Nuveen Exchange-Traded Funds
Providing tax-free income to help you live your dreams
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
SEMIANNUAL REPORT/FEBRUARY 28, 1995
Photo of man reading statement on porch.
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
8 Fund performance
9 Amendment to dividend reinvestment plan
10 Getting to know your fund
12 Portfolio of investments
23 Statement of net assets
24 Statement of operations
25 Statement of changes in net assets
27 Notes to financial statements
36 Financial highlights
<PAGE>
Dear shareholder
"Providing secure income remains our top priority"
Photo of Richard J. Franke, Chairman of the Board
The 12 months ended February 28, 1995, was one of the most difficult periods
the bond markets have experienced in decades. During the past 13 months, the
Federal Reserve Board raised interest rates seven times to fend off future
inflation, and the prices of all bonds and bond funds declined.
This time of unusually high volatility and uncertainty has brought home a
basic fact about fixed-income securities: interest rates are subject to
change, and sometimes the changes can have marked effects on net asset values.
At Nuveen, we believe that the best approach to tax-free investing in such
tumultuous times is to focus on quality and income dependability. By this
standard, in one of the most challenging periods the municipal market has seen
in years, your Fund continued to meet its objectives relatively well,
providing an attractive level of tax free income while holding portfolio
values in line with or higher than the market as a whole.
Looking first at income, current yields on share prices for the Funds
covered in this report ranged from 6.35% to 6.86%. To equal these yields, an
investor in the 42.5% combined federal and state income tax bracket would need
to earn at least 11.04% on taxable alternatives. This taxable yield is
difficult to achieve on investments of comparable quality.
The fact that your Fund is leveraged means that it will be somewhat more
sensitive to interest rate changes, both upward and downward, than unleveraged
funds. Because these funds hold bonds issued when interest rates were lower
and bond prices were correspondingly higher, they were more affected by
changing interest rates and could be expected to rebound more quickly if
interest rates decline.
As we have noted in past reports, the municipal market's supply and demand
fundamentals continue to be sound. To put these trends in perspective, in 1994
the supply of new municipal bonds declined by approximately 40% from 1993, a
trend expected to continue in 1995. At the same time, demand for
tax-free bonds, which has been subdued over the past year as a result of the
market's extraordinary volatility, seems to be resuming its long-term upward
trend, as investors recognize the exceptional yields tax-free bonds offer at
current price levels.
<PAGE>
This combination of lower supply, which may be reduced further by the high
volume of bond calls expected in 1995, and the likelihood of rising demand
should help support municipal bond prices in the long term.
Through our value approach to investing--a disciplined approach to security
selection and portfolio construction supported by one of the largest and most
respected research teams in the municipal industry--we will continue to pursue
the objectives of your Fund: attractive tax-free income and the enhancement of
portfolio value relative to the municipal bond market.
At Nuveen we are taking steps to increase the value our funds provide to
shareholders--steps reflected in the merger of two of our California funds in
November. Following shareholder approval, Nuveen California Premium Income
Fund 2 was merged into Nuveen California Premium Income Fund. Through the
merger of these funds, we expect to achieve management efficiencies and
improve liquidity for our shareholders.
In closing, I want to welcome new investors to the Nuveen California funds
and thank those who have been with us for some time. All of us at Nuveen
appreciate your confidence in our family of municipal bond funds, and we look
forward to helping you reach your tax-free investment objectives in the
future.
Sincerely,
Richard J. Franke
Chairman of the Board
April 17, 1995
<PAGE>
Answering your questions
We spoke recently with Tom Spalding, head of Nuveen's portfolio management
team, and asked him about developments in the municipal market and the outlook
for Nuveen's Tax-Free Exchange-Traded Funds.
Why did my Fund's net asset value decline over the past year?
These have been difficult times for all fixed-income investors. While the net
asset values of the funds covered in this report declined between 6% to 12%,
the Bond Buyer 40 index--a measure of municipal market performance--declined
by 8.5% over the past 12 months and 30-year Treasury bonds declined by 10%
during the year.
Viewed in that context, the Nuveen funds covered in this report held their
value well.
The fact that these funds are leveraged also increases the impact of
interest rate changes on the funds' net asset values per common share. Keep in
mind, however, that leverage also has enabled these funds to generate a higher
level of tax-free income than unleveraged funds.
Since my Fund is leveraged, will rising short-term interest rates affect my
dividends?
With the long-term bonds in these funds' portfolios yielding around 6.7% and
the average 7-day rate on short-term preferred shares averaging 3.8% over the
past three months, leverage has continued to provide an important income
benefit to our shareholders.
Although the funds' core dividends are set to provide relatively stable
income, steady increases in short-term interest rates will affect these
dividends over time.
In general, our leveraged funds' dividends continue to be highly attractive
compared with both unleveraged and taxable alternatives. All things
considered, prudent leverage can provide highly attractive returns in a
variety of market conditions to investors who understand its uses, benefits,
and characteristics, and are willing to accept somewhat higher short-term NAV
fluctuations in anticipation of greater long-range returns.
Will bond calls affect my income or the stability of the net asset value of my
shares?
In general, bond calls can mean some reduction in income for investors in both
individual bonds and bond funds, because bonds issued when interest rates were
higher need to be replaced with today's lower-yielding bonds. The effect of
bond calls, however, depends to some extent on the age of a fund and the types
of bonds in its portfolio.
Older funds hold high coupon bonds that may be subject to calls, but these
bonds also often are priced at premiums to their par values and to their call
prices. As we saw last year, this premium is a "cushion" that can soften the
effect of rising interest rates. As these bonds approach their call dates, the
premiums gradually approach the bonds' call prices, potentially reducing net
asset values.
Newer funds like the ones covered in this report, on the other hand,
primarily hold bonds priced at discounts to their par values. As a result,
these funds are more sensitive to interest rate changes, both up and down, but
they are unaffected by the declining premium values related to called bonds.
Of course, we manage all of our portfolios with calls in mind. As part of
our basic management process, we continually evaluate opportunities to sell
bonds approaching their call dates and to reinvest the proceeds in bonds we
think have potential to provide above-market returns.
<PAGE>
<TABLE>
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NPC
Nuveen funds set dividends with stability in mind, seeking a level that is
expected to be sustainable over time. The Fund recently adjusted the monthly
tax-free dividend following more than 12 months of relatively steady
dividends.
