NUVEEN EXCHANGE TRADED FUNDS
AUGUST 31, 1997
DEPENDABLE, TAX-FREE INCOME
TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NPC
NCL
NCU
California
Photo of family at poolside.
<PAGE>
Build Your Wealth Automatically
Nuveen offers a number of convenient ways to add to your portfolio and earn the
tax-free income you need to achieve your financial goals.
Nuveen exchange-traded funds dividend reinvestment plan
Your Nuveen exchange-traded fund allows you to conveniently reinvest dividends
and/or capital gains distributions in additional fund shares. If you do not
elect to reinvest distributions, all distributions are paid by check, or can be
deposited directly into your bank or brokerage account.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. You'll also benefit from dollar-cost averaging, a technique of
investing at regular intervals, which allows you to build a high-quality,
tax-free portfolio conveniently and cost effectively over time.
Easy and convenient
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
Income or capital gains taxes may be payable on dividends or distributions that
are reinvested.
How shares are purchased
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date; no interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase
(continued on inside back cover)
<PAGE>
Contents
2 DEAR SHAREHOLDER
4 ANSWERING YOUR QUESTIONS
6 NPC PERFORMANCE OVERVIEW
7 NCL PERFORMANCE OVERVIEW
8 NCU PERFORMANCE OVERVIEW
9 INDEPENDENT AUDITOR'S REPORT
10 PORTFOLIO OF INVESTMENTS
21 STATEMENT OF NET ASSETS
22 STATEMENT OF OPERATIONS
23 STATEMENT OF CHANGES IN NET ASSETS
24 NOTES TO FINANCIAL STATEMENTS
29 FINANCIAL HIGHLIGHTS
32 FUND INFORMATION
Ghosted Photo of family at poolside.
<PAGE>
Dear Shareholder
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
It's a pleasure to report to you on the performance of the Nuveen California
exchange-traded funds. For the fiscal year ended August 31, 1997, the value of
the funds covered in this report rose between 11.82% and 13.20% with tax-free
income dividends reinvested. Over this 12-month period, the total return
performance for these funds outpaced the 9.25% increase (with income reinvested)
produced by the Lehman Brothers Municipal Bond Index, which represents the
municipal bond market on an unmanaged basis. Each fund's individual performance
is detailed on pages 6-8.
In addition to solid returns, shareholders continued to enjoy very attractive
current yields generated by portfolios of quality bonds, which provide excellent
income for investors. As of August 31, 1997, shareholders were receiving annual
tax-free yields on net asset value that ranged from 5.51% to 5.62%. To match
these yields, investors in the combined 37.5% federal and California income tax
bracket would have had to earn at least 8.82% on taxable alternatives of
comparable quality.
These results were produced in an environment of continued economic expansion
and the lowest unemployment rates in more than two decades, a combination that
in the past has predictably been accompanied by an increase in inflation.
Current conditions, however, give every indication that inflation is well under
control. After tightening short-term interest rates by 0.25% in March, the
Federal Reserve demonstrated its confidence in the path the economy is taking by
maintaining the status quo at subsequent meetings over the past six months. In
the first half of the year, investors and the markets focused their attention on
fiscal issues such as the federal budget accord and tax relief measures,
including a reduction in the capital gains tax. As the economy continued to show
evidence of moderation, corporate earnings reports maintained their strength,
and interest rates fell over the past two quarters. All of this is positive
news. The net effect is that, although we have experienced some volatility, the
markets have performed very well this year.
<PAGE>
"In addition to solid returns, shareholders continued to enjoy very attractive
current yields generated by portfolios of quality bonds."
Recently, the need for diversification and a renewed emphasis on asset
allocation--as well as attractive tax-free yields--have sparked increased
interest in municipal bonds. The current level of the stock market reminds
investors to re-allocate profits to other segments of the market in order to
limit risk. Nuveen exchange-traded funds provide an excellent alternative, and
their current yields make them very attractive.
On behalf of everyone at Nuveen, I thank you for your confidence in us and our
family of investments. We will continue to strive to provide you with
high-quality investments that withstand the test of time. We look forward to
reporting to you again in six months.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
October 15, 1997
<PAGE>
Answering Your Questions
Photo of: Tom Spalding
Tom Spalding, Senior Investment Officer, talks about the municipal bond market
and offers insights into factors that affected fund performance over the past
year.
What factors influenced the performance of these funds over the past year?
Over the past 12 months, the municipal bond market has been characterized by low
volatility, falling interest rates, and stable trading ranges. The performance
of the Nuveen California funds continues to be influenced by their longer call
protection, duration and lower coupons, all of which are typical of the market
at the time of their inception in late 1992 and 1993. Another factor affecting
performance over the past year has been the low supply of new issues, which has
limited the selections available to our portfolio managers.
What strategic moves did you make to enhance portfolio value? Over the past
year, our focus was on quality, maturity, and call protection:
o With the yield difference between high and low quality bonds compressed to a
few basis points, we made the move to bonds with higher quality ratings. This
resulted in a very small sacrifice in yield, which was more than offset by the
virtual elimination of credit risk.
o We also took advantage of the price advantage offered by bonds with shorter
maturities by buying these bonds at competitive prices and selling them as the
market realized their inherent value. We then used the proceeds to buy
additional 30-year bonds.
o In addition, we found opportunities to purchase bonds that offered extended
call protection at prices similar to those of bonds with shorter calls. As
interest rates moved down, the bonds with longer call protection appreciated
more than those with shorter calls, enhancing the value of our portfolios.
<PAGE>
Where are you finding value in the current municipal bond market?
In our view, two areas of the municipal market currently offer opportunities to
add value to our portfolios: utilities and land-based financing. Changes and
consolidation in the utilities sector are creating opportunities for the
research-intensive bond buying at which Nuveen excels. We are currently focusing
on bonds issued by utility companies that we believe are strong enough to
weather the storm caused by California's deregulation of the industry. In
land-based financing, which provides funding for projects where future
improvements are, in many cases, expected to significantly increase the value of
the underlying property, we are taking advantage of the fact that this sector is
often overlooked by the market. While the bonds issued by these projects are not
highly rated, the lack of investors in this sector enables us to seek out those
that offer the best quality and value.
What is your outlook for the California municipal market?
The California economy has improved dramatically over the past year, brightening
the outlook for many sectors of the municipal market. However, we expect to see
the California market continue to take twists and turns in reaction to
legislative, regulatory, and taxation issues. Our strategy will remain focused
on a disciplined value approach to buying and selling bonds in order to boost
net asset values and create value for shareholders of the California Premium
Income funds. This includes taking advantage of tight credit spreads and
investing in sectors that have temporarily fallen out of favor. The current
turmoil in the utilities and hospital sectors due to consolidation and
deregulation should continue to present opportunities to find issues that are
underrated or undervalued by the market. Overall, we expect that the California
market will continue to be characterized by low supply, partly due to the
reduced needs of the utilities sector in the aftermath of deregulation.
<PAGE>
Nuveen Insured California Premium Income Municipal Fund, Inc.
