Angeles County, 9/05 at 102 AAA 2,947,083
California), Tax Allocation Refunding Revenue Bonds, 1995 Series A,
6.000%, 9/01/15
5,000,000 City of Pasadena, Community Facilities District No.1 (Civic Center West 12/08 at 101 AAA 5,100,600
Public Improvements), 1997 Special Tax Bonds, 5.250%, 12/01/25
9,000,000 City of Redlands, California, Certificates of Participation 9/03 at 102 AAA 9,539,460
(1993 Refunding of 1986 and 1987 Projects), 5.800%, 9/01/17
3,000,000 San Dieguito Public Facilities Authority (California), Revenue Bonds, 8/08 at 102 AAA 2,978,730
1998 Series A (Tax-Exempt), 5.000%, 8/01/30
1,500,000 San Francisco Bay Area Rapid Transit District (California), Sales Tax 7/08 at 101 AAA 1,491,900
Revenue Bonds, Series 1998, 5.000%, 7/01/28
1,930,000 Santa Margarita/Dana Point Authority, Orange County, California, Revenue No Opt. Call AAA 2,296,951
Bonds, Series A (1994 Improvement Districts Nos. 1, 2, 2A and 8 General
Obligation Bond Refinancing), 7.250%, 8/01/05
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 5,190,200
7,330,000 8.000%, 8/15/09 No Opt. Call AAA 9,629,641
4,005,000 Redevelopment Agency of the City of Suisun City, Suisun City 10/03 at 102 AAA 4,315,347
Redevelopment Project, 1993 Tax Allocation Refunding Bonds (County of
Solano, California), 5.900%, 10/01/23
5,450,000 City of Visalia, California (Motor Vehicle License Fee Enhancement), 12/06 at 102 AAA 5,625,054
Visalia Public Finance Authority, Refunding Certificates of Participation,
Series 1996A, 5.375%, 12/01/26
2,400,000 Yorba Linda Redevelopment Agency (Orange County, California), Yorba No Opt. Call AAA 517,560
Linda Redevelopment Project, 1998 Tax Allocation Parity Refunding
Bonds, Series A, 0.000%, 9/01/28
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.7%
Alameda Corridor Transportation Authority (California), Tax-Exempt Senior
Lien Revenue Bonds, Series 1999A:
3,000,000 4.750%, 10/01/25 10/09 at 101 AAA 2,888,070
5,000,000 5.000%, 10/01/29 10/09 at 101 AAA 4,972,600
3,000,000 San Joaquin Hills Transportation Corridor Agency, Toll Road Refunding No Opt. Call AAA 1,382,850
Revenue Bonds, Series 1997 A, 0.000%, 1/15/15
3,750,000 City of San Jose, California, Airport Revenue Bonds, Series of 1993, 3/03 at 102 AAA 3,919,500
5.700%, 3/01/18 (Alternative Minimum Tax)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed - 15.2%
$ 3,370,000 State of California, Various Purpose General Obligation Bonds, 11/02 at 102 AAA $ 3,698,070
5.750%, 11/01/17 (Pre-refunded to 11/01/02)
1,000,000 Kern High School District (County of Kern, California), General Obligation 8/03 at 102 AAA 1,078,500
Bonds, Election of 1990, Series D, 5.600%, 8/01/15
13,000,000 The Metropolitan Water District of Southern California, Water Revenue 7/05 at 102 AAA 14,680,900
Bonds, 1995 Series A,5.750%, 7/01/21 (Pre-refunded to 7/01/05)
4,320,000 County of Riverside, California, Single Family Mortgage Revenue Bonds No Opt. Call AAA 6,137,208
(GNMA Mortgage-Backed Securities Program), Issue B of 1987,
8.625%, 5/01/16 (Alternative Minimum Tax)
5,000,000 Riverside County Transportation Commission, Sales Tax Revenue Bonds, 6/01 at 102 AAA 5,448,600
1991 Series A (California), 6.500%, 6/01/09 (Pre-refunded to 6/01/01)
9,000,000 Airports Commission of the City and County of San Francisco, California, 5/04 at 101 AAA 10,117,710
San Francisco International Airport, Second Series Revenue Bonds,
Issue 8B, 6.100%, 5/01/20 (Pre-refunded to 5/01/04)
1,675,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds (Little 12/05 at 100 AAA 1,932,615
Company of Mary Hospital), 1985 Series A, 7.100%, 12/01/15
(Pre-refunded to 12/01/05)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 4.6%
3,215,000 Modesto Irrigation District Financing Authority, Refunding Revenue Bonds, 10/06 at 102 AAA 3,551,675
Series A, 6.000%, 10/01/15
2,425,000 Northern California Power Agency, Hydroelectric Project Number One, 7/08 at 101 AAA 2,459,096
Revenue Bonds, 1998 Refunding Series A, 5.200%, 7/01/32
6,750,000 Turlock Irrigation District (California), Revenue Refunding Bonds, 7/02 at 100 AAA 7,100,055
Series 1992-A, 5.750%, 1/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 10.1%
1,250,000 City of Barstow, California, Certificates of Participation (1994 Wastewater 10/04 at 102 AAA 1,275,425
Reclamation Improvement Project), 5.250%, 10/01/18
3,530,000 Castaic Lake Water Agency (California), Refunding Revenue Certificates No Opt. Call AAA 4,232,964