<CAPTION>
12 MONTH DIVIDEND HISTORY
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
3/94 $0.0705
4/94 $0.0705
5/94 $0.0705
6/94 $0.0705
7/94 $0.0705
8/94 $0.0715
9/94 $0.0715
10/94 $0.0715
11/94 $0.0715
12/94 $0.0715
1/95 $0.0715
2/95 $0.0675
<CAPTION>
FUND HIGHLIGHTS 2/28/95
<S> <C>
Yield 6.35%
Taxable-equivalent yield 11.04%
Annual total return on NAV 0.13%
Taxable-equivalent total return 4.46%
Share price $12.75
NAV $13.98
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
</TABLE>
<PAGE>
<TABLE>
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NCL
Nuveen funds set dividends with stability in mind, seeking a level that is
expected to be sustainable over time. The Fund recently adjusted the monthly
tax-free dividend following more than 12 months of relatively steady
dividends.
<CAPTION>
12 MONTH DIVIDEND HISTORY
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
3/94 $0.0650
4/94 $0.0650
5/94 $0.0650 $0.0150
6/94 $0.0650
7/94 $0.0650
8/94 $0.0670 $0.0150
9/94 $0.0670
10/94 $0.0670
11/94 $0.0670
12/94 $0.0670
1/95 $0.0670
2/95 $0.0650
<CAPTION>
FUND HIGHLIGHTS 2/28/95
<S> <C>
Yield 6.50%
Taxable-equivalent yield 11.30%
Annual total return on NAV -2.94%
Taxable-equivalent total return 1.50%
Share price $12.00
NAV $12.77
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
</TABLE>
<PAGE>
<TABLE>
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
NCU
In line with the Fund's objective of providing attractive, dependable tax-free
income, shareholders enjoyed 12 months of steady dividends plus supplemental
dividends totaling 2.5 cents per common share.
<CAPTION>
12 MONTH DIVIDEND HISTORY
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
3/94 $0.0650
4/94 $0.0650
5/94 $0.0650 $0.0125
6/94 $0.0650
7/94 $0.0650
8/94 $0.0650 $0.0125
9/94 $0.0650
10/94 $0.0650
11/94 $0.0650
12/94 $0.0650
1/95 $0.0650
2/95 $0.0650
<CAPTION>
FUND HIGHLIGHTS 2/28/95
<S> <C>
Yield 6.86%
Taxable-equivalent yield 11.93%
Annual total return on NAV -5.12%
Taxable-equivalent total return -0.61%
Share price $11.375
NAV $12.05
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
</TABLE>
Amendment to Dividend Reinvestment Plan
Effective August 1, 1995, your Fund's Dividend Reinvestment Plan will be
amended in order to enhance the ability of the Plan Agent to obtain the best
execution when making open-market purchases of Fund shares in connection with
the Plan. As of the effective date, the Plan Agent, United States Trust
Company of New York, may make Plan purchases in advance of the payment date of
the applicable Fund distribution, provided that settlement for such purchases
shall occur no earlier than the payment date for such distribution.
<PAGE>
Getting to know your fund
Yield
An exchange-traded fund's annualized monthly dividend on a given date (in the
case of this report, February 28, 1995) divided by its closing price per share
on that date.
Taxable equivalent yield
The return an investor subject to a given federal and state income tax rate
would need to obtain from a fully taxable investment to equal the fund's
stated annualized yield on share price. In this report, the combined tax rate
is assumed to be 42.5% for California shareholders, based on incomes of
$117,950-$214,928 for investors filing singly, $143,600-$256,500 for those
filing jointly.
Net Asset Value (NAV)
The market value of all securities and other assets held by an exchange-traded
fund, minus any liabilities. The NAV per share is the fund's net assets, less
the value of its preferred shares, divided by its total number of common
shares outstanding.
Total return on NAV
The percentage change in a fund's NAV per common share for a given period,
assuming reinvestment of all dividends and capital gains distributions, if
any.
Taxable equivalent total return
The total return an investor subject to a given state and federal income tax
rate would need to obtain from a fully taxable investment to equal the Fund's
stated total return on NAV.
Leverage
A fund structure that enhances the income produced for common shareholders by
a long-term municipal bond fund through the issuance of short-term preferred
shares. Preferred shareholders receive short-term tax-free income, while the
proceeds can be used to purchase additional long-term bonds, thus increasing
the portfolio's income for common shareholders.
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as are deemed advisable. No
shares were repurchased during the 6 months ended February 28, 1995. Any
future repurchases will be reported to shareholders in the next annual or
semiannual report.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
(Unaudited)
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC. (NPC)
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 3,725,000 California Housing Finance Agency, Multi-Unit
Rental, Alternative Minimum Tax,
6.625%, 2/01/24 2/03 at 102 A1 $ 3,708,089
4,000,000 California Pollution Control Finance Authority
(Southern California Edison Company), Alternative
Minimum Tax, 6.400%, 12/01/24 12/02 at 102 Aaa 4,013,880
4,000,000 California Statewide Community Development
Authority (Sutter Health), 6.125%, 8/15/22 8/02 at 102 Aaa 4,006,960
4,000,000 Chula Vista (San Diego Gas and Electric Company),
Alternative Minimum Tax, 6.400%, 12/01/27 12/02 at 102 A1 3,825,760
4,000,000 Contra Costa County Public Facilities Corporation,
Certificates of Participation, 8.200%, 7/01/08
(Pre-refunded to 7/01/96) 7/96 at 102 AAA 4,262,320
2,000,000 Cucamonga County Water District, Certificates of