August 31, 1997 Annual Report
Insured California
Premium Income (NPC)
Performance Overview
Fund Highlights
- ------------------------------------------------------
Inception Date 11/92
- ------------------------------------------------------
Share Price 14 1/2
- ------------------------------------------------------
Net Asset Value $15.39
- ------------------------------------------------------
Current Yield on NAV 5.59%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal Only)(1) 8.10%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal and State)(1) 8.94%
- ------------------------------------------------------
Annualized Total Return (at NAV)
- -----------------------------------------------------
1-Year 12.30%
- -----------------------------------------------------
3-Year 9.88%
- -----------------------------------------------------
Since Inception 7.63%
- -----------------------------------------------------
Taxable Equivalent Total Return(2)
- -----------------------------------------------------
1-Year 15.75%
- -----------------------------------------------------
3-Year 13.39%
- -----------------------------------------------------
Since Inception 11.03%
- -----------------------------------------------------
1 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the after-tax yield of the Nuveen fund. The federal only rate is
based on the current yield and a federal tax rate of 31%. The rate shown for
federal and state highlights the added value of owning shares that are also
exempt from state taxes. It is based on a combined federal and state tax rate
of 37.5%.
2 Taxable equivalent total return is based on the one-year 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.
Pie Charts:
Credit Quality
AAA 94%
A 6%
Diversification
General Obligation 5%
Escrowed Bonds 32%
Transportation 4%
Water & Sewer 20%
Housing 7%
Health Care 3%
Pollution Control 6%
Other 18%
Utilities 5%
Dividend History
Sept 1996 0.0675
Oct. 1996 0.0675
Nov. 1996 0.0675
Dec. 1996 0.0675
Jan. 1997 0.0675
Feb. 1997 0.0675
Mar. 1997 0.0675
Apr. 1997 0.0675
May 1997 0.0675
June 1997 0.0675
July 1997 0.0675
Aug. 1997 0.0675
<PAGE>
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
August 31, 1997 Annual Report
Insured California
Premium Income 2 (NCL)
Performance Overview
Fund Highlights
- ------------------------------------------------------
Inception Date 3/93
- ------------------------------------------------------
Share Price 13 1/2
- ------------------------------------------------------
Net Asset Value $14.06
- ------------------------------------------------------
Current Yield on NAV 5.51%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal Only)(1) 7.99%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal and State)(1) 8.82%
- ------------------------------------------------------
Annualized Total Return (at NAV)
- ------------------------------------------------------
1-Year 11.82%
- ------------------------------------------------------
3-Year 9.42%
- ------------------------------------------------------
Since Inception 5.70%
- ------------------------------------------------------
Taxable Equivalent Total Return(2)
- ------------------------------------------------------
1-Year 15.27%
- ------------------------------------------------------
3-Year 13.02%
- ------------------------------------------------------
Since Inception 9.11%
- ------------------------------------------------------
1 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the after-tax yield of the Nuveen fund. The federal only rate is
based on the current yield and a federal tax rate of 31%. The rate shown for
federal and state highlights the added value of owning shares that are also
exempt from state taxes. It is based on a combined federal and state tax rate
of 37.5%.
2 Taxable equivalent total return is based on the one-year 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.
Pie Charts:
Credit Quality
AAA - 100%
Diversification
General Obligation 11%
Escrowed Bonds 12%
Housing 6%
Transportation 5%
Education 13%
Water & Sewer 13%
Lease Rental 13%
Health Care 4%
Utilities 6%
Other 17%
Dividend History
Sept 1996 0.062
Oct. 1996 0.062
Nov. 1996 0.062
Dec. 1996 0.062
Jan. 1997 0.062
Feb. 1997 0.062
Mar. 1997 0.062
Apr. 1997 0.062
May 1997 0.062
June 1997 0.062
July 1997 0.062
Aug. 1997 0.062
<PAGE>
Nuveen California Premium Income Municipal Fund
August 31, 1997 Annual Report
California Premium Income (NCU)
Performance Overview
Fund Highlights
- ------------------------------------------------------
Inception Date 6/93
- ------------------------------------------------------
Share Price 13 1/8
- ------------------------------------------------------
Net Asset Value $13.60
- ------------------------------------------------------
Current Yield on NAV 5.62%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal Only)(1) 8.14%
- ------------------------------------------------------
Taxable Equivalent Yield (Federal and State)(1) 8.99%
- ------------------------------------------------------
Annualized Total Return (at NAV)
- ------------------------------------------------------
1-Year 13.20%
- ------------------------------------------------------
3-Year 10.60%
- ------------------------------------------------------
Since Inception 5.12%
- ------------------------------------------------------
Taxable Equivalent Total Return(2)
- ------------------------------------------------------
1-Year 16.78%
- ------------------------------------------------------
3-Year 14.33%
- ------------------------------------------------------
Since Inception 8.63%
- ------------------------------------------------------
1 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the after-tax yield of the Nuveen fund. The federal only rate is
based on the current yield and a federal tax rate of 31%. The rate shown for
federal and state highlights the added value of owning shares that are also
exempt from state taxes. It is based on a combined federal and state tax rate
of 37.5%.
2 Taxable equivalent total return is based on the one-year 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.
Pie Charts:
Credit Quality
AAA 64%
AA 9%
A 18%
BBB/NR 9%
Diversification
General Obligation 10%
Escrowed Bonds 7%
Transportation 4%
Housing 22%
Education 10%
Health Care 10%
Water & Sewer 14%
Other 10%
Utilities 13%
Dividend History
Sept 1996 0.0615
Oct. 1996 0.0615
Nov. 1996 0.0615
Dec. 1996 0.0615
Jan. 1997 0.0615
Feb. 1997 0.0615
Mar. 1997 0.0615
Apr. 1997 0.0615
May 1997 0.0615
June 1997 0.0615
July 1997 0.0615
Aug. 1997 0.0615
<PAGE>
Independent Auditor's Report
THE BOARDS OF DIRECTORS, TRUSTEES AND SHAREHOLDERS
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Insured California Premium Income Municipal
Fund, Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc. and
Nuveen California Premium Income Municipal Fund as of August 31, 1997, and the
related statements of operations, changes in net assets and the financial
highlights for the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
August 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen Insured
California Premium Income Municipal Fund 2, Inc. and Nuveen California Premium
Income Municipal Fund at August 31, 1997, and the results of their operations,
changes in their net assets and financial highlights for the periods indicated
therein in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
October 16, 1997
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Insured California Premium
Income Municipal Fund, Inc. (NPC)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATIONAL FACILITIES - 1.7%
