LOGO: NUVEEN INVESTMENTS
ANNUAL REPORT August 31, 2000
Municipal Closed-End Exchange-Traded Funds
Dependable, tax-free income to help you keep more of what you earn.
CALIFORNIA
NPC
NCL
NCU
INVEST WELL.
LOOK AHEAD.
LEAVE YOUR MARK.(SM)
PHOTO OF: PEOPLE LOOKING AT SEA SHELLS.
PHOTO OF: PEOPLE TAKING A WALK.
<PAGE>
Credit Quality
HIGHLIGHTS As of August 31, 2000
Pie Chart:
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
U.S. Guaranteed 18%
Insured 82%
Pie Chart:
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Insured & U.S. Guaranteed 5%
U.S. Guaranteed 3%
Insured 92%
Pie Chart:
Nuveen California Premium Income Municipal Fund (NCU)
AAA/U.S. Guaranteed 65%
AA 8%
A 5%
BBB 7%
NR 13%
Other 2%
CONTENTS
1 Dear Shareholder
3 Portfolio Managers' Comments
6 NPC Performance Overview
7 NCL Performance Overview
8 NCU Performance Overview
9 Report of Independent Auditors
10 Portfolio of Investments
18 Statement of Net Assets
19 Statement of Operations
20 Statement of Changes in Net Assets
21 Notes to Financial Statements
26 Financial Highlights
28 Build Your Wealth Automatically
29 Fund Information
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COMPOUND YOUR WEALTH - AUTOMATICALLY
All Nuveen Municipal Closed-End Exchange-Traded Funds let you reinvest dividends
and capital gains directly into additional shares of your Fund. This is a great
way to see your investment grow through the power of tax-free compounding.
For more information about Dividend Reinvestment, see the last page of this
report or speak with your financial advisor.
--------------------------------------------------------------------------------
<PAGE>
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: "BUILDING AND SUSTAINING WEALTH REQUIRES SOUND, ONGOING ADVICE."
Dear
SHAREHOLDER
The primary objective of your Nuveen California Municipal Exchange-Traded Fund
is to provide dependable, attractive tax-free dividends. I am very happy to
report that your Fund continued to achieve this goal during the period covered
by this report. For more specifics on this performance, I encourage you to read
the Portfolio Manager's Comments and Performance Overview pages that follow this
letter.
We believe that your Nuveen Municipal Closed-End Exchange-Traded Fund, as an
income-oriented investment, is well positioned to be a core element of your
long-term investment program. With the help of your financial advisor, all of us
at Nuveen Investments are dedicated to providing the services, products,
perspectives, and solutions that you need to help you meet your personal and
family financial goals.
New Ways to Think About Wealth
Over the past few years, much attention has been directed toward the ways
investors are accumulating wealth. At Nuveen, we believe it is equally important
for investors to focus on preserving that wealth, on the responsibilities that
accompany wealth, and on the legacies we will leave for future generations.
This long-term perspective is key to understanding our portfolio management
strategies, our insistence on quality, and our determination to provide
investments that can withstand the test of time. It is a philosophy that we
think is well encapsulated in our brand theme: Invest Well. Look Ahead. Leave
Your Mark.
Invest Well
Building and sustaining the wealth that can result in lasting legacies requires
a well-developed plan, sound ongoing advice, and the discipline to remain
focused on long-term results. With today's abundance of investment products and
offers, it also increasingly requires an experienced and trusted advisor who can
guide you through the opportunities and the pitfalls. With so much potentially
at stake, Nuveen Investments is dedicated to delivering quality products like
your Nuveen Fund through the financial advisors who assist you in making wise
investment choices and help you manage your most important financial assets.
<PAGE>
Sidebar text: "WE BELIEVE YOUR NUVEEN MUNICIPAL CLOSED-END EXCHANGE-TRADED FUND
IS WELL POSITIONED TO BE A CORE ELEMENT OF YOUR LONG-TERM INVESTMENT PROGRAM."