Participation, 6.300%, 9/01/12 9/01 at 102 Aaa 2,051,540
3,000,000 Culver City Redevelopment Finance Authority, Tax
Allocation, 4.600%, 11/01/20 11/03 at 102 Aaa 2,393,490
6,000,000 Huntington Park Redevelopment Agency, Single
Family Mortgage, 8.000%, 12/01/19 No Opt. Call Aaa 7,454,760
3,960,000 Los Angeles Convention and Exhibition Center
Authority, Certificates of Participation,
7.375%, 8/15/18 (Pre-refunded to 8/15/99) 8/99 at 101 1/2 Aaa 4,388,036
2,300,000 Los Angeles Department of Water and Power,
Electric Plant, 6.000%, 2/01/28 2/02 at 102 AA 2,232,472
3,000,000 Los Angeles Department of Water and Power,
Waterworks, 6.000%, 7/15/32 7/02 at 102 AA 2,879,220
4,000,000 Los Angeles, FHA-Insured, 6.300%, 1/01/25 7/02 at 102 Aaa 3,988,880
Los Angeles Wastewater System:
3,250,000 4.700%, 11/01/17 11/03 at 102 Aaa 2,677,480
11,000,000 4.700%, 11/01/19 11/03 at 102 Aaa 8,975,340
4,000,000 7.100%, 2/01/21 (Pre-refunded to 2/01/99) 2/99 at 102 Aaa 4,372,200
4,000,000 Los Angeles County Metropolitan Transportation
Authority, 5.000%, 7/01/21 7/03 at 100 Aaa 3,412,600
5,000,000 Los Angeles County Metropolitan Transit Authority,
Sales Tax, 4.750%, 7/01/13 7/03 at 102 Aaa 4,290,250
4,000,000 Modesto Water System, Certificates of Participation,
6.250%, 10/01/22 10/01 at 102 Aaa 4,032,720
4,000,000 Norco Redevelopment Agency, Tax Allocation,
6.250%, 3/01/19 3/02 at 102 Aaa 4,037,960
5,135,000 Palmdale Community Redevelopment Agency,
8.000%, 3/01/16 No Opt. Call Aaa 6,359,338
3,500,000 Riverside Redevelopment Agency, Tax Allocation,
5.625%, 8/01/23 8/02 at 102 Aaa 3,276,630
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 6,220,000 Riverside County, Single Family Mortgage (GNMA),
Alternative Minimum Tax, 9.000%, 5/01/21 No Opt. Call Aaa $ 8,562,576
Sacramento Municipal Utility District:
2,000,000 5.750%, 8/15/13 8/02 at 100 Aaa 1,942,400
5,000,000 4.750%, 9/01/21 9/03 at 100 Aaa 4,073,450
2,135,000 San Buenaventura, Certificates of Participation,
5.500%, 1/01/17 1/03 at 100 Aaa 1,962,044
4,000,000 San Francisco Airports Commission, Alternative
Minimum Tax, 6.200%, 5/01/20 5/03 at 102 Aaa 3,979,360
9,500,000 San Jose Redevelopment Agency, Tax Allocation,
4.750%, 8/01/24 2/04 at 102 Aaa 7,667,925
1,485,000 San Jose Single Family Mortgage, 9.500%, 10/01/13 No Opt. Call Aaa 2,066,660
3,400,000 Santa Maria, Certificates of Participation,
5.500%, 8/01/21 8/02 at 102 Aaa 3,133,712
5,440,000 Santa Monica Wastewater (Hyperion Project),
4.500%, 1/01/15 1/04 at 102 Aaa 4,432,294
2,000,000 Suisun City Redevelopment Agency, Tax Allocation,
5.500%, 10/01/23 10/03 at 102 Aaa 1,838,440
2,670,000 University of California, 4.750%, 9/01/21 9/03 at 102 Aaa 2,163,368
3,425,000 Woodland Wastewater System, Certificates of
Participation, 5.500%, 3/01/18 3/03 at 100 Aaa 3,160,692
$135,145,000 Total Investments - (cost $127,989,524) - 97.8% 131,622,846
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.1%
$ 500,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series A, Variable Rate
Demand Bonds, 3.700%, 7/01/13t VMIG-1 500,000
400,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series 1991B, Variable
Rate Demand Bonds, 3.700%, 7/01/09t VMIG-1 400,000
500,000 California Health Facilities Financing Authority
(St. Francis Memorial Hospital), Series 1993B,
Variable Rate Demand Bonds, 3.750%, 11/01/19t P-1 500,000
$ 1,400,000 Total Temporary Investments - 1.1% 1,400,000
============
Other Assets Less Liabilities - 1.1% 1,533,390
Net Assets - 100% $134,556,236
============
<PAGE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 29 $118,977,305 90%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 2 5,111,692 4
PORTFOLIO OF A+ A1 2 7,533,849 6
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
TOTAL 33 $131,622,846 100%
<FN>
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue
Insurance, Secondary Market Insurance or Portfolio Insurance, or are backed by
an escrow or trust containing sufficient U. S. Government or U S. Government
agency securities to 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.
t The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
(Unaudited)
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC. (NCL)
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 3,250,000 California Educational Facilities Authority
(Pepperdine University), Pooled College and
University, 5.500%, 6/01/19 6/03 at 102 Aaa $ 2,994,745
5,500,000 California General Obligation, 5.750%, 11/01/17 11/02 at 102 Aaa 5,248,430
4,600,000 California Health Facilities Financing Authority
(Children's Hospital of San Diego),
5.750%, 7/01/23 7/03 at 102 Aaa 4,360,018
California Public Works Board, Department of
Corrections (State Prisons):
5,000,000 7.000%, 9/01/09 (Pre-refunded to 9/01/00) 9/00 at 102 Aaa 5,544,800
3,000,000 5.000%, 12/01/19 No Opt. Call Aaa 2,591,190
7,985,000 Alameda County (Santa Rita Jail), Certificates of
Participation, 5.700%, 12/01/14 12/03 at 102 Aaa 7,593,895
5,500,000 Anaheim Public Finance Authority (San Juan Unit 4
Project), 5.750%, 10/01/22 4/03 at 102 Aaa 5,188,315
5,200,000 Azusa Public Financing Authority, Water System,
5.500%, 7/01/20 7/03 at 102 Aaa 4,780,776
2,200,000 Bakersfield (Adventist Health System/West),
5.500%, 3/01/19 3/03 at 102 Aaa 2,026,926
5,565,000 Burbank Redevelopment Agency, Tax Allocation,
5.500%, 12/01/23 12/03 at 102 Aaa 5,079,231
3,530,000 Castaic Lake Water Agency, Certificates of
Participation, 8.000%, 8/01/04 No Opt. Call Aaa 4,206,525
3,000,000 Central Unified School District, General Obligation,