$ 2,670,000 The Regents of the University of California, Refunding Revenue Bonds (Multiple Purpose 9/03 at 102 Aaa $2,388,529
Projects), Series B, 4.750%, 9/01/21
- ----------------------------------------------------------------------------------------------------------------------------------
ESCROWED BONDS - 31.1%
6,000,000 Huntington Park Redevelopment Agency, Single Family Residential Mortgage Revenue No Opt. Call Aaa 8,038,980
Refunding Bonds, 1986 Series A, 8.000%, 12/01/19
4,000,000 The City of Los Angeles, California, Wastewater System Revenue Bonds, Series 1991-A, 2/99 at 102 Aaa 4,252,600
7.100%, 2/01/21 (Pre-refunded to 2/01/99)
3,750,000 City of Los Angeles, California, Wastewater System Revenue Bonds, Series 1991-D, 12/00 at 102 Aaa 4,113,975
6.700%, 12/01/21 (Pre-refunded to 12/01/00)
4,015,000 Los Angeles County Transportation Commission (California), Sales Tax Revenue Bonds, 7/01 at 102 Aaa 4,450,989
Series 1991-A, 6.750%, 7/01/18 (Pre-refunded to 7/01/01)
5,135,000 Community Redevelopment Agency of the City of Palmdale, Restructured Single Family No Opt. Call Aaa 6,731,882
Mortgage Revenue Bonds, Series 1986A (Escrowed to Maturity), 8.000%, 3/01/16
(Alternative Minimum Tax)
4,450,000 County of Riverside Asset Leasing Corporation, Leasehold Revenue Bonds, 1989 Series A 6/99 at 102 Aaa 4,776,853
(County of Riverside Hospital Project), 7.200%, 6/01/10 (Pre-refunded to 6/01/99)
6,220,000 County of Riverside, California, Single Family Mortgage Revenue Bonds (GNMA No Opt. Call Aaa 9,096,874
Mortgage-Backed Securities Program), Issue A of 1987, 9.000%, 5/01/21 (Alternative
Minimum Tax)
1,000,000 City and County of San Francisco, General Purpose Sewer Revenue Bonds, Series 1991, 10/99 at 102 Aaa 1,068,930
6.500%, 10/01/21 (Pre-refunded to 10/01/99)
1,485,000 City of San Jose, California, Single Family Mortgage Revenue Bonds, 1985 Series A, No Opt. Call Aaa 2,088,415
9.500%, 10/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL OBLIGATION BONDS - 4.8%
3,000,000 State of California, Various Purpose General Obligation Bonds, 6.500%, 9/01/06 No Opt. Call Aaa 3,425,910
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, Series 1997-A, 8/11 at 103 Aaa 3,449,670
6.500%, 8/01/19
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE FACILITIES - 2.9%
4,000,000 California Statewide Communities Development Authority, Sutter Health Obligated Group, 8/02 at 102 Aaa 4,159,240
Certificates of Participation, 6.125%, 8/15/22
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSING FACILITIES - 7.1%
2,300,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 1997 Series A, 2/07 at 102 Aaa 2,353,337
6.000%, 8/01/20 (Alternative Minimum Tax)
3,650,000 California Housing Finance Agency, Multi-Unit Rental Housing Revenue Bonds, 1992 2/03 at 102 A1 3,787,021
Series A, 6.625%, 2/01/24 (Alternative Minimum Tax)
4,000,000 The City of Los Angeles (California), Tax-Exempt Mortgage Revenue Refunding Bonds, 7/02 at 102 Aaa 4,119,400
Series 1993A (FHA Insured Mortgage Loans - Section 8 Assisted Projects),
6.300%, 1/01/25
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE RENTAL - 1.5%
$ 2,135,000 City of San Buenaventura, California, 1993 Refunding, Certificates of 1/03 at 100 Aaa $2,124,773
Participation (Capital Improvements Project), 5.500%, 1/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER REVENUE - 14.7%
4,000,000 Los Angeles County, Metropolitan Transportation Authority (California), Proposition A, 7/03 at 100 Aaa 3,750,960
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 Tax Revenue 7/03 at 102 Aaa 4,626,500
Second Senior Bonds, Series 1993-B, 4.750%, 7/01/13
4,000,000 Norco Redevelopment Agency, Norco Redevelopment Project Area No. One, 1992 3/02 at 102 Aaa 4,265,200
Refunding Tax Allocation Bonds, 6.250%, 3/01/19
9,500,000 Redevelopment Agency of the City of San Jose, Merged Area Redevelopment Project, 2/04 at 102 Aaa 8,443,885
Tax Allocation Bonds, Series 1993, 4.750%, 8/01/24
- -----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL FACILITIES - 6.0%
4,000,000 California Pollution Control Financing Authority, Pollution Control Revenue Bonds 12/02 at 102 Aaa 4,269,400
(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 Gas and Electric 12/02 at 102 A1 4,285,640
Company), 1992 Series A, 6.400%, 12/01/27 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.6%
4,000,000 Airports Commission, City and County of San Francisco, California, San Francisco 5/03 at 102 Aaa 4,178,040
International Airport, Second Series Refunding Revenue Bonds, Issue 3 Bonds,
6.200%, 5/01/20 (Alternative Minimum Tax)
1,000,000 Airports Commission of the City and County of San Francisco, California, San Francisco 5/04 at 101 Aaa 1,042,930
International Airport, Second Series Revenue Bonds, Issue 8B, 6.000%, 5/01/15
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.5%
2,000,000 Sacramento Municipal Utility District (California), Electric Revenue Refunding Bonds, 8/02 at 100 Aaa 2,050,140
1992 Series A, 5.750%, 8/15/13
5,000,000 Sacramento Municipal Utility District (California), Electric Revenue Refunding Bonds, 9/03 at 100 Aaa 4,472,900
1993 Series G, 4.750%, 9/01/21
- -----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER FACILITIES - 19.7%
2,000,000 Cucamonga County Water District (San Bernardino County, California), Certificates of 9/01 at 102 Aaa 2,150,320
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 2,938,943
11,000,000 4.700%, 11/01/19 11/03 at 102 Aaa 9,840,820
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER/SEWER FACILITIES - continued
$ 5,440,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion Project), 1993 1/04 at 102 Aaa $4,831,046
Refunding Series, 4.500%, 1/01/15
5,000,000 Wheeler Ridge - Maricopa Water Storage District (Kern County, California), 1996 Water 11/06 at 102 Aaa 5,171,700
Refunding Bonds, 5.700%, 11/01/15
3,425,000 City of Woodland (Yolo County, California), Certificates of Participation (1992 3/03 at 100 Aaa 3,408,320
Wastewater
System Refunding Project), 5.500%, 3/01/18
- ----------------------------------------------------------------------------------------------------------------------------------
$133,425,000 Total Investments - (cost $127,595,661) - 97.6% 140,154,122
============----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 1.3%
$ 500,000 California Health Facilities Financing Authority, Insured Revenue Bonds (Sutter/CHS), VMIG-1 500,000
Variable Rate Demand Bonds, 3.400%, 7/01/22+
500,000 California Pollution Control Financing Authority, Pollution Control Revenue Bonds (Shell VMIG-1 500,000
Oil Company Project), 1991 Series A, Variable Rate Demand Bonds, 3.350%, 10/01/08+
300,000 Irvine Ranch Water District, Variable Rate Demand Bonds, 3.350%, 6/01/15+ VMIG-1 300,000
500,000 Orange County, Irvine Coast Assessment District, Series 88-1 Variable Rate Demand VMIG-1 500,000
Bonds, 3.550%, 9/02/18+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 1,800,000 Total Temporary Investments - 1.3% 1,800,000
===========------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 1,616,596
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $143,570,718
- -----------------------------------------------------------------------------------------------------------------------============
<FN>
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow or
trust containing sufficient U.S. Government or U.S. Government agency
securities, any of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent auditors): 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.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Nuveen Exchange Traded Funds
August 31, 1997 Annual Report