of Participation (Water System Improvement Projects), Series 1994A,
8.000%, 8/01/04
2,975,000 Chino Basin Regional Financing Authority, Revenue Bonds, Series 1994 8/04 at 102 AAA 3,270,061
(Chino Basin Municipal Water District Sewer System Project),
6.000%, 8/01/16
7,000,000 City of San Diego, California, Certificates of Undivided Interest, 8/08 at 101 AAA 6,967,030
Series 1998, Net System Revenues of The Water Utility Fund,
5.000%, 8/01/21
2,900,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, 10/02 at 102 AAA 2,999,180
Series 1992, 5.500%, 10/01/15
4,000,000 South San Joaquin Irrigation District (San Joaquin County, California), 1/03 at 102 AAA 4,146,160
1993 Refunding Revenue Certificates of Participation (1987 Project and
1992 Project), 5.500%, 1/01/15
5,410,000 City of Tulare, California, 1996 Sewer Revenue Bonds, 5.750%, 11/15/21 11/06 at 102 AAA 5,833,387
- -----------------------------------------------------------------------------------------------------------------------------------
$ 260,715,000 Total Investments - (cost $259,656,778) - 98.9% 279,847,790
=============
Temporary Investments in Short-Term Municipal Securities - 0.1%
$ 300,000 California Health Facilities Financing Authority, Revenue Refunding Bonds VMIG-1 300,000
============= (Sutter/CHS), Variable Rate Demand Bonds, 3.100%, 7/01/22+
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 2,913,036
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $283,060,826
===================================================================================================================
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
Nuveen California Premium Income Municipal Fund (NCU)
February 28, 1999
(Unaudited)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations - 3.6%
$ 1,995,000 California State Public Works Board, Lease Revenue Bonds (Various 3/06 at 102 AAA $ 2,134,610
California Community College Projects), Series 1996A, 5.625%, 3/01/16
2,225,000 The Regents of the University of California, University of California 11/03 at 102 AAA 2,305,879
Housing System Revenue Bonds, Series A, 5.500%, 11/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care - 17.1%
5,150,000 California Health Facilities Financing Authority, Hospital Revenue Bonds 5/03 at 102 A- 5,341,323
(Downey Community Hospital), Series 1993, 5.750%, 5/15/15
4,000,000 California Statewide Communities Development Authority, Certificates of 8/02 at 102 A1 4,419,240
Participation (Cedars-Sinai Medical Center), 6.500%, 8/01/15
8,100,000 California Statewide Community Development Authority, Revenue No Opt. Call AAA 8,183,592
Refunding Bonds (Sherman Oaks Project), Series 1998A, 5.000%, 8/01/22
2,000,000 City of Loma Linda, California, Hospital Revenue Bonds (Loma Linda 12/03 at 102 BBB 2,112,240
University Medical Center Project), Series 1993-A, 6.000%, 12/01/06
1,355,000 Palomar Pomerado Health System, Insured Revenue Bonds, 11/03 at 102 AAA 1,375,271
Series 1993, 5.000%, 11/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 12.7%
2,000,000 California Statewide Communities Development Authority, Apartment 7/08 at 101 BBB 2,022,020
Development Revenue Refunding Bonds (Irvine Apartment Communities,
L.P.), Series 1998A, 5.250%, 5/15/25
8,285,000 The Community Redevelopment Agency of the City of Los Angeles, 6/05 at 105 AAA 9,547,883
California, Multifamily Housing Revenue Refunding Bonds,
1995 Series A (Angelus Plaza Project), 7.400%, 6/15/10
4,000,000 City of Stanton Multifamily Housing Revenue Bonds (Continental Gardens 8/07 at 102 AAA 4,268,160
Apartments), Series 1997, 5.625%, 8/01/29 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 9.0%
4,185,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 1997 2/07 at 102 AAA 4,445,265
Series A, 6.000%, 8/01/20 (Alternative Minimum Tax)
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 8/04 at 102 Aa 1,073,820
1994 Series A, 6.550%, 8/01/26
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 8/05 at 102 AAA 1,060,760
1994 Series F-3, 6.100%, 8/01/15 (Alternative Minimum Tax)
2,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/07 at 102 AAA 2,130,780
1997 Series B, 6.000%, 8/01/16 (Alternative Minimum Tax)
2,185,000 California Rural Home Mortgage Finance Authority, Single Family No Opt. Call AAA 2,515,241
Mortgage Revenue Bonds (Mortgage-Backed Securities Program),
1996 Series C, 7.500%, 8/01/27 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 3.7%