5.625%, 3/01/18 3/03 at 102 Aaa 2,824,980
Contra Costa Water District:
3,500,000 5.750%, 10/01/18 10/02 at 100 Aaa 3,360,245
5,000,000 5.750%, 10/01/20 10/02 at 102 Aaa 4,780,650
6,830,000 Contra Costa County (GNMA), 7.500%, 5/01/14 No Opt. Call Aaa 8,109,054
1,000,000 Industry General Obligation, 5.500%, 7/01/15 7/03 at 101 1/2 Aaa 938,260
1,000,000 Kern High School District, General Obligation,
5.600%, 8/01/15 8/03 at 102 Aaa 943,110
9,745,000 Lancaster Redevelopment Agency, Tax Allocation,
5.800%, 8/01/23 8/02 at 102 Aaa 9,390,185
2,000,000 Los Angeles Convention and Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 1,822,580
5,720,000 Los Angeles Wastewater System, 5.800%, 6/01/21 6/03 at 102 Aaa 5,488,912
2,550,000 Los Angeles County (Correctional Facilities),
Certificates of Participation, 6.000%, 9/01/15 9/00 at 102 Aaa 2,535,108
5,400,000 Los Angles County Metropolitan Transportation
Authority, 5.000%, 7/01/21 7/03 at 100 Aaa 4,607,010
9,445,000 Los Angeles County Transportation Commission,
Sales Tax, 5.750%, 7/01/18 7/01 at 100 Aaa 9,069,467
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 6,745,000 Marysville (Fremont-Reideout Health System),
5.650%, 1/01/19 1/04 at 102 Aaa $ 6,277,639
Northern California Power Agency, Hydroelectric
Project No. 1:
4,000,000 5.500%, 7/01/16 7/03 at 102 Aaa 3,733,360
2,250,000 5.500%, 7/01/23 7/02 at 100 Aaa 2,074,455
2,200,000 Northern California Transmission Agency,
5.500%, 5/01/14 5/03 at 102 Aaa 2,061,202
Orange County (John Wayne Airport),
Alternative Minimum Tax:
4,900,000 6.625%, 7/01/18 7/97 at 100 A1 4,480,217
3,575,000 5.500%, 7/01/18 7/03 at 102 Aaa 3,197,373
2,500,000 Oxnard Financing Authority, Wastewater System,
5.500%, 6/01/14 6/03 at 100 Aaa 2,339,175
9,000,000 Redlands Certificates of Participation,
5.800%, 9/01/17 9/03 at 102 Aaa 8,703,810
Redlands Unified School District, General
Obligation:
4,280,000 5.500%, 7/01/14 7/03 at 101 Aaa 4,004,111
4,430,000 5.500%, 7/01/18 7/03 at 101 Aaa 4,085,523
1,500,000 Riverside Redevelopment Agency, Tax Allocation
(Casa Blanca Project), 5.625%, 8/01/23 8/02 at 102 Aaa 1,404,270
4,320,000 Riverside County Single Family (GNMA),
Alternative Minimum Tax, 8.625%, 5/01/16 No Opt. Call AAA 5,675,141
4,850,000 Sacramento Municipal Utility District,
8.625%, 7/01/10 (Pre-refunded to 7/01/95) 7/95 at 102 AAA 5,019,362
6,290,000 San Francisco General Obligation, 5.500%, 6/15/11 6/01 at 102 Aaa 6,021,920
1,000,000 San Francisco Airports Commission, Alternative
Minimum Tax, 6.200%, 5/01/20 5/03 at 102 Aaa 994,840
San Francisco City and County Sewer System:
2,900,000 5.500%, 10/01/15 10/02 at 102 Aaa 2,742,762
2,000,000 5.375%, 10/01/22 10/02 at 102 Aaa 1,800,100
3,750,000 San Jose Airport, Alternative Minimum Tax,
5.700%, 3/01/18 3/03 at 102 Aaa 3,491,400
3,100,000 Santa Clara Electric System, 5.750%, 7/01/24 7/01 at 100 Aaa 2,956,408
7,400,000 Santa Cruz County Housing Authority, GNMA
(Meadowview Apartments), 6.125%, 5/20/28 5/03 at 102 Aaa 7,120,280
1,930,000 Santa Margarita/Dana Point Authority,
7.250%, 8/01/05 No Opt. Call Aaa 2,190,222
South Orange County Public Finance Authority
(Foothill Area):
4,000,000 8.000%, 8/15/08 No Opt. Call Aaa 4,835,440
3,680,000 8.000%, 8/15/09 No Opt. Call Aaa 4,440,877
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 4,000,000 South San Joaquin Irrigation District,
5.500%, 1/01/15 1/03 at 102 Aaa $ 3,708,280
6,500,000 Stockton Wastewater System, Certificates of
Participation, 5.750%, 9/01/23 9/03 at 101 Aaa 6,219,590
5,000,000 Stockton Housing, GNMA (O'Connor Woods),
5.600%, 3/20/28 3/03 at 102 AAA 4,433,950
7,500,000 Suisun City Redevelopment Agency, Tax Allocation,
5.900%, 10/01/23 10/03 at 102 Aaa 7,327,425
1,840,000 Torrance (Little Company of Mary Hospital),
7.100%, 12/01/15 (Pre-refunded to 12/01/05) 12/05 at 100 AAA 2,023,025
1,500,000 Tulare Sewer System, 5.700%, 11/15/18 11/03 at 102 Aaa 1,430,550
10,750,000 Turlock Irrigation District, 5.750%, 1/01/18 7/02 at 100 Aaa 10,326,880
4,900,000 University of California Housing System,
5.500%, 11/01/18 11/03 at 102 Aaa 4,539,507
6,350,000 University of California, 5.000%, 9/01/12 9/03 at 102 Aaa 5,636,005
5,000,000 Washington Township Hospital District,
5.250%, 7/01/23 7/03 at 102 Aaa 4,411,449
$250,460,000 Total Investments - (cost $251,362,741) - 95.1% 243,190,960
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.7%
$ 1,800,000 California Pollution Control Finance Authority,
Pollution Control (Exxon Project), Variable Rate
Demand Bonds, 3.800%, 12/01/12t A-1+ 1,800,000
6,300,000 Sacramento County Certificates of Participation
(Administration and Courthouse Project), Variable
Rate Demand Bonds, 3.700%, 6/01/20t VMIG-1 6,300,000
1,300,000 Santa Clara County Transit District, Refunding
Equipment Trust Certificates, Variable Rate
Demand Bonds, 3.850%, 6/01/15t VMIG-1 1,300,000
$ 9,400,000 Total Temporary Investments - 3.7% 9,400,000
============
Other Assets Less Liabilities - 1.2% 3,082,155
Net Assets - 100% $255,673,115
============
<PAGE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 55 $238,710,743 98%
RATINGS** A+ A1 1 4,480,217 2
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
TOTAL 56 $243,190,960 100%
<FN>
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue
Insurance, Secondary Market Insurance or Portfolio Insurance, or are backed by
an escrow or trust containing sufficient U. S. Government or U S. Government
agency securities to 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.