Portfolio of Investments
Nuveen Insured California Premium
Income Municipal Fund 2, Inc. (NCL)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATIONAL FACILITIES - 13.0%
$ 5,000,000 California Educational Facilities Authority, Revenue Bonds (University of San 10/06 at 102 Aaa $5,251,850
Francisco), Series 1996, 6.000%, 10/01/26
10,050,000 California Educational Facilities Authority, Revenue Bonds (Santa Clara University), 9/06 at 102 Aaa 10,280,346
Series 1991, 5.750%, 9/01/21
California State University, Housing System Revenue Bonds, Series 1996:
2,655,000 5.700%, 11/01/13 11/05 at 102 Aaa 2,763,324
2,000,000 5.800%, 11/01/17 11/05 at 102 Aaa 2,072,900
3,000,000 The Regents of the University of California, Refunding Revenue Bonds (1989 Multiple No Opt. Call Aaa 3,755,070
Purpose Projects), Series C, 10.000%, 9/01/02
4,900,000 The Regents of the University of California, University of California, Housing System 11/03 at 102 Aaa 4,905,978
Revenue Bonds, Series A, 5.500%, 11/01/18
6,350,000 The Regents of the University of California, Refunding Revenue Bonds (Multiple Purpose 9/03 at 102 Aaa 6,251,258
Projects), Series C, 5.000%, 9/01/12
- -----------------------------------------------------------------------------------------------------------------------------------
ESCROWED BONDS - 11.4%
3,000,000 State Public Works Board of the State of California Lease Revenue Bonds (Department 9/00 at 102 Aaa 3,299,910
of Corrections), 1990 Series A (State Prison - Madera County), 7.000%, 9/01/09
(Pre-refunded to 9/01/00)
8,000,000 Galt Community Facility District, Special Tax #88-1, 7.700%, 9/01/19 (Pre-refunded 9/98 at 102 Aaa 8,461,680
to 9/01/98)
1,000,000 Kern High School District (County of Kern, California), General Obligation Bonds, 8/03 at 102 Aaa 1,045,860
Election of 1990, Series D, 5.600%, 8/01/15
2,000,000 Transmission Agency of Northern California, California - Oregon Transmission 5/00 at 101 1/2 Aaa 2,174,020
Project, Revenue Bonds, 1990 Series A, 7.000%, 5/01/24 (Pre-refunded to 5/01/00)
4,320,000 County of Riverside, California, Single Family Mortgage Revenue Bonds (GNMA
Mortgage-Backed Securities Program), Issue B of 1987, 8.625%, 5/01/16 (Alternative No Opt. Call Aaa 5,927,818
Minimum Tax)
5,000,000 Riverside County Transportation Commission, Sales Tax Revenue Bonds, 1991 Series A 6/01 at 102 Aaa 5,490,950
(California), 6.500%, 6/01/09 (Pre-refunded to 6/01/01)
2,500,000 City and County of San Francisco, General Purpose Sewer Revenue Bonds, Series 1991, 10/99 at 102 Aaa 2,672,325
6.500%, 10/01/21 (Pre-refunded to 10/01/99)
1,765,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds (Little Company of Mary 12/05 at 100 AAA 1,970,764
Hospital), 1985 Series A, 7.100%, 12/01/15 (Pre-refunded to 12/01/05)
- -----------------------------------------------------------------------------------------------------------------------------------
GENERAL OBLIGATION BONDS - 10.4%
2,100,000 State of California, General Obligation Bonds, Veterans Bonds, Series BA, No Opt. Call Aaa 2,357,943
7.000%, 8/01/02
State of California, Various Purpose General Obligation Bonds:
3,000,000 6.500%, 9/01/06 No Opt. Call Aaa 3,425,910
1,000,000 6.750%, 2/01/08 No Opt. Call Aaa 1,163,760
5,500,000 5.750%, 11/01/17 11/02 at 102 Aaa 5,629,140
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATION BONDS - continued
$ 2,575,000 Calipatria Unified School District, Imperial County, California, 1996 Series A, General 8/06 at 102 Aaa $2,660,876
Obligation Bonds, 5.625%, 8/01/13
3,000,000 Central Unified School District (Fresno County, California), General Obligation Bonds, 3/03 at 102 Aaa 3,039,360
Election 1992, 5.625%, 3/01/18
3,000,000 Escondido Union High School District, San Diego County, California, General Obligation 11/06 at 102 Aaa 3,186,330
Bonds (1996 Election), 5.700%, 11/01/10
1,000,000 City of Los Angeles, California, Unified School District, General Obligation Bonds, No Opt. Call Aaa 1,094,030
1997 Series A, 6.000%, 7/01/15
3,290,000 City and County of San Francisco, General Obligation Bonds, Various Purpose Bonds, 6/01 at 102 Aaa 3,358,333
Series 1993, 5.500%, 6/15/11
2,250,000 Santa Monica Community, College District (County of Los Angeles, California), General 7/05 at 102 Aaa 2,297,250
Obligation Bonds, 1992 Election, Series B, 5.750%, 7/01/20
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE FACILITIES - 3.7%
5,000,000 California Health Facilities Financing Authority, Insured Health Facility Refunding 7/06 at 102 Aaa 5,243,300
Revenue Bonds (Mark Twain St. Joseph's Healthcare Corporation), 1996 Series A,
6.000%, 7/01/25
1,450,000 California Health Facilities Financing Authority, Insured Health Facility Refunding 7/06 at 102 Aaa 1,520,557
Revenue Bonds (Mark Twain St. Joseph's Healthcare), 1996 Series A, 6.000%, 7/01/19
3,110,000 California Health Facilities Financing Authority, Hospital Revenue Refunding Bonds 1/99 at 101 Aaa 3,234,431
(Sutter Health), Series 1989A, 6.700%, 1/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSING FACILITIES - 5.4%
1,500,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1996 Series E, 2/06 at 102 Aaa 1,546,470
6.150%, 8/01/25 (Alternative Minimum Tax)
5,020,000 The Community Redevelopment Agency of the City of Los Angeles, California, 6/05 at 105 AAA 5,722,750
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 Housing Revenue 5/03 at 102 Aaa 7,565,686
Refunding Bonds, Series 1993A, (GNMA Collateralized - Meadowview Apartments),
6.125%, 5/20/28
- -----------------------------------------------------------------------------------------------------------------------------------
LEASE RENTAL - 12.9%
1,800,000 California Public School District Financing Authority, Lease Revenue Bonds (Richgrove 9/06 at 102 Aaa 1,866,708
Elementary School District Projects), Series 1996B, 5.800%, 9/01/16
3,935,000 Certificates of Participation (1991 Financing Project), County of Alameda, California, 9/06 at 102 Aaa 4,153,235
Alameda County Public Facilities Corporation, 6.000%, 9/01/21
7,985,000 County of Alameda, California, 1993 Refunding Certificates of Participation 12/03 at 102 Aaa 8,212,812
(Santa Rita Jail Project), 5.700%, 12/01/14
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LEASE RENTAL - continued
$ 4,000,000 County of Contra Costa County, California (Merrithew Memorial Hospital Replacement 11/07 at 102 Aaa $3,972,720
Project), Refunding Series of 1997, 5.500%, 11/01/22
2,135,000 Menifee Union School District (Riverside County, California), Certificates 9/06 at 102 Aaa 2,263,997
of Participation (1996 School Project), 6.125%, 9/01/24
9,000,000 City of Redlands, California, Certificates of Participation (1993 Refunding of 1986 and 9/03 at 102 Aaa 9,202,140
1987 Projects), 5.800%, 9/01/17
5,450,000 City of Visalia, California (Motor Vehicle License Fee Enhancement), Fisalia Public 12/06 at 102 Aaa 5,350,974
Finance Authority, Series 1996A, 5.375%, 12/01/26
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER REVENUE - 16.6%
5,000,000 Community Redevelopment Agency of the City of Compton, California, Compton 8/05 at 102 Aaa 5,570,450
Redevelopment Project, Refunding Tax Allocation Bonds, Series 1995A (Project Tax
Revenues, Subventions and Housing Tax Revenues) (Insured/Tax Exempt),
6.500%, 8/01/13
3,000,000 Galt Schools Joint Powers Authority (Sacramento County, California), 1997 Refunding 11/07 at 102 Aaa 3,106,680
Revenue Bonds, Series A (High School and Elementary School Facilities),
5.875%, 11/01/24
6,750,000 Los Angeles County, Metropolitan Transit Authority, Proposition C Sales Tax Revenue 7/03 at 102 Aaa 6,491,205
Second Senior Bonds, Series 1993-B, 5.250%, 7/01/23