1,025,000 Calipatria Unified School District, Imperial County, California, 1996 8/06 at 102 AAA 1,110,516
Series A, General Obligation Bonds, 5.800%, 8/01/20
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, 8/11 at 103 AAA 3,454,860
Series 1997-A, 6.150%, 8/01/15
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 23.7%
4,500,000 Bonita Canyon Public Facilities Financing Authority (California), Community 9/99 at 103 N/R 4,381,155
Facilities District No. 98-1 Special Tax Bonds, Series 1998,
5.375%, 9/01/28
2,500,000 City of Carlsbad (California), Assessment District No. 96-1 (Rancho 5/99 at 103 N/R 2,476,550
Carillo), Limited Obligation Improvement Bonds, 5.500%, 9/02/28
2,000,000 Carson Redevelopment Agency (California), Redevelopment Project Area 10/03 at 102 BBB 2,120,240
No. 2, Refunding Tax Allocation Bonds, Series 1993, 5.875%, 10/01/09
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/Limited (continued)
$ 1,760,000 Carson Redevelopment Agency (California), Redevelopment Project Area 10/03 at 102 BBB+ $ 1,873,027
No. 1, Tax Allocation Bonds, Series 1993, 5.625%, 10/01/08
2,160,000 Community Redevelopment Financing Authority of the Community 6/03 at 102 BB 2,172,182
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)
1,000,000 Community Facilities District No. 88-1 of the City of Poway, California 8/08 at 102 N/R 1,079,180
(Parkway Business Center), Special Tax Refunding Bonds, Series 1998,
6.500%, 8/15/09
1,500,000 City of Richmond, Limited Obligation Refunding Improvement Bonds, 3/99 at 103 N/R 1,552,050
Reassessment District No. 855 (Atlas Road West and Interchange),
6.600%, 9/02/19
2,100,000 Sacramento City Finance Authority, Lease Revenue Refunding Bonds, No Opt. Call A+ 2,203,110
Series 1993 B, 5.400%, 11/01/20
8,750,000 Redevelopment Agency of the City of San Jose (California), Merged Area 8/08 at 101 AAA 8,402,975
Redevelopment Project, Tax Allocation Bonds, Series 1999,
4.750%, 8/01/29
San Marcos Public Facilities Authority (California), Refunding Revenue
Bonds, Series 1998:
1,500,000 5.800%, 9/01/18 9/08 at 101 N/R 1,509,375
2,000,000 5.800%, 9/01/27 9/08 at 101 N/R 2,004,140
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 4.1%
2,750,000 Airport Commission, City and County of San Francisco, California, 5/04 at 102 AAA 3,055,223
San Francisco International Airport, Second Series Revenue Bonds,
Issue 5, 6.500%, 5/01/24 (Alternative Minimum Tax)
2,000,000 Airports Commission, City and County of San Francisco, California, 5/06 at 102 AAA 2,128,420
San Francisco International Airport, Second Series Revenue Bonds,
Issue 10, 5.700%, 5/01/26 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 11.3%
1,500,000 ABAG Finance Authority for Nonprofit Corporations, Certificates of 11/03 at 102 AAA 1,537,425
Participation (Stanford University Hospital), California, Series 1993,
5.250%, 11/01/20
3,200,000 State Public Works Board of the State of California, Lease Revenue Bonds 10/04 at 102 A1*** 3,687,328
(The Trustees of the California State University), 1994 Series A (Various
California State University Projects), 6.375%, 10/01/14
(Pre-refunded to 10/01/04)
4,100,000 Imperial Irrigation District, California, Certificates of Participation 11/04 at 102 AAA 4,662,479
(1994 Electric System Project), 6.000%, 11/01/15
(Pre-refunded to 11/01/04)
1,000,000 City of Los Angeles, California, Wastewater System Revenue Bonds, 6/02 at 102 AAA 1,104,380
Series 1992-B, 6.250%, 6/01/12 (Pre-refunded to 6/01/02)
2,735,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds 12/05 at 100 AAA 3,155,643
(Little Company of Mary Hospital), 1985 Series A, 7.100%, 12/01/15
(Pre-refunded to 12/01/05)
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 13.3%
1,000,000 California Pollution Control Financing Authority, Pollution Control Revenue12/02 at 102 AAA 1,099,320
Bonds (Southern California Edison Company), 1992 Series B,
6.400%, 12/01/24 (Alternative Minimum Tax)
2,000,000 Department of Water and Power of The City of Los Angeles (California), 9/03 at 102 AAA 2,051,860
Electric Plant Refunding Revenue Bonds, Issue of 1993, 5.375%, 9/01/23
1,560,000 Northern California Power Agency, Hydroelectric Project Number One, No Opt. Call AAA 1,950,109
Revenue Bonds, 1992 Refunding Series A, 10.000%, 7/01/03
1,095,000 Sacramento Municipal Utility District (California), Electric Revenue Bonds, 5/03 at 102 A 1,159,364
1993 Series E, 5.700%, 5/15/12
4,705,000 State of California, Department of Water Resources, Central Valley 6/03 at 101 1/2 AA 5,003,015