Look Ahead
We urge all our investors to look ahead, not only toward their own goals and
futures, but those of future generations as well. We now stand on the threshold
of a new century, anticipating a time of change, discovery, and potential that
may one day make the year 2000 seem as archaic as the year 1900. While we cannot
know all that the future will bring, we do know that a well-diversified,
carefully monitored investment program that combines elements of growth, income,
and capital preservation forms a solid foundation that can help us meet whatever
opportunities and challenges the new century has to offer.
Leave Your Mark
With the enormous wealth creation of the past decade and the considerable
intergenerational transfer of wealth that is expected to occur over the next 20
years, investors today have a significant opportunity to shape the financial
future for themselves and their families. These opportunities may include
establishing trusts, endowments, or legacies that can directly affect our
families and communities for generations to come. We at Nuveen Investments are
committed to facilitating and raising the level of dialogue between investors
and their financial advisors in ways that help meet goals that extend far beyond
the boundaries of a single life span.
Since 1898, the name Nuveen has been synonymous with quality investments,
careful research and prudent management. Today, more than ever, the investments
and services we offer through financial advisors are designed to be well suited
to those who recognize and embrace the need for building and managing wealth. We
encourage you to speak with your financial advisor about how you can enhance
your investment program in ways that can help you Invest Well, Look Ahead, and
Leave Your Mark.
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 16, 2000
<PAGE>
Nuveen California Premium Income Closed-End Exchange-Traded Funds
(NPC, NCL, NCU)
Portfolio Managers'
COMMENTS
Portfolio managers Mike Davern and Bill Fitzgerald discuss the economy, its
impact on the municipal market and recent fund performance, and the outlook for
the Nuveen California Premium Income Municipal Funds. Mike, who has more than 17
years of experience as an investment professional, including eight years with
Nuveen, has managed NPC and NCL since 1998. Bill, who was recently named
managing director of Nuveen's portfolio management team, is a 12-year veteran of
Nuveen and has managed NCU since 1998.
WHAT FACTORS AFFECTED THE ECONOMY OVER THE PAST 12 MONTHS?
To gain some perspective on what's been happening in California, let's first
take a look at the national economy. The U.S. is now well into its tenth year of
uninterrupted economic growth, the longest continuous expansion in the nation's
history. To pre-empt the threat of inflation, the Federal Reserve initiated a
series of short-term interest rate increases June 1999 that continued through
May 2000. Over that period, the Fed raised rates six times, eventually lifting
the fed funds rate to 6.50% from 4.75%. After each increase the Fed has signaled
its willingness to continue tightening as long as it perceived the risk of
inflationary pressures. In this environment, investor uncertainty has grown, the
equity markets have became increasingly volatile, and bond prices and yields
have fluctuated.
In recent months, several economic indicators have begun to suggest that the
Fed's tightening strategy may be having the desired effect of slowing the
economy. Although the Fed has indicated it is too soon to conclude that the risk
of inflation is over, these positive trends could mean that the current
tightening cycle may be on hold until later in 2000 and may even have neared its
end.
In California, the state economy continued to turn in solid performance overall,
although consolidation within the internet and e-commerce industries has led to
some signs of moderate slowing. In addition, higher energy and labor costs began
to cut into profits in some areas, as competitive pressures kept producers from
passing increased costs on to consumers. These factors, in turn, contributed to
slower employment growth in recent months. Despite the slowdown in the
technology sector, job creation in the construction and service sectors
continued to place California among the top 10 states in overall employment
growth. As of August 2000, the unemployment rate in California was 5.1%, on par
with the state figure for August 1999 but still above the national average of
4.1%. California also ranked first among the states in terms of venture capital
investments. During the second quarter of 2000, California companies received an
infusion of $8.23 billion in venture capital, which represented 42% of all U.S.
venture capital investment during that period, more than the rest of the top 10
states combined.
Increased tax revenues, generated by economic prosperity and significant gains
in California residents' personal income, have created a substantial budget
surplus at the state level, and California is currently considering reducing the
amount of debt it issues. In other municipal-related news, California voters
recently rejected the much-debated Proposition 26, which would have lowered the
voter approval threshold on school bonding referendums from a two-thirds
majority to a simple majority. The proposition would have also given California
school districts the power to establish charter schools.
HOW HAVE THESE EVENTS IMPACTED THE CALIFORNIA MUNICIPAL MARKET?