5,585,000 Los Angeles County Transportation Commission (California), Sales Tax Revenue Refunding 7/01 at 102 Aaa 6,062,350
Bonds, Series 1991-B, 6.500%, 7/01/13
2,690,000 Norwalk Community Facilities Financing Authority (Los Angeles County, California), Tax 9/05 at 102 Aaa 2,845,132
Allocation Refunding Revenue Bonds, 1995 Series A, 6.000%, 9/01/15
1,930,000 Santa Margarita/Dana Point Authority, Orange County, California, Revenue Bonds Series No Opt. Call Aaa 2,283,846
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 5,096,800
7,330,000 8.000%, 8/15/09 No Opt. Call Aaa 9,429,972
4,140,000 Redevelopment Agency of the City of Suisun City, Suisun City Redevelopment Project, 10/03 at 102 Aaa 4,265,939
1993 Tax Allocation Refunding Bonds (County of Solano, California), 5.900%, 10/01/23
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.9%
9,000,000 Airports Commission of the City and County of San Francisco, California, San Francisco 5/04 at 101 Aaa 9,442,530
International Airport, Second Series Revenue Bonds, Issue 8B, 6.100%, 5/01/20
3,750,000 City of San Jose, California, Airport Revenue Bonds, Series of 1993, 5.700%, 3/01/18 3/03 at 102 Aaa 3,763,613
(Alternative Minimum Tax)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 5.6%
$ 3,215,000 Modesto Irrigation District Financing Authority, Refunding Revenue Bonds, Series A, 10/06 at 102 Aaa $3,413,044
6.000%, 10/01/15
11,750,000 Turlock Irrigation District (California), Revenue Refunding Bonds, Series 1992-A, 7/02 at 100 Aaa 11,942,113
5.750%, 1/01/18
- -----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER FACILITIES - 12.9%
2,000,000 City of Barstow, California, Certificates of Participation (1994 Wastewater 10/04 at 102 Aaa 1,923,460
Reclamation Improvement Project), 5.250%, 10/01/18
3,530,000 Castaic Lake Water Agency (California), Refunding Revenue, Certificates of No Opt. Call Aaa 4,239,106
Participation (Water System Improvement Projects), Series 1994A, 8.000%, 8/01/04
2,975,000 Chino Basin Regional Financing Authority Revenue Bonds, Series 1994 (Chino Basin 8/04 at 102 Aaa 3,125,714
Municipal Water District Sewer System Project), 6.000%, 8/01/16
13,000,000 The Metropolitan Water District of Southern California, Water Revenue Bonds, 1995 7/05 at 102 Aaa 13,273,000
Series A, 5.750%, 7/01/21
2,900,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, Series 1992, 10/02 at 102 Aaa 2,916,732
5.500%, 10/01/15
4,000,000 South San Joaquin Irrigation District (San Joaquin County, California), 1993 Refunding 1/03 at 102 Aaa 4,023,640
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 5,535,186
- ----------------------------------------------------------------------------------------------------------------------------------
$247,995,000 Total Investments - (cost $251,865,719) - 96.8% 263,143,277
============----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 1.8%
$ 1,400,000 Irvine Ranch Water District, Consolidated Refunding Bonds, Series 1985-B, 1986 Capital A-1+ 1,400,000
Improvement Project, Variable Rate Demand Bonds, 3.350%, 10/01/04+
3,400,000 Irvine Ranch Water District, Consolidated Refunding Bonds Series A, Variable Rate VMIG-1 3,400,000
Demand Bonds, 3.350%, 5/01/09+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 4,800,000 Total Temporary Investments - 1.8% 4,800,000
===========------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 3,939,408
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $271,882,685
- -----------------------------------------------------------------------------------------------------------------------============
<FN>
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow or
trust containing sufficient U.S. Government or U.S. Government agency
securities, any of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call or
redemption.
There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent auditors):
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.
</FN>
</TABLE>
<PAGE>
<TABLE>
Nuveen Exchange Traded Funds
August 31, 1997 Annual Report
Portfolio of Investments
Nuveen California Premium
Income Municipal Fund (NCU)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATIONAL FACILITIES - 9.5%
$ 3,500,000 California Educational Facilities Authority, Revenue Bonds (University of Southern 10/99 at 102 AA $3,756,060
California Project), Series 1989B, 6.750%, 10/01/15
1,995,000 California State Public Works Board, Lease Revenue Bonds (Various California Community 3/06 at 102 Aaa 2,030,631
College PJS), Series 1996A, 5.625%, 3/01/16
3,200,000 State Public Works Board of the State of California, Lease Revenue Bonds (The Trustees 10/04 at 102 A 3,478,784
of the California State University), 1994 Series A (Various California State University
Projects), 6.375%, 10/01/14
2,225,000 The Regents of the University of California, University of California Housing System 11/03 at 102 Aaa 2,227,715
Revenue Bonds, Series A, 5.500%, 11/01/18
- ----------------------------------------------------------------------------------------------------------------------------------
ESCROWED BONDS - 6.4%
4,000,000 California State Public Works Board of the State of California, Lease Revenue Bonds 12/02 at 102 Aaa 4,503,400
(Regents of the University of California), 1992 Series A (Various University of
California Projects), 6.600%, 12/01/22 (Pre-refunded to 12/01/02)
2,880,000 City of Torrance, Floating Rate Demand Hospital Revenue Bonds (Little Company of 12/05 at 100 AAA 3,215,750
Mary Hospital), 1985 Series A, 7.100%, 12/01/15 (Pre-refunded to 12/01/05)
- ----------------------------------------------------------------------------------------------------------------------------------
GENERAL OBLIGATION BONDS - 9.3%
State of California, Various Purpose General Obligation Bonds:
2,000,000 6.500%, 9/01/06 No Opt. Call Aaa 2,283,940
2,380,000 6.250%, 9/01/12 No Opt. Call A1 2,673,930
2,000,000 5.150%, 10/01/19 10/03 at 102 A1 1,925,860
1,025,000 Calipatria Unified School District, Imperial County, California, 1996 Series A, General 8/06 at 102 Aaa 1,052,491
Obligation Bonds, 5.800%, 8/01/20
3,000,000 Pomona Unified School District, General Obligation Refunding Bonds, Series 1997-A, 8/11 at 103 Aaa 3,311,580
6.150%, 8/01/15
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE FACILITIES - 9.1%
4,000,000 California Statewide Communities Development Authority, Certificates of Participation, 8/02 at 102 A1 4,303,280
(Cedars - Sinai Medical Center), 6.500%, 8/01/15
1,500,000 ABAG Finance Authority for Nonprofit Corporations, Certificates of Participation 11/03 at 102 A1 1,443,495
(Stanford University Hospital), California, Series 1993, 5.250%, 11/01/20
2,000,000 City of Loma Linda California, Hospital Revenue Bonds (Loma Linda University Medical 12/03 at 102 BBB 2,083,760
Center Project), Series 1993-A, 6.000%, 12/01/06
1,355,000 Palomar Pomerado Health System, Insured Revenue Bonds, Series 1993, 5.000%, 11/01/13 11/03 at 102 Aaa 1,306,843
2,000,000 Washington Township Hospital District, Revenue Bonds, Series 1993, 5.250%, 7/01/23 7/03 at 102 A2 1,915,360
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING FACILITIES - 21.2%
$ 4,305,000 California Housing Finance Agency, Single Family Mortgage Bonds II, 1997 Series A, 2/07 at 102 Aaa $4,404,833
6.000%, 8/01/20 (Alternative Minimum Tax)
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1994 Series A, 8/04 at 102 Aa 1,055,170
6.550%, 8/01/26
1,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1994 Series F-3, 8/05 at 102 Aaa 1,033,770
6.100%, 8/01/15 (Alternative Minimum Tax)
2,000,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 1997 Series B, 2/07 at 102 Aaa 2,058,220