Project, Water System Revenue Bonds, Series L, 5.750%, 12/01/13
1,000,000 Eastern Municipal Water District (Riverside County, California), Water 7/01 at 101 AAA 1,066,240
and Sewer Revenue Refunding Certificates of Participation,
Series 1991A, 6.300%, 7/01/20
1,000,000 City of Riverside, California, Water Revenue Bonds, Issue of 1991, No Opt. Call AA 1,139,230
9.000%, 10/01/01
3,100,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, 10/02 at 102 AAA 3,171,919
Series 1994, 5.375%, 10/01/16
- -----------------------------------------------------------------------------------------------------------------------------------
$ 116,020,000 Total Investments - (cost $115,595,460) - 98.5% 123,247,399
============
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 0.5%
$ 600,000 California Health Facilities Financing Authority, Revenue Refunding Bonds VMIG-1 $ 600,000
(Sutter/CHS), Variable Rate Demand Bonds, 3.100%, 7/01/22+
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 1,227,074
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $125,074,473
===================================================================================================================
* Optional Call Provisions: Dates (month and year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
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
February 28, 1999
(Unaudited)
<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) $148,310,334 $279,847,790 $123,247,399
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) -- 300,000 600,000
Cash -- -- 80,318
Receivables:
Interest 1,998,156 4,109,564 1,696,322
Investments sold -- 3,175,828 --
Other assets 18,240 36,272 7,379
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 150,326,730 287,469,454 125,631,418
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 134,577 329,271 --
Payable for investments purchased -- 2,988,860 --
Accrued expenses:
Management fees (note 6) 74,589 139,630 62,483
Other 87,093 102,520 114,262
Preferred share dividends payable 12,946 29,791 15,434
Common share dividends payable 448,577 818,556 364,766
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 757,782 4,408,628 556,945
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $149,568,948 $283,060,826 $125,074,473
====================================================================================================================================
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 6,408,176 12,593,984 5,744,587
====================================================================================================================================
Net asset value per Common share outstanding (net assets less Preferred shares
at liquidation value, divided by Common shares outstanding) $ 16.32 $ 14.93 $ 14.29
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Operations
Six Months ended February 28, 1999
(Unaudited)
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income (note 1) $4,031,811 $7,564,670 $3,386,004
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 482,287 902,685 404,546
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 7,094 10,728 5,288
Custodian's fees and expenses 20,082 26,877 19,553
Directors'/Trustees' fees and expenses (note 6) 691 1,307 581
Professional fees 8,811 8,993 8,582
Shareholders' reports - printing and mailing expenses 21,649 29,790 16,721
Stock exchange listing fees 8,018 12,031 2,661
Investor relations expense 5,914 10,630 4,881
Portfolio insurance expense 6,789 3,055 --
Other expenses 5,651 8,439 4,775
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 627,733 1,142,225 525,855
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,404,078 6,422,445 2,860,149
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 4) 588,405 1,148,927 925,275
Net change in unrealized appreciation or depreciation of investments (669,540) 105,750 (1,063,341)
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (81,135) 1,254,677 (138,066)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $3,322,943 $7,677,122 $2,722,083
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
(Unaudited)
<CAPTION>
Insured California Premium Income Insured California Premium Income 2 California Premium Income
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended Six Months Ended Year Ended
2/28/99 8/31/98 2/28/99 8/31/98 2/28/99 8/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 3,404,078 $ 6,617,904 $ 6,422,445 $ 12,373,288 $ 2,860,149 $ 5,619,112