Over the past year, the Fed's series of interest rate hikes helped push
municipal yields higher, with a corresponding drop in municipal bond prices. In
addition, the U.S. Treasury announced that it would buy back up to $30 billion
of government debt in 2000 and reduce additional new issuance of certain
maturities. While the possibility of decreased supply in the Treasury market
helped support the prices of these securities, municipal bonds were unaffected
by this repurchase policy and felt the full effects of market forces.
More recently, the combination of encouraging economic reports, the Fed's
stand-pat approach to additional rate increases, tight municipal supply, and
generally favorable technicals prompted a shift in market outlook, rallying the
municipal market and boosting the prices of many individual issues. Over the 12
months ended August 2000, long-term municipal yields nationally fell almost 20
basis points, while 30-year Treasury yields dropped approximately 40 basis
points. This resulted in long-term municipal yields that were approximately 101%
of 30-year Treasury yields, compared with the historical average of 86% for the
period 1986-1999.
<PAGE>
During the first eight months of 2000, new municipal issuance nationwide totaled
$124 billion, down approximately 18% from 1999 levels. If national issuance
continues at this rate during the remainder of 2000, the supply of municipal
bonds could finish the year at its lowest level since 1995. The decline in
California's issuance for this period exceeded that of the broad municipal
market, with a total of $14.4 billion of new California bonds, down 27% from
1999. The drop in both state and national supply continued the trend begun last
year, as rising interest rates deterred municipalities from issuing new bonds or
refinancing old debt. In addition, increased revenues have enabled California to
build reserve levels and finance projects using pay-as-you-go funding, rather
than issuing additional debt.
Nationally, the decline in supply helped to offset some of the negative impact
that higher interest rates and equity market activity had on the demand for
municipal bonds and, ultimately, on bond prices. Over the past six months,
demand from individual investors looking for diversification and income has
improved, with insured bonds and high-quality general obligation, essential
services revenue, and noncallable bonds in greatest demand. This provided
support for a municipal market experiencing a decline in demand from
institutional investors, particularly mutual and money market funds. In July
2000, long-term tax-exempt open-end bond funds experienced positive cash inflows
for the first time since June 1999. In California, however, demand for in-state
paper has remained exceptionally strong, due to the strong state economy,
individual wealth, and high level of state taxes.
Overall, the economic prosperity of the past decade benefited the balance sheets
of many municipalities as well as the state itself. In September, shortly after
the close of the reporting period for these Funds, Moody's and Standard & Poor's
upgraded the credit quality rating for California's general obligation debt to
Aa2 and AA from Aa3 and AA-, respectively. Moody's cited California's strong,
diverse economy, which continued to outpace national averages in terms of
personal income and employment growth, while S&P based its upgrade on
substantial improvements in the state's general fund balances and overall
financial position. These two upgrades followed Fitch's February upgrade of the
state's general obligation debt to AA from AA-.
HOW DID THE NUVEEN CALIFORNIA PREMIUM INCOME FUNDS PERFORM OVER THE PAST YEAR?
For the fiscal year ended August 31, 2000, the Nuveen California Premium Income
Funds produced total returns on net asset value (NAV) as shown in the
accompanying table. For comparison purposes, the annual returns for the
appropriate Lehman Brothers index1 and Lipper Peer Group2 are also presented.
TOTAL LEHMAN LIPPER
RETURN CALIFORNIA CALIFORNIA
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
-----------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
8/31/00 EQUIVALENT3 8/31/00 8/31/00 8/31/00
-----------------------------------------------------------------------
NPC 5.73% 9.17% 8.34% 8.51% 8.57%
-----------------------------------------------------------------------
NCL 5.53% 8.85% 9.21% 8.51% 8.57%
-----------------------------------------------------------------------
NCU 5.77% 9.23% 7.63% 7.82% 7.88%
-----------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
In recent months, as inflation fears continued to diminish and the Fed appeared
to be considering an end to its current tightening cycle, the municipal market
began to show signs of recovery. This recovery is reflected in the positive
total returns on NAV listed above, which show dramatic improvement over the
performance results in the Funds' semiannual report earlier this year.