t The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
(Unaudited)
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND (NCU)
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
California Department of Water Resources (Central
Valley Project):
$ 910,000 5.500%, 12/01/22 6/01 at 100 AA $ 833,879
1,000,000 5.500%, 12/01/23 12/03 at 101 1/2 AA 915,850
California General Obligation:
2,000,000 6.250%, 9/01/12 No Opt. Call A1 2,051,520
2,000,000 5.150%, 10/01/19 10/03 at 102 A1 1,703,160
1,750,000 California Health Facilities Authority (Kaiser
Permanente), 5.450%, 10/01/13 10/01 at 101 Aa2 1,591,853
3,500,000 California Health Facilities Financing Authority
(Downey Community Hospital), 5.750%, 5/15/15 5/03 at 102 A- 3,120,110
1,000,000 California Housing Finance Agency, Alternative
Minimum Tax, 6.550%, 8/01/26 8/04 at 102 AA- 1,006,320
1,505,000 California Housing Finance Agency,
5.650%, 8/01/14 2/04 at 102 AA- 1,377,301
2,000,000 California Pollution Control Finance Authority
(Pacific Gas and Electric), Alternative Minimum
Tax, 5.875%, 6/01/23 6/03 at 102 A2 1,812,760
1,000,000 California Pollution Control Finance Authority
(Pacific Gas and Electric Company),
5.850%, 12/01/23 12/03 at 102 A2 902,620
2,000,000 California Pollution Control Finance Authority
(San Diego Gas and Electric Company), Alternative
Minimum Tax, 5.850%, 6/01/21 6/03 at 102 A1 1,820,720
3,200,000 California State Public Works Board (California
State University), 6.375%, 10/01/14 10/04 at 102 A- 3,176,768
2,000,000 California Statewide Communities Development
Authority (St. Joseph Health System),
5.500%, 7/01/23 7/03 at 102 AA 1,744,640
1,500,000 California Statewide Communities Development
Authority (Catholic Healthcare West Obligated
Group), Certificates of Participation,
5.500%, 7/01/23 7/03 at 102 Aaa 1,364,220
4,000,000 California Statewide Communities Development
Authority (Cedars-Sinai Medical Center),
6.500%, 8/01/15 8/02 at 102 A1 3,972,920
1,500,000 ABAG Finance Authority for Nonprofit Corporations
(Stanford University Hospital), Certificates of
Participation, 5.250%, 11/01/20 11/03 at 102 AA- 1,267,215
2,090,000 Anaheim Public Finance Authority (San Juan Unit
4 Project), 5.750%, 10/01/22 4/03 at 102 Aaa 1,971,560
Carson Redevelopment Agency Tax Allocation:
1,760,000 5.625%, 10/01/08 10/03 at 102 Baa1 1,600,086
2,000,000 5.875%, 10/01/09 10/03 at 102 BBB 1,890,360
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
Eastern Municipal Water District, Water and Sewer,
Certificates of Participation:
$ 1,000,000 6.300%, 7/01/20 7/01 at 101 Aaa $ 1,007,620
2,000,000 5.250%, 7/01/23 7/03 at 102 Aaa 1,764,580
1,175,000 Elsinore Valley Municipal Water District,
5.750%, 7/01/19 7/02 at 102 Aaa 1,110,305
2,000,000 Garden Grove Agency for Community Development,
Tax Allocation, 5.875%, 10/01/23 10/03 at 102 A 1,756,660
2,000,000 Huntington Beach Civic Center, Certificates of
Participation, 5.500%, 8/01/19 8/01 at 102 Aaa 1,822,560
2,000,000 Loma Linda University Medical Center,
6.000%, 12/01/06 12/03 at 102 BBB 1,898,740
2,160,000 Los Angeles Community Redevelopment Agency,
Multi-Family Housing, Alternative Minimum Tax,
5.750%, 12/01/13 6/03 at 102 A 1,976,854
3,000,000 Los Angeles Convention and Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 2,733,870
2,000,000 Los Angeles Department of Water and Power,
Electric Plant, 5.375%, 9/01/23 9/03 at 102 Aaa 1,797,700
1,000,000 Los Angeles Wastewater System, 5.200%, 11/01/21 11/03 at 102 Aaa 878,500
Los Angeles County Metropolitan Transportation
Authority, Sales Tax:
2,000,000 5.750%, 7/01/18 7/01 at 100 Aaa 1,920,480
2,690,000 5.625%, 7/01/18 7/03 at 102 Aaa 2,547,780
2,000,000 Metropolitan Water District of Southern California,
5.500%, 7/01/19 7/02 at 102 AA 1,839,180
980,000 Modesto Irrigation District Financing Authority,
Domestic Water Project, 5.500%, 9/01/22 9/02 at 100 Aaa 895,985
3,000,000 Moulton Niguel Water District, Certificates of
Participation, 5.300%, 9/01/23 9/03 at 102 Aaa 2,648,130
500,000 Northern California Power Agency, Hydroelectric
Project No. 1, 5.500%, 7/01/23 7/02 at 100 Aaa 460,990
3,150,000 Northern California Transmission Agency,
5.250%, 5/01/20 5/03 at 102 Aaa 2,796,380
2,000,000 Orange County Water District, Certificates of
Participation, 5.000%, 8/15/18 8/03 at 100 AA 1,647,520
3,250,000 Oxnard Financing Authority, Wastewater System,
5.250%, 6/01/20 6/03 at 100 Aaa 2,884,635
1,355,000 Palomar Pomerado Health System, 5.000%, 11/01/13 11/03 at 102 Aaa 1,190,083
1,600,000 Rancho Cucamonga Redevelopment Agency,
5.500%, 9/01/23 3/04 at 102 Aaa 1,470,976
3,000,000 Riverside Redevelopment Agency Tax Allocation,
5.625%, 8/01/23 8/02 at 102 Aaa 2,808,540
1,000,000 Riverside Water System, 9.000%, 10/01/01 No Opt. Call AA 1,204,740
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
$ 2,100,000 Sacramento City Finance Authority,
5.400%, 11/01/20 No Opt. Call Aa $ 1,885,338
Sacramento Municipal Utility District:
1,095,000 5.700%, 5/15/12 5/03 at 102 A- 1,047,477
1,370,000 5.250%, 11/15/20 11/03 at 102 Aaa 1,214,820
900,000 San Diego, Industrial Development (San Diego Gas
and Electric Company), 7.625%, 7/01/21 7/96 at 102 Aa3 930,618
2,750,000 San Francisco Airports Commission, Alternative
Minimum Tax, 6.500%, 5/01/24 5/04 at 102 Aaa 2,806,594
3,100,000 San Francisco City and County Sewer System,
5.375%, 10/01/16 10/02 at 102 Aaa 2,845,924
3,500,000 San Joaquin County, Certificates of Participation,
4.750%, 11/15/19 11/03 at 102 Aaa 2,877,384
1,150,000 Santa Monica-Malibu Unified School District,
General Obligation, 5.500%, 8/01/18 8/03 at 102 AA- 1,047,202
Southern California Public Power Authority:
1,975,000 5.500%, 7/01/20 7/02 at 100 AA- 1,796,934
1,250,000 5.250%, 7/01/20 7/03 at 102 Aaa 1,109,288
3,000,000 Torrance (Little Company of Mary Hospital),
7.100%, 12/01/15 (Pre-refunded to 12/01/05) 12/05 at 100 AAA 3,298,410
1,500,000 University of California (UCLA Central
Chiller/Cogeneration), 5.600%, 11/01/20 11/03 at 102 Aa 1,351,275
University of California Research Facilities:
2,000,000 5.750%, 9/01/18 9/01 at 102 A- 1,843,040
2,000,000 5.800%, 9/01/23 9/01 at 102 A- 1,833,840
2,225,000 University of California, Housing System,
5.500%, 11/01/18 11/03 at 102 Aaa 2,061,306
2,000,000 Walnut Creek (John Muir Medical Center),
Certificates of Participation, 5.000%, 2/15/16 2/04 at 102 Aaa 1,750,180
2,000,000 Washington Township Hospital District,
5.250%, 7/01/23 7/03 at 102 A 1,631,660
$115,490,000 Total Investments - (cost $112,965,697) - 95.0% 106,517,960
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.0%
$ 300,000 California Health Facilities Financing Authority
(Sutter Health), Series 1990B, Variable Rate
Demand Bonds, 3.600%, 3/01/20t VMIG-1 300,000
800,000 Santa Clara County Transit District, Refunding
Equipment Trust Certificates, Variable Rate
Demand Bonds, 3.850%, 6/01/15t VMIG-1 800,000
$ 1,100,000 Total Temporary Investments - 1.0% 1,100,000
============
Other Assets Less Liabilities - 4.0% 4,496,611
Net Assets - 100% $112,114,571
============
<PAGE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 27 $ 52,038,800 49%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 15 20,439,865 19
PORTFOLIO OF A+ A1 4 9,548,320 9
INVESTMENTS A, A- A, A2, A3 10 19,101,789 18
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 3 5,389,186 5
TEMPORARY
INVESTMENTS):
TOTAL 59 $106,517,960 100%
<FN>
* 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.