Net realized gain from investment
transactions (notes 1 and 4) 588,405 5,603 1,148,927 798,085 925,275 539,431
Net change in unrealized appreciation
or depreciation of investments (669,540) 5,944,476 105,750 8,807,703 (1,063,341) 3,467,586
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from operations 3,322,943 12,567,983 7,677,122 21,979,076 2,722,083 9,626,129
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (2,642,599) (5,220,819) (4,912,099) (9,376,562) (2,181,614) (4,234,452)
Preferred shareholders (636,297) (1,439,964) (1,347,730) (3,086,048) (592,014) (1,384,389)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (3,278,896) (6,660,783) (6,259,829) (12,462,610) (2,773,628) (5,618,841)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 46,983 -- 244,382 -- 59,848 63,519
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 91,030 5,907,200 1,661,675 9,516,466 8,303 4,070,807
Net assets at beginning of period 149,477,918 143,570,718 281,399,151 271,882,685 125,066,170 120,995,363
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $149,568,948 $149,477,918 $283,060,826 $281,399,151 $125,074,473 $125,066,170
===================================================================================================================================
Balance of undistributed net
investment income at
end of period $ 442,596 $ 317,414 $ 718,873 $ 556,257 $ 331,111 $ 244,590
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<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, 1999, there were no such outstanding purchase commitments in any of
the Funds.
Investment 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:
Insured Insured
California California California
Premium Premium Premium
Income Income 2 Income
- --------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series Th -- 1,900 --
- --------------------------------------------------------------------------------
Total 1,800 3,800 1,720
================================================================================
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, 1999.
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. Actual results may differ
from those estimates.
<PAGE>
2. Fund Shares
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
Insured California Insured California
Premium Income Premium Income 2
- --------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
2/28/99 8/31/98 2/28/99 8/31/98
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 2,826 -- 16,277 --
<CAPTION>
California
Premium Income
- --------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
2/28/99 8/31/98
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 4,075 4,535
==============================================================================================================
</TABLE>
3. Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid April 1, 1999, to shareholders of record on
March 15, 1999, as follows:
Insured Insured
California California California
Premium Premium Premium
Income Income 2 Income
- --------------------------------------------------------------------------------
Dividend per share $.0700 $.0650 $.0635
================================================================================
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the six months ended
February 28, 1999, were as follows:
Insured Insured
California California California
Premium Premium Premium
Income Income 2 Income
- --------------------------------------------------------------------------------
Purchases:
Investments in municipal securities $16,113,962 $24,313,995 $29,455,408
Temporary municipal investments 8,600,000 7,800,000 11,800,000
Sales and Maturities:
Investments in municipal securities 14,748,484 20,946,096 29,691,532
Temporary municipal investments 9,400,000 8,450,000 11,200,000
================================================================================
At February 28, 1999, 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, 1998, 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:
Insured Insured
California California California
Premium Premium Premium
Income Income 2 Income
- --------------------------------------------------------------------------------
Expiration year:
2001 $ 4,397 $ -- $ --
2002 -- -- 982,894
2003 2,373,250 3,125,126 1,893,938
2004 228,384 4,345,091 2,742,449
2005 373,309 1,283,948 1,049,994