HOW WERE THE FUNDS' DIVIDENDS AFFECTED BY THE MARKET ENVIRONMENT?
All three Nuveen California Premium Income Funds use leverage as a way to
potentially enhance the dividends paid to common shareholders. The extent of
this benefit, however, is tied to some degree to the short-term rates the Funds
pay their MuniPreferred(R) shareholders. As short-term rates rise, the income
available for common shareholder dividends decreases. As noted, the Federal
Reserve raised short-term rates six times between June 1999 and May 2000, and
these actions had a corresponding impact on short-term municipal rates. In June
2000, higher short-term rates led to decreases in the common share dividends of
each of the Nuveen California Premium Income Funds.
Recently, investors' demand for municipal bonds with shorter maturities (1 to 15
years) has caused the slope of the municipal yield curve to be very steep. The
increased demand for short-maturity bonds could have beneficial effects in
helping to stabilize the Funds' dividends going forward by keeping short-term
rates down and reducing the amount the Funds must pay their MuniPreferred
shareholders.
WHAT ABOUT THE FUNDS' SHARE PRICE PERFORMANCE?
Over the past fiscal year, uncertainties about inflation and interest rates,
coupled with investors' focus on equity market performance, tended to dampen
interest in most fixed-income products. The lack of demand put pressure on the
prices of many municipal bond investments, including the Nuveen California
Premium Income Funds. Even in recent months, as the bond market began to show
signs of recovery, investor recognition of the change in environment continued
1 The performance of NPC and NCL is compared with that of the Lehman Brothers
California Insured Tax-Exempt Bond Index, an unleveraged index comprising a
broad range of insured California municipal bonds, while NCU's performance
is compared with that of the Lehman California Tax-Exempt Bond Index, an
unleveraged index comprising a broad range of investment-grade California
municipal bonds. Results for the Lehman indexes do not reflect any
expenses.
2 The total returns for NPC and NCL are compared with the average annualized
return of the 10 funds in the Lipper California Insured Municipal Debt
Funds category, while NCU's total return is compared with the average
annualized return of the 19 funds in the Lipper California Municipal Debt
Funds category. Fund and Lipper returns assume reinvestment of dividends.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a combined federal and state income tax
rate of 37.5%.
4 Fund duration, also known as leverage-adjusted duration, takes into account
the leveraging process for the Fund and therefore is generally longer than
the duration of the actual portfolio of individual bonds that make up the
Fund. Unless otherwise noted, references to duration in this commentary are
intended to indicate Fund duration.
<PAGE>
to lag the improvement in the asset value of the bonds themselves. As shown in
the charts on the individual Performance Overview pages, while the share prices
of all three Funds improved as the market began to recover, the net effect over
the fiscal year period was a decline in share price and an increase in NAVs. As
a result, the Funds saw their premiums (share price above NAV) move to discounts
(share price below NAV) as of August 31, 2000. With the market prices of these
Funds lower than the actual value of the bonds in their portfolios, shareholders
may want to consider taking advantage of this opportunity to add to their
holdings of the Nuveen California Premium Income Funds.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN CALIFORNIA PREMIUM INCOME
FUNDS DURING THE FISCAL YEAR ENDED AUGUST 31, 2000?
The past fiscal year represented a challenging period for all fixed-income
investments. However, we were able to take advantage of market conditions during
this period to strengthen the Funds' long-term dividend-paying capabilities and
extend call protection.
Over the past year, our strategies included selling bonds with short calls that
we anticipated would underperform as the market recovered. In this way, we were
able to reduce the Funds' exposure to bonds with calls scheduled over the next
three to five years, while taking advantage of strong demand and good prices in
the secondary market, where higher-coupon paper has been in short supply. The
proceeds from these sales were reinvested in bonds that can potentially enhance
the Funds' income streams and total returns over time. One of the larger trades
we participated in was the $500 million issuance of California state general
obligation bonds in March, purchasing $20 million of these bonds for NPC and
NCL. With a yield of 5.90%, these bonds not only added incremental yield to
these portfolios, but also enhanced the Funds' performance as they were
subsequently upgraded in September. We also found opportunities to purchase
selected healthcare bonds that carried very attractive prices relative to our
estimation of their underlying value, including $3 million of California
hospital bonds for NCL.