t The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
(Unaudited)
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market
value (note 1) $131,622,846 $243,190,960 $106,517,960
Temporary investments in short-term municipal
securities, at amortized cost (note 1) 1,400,000 9,400,000 1,100,000
Cash 75,331 113,181 3,238,303
Interest receivable 2,076,208 4,062,336 1,816,166
Other assets 6,760 18,411 26,078
------------ ------------ ------------
Total assets 135,181,145 256,784,888 112,698,507
------------ ------------ ------------
LIABILITIES
Accrued expenses:
Management fees (note 6) 65,768 123,936 54,843
Other 93,336 115,468 151,189
Preferred share dividends payable 33,444 54,818 5,065
Common share dividends payable 432,361 817,551 372,839
------------ ------------ ------------
Total liabilities 624,909 1,111,773 583,936
------------ ------------ ------------
Net assets (note 7) $134,556,236 $255,673,115 $112,114,571
============ ============ ============
Preferred shares, at liquidation value $ 45,000,000 $ 95,000,000 $ 43,000,000
============ ============ ============
Preferred shares outstanding 1,800 3,800 1,720
============ ============ ============
Common shares outstanding 6,405,350 12,577,707 5,735,977
============ ============ ============
Net asset value per Common share outstanding
(net assets less Preferred shares at liquidation value,
divided by Common shares outstanding) $ 13.98 $ 12.77 $ 12.05
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
Six months ended February 28, 1995
(Unaudited)
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $3,937,050 $ 7,497,893 $ 2,916,091
---------- ----------- -----------
Expenses:
Management fees (note 6) 409,766 772,723 291,992
Preferred shares--auction fees 55,788 117,773 45,746
Preferred shares--dividend disbursing agent fees 7,438 14,877 12,041
Shareholders' servicing agent fees and expenses 7,052 7,210 6,601
Custodian's fees and expenses 23,365 32,791 20,654
Directors'/Trustees' fees and expenses (note 6) 1,108 713 2,035
Professional fees 9,732 10,339 50,958
Shareholders' reports--printing and mailing expenses 8,927 20,637 88,848
Stock exchange listing fees 10,263 13,380 7,779
Investor relations expense 5,858 6,699 8,664
Portfolio insurance expense 9,631 2,820 --
Other expenses 8,788 12,745 13,440
---------- ----------- -----------
Total expenses 557,716 1,012,707 548,758
---------- ----------- -----------
Net investment income 3,379,334 6,485,186 2,367,333
---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) FROM INVESTMENTS
Net realized gain (loss) from investment transactions
(note 3) (542,315) (2,391,385) (1,341,350)
Net change in unrealized appreciation or depreciation
of investments 2,367,067 2,889,463 6,015,428
---------- ----------- -----------
Net gain from investments 1,824,752 498,078 4,674,078
---------- ----------- -----------
Net increase in net assets from operations $5,204,086 $ 6,983,264 $ 7,041,411
========= =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<CAPTION>
NPC NCL
6 months ended Year ended 6 months ended Year ended
2/28/95 8/31/94 2/28/95 8/31/94
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 3,379,334 $ 6,816,739 $ 6,485,186 $ 12,814,174
Net realized gain (loss) from investment transactions (542,315) (2,336,303) (2,391,385) (3,896,131)
Net change in unrealized appreciation or depreciation
of investments 2,367,067 (7,955,729) 2,889,463 (19,281,476)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from operations 5,204,086 (3,475,293) 6,983,264 (10,363,433)
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income:
Common shareholders (2,720,901) (5,416,885) (5,029,217) (10,264,081)
Preferred shareholders (811,044) (1,280,025) (1,628,713) (2,155,064)
In excess of accumulated net realized gains from
investment transactions:
Common shareholders -- -- -- --
Preferred shareholders -- -- -- --
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders (3,531,945) (6,696,910) (6,657,930) (12,419,145)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS (note 2)
Common shares:
Net proceeds from sale of Common shares issued
in acquisition of NCV (note 1) -- -- -- --
Net proceeds from Common shares issued to
shareholders due to reinvestment of distributions
from net investment income and from net
realized gains from investment transactions 78,499 166,287 103,295 78,755
Preferred shares, net proceeds from sale of shares -- -- -- --
------------ ------------ ------------ ------------
Net increase in net assets derived from capital
share transactions 78,499 166,287 103,295 78,755
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 1,750,640 (10,005,916) 428,629 (22,703,823)
Net assets at beginning of period 132,805,596 142,811,512 255,244,486 277,948,309
------------ ------------ ------------ ------------
Net assets at end of period $134,556,236 $132,805,596 $255,673,115 $255,244,486
============ ============ ============ ============
Balance of undistributed net investment income at end
of period $ 174,625 $ 327,236 $ 620,616 $ 793,360
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
<CAPTION>
NCU
6 months ended Year ended
2/28/95 8/31/94
<S> <C> <C>
OPERATIONS
Net investment income $ 2,367,333 $ 3,459,879
Net realized gain (loss) from investment transactions (1,341,350) (1,794,556)
Net change in unrealized appreciation or depreciation
of investments 6,015,428 (6,342,505)
------------ -----------
Net increase (decrease) in net assets from operations 7,041,411 (4,677,182)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income:
Common shareholders (1,812,195) (2,899,201)
Preferred shareholders (666,620) (598,618)
In excess of accumulated net realized gains from
investment transactions:
Common shareholders -- (82,885)
Preferred shareholders -- (14,774)
------------ -----------
Decrease in net assets from distributions
to shareholders (2,478,815) (3,595,478)
------------ -----------
CAPITAL SHARE TRANSACTIONS (note 2)
Common shares:
Net proceeds from sale of Common shares issued
in acquisition of NCV (note 1) 37,803,999 --
Net proceeds from Common shares issued to
shareholders due to reinvestment of distributions
from net investment income and from net
realized gains from investment transactions 37,811 79,976
Preferred shares, net proceeds from sale of shares -- 26,416,000
------------ -----------
Net increase in net assets derived from capital
share transactions 37,841,810 26,495,976
------------ -----------
Net increase (decrease) in net assets 42,404,406 18,223,316
Net assets at beginning of period 69,710,165 51,486,849
------------ -----------
Net assets at end of period $112,114,571 $69,710,165
============ ===========
Balance of undistributed net investment income at end
of period $ 51,241 $ 245,598
============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
At February 28, 1995, the California Funds (the "Funds") covered in this
report and their corresponding stock exchange symbols are Nuveen Insured
California Premium Income Municipal Fund, Inc. (NPC), Nuveen Insured
California Premium Income Municipal Fund 2, Inc. (NCL), and Nuveen California
Premium Income Municipal Fund (NCU). NPC and NCL are traded on the New York
Stock Exchange while NCU is traded on the American Stock Exchange.