- --------------------------------------------------------------------------------
Total $2,979,340 $8,754,165 $6,669,275
================================================================================
<PAGE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 1999, were as follows:
Insured Insured
California California California
Premium Premium Premium
Income Income 2 Income
- -------------------------------------------------------------------------------
Gross unrealized:
appreciation $17,867,719 $20,236,211 $7,726,724
depreciation (34,322) (45,199) (74,785)
- -------------------------------------------------------------------------------
Net unrealized appreciation $17,833,397 $20,191,012 $7,651,939
===============================================================================
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:
Average Daily Net Asset Value Management Fee
- -------------------------------------------------------------------------------
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, 1999, net assets consisted of:
<TABLE>
<CAPTION>
Insured Insured
California California California
Premium Premium Premium
Income Income 2 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 64,082 125,940 57,446
Paid-in surplus 88,619,808 174,727,182 79,794,633
Balance of undistributed net investment income 442,596 718,873 331,111
Accumulated net realized gain (loss) from
investment transactions (2,390,935) (7,702,181) (5,760,656)
Net unrealized appreciation of investments 17,833,397 20,191,012 7,651,939
- ---------------------------------------------------------------------------------------------------------
Net assets $ 149,568,948 $ 283,060,826 $ 125,074,473
- ---------------------------------------------------------------------------------------------------------
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:
<CAPTION>
Investment Operations
Net
Realized/
Beginning Net Unrealized
Net Asset Investment Investment
Value Income Gain (Loss) Total
<S> <C> <C> <C> <C>
Insured California
Premium Income
Year Ended 8/31:
1999 (a) $16.31 $ .53 $ (.01) $ .52
1998 15.39 1.03 .92 1.95
1997 14.46 1.04 .93 1.97
1996 14.41 1.05 .02 1.07
1995 13.72 1.05 .73 1.78
1994 15.31 1.07 (1.61) (.54)
<CAPTION>
Insured California
Premium Income 2
<S> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) 14.82 .50 .11 .61
1998 14.06 .98 .77 1.75
1997 13.27 .99 .77 1.76
1996 13.01 1.00 .24 1.24
1995 12.75 1.02 .30 1.32
1994 14.57 1.02 (1.85) (.83)
<CAPTION>
California Premium Income
<S> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) 14.30 .50 (.03) .47
1998 13.60 .98 .70 1.68
1997 12.70 .99 .89 1.88
1996 12.43 .98 .27 1.25
1995 12.01 1.00 .47 1.47
1994 14.47 .97 (2.26) (1.29)
<PAGE>
<CAPTION>
Less Distributions
Net Net
Investment Investment Capital Capital
Income Income Gains Gains
To Common To Preferred To Common To Preferred
Shareholders Shareholders+ Shareholders Shareholders+ Total
Insured California
Premium Income
<S> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) $(.41) $(.10) $ -- $ -- $ (.51)
1998 (.81) (.22) -- -- (1.03)
1997 (.81) (.23) -- -- (1.04)
1996 (.79) (.23) -- -- (1.02)
1995 (.83) (.26) -- -- (1.09)
1994 (.85) (.20) -- -- (1.05)
<CAPTION>
Insured California
Premium Income 2
<S> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) (.39) (.11) -- -- (.50)
1998 (.75) (.24) -- -- (.99)
1997 (.74) (.23) -- -- (.97)
1996 (.74) (.24) -- -- (.98)
1995 (.79) (.27) -- -- (1.06)
1994 (.82) (.17) -- -- (.99)
<CAPTION>
California Premium
Income
<S> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) (.38) (.10) -- -- (.48)
1998 (.74) (.24) -- -- (.98)
1997 (.74) (.24) -- -- (.98)
1996 (.74) (.24) -- -- (.98)
1995 (.77) (.28) -- -- (1.05)
1994 (.82) (.17) (.02) -- (1.01)
<PAGE>
<CAPTION>
Total Returns
Organization and
Offering Costs and
Preferred Share Ending
Underwriting Net Asset Ending Based on Based on Net
Discounts Value Market Value Market Value** Asset Value**
<S> <C> <C> <C> <C> <C>
Insured California
Premium Income
Year Ended 8/31:
1999 (a) $ -- $16.32 $16.3750 5.38% 2.60%
1998 -- 16.31 15.9375 15.85 11.51
1997 -- 15.39 14.5000 10.69 12.30
1996 -- 14.46 13.8750 15.39 5.83
1995 -- 14.41 12.7500 4.67 11.68
1994 -- 13.72 13.0000 (10.88) (4.99)
<CAPTION>
Insured California
Premium Income 2
<S> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) -- 14.93 15.2500 5.66 3.39
1998 -- 14.82 14.8125 15.70 10.95
1997 -- 14.06 13.5000 14.36 11.82
1996 -- 13.27 12.5000 15.36 7.76