6.000%, 8/01/16 (Alternative Minimum Tax)
2,470,000 California Rural Home Mortgage Finance Authority, Single Family Mortgage Revenue No Opt. Call AAA 2,783,073
Bonds (Mortgage-Backed Securities Program), 1996 Series C, 7.500%, 8/01/27
(Alternative Minimum Tax)
9,000,000 The Community Redevelopment Agency of the City of Los Angeles, California, Multifamily 6/05 at 105 AAA 10,259,910
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 Apartments), 8/07 at 102 AAA 4,110,040
Series 1997, 5.625%, 8/01/29 (Alternative Minimum Tax) (Mandatory put 8/01/09)
- ----------------------------------------------------------------------------------------------------------------------------------
LEASE RENTAL - 1.7%
2,100,000 Sacramento City Finance Authority, Lease Revenue Refunding Bonds, Series 1993 B, No Opt. Call A1 2,099,832
5.400%, 11/01/20
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER REVENUE - 6.2%
2,000,000 Carson Redevelopment Agency (California), Redevelopment Project Area No. 2, 10/03 at 102 Baa 2,048,320
Refunding Tax Allocation Bonds, Series 1993, 5.875%, 10/01/09
1,760,000 Carson Redevelopment Agency (California), Redevelopment Project Area No. 1, Tax 10/03 at 102 Baa1 1,802,962
Allocation Bonds, Series 1993, 5.625%, 10/01/08
2,160,000 Community Redevelopment Financing Authority of the Community Redevelopment 6/03 at 102 Ba 2,061,094
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)
1,500,000 City of Richmond, Limited Obligation Refunding Improvement Bonds, Reassessment 9/97 at 103 N/R 1,549,095
District No. 855 (Atlas Road West and Interchange), 6.600%, 9/02/19
- ----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL FACILITIES - 0.9%
1,000,000 California Pollution Control Financing Authority, Pollution Control Revenue Bonds 12/02 at 102 Aaa 1,067,350
(Southern California Edison Company), 1992 Series B, 6.400%, 12/01/24 (Alternative
Minimum Tax)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - 4.1%
$ 2,750,000 Airport Commission, City and County of San Francisco, California, San Francisco 5/04 at 102 Aaa $2,993,073
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, San Francisco
International Airport, Second Series Revenue Bonds, Issue 10, 5.700%, 5/01/26 5/06 at 102 Aaa 2,018,920
(Alternative Minimum Tax)
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.5%
4,100,000 Imperial Irrigation District, California, Certificates of Participation (1994
Electric System Project), 6.000%, 11/01/15 11/04 at 102 Aaa 4,287,821
2,000,000 Department of Water and Power of The City of Los Angeles, Electric Plant Refunding 9/03 at 102 Aaa 1,949,440
Revenue Bonds, Issue of 1993, 5.375%, 9/01/23
3,560,000 Northern California Power Agency, Hydroelectric Project Number One, Revenue Bonds, No Opt. Call Aaa 4,565,771
1992 Refunding Series A, 10.000%, 7/01/03
1,500,000 City of Pasadena, Electric Works Revenue Bonds, 1990 Series, 7.000%, 8/01/09 8/00 at 102 A1 1,637,835
1,095,000 Sacramento Municipal Utility District (California), Electric Revenue Bonds, 1993 5/03 at 102 A 1,121,630
Series E, 5.700%, 5/15/12
1,400,000 City of Santa Clara, California, Electric Revenue Bonds, Series 1991A, 6.250%, 7/01/13 7/01 at 102 Aaa 1,502,312
- ----------------------------------------------------------------------------------------------------------------------------------
WATER/SEWER FACILITIES - 13.9%
4,705,000 State of California, Department of Water Resources, Central Valley Project, Water 6/03 at 101 1/2 Aa 4,847,844
System Revenue Bonds, Series L, 5.750%, 12/01/13
1,000,000 Eastern Municipal Water District (Riverside County, California), Water and Sewer 7/01 at 101 Aaa 1,063,890
Revenue Refunding Certificates of Participation, Series 1991A, 6.300%, 7/01/20
1,000,000 City of Los Angeles, California, Wastewater System Revenue Bonds, Series 1992-B, 6/02 at 102 Aaa 1,074,660
6.250%, 6/01/12
3,515,000 City of Riverside, California, Sewer Refunding Revenue Bonds, Series 1993, No Opt. Call Aaa 4,153,148
7.000%, 8/01/07
1,000,000 City of Riverside, California, Water Revenue Bonds, Issue of 1991, 9.000%, 10/01/01 No Opt. Call Aa 1,179,380
3,100,000 City and County of San Francisco, Sewer Revenue Refunding Bonds, Series 1994, 10/02 at 102 Aaa 3,057,994
5.375%, 10/01/16
1,005,000 City of Santa Monica, Wastewater Enterprise Revenue Bonds (Hyperion Project), 1993 No Opt. Call Aaa 1,412,476
Refunding Series, 12.000%, 1/01/04
- ---------------------------------------------------------------------------------------------------------------------------------
$107,085,000 Total Investments - (cost $109,465,048) - 94.8% 114,712,742
============---------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 4.1%
$ 1,200,000 California Health Facilities Financing Authority, Refunding Revenue Bonds (St. Joseph VMIG-1 $1,200,000
Health System), Series 1985B, Variable Rate Demand Bonds, 3.400%, 7/01/13+
700,000 Certificates of Participation, California Statewide Communities Development Authority, VMIG-1 700,000
St. Joseph Health System Obligated Group, Variable Rate Demand Bonds,
3.400%, 7/01/24+
500,000 Irvine Ranch Water District, Consolidated Refunding Bonds, Series 1985-B, 1986 Capital A-1+ 500,000
Improvement Project, Variable Rate Demand Bonds, 3.350%, 10/01/04+
500,000 Irvine Ranch Water District, Consolidated Bonds, Series 1985-B, 1986 Capital A-1+ 500,000
Improvement Project, Variable Rate Demand Bonds, 3.350%, 10/01/09+
1,500,000 Irvine Ranch Water District Consolidated Refunding Bonds, Series A, Variable Rate VMIG-1 1,500,000
Demand Bonds, 3.350%, 5/01/09+
600,000 City of Santa Ana, Multi-Modal Interchangeable Rate Health Facility Revenue Bonds A-1 600,000
(Town and Country Manor Project), Series 1990, Variable Rate Demand Bonds,
3.500%, 10/01/20+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 5,000,000 Total Temporary Investments - 4.1% 5,000,000
===========------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 1,282,621
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $120,995,363
- -----------------------------------------------------------------------------------------------------------------------============
<FN>
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent auditors):
Using the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate
and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Net Assets
August 31, 1997
<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) $140,154,122 $263,143,277 $114,712,742
Temporary investments in short-term municipal
securities, at amortized cost, which
approximates market value (note 1) 1,800,000 4,800,000 5,000,000
Cash 17,470 348,694 53,719
Receivables:
Interest 2,201,878 4,584,909 1,789,951
Investments sold -- 65,000 --
Other assets 9,733 4,443 1,057
------------ ------------ ------------
Total assets 144,183,203 272,946,323 121,557,469
------------ ------------ ------------
Liabilities
Accrued expenses:
Management fees (note 6) 79,456 148,816 67,003
Other 85,253 105,942 121,259
Preferred share dividends payable 15,415 29,067 21,081
Common share dividends payable 432,361 779,813 352,763
------------ ------------ ------------
Total liabilities 612,485 1,063,638 562,106
------------ ------------ ------------
Net assets (note 7) $143,570,718 $271,882,685 $120,995,363
============ ============ ============
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) $ 15.39 $ 14.06 $ 13.60
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statement of Operations
Year ended August 31, 1997
<CAPTION>
Insured
Insured California California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $ 7,884,120 $ 14,698,381 $ 6,675,243