The Funds are registered under the Investment Company Act of 1940 as
closed-end, diversified management investment companies.
On November 7, 1994, NCU acquired all of the net assets of NCV pursuant
to a plan of reorganization approved by the shareholders of the Funds on
October 21, 1994. The acquisition was accomplished by a tax-free exchange of
2,175,061 shares of NCU (valued at $37,803,999) for the 2,233,987 shares of
NCV outstanding on November 7, 1994. NCV's net assets at that date of
$37,803,999 included $7,676,463 of unrealized depreciation which was combined
with that of NCU. The combined net assets of NCU immediately after the
acquisition were $100,464,481.
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors/Trustees. Temporary
investments in securities that have variable rate and demand features
qualifying them as short-term securities are traded and valued at amortized
cost.
<PAGE>
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the transaction date. The
securities so purchased are subject to market fluctuation during this period.
The Funds have instructed the custodian to segregate assets in a separate
account with a current value at least equal to the amount of their purchase
commitments. At February 28, 1995, there were no such purchase commitments in
any of the Funds.
Interest Income
Interest income is determined on the basis of interest accrued and discount
earned, adjusted for amortization of premiums or discounts on long-term debt
securities when required for federal income tax purposes.
Income Taxes
The Funds intend to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies by distributing all of their net
investment income, in addition to any significant amounts of net realized
gains from investments, to shareholders. The Funds currently consider
significant net realized gains 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.
Dividends and Distributions to Shareholders
Net investment income is declared as a dividend monthly and payment is made or
reinvestment is credited to shareholder accounts after month-end. Net realized
gains from investment transactions are distributed to shareholders not less
frequently than annually only to the extent they exceed available capital loss
carryovers.
Distributions to shareholders of net investment income and net realized
capital gains are recorded on the ex-dividend date. The amount and timing of
such distributions are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
Accordingly, temporary over-distributions as a result of these differences may
result and will be classified as either distributions in excess of net
investment income or distributions in excess of accumulated net realized
capital gains, if applicable.
<PAGE>
<TABLE>
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend
rate on each Series may change every 7 days, as set by the Auction Agent. The
number of shares outstanding, by Series and in total, at February 28, 1995,
for each Fund is as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Number of Shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series Th -- 1,900 --
----- ----- -----
Total 1,800 3,800 1,720
===== ===== =====
</TABLE>
Insurance
NPC and NCL invest in municipal securities which are covered by insurance
guaranteeing the timely payment of principal and interest thereon or are
backed by an escrow or trust account containing sufficient U.S. Government or
U.S Government agency securities to 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.
<PAGE>
<TABLE>
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
<CAPTION>
NPC NCL
6 months ended Year ended 6 months ended Year ended
2/28/95 8/31/94 2/28/95 8/31/94
<S> <C> <C> <C> <C>
Common shares:
Shares issued in acquisition of NCV -- -- -- --
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions 6,408 11,512 9,285 13,598
----- ------ ----- ------
Net increase 6,408 11,512 9,285 13,598
===== ====== ===== ======
Preferred shares sold -- -- -- --
===== ====== ===== ======
<CAPTION>
NCU
6 months ended Year ended
2/28/95 8/31/94
<S> <C> <C>
Common shares:
Shares issued in acquisition of NCV 2,175,061 --
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions 3,601 197
--------- -----
Net increase 2,178,662 197
========= =====
Preferred shares sold -- 1,720
========= =====
</TABLE>
<PAGE>
<TABLE>
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the six months ended
February 28, 1995, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $22,298,222 $ 6,938,844 $ 5,215,475
Investments in municipal securities in acquisition
of NCV -- -- 44,829,011
Temporary municipal investments 22,100,000 36,200,000 13,100,000
SALES AND MATURITIES
Investments in municipal securities 22,519,501 14,514,830 8,513,458
Temporary municipal investments 21,400,000 27,600,000 12,800,000
=========== =========== ===========
At February 28, 1995, 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, 1994, the Funds' last fiscal year end, the Funds had unused
capital loss carryovers available for federal income tax purposes to be
applied against future security gains, if any. If not applied, the carryovers
will expire as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Expiration Year:
2001 $ 10,001 $ -- $ --
2002 2,336,303 3,896,131 2,970,339
---------- ---------- ----------
Total $2,346,304 $3,896,131 $2,970,339
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
4. DISTRIBUTIONS TO COMMON SHAREHOLDERS
On March 1, 1995, the Funds declared Common share dividend distributions from
their ordinary income which were paid April 3, 1995, to shareholders of record
on March 15, 1995, as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Dividend per share $.0675 $.0650 $.0650
====== ====== ======
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of
investments at February 28, 1995, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Gross unrealized:
Appreciation $ 4,885,272 $ 443,830 $ 645,083
Depreciation (1,251,950) (8,615,611) (7,092,820)
----------- ----------- ------------
Net unrealized appreciation (depreciation) $ 3,633,322 $(8,171,781) $ (6,447,737)
=========== =========== ============
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
("the Adviser"), a wholly owned subsidiary of The John Nuveen Company, each
Fund pays to the Adviser an annual management fee, payable monthly, at the
rates set forth below, which are based upon the average daily net asset value
of each Fund:
<CAPTION>
Average daily net asset value Management fee
<S> <C>
For the first $125,000,000 .65 of 1%