1995 -- 13.01 11.5000 3.55 8.80
1994 -- 12.75 11.8750 (15.01) (7.07)
<CAPTION>
California Premium
Income
<S> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) -- 14.29 14.3125 4.95 2.60
1998 -- 14.30 14.0000 12.54 10.83
1997 -- 13.60 13.1250 17.16 13.20
1996 -- 12.70 11.8750 17.51 8.15
1995 -- 12.43 10.7500 3.65 10.53
1994 (.16) 12.01 11.1250 (20.07) (11.51)
<PAGE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Expenses to Income to Expenses to Income to
Average Average Average Total Average Total
Ending Net Assets Net Assets Net Assets Net Assets Portfolio
Net Assets Applicable to Applicable to Including Including Turnover
(000) Common Shares++ Common Shares++ Preferred++ Preferred++ Rate
Insured California
Premium Income
<S> <C> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) $149,569 1.20%* 6.53%* .84%* 4.57%* 10%
1998 149,478 1.22 6.49 .85 4.50 2
1997 143,571 1.25 6.96 .85 4.74 9
1996 137,610 1.26 7.08 .85 4.81 9
1995 137,323 1.35 7.74 .89 5.10 24
1994 132,806 1.26 7.33 .85 4.94 29
<CAPTION>
Insured California
Premium Income 2
<S> <C> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) 283,061 1.22* 6.86* .81* 4.56* 7
1998 281,399 1.25 6.79 .82 4.46 13
1997 271,883 1.28 7.24 .83 4.67 24
1996 261,851 1.29 7.39 .83 4.73 27
1995 258,628 1.36 8.23 .84 5.11 24
1994 255,244 1.30 7.45 .84 4.80 24
<CAPTION>
California Premium
Income
<S> <C> <C> <C> <C> <C> <C>
Year Ended 8/31:
1999 (a) 125,074 1.29* 6.99* .84* 4.59* 24
1998 125,066 1.32 7.02 .86 4.57 21
1997 120,995 1.34 7.47 .86 4.76 44
1996 115,869 1.39 7.63 .88 4.83 25
1995 114,304 1.73 8.34 1.05 5.08 26
1994 69,710 1.47 7.37 .95 4.79 40
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on 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 for periods less than one year.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the six months ended February 28, 1999.
</TABLE>
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
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
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
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 offers a family of equity, balanced and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
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 to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
<PAGE>
Fund Information
Board of Directors/Trustees
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian, Transfer Agent
and Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Chicago, IL
Year 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, we have updated or replaced our trading, fund
management, and pricing systems at Nuveen - systems that directly affect our
investors and their financial advisers - to address Year 2000 concerns.
We continue to work closely with our transfer agent, custodian, firms through
whom we buy and sell portfolio securities, and other service partners to monitor
the Year 2000 readiness of their systems, while addressing other remaining
systems issues.
In addition, the Funds hold securities of issuers whose business operations
leave them susceptible to Year 2000 concerns. We seek to evaluate an issuer's
Year 2000 readiness as part of our initial and ongoing research of these
issuers. This is only one of the many factors considered in determining whether
to buy, sell, or continue holding a particular security. We anticipate that all
significant components of our Year 2000 review, repair, and testing program will
be complete by mid-1999. This includes appropriate industry-wide testing of
critical systems and receipt of satisfactory assurances from critical service
providers, vendors, and issuers regarding their Year 2000 readiness. We are also
making Year 2000 contingency plans to guide recovery efforts in the event that,
despite our remediation attempts, Year 2000 issues adversely affect the Funds.
Although we cannot give complete assurance at this time that the steps we take
will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds, we can assure you that we will take all reasonable steps
to prevent disruption of the services provided by your Fund.
Each fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the six-months ended February 28, 1999. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
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 investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
GRAPHIC:
NUVEEN 1898 1998
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
FAN-2-2-99