------------ ------------ ------------
Expenses
Management fees (note 6) 914,428 1,718,856 771,851
Preferred shares - auction fees 112,731 237,987 107,721
Preferred shares - dividend disbursing agent fees 13,641 19,043 12,758
Shareholders' servicing agent fees and expenses 14,821 21,806 10,325
Custodian's fees and expenses 40,537 54,335 39,638
Directors'/Trustees' fees and expenses (note 6) 1,239 2,159 1,021
Professional fees 19,529 18,865 13,217
Shareholders' reports - printing and mailing expenses 30,114 64,266 33,161
Stock exchange listing fees 16,192 24,295 5,311
Investor relations expense 10,406 18,773 8,622
Portfolio insurance expense 12,719 13,049 --
Other expenses 13,978 18,443 13,186
------------ ------------ ------------
Total expenses 1,200,335 2,211,877 1,016,811
------------ ------------ ------------
Net investment income 6,683,785 12,486,504 5,658,432
------------ ------------ ------------
Realized and Unrealized Gain (Loss)
from Investments
Net realized gain (loss) from investment
transactions (notes 1 and 4) 193,918 (7,580) (471,163)
Net change in unrealized appreciation or
depreciation of investments 5,715,236 9,860,840 5,537,743
------------ ------------ ------------
Net gain from investments 5,909,154 9,853,260 5,066,580
------------ ------------ ------------
Net increase in net assets from operations $ 12,592,939 $ 22,339,764 $ 10,725,012
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended Year ended
8/31/97 8/31/96 8/31/97 8/31/96 8/31/97 8/31/96
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 6,683,785 $ 6,730,275 $ 12,486,504 $ 12,507,290 $ 5,658,432 $ 5,645,423
Net realized gain (loss) from investment
transactions (notes 1 and 4) 193,918 (563,462) (7,580) (1,714,194) (471,163) (1,120,843)
Net change in unrealized appreciation or
depreciation of investments 5,715,236 662,762 9,860,840 4,801,344 5,537,743 2,668,037
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets from operations 12,592,939 6,829,575 22,339,764 15,594,440 10,725,012 7,192,617
------------ ------------ ------------ ------------ ------------ ------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (5,188,336) (5,073,040) (9,357,929) (9,357,813) (4,233,151) (4,233,153)
Preferred shareholders (1,443,769) (1,470,134) (2,950,385) (3,013,164) (1,365,049) (1,394,718)
------------ ------------ ------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders (6,632,105) (6,543,174) (12,308,314) (12,370,977) (5,598,200) (5,627,871)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets 5,960,834 286,401 10,031,450 3,223,463 5,126,812 1,564,746
Net assets at beginning of year 137,609,884 137,323,483 261,851,235 258,627,772 115,868,551 114,303,805
------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of year $143,570,718 $137,609,884 $271,882,685 $261,851,235 $120,995,363 $115,868,551
============ ============ ============ ============ ============ ============
Balance of undistributed net investment
income at end of year $ 360,293 $ 308,613 $ 645,579 $ 467,389 $ 244,319 $ 184,087
============ ============ ============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
1. GENERAL INFORMATION AND SIGNI1/2CANT 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 and Insured California Premium 2 are traded on
the New York Stock Exchange while California Premium 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 their when-issued and delayed delivery purchase commitments. At
August 31, 1997, there were no such purchase commitments Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount realized from investment transactions. The
Funds currently consider significant net realized capital gains and/or market
discount as amounts in excess of $.01 per Common share. Furthermore, each Fund
intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal and California state income
taxes, to retain such tax-exempt status when distributed to share holders of the
Funds. All income dividends paid during the fiscal year ended August 31, 1997,
have been designated Exempt Interest Dividends. Net realized capital gain and
market discount distributions are subject to federal taxation.
<PAGE>
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, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryovers.
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.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend rate
on each Series may change every seven days, as set by the auction agent. The
number of shares outstanding, by Series and in total, for each Fund is as
follows:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Number of shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series Th -- 1,900 --
----- ----- -----
Total 1,800 3,800 1,720
===== ===== =====
</TABLE>
Insurance
Insured California Premium and Insured California Premium 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.
<PAGE>
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial instruments
including futures, forward, swap, option contracts, and other financial
instruments with similar characteristics. Although the Funds are authorized to
invest in such financial instruments, and may do so in the future, they did not
make any such investments during the fiscal year ended August 31, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. FUND SHARES
There were no share transactions for the fiscal year ended August 31, 1997, nor
during the fiscal year ended August 31, 1996, in any of the Funds.
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS
On September 2, 1997, the Funds declared Common share dividend distributions
from their tax-exempt net investment income which were paid October 1, 1997, to
shareholders of record on September 15, 1997, as follows:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Dividend per share $.0675 $.0620 $.0615
====== ====== ======
</TABLE>
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the fiscal year ended
August 31, 1997, were as follows:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Purchases:
Investments in municipal securities $13,407,554 $63,031,175 $51,016,174
Temporary municipal investments 7,900,000 38,000,000 22,365,000
Sales and Maturities:
Investments in municipal securities 12,142,490 65,953,010 52,069,592
Temporary municipal investments 8,600,000 38,810,000 19,965,000
=========== =========== ===========
At August 31, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
</TABLE>
<PAGE>
At August 31, 1997, the Funds had unused capital loss carryovers available for
federal income tax purposes to be applied against future capital gains, if any.
If not applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Expiration year:
2001 $ 10,001 $ -- $ --
2002 -- -- 1,175,783
2003 2,373,250 3,896,131 1,893,938
2004 228,384 4,345,091 2,742,449
2005 373,309 1,283,948 1,049,994
---------- ---------- ----------
Total $2,984,944 $9,525,170 $6,862,164
========== ========== ==========
</TABLE>
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 1997, were as follows:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Gross unrealized:
appreciation $12,558,461 $11,277,558 $5,346,600
depreciation -- -- (98,906)
----------- ----------- ----------
Net unrealized appreciation $12,558,461 $11,277,558 $5,247,694
=========== =========== ==========
</TABLE>
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 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:
<TABLE>
<CAPTION>
Average daily net asset value Management fee
<S> <C>
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .5875 of 1
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those 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.