For the next $125,000,000 .6375 of 1
For the next $250,000,000 .625 of 1
For the next $500,000,000 .6125 of 1
For the next $1,000,000,000 .6 of 1
For net assets over $2,000,000,000 .5875 of 1
</TABLE>
<PAGE>
<TABLE>
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those Directors/Trustees who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
7. COMPOSITION OF NET ASSETS
At February 28, 1995, net assets consisted of:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Preferred shares, $25,000 stated value per share,
at liquidation value $ 45,000,000 $ 95,000,000 $ 43,000,000
Common shares, $.01 par value per share 64,054 125,777 57,360
Paid-in surplus 88,572,854 174,386,019 79,864,520
Balance of undistributed net investment income 174,625 620,616 51,241
Accumulated net realized gain (loss) from
investment transactions, net of taxes, if applicable (2,888,619) (6,287,516) (4,313,154)
Distributions in excess of accumulated net realized
gains from investment transactions -- -- (97,659)
Net unrealized appreciation or depreciation
of investments 3,633,322 (8,171,781) (6,447,737)
------------ ------------ ------------
Net assets $134,556,236 $255,673,115 $112,114,571
============ ============ ============
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
============ ============ ============
</TABLE>
<PAGE>
<TABLE>
8. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At February 28, 1995, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<CAPTION>
NPC NCL NCU
<S> <C> <C> <C>
Revenue Bonds:
Water / Sewer Facilities 24% 17% 17%
Health Care Facilities 3 7 18
Lease Rental Facilities 1 9 14
Electric Utilities 6 11 10
Educational Facilities 2 5 7
Housing Facilities 6 5 2
Pollution Control Facilities 6 -- 5
Transportation 3 5 3
Other 20 20 17
General Obligation Bonds -- 10 4
Escrowed Bonds 29 11 3
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
<PAGE>
Certain long-term and intermediate-term investments owned by the Funds are
covered by insurance issued by several private insurers or are backed by an
escrow or trust containing U.S. Government or U.S. Government agency
securities, either of which ensure the timely payment of principal and
interest in the event of default (100% for NPC, 100% for NCL, and 49% for
NCU). Such insurance or escrow, however, does not guarantee the market value
of the municipal securities or the value of any of the Funds' shares.
All of the temporary investments in short-term municipal securities have
credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
(Unaudited)
selected data for a common share outstanding throughout each period is as
follows:
<CAPTION>
Operating performance Dividends from net investment income
Net
realized &
Net asset Net unrealized
value invest- gain (loss) To To
beginning ment from invest- Common Preferred
of period income mentstt shareholders shareholderst
NPC
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 $13.720 $ .528 $ .284 $(.425) $(.127)
Year ended
8/31/94 15.310 1.066 (1.609) (.847) (.200)
11/19/92 to
8/31/93 14.050 .640 1.445 (.500) (.108)
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 12.750 .516 .034 (.400) (.130)
Year ended
8/31/94 14.570 1.020 (1.851) (.817) (.172)
3/18/93 to
8/31/93 14.050 .247 .655 (.192) (.023)
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 12.010 .469 .100 (.390) (.139)
Year ended
8/31/94 14.470 .973 (2.259) (.815) (.168)
6/18/93 to
8/31/93 14.050 .080 .438 -- --
<CAPTION>
Distributions from capital gains
Per
Common
share
market
To To Organiza- Net asset value
Common Preferred tion and value end end of
shareholders shareholderst offering costs of period period
NPC
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 $ -- $ -- $ -- $13.980 $12.750
Year ended
8/31/94 -- -- -- 13.720 13.000
11/19/92 to
8/31/93 -- -- (.217) 15.310 15.500
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 -- -- -- 12.770 12.000
Year ended
8/31/94 -- -- -- 12.750 11.875
3/18/93 to
8/31/93 -- -- (.167) 14.570 14.875
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 -- -- -- 12.050 11.375
Year ended
8/31/94 (.023)@@ (.004)@@ (.164) 12.010 11.125
6/18/93 to
8/31/93 -- -- (.098) 14.470 14.875
<PAGE>
<CAPTION>
Ratios/Supplemental data
Total
invest- Ratio of
ment net
return Total Net assets Ratio of investment
on return on end of expenses income Portfolio
market net asset period (in to average to average turnover
value** value** thousands) net assets@ net assets@ rate
NPC
<S> <C> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 1.54% 5.35% $134,556 .88*% 5.34*% 18%
Year ended
8/31/94 (10.88) (4.99) 132,806 .85 4.94 29
11/19/92 to
8/31/93 6.80 12.73 142,812 .88* 4.45* 20
<CAPTION>
NCL
<S> <C> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 4.69 3.68 255,673 .84* 5.40* 3
Year ended
8/31/94 (15.01) (7.07) 225,244 .84 4.80 24
3/18/93 to
8/31/93 .49 5.11 277,948 .86* 3.46* --
<CAPTION>
NCU
<S> <C> <C> <C> <C> <C> <C>
6 Mos. ended
2/28/95 6.13 3.96 112,115 1.22* 5.27* 6
Year ended
8/31/94 (20.07) (11.51) 69,710 .95 4.79 40
6/18/93 to
8/31/93 (.83) 2.99 51,487 1.19* 3.33* --
<FN>
* Annualized.
** 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.
t The amounts shown are based on Common share equivalents.
tt Net of taxes, if applicable.
@ Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
@@ The amounts shown reflect distributions in excess of capital gains.
</TABLE>
<PAGE>
The human bond
Photo of John Nuveen
At John Nuveen & Co. Incorporated, where our tax-free municipal bonds have
helped people live their dreams for nearly 100 years, we still believe our
strongest bond is human.TM
For almost a century, John Nuveen & Company has concentrated its resources and
expertise in one area: municipal bonds. We are one of the oldest and largest
investment banking firms specializing exclusively in municipal securities, and
we strive to be the best.
Our approach to managing our shareholders' investments endures. We maintain
a sharp focus on the needs of prudent investors and their families, offer
investments of quality, and then work to make them better by seeking out
opportunity. We hold to a dedicated belief in the importance of research. And
we sustain a commitment to sound financial management through value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we strive to provide our
shareholders with the attractive level of income they need to achieve their
personal goals and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen,
our strongest bond is human.
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
ETF2-APR 95