</TABLE>
<PAGE>
7. COMPOSITION OF NET ASSETS
At August 31, 1997, net assets consisted of:
<TABLE>
<CAPTION>
Insured California Insured California California
Premium Income Premium Income 2 Premium Income
<S> <C> <C> <C>
Preferred shares, $25,000 stated value per
share, at liquidation value $ 45,000,000 $ 95,000,000 $ 43,000,000
Common shares, $.01 par value per share 64,054 125,777 57,360
Paid-in surplus 88,572,854 174,386,019 79,655,809
Balance of undistributed net investment income 360,293 645,579 244,319
Accumulated net realized gain (loss) from
investment transactions (2,984,944) (9,552,248) (7,209,819)
Net unrealized appreciation of investments 12,558,461 11,277,558 5,247,694
------------ ------------ ------------
Net assets $143,570,718 $271,882,685 $120,995,363
============ ============ ============
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
============ ============ ============
</TABLE>
<PAGE>
Financial Highlights
Ghosted Photo of family at poolside
<PAGE>
<TABLE>
Financial Highlights
Selected data for a common share outstanding throughout each period is as
follows:
<CAPTION>
Dividends from tax-exempt
Operating performance net investment income
Net asset Net realized
value Net and unrealized
beginning investment gain (loss) To Common To Preferred
of period income from investments Shareholders Shareholders+
<S> <C> <C> <C> <C> <C>
Insured California Premium Income
Year ended 8/31:
1997 $14.46 $1.04 $ .93 $(.81) $(.23)
1996 14.41 1.05 .02 (.79) (.23)
1995 13.72 1.05 .73 (.83) (.26)
1994 15.31 1.07 (1.61) (.85) (.20)
11/19/92 to
8/31/93 14.05 .64 1.45 (.50) (.11)
<CAPTION>
Insured California Premium Income 2
<S> <C> <C> <C> <C> <C>
Year ended 8/31:
1997 13.27 .99 .77 (.74) (.23)
1996 13.01 1.00 .24 (.74) (.24)
1995 12.75 1.02 .30 (.79) (.27)
1994 14.57 1.02 (1.85) (.82) (.17)
3/18/93 to
8/31/93 14.05 .25 .65 (.19) (.02)
<CAPTION>
California Premium Income
<S> <C> <C> <C> <C> <C>
Year ended 8/31:
1997 12.70 .99 .89 (.74) (.24)
1996 12.43 .98 .27 (.74) (.24)
1995 12.01 1.00 .47 (.77) (.28)
1994 14.47 .97 (2.26) (.82) (.17)
6/18/93 to
8/31/93 14.05 .08 .44 -- --
<PAGE>
<CAPTION>
Distributions from
capital gains
Organization and
offering costs and Per common Total
Preferred share Net asset share investment
To Common To Preferred underwriting value market value return on
Shareholders Shareholders+ discounts end of period end of period market value**
<S> <C> <C> <C> <C> <C> <C>
Insured California Premium Income
Year ended 8/31:
1997 $-- $-- $-- $15.39 $14.5000 10.69%
1996 -- -- -- 14.46 13.8750 15.39
1995 -- -- -- 14.41 12.7500 4.67
1994 -- -- -- 13.72 13.0000 (10.88)
11/19/92 to
8/31/93 -- -- (.22) 15.31 15.5000 6.80
<CAPTION>
Insured California Premium
Income 2
<S> <C> <C> <C> <C> <C> <C>
Year ended 8/31:
1997 -- -- -- 14.06 13.5000 14.36
1996 -- -- -- 13.27 12.5000 15.36
1995 -- -- -- 13.01 11.5000 3.55
1994 -- -- -- 12.75 11.8750 (15.01)
3/18/93 to
8/31/93 -- -- (.17) 14.57 14.8750 .49
<CAPTION>
California Premium Income
<S> <C> <C> <C> <C> <C> <C>
Year ended 8/31:
1997 -- -- -- 13.60 13.1250 17.16
1996 -- -- -- 12.70 11.8750 17.51
1995 -- -- -- 12.43 10.7500 3.65
1994 (.02) -- (.16) 12.01 11.1250 (20.07)
6/18/93 to
8/31/93 -- -- (.10) 14.47 14.8750 (.83)
<PAGE>
<CAPTION>
Ratios/Supplemental data
Ratio of net
Ratio of investment
Total return Net assets expenses to income to Portfolio
on net end of period average average turnover
asset value** (in thousands) net assets++ net assets++ rate
<S> <C> <C> <C> <C> <C>
Insured California Premium Income
Year ended 8/31:
1997 12.30% $143,571 .85% 4.74% 9%
1996 5.83 137,610 .85 4.81 9
1995 11.68 137,323 .89 5.10 24
1994 (4.99) 132,806 .85 4.94 29
11/19/92 to
8/31/93 12.73 142,812 .88* 4.45* 20
Insured California Premium Income 2
Year ended 8/31:
1997 11.82 271,883 .83 4.67 24
1996 7.76 261,851 .83 4.73 27
1995 8.80 258,628 .84 5.11 24
1994 (7.07) 255,244 .84 4.80 24
3/18/93 to
8/31/93 5.11 277,948 .86* 3.46* --
California Premium Income
Year ended 8/31:
1997 13.20 120,995 .86 4.76 44
1996 8.15 115,869 .88 4.83 25
1995 10.53 114,304 1.05 5.08 26
1994 (11.51) 69,710 .95 4.79 40
6/18/93 to
8/31/93 2.99 51,487 1.19* 3.33* --
<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. Total returns are not annualized.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
</FN>
</TABLE>
<PAGE>
Fund Information
Board of Directors
Robert P. Bremmer
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Legal Counsel
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Chicago, Illinois
<PAGE>
Nuveen makes reinvesting easy. A phone call is all it takes to set up your
reinvestment account.
(continued from inside front cover)
before purchases are completed, the average purchase price per share may exceed
the market price at the time of valuation resulting in the acquisition of fewer
shares than if the dividend or distribution had been paid in shares issued by
the fund. A pro rata portion of any applicable brokerage commissions on open
market purchases will be paid by Plan participants. These commissions usually
will be lower than those charged on individual transactions.
Flexibility
You may, of course, change your distribution option or withdraw from the Plan at
any time, should your needs or situation change. Should you withdraw, you can
receive a certificate for all whole shares credited to your reinvestment account
and cash payment for fractional shares, or cash payment for all reinvestment
account shares, less brokerage commissions and a $2.50 service fee.
You can also reinvest if your shares are registered in the name of a brokerage
firm, bank, or other nominee. Just ask your investment adviser if the firm will
participate on your behalf. If not, it's easy to have the shares registered in
your name and to apply for a reinvestment account directly. Participants whose
shares are registered in the name of one firm may not be able to transfer the
shares to another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial adviser or call us
toll-free at (800) 257-8787.
<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
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
trusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach - purchasing securities of strong companies and
communities that represent good long-term value - is the cornerstone of Nuveen's
investment philosophy. It is a careful, long-term strategy that offers the
potential for attractive returns with moderated risk. Successful value investing
begins with in-depth research and a discerning eye for marketplace opportunity.
Nuveen's team of investment professionals is backed by the discipline, resources
and expertise of almost a century of investment experience, including one of the
most recognized research departments in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of equity and fixed-income mutual funds,
unit trusts, exchange-traded funds, individual managed account services, and
cash management products, including many that generate tax-free income.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 257-8787 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
NUVEEN LOGO
John Nuveen &Co. Incorporated
333 West Wacker Drive
Chicago, IL60606-1286
(800) 257-8787
www.nuveen.com
FAN-2-8.97