As of August 31, 2000, the durations4 of NPC and NCL were 12.46 and 11.76,
respectively, compared with the Lehman California Insured index's 8.81. NCU's
duration was 12.69, while the Lehman California index had a duration of 7.96.
Duration is a measure of a fund's NAV volatility in reaction to interest rate
movements. Over the past year, the Funds' durations shortened due to market
effects and portfolio actions we took to ensure that the Funds' durations did
not extend beyond normal parameters. However, this shortening was not enough to
affect the Funds' ability to benefit from any market recovery. We believe that
maintaining the longer durations of these Funds relative to their indexes should
help to strengthen the relative stability of their common share dividends over
the long term.
In terms of credit quality, NCU had 73% of its assets invested in bonds rated
AAA/U.S. guaranteed and AA at the end of August 2000. The Fund also had a 20%
allocation to BBB/non-rated bonds. Over the past year, lower quality bonds
generally provided higher yields, especially as credit spreads widened in recent
months, but - in most cases - these bonds did not appreciate as quickly as
higher quality credits as the market rallied. As insured funds, NPC and NCL are
100% invested in insured and/or U.S. guaranteed bonds, which means that credit
quality is not an issue.
WHAT IS YOUR OUTLOOK FOR THE NUVEEN CALIFORNIA PREMIUM INCOME FUNDS?
Both insured Funds offer excellent levels of bond call protection, with no
scheduled calls in either Fund for the remainder of 2000. Over the next two
years (2001-2), less than 5% of NCL and less than 18% of NPC will be subject to
calls. During the past two months, we successfully eliminated approximately 5%
of NPC's call exposure. While NCU still faces a few calls this year, the Fund is
well protected over the next two years, with only 7% of its portfolio scheduled
to be called during this period. We continue to actively manage the Funds in an
effort to mitigate the longer-term effects of the bond call process, using
strategies such as selling bonds with short calls as we find appropriate
investments to replace the sold bonds. In this way, we can capture the premium
prices of the short-call bonds and still remain fully invested, rather than
allow the bonds to be called and the proceeds sit in cash. We will also continue
to closely monitor the market for opportunities to add bonds that extend call
protection so the Funds can participate fully in any bond market recovery.
In addition to enhancing call protection, we plan to continue to focus on the
same portfolio strategies that we emphasized over the past year, including
strengthening dividend-payment capabilities and maintaining the Funds' durations
relative to their indexes. If the Federal Reserve is, in fact, finished with
raising short-term rates and the economy manages a soft landing, the Funds could
benefit in a number of ways: increased demand as investors look for higher
yields, lower MuniPreferred rates, which could lead to more income for common
shareholders, and - as a result of these - the possibility of improved share
prices. We believe the Nuveen California Premium Income Funds are currently
well-positioned to provide attractive income and a measure of portfolio
diversification that can be a valuable benefit to investors now and in the years
ahead.
<PAGE>
NPC
Nuveen Insured California Premium Income Municipal Fund, Inc.
Performance
OVERVIEW As of August 31, 2000
PORTFOLIO STATISTICS
--------------------------------------------------
Inception Date 11/92
--------------------------------------------------
Share Price $14 9/16
--------------------------------------------------
Net Asset Value $15.08
--------------------------------------------------
Market Yield 5.73%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.30%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 9.17%
--------------------------------------------------
Fund Net Assets ($000) $141,903
--------------------------------------------------
Average Effective Maturity (Years) 21.29
--------------------------------------------------
Leverage-Adjusted Duration 12.46
--------------------------------------------------
ANNUALIZED TOTAL RETURN
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 0.84% 8.34%
--------------------------------------------------
5-Year 8.68% 6.55%
--------------------------------------------------
Since Inception 5.43% 6.58%
--------------------------------------------------
TOP FIVE SECTORS (AS A % OF TOTAL INVESTMENTS)
--------------------------------------------------
U.S.Guaranteed 18%
--------------------------------------------------
Tax Obligation/Limited 16%
--------------------------------------------------
Water and Sewer 15%
--------------------------------------------------
Tax Obligation/General 11%
--------------------------------------------------
Utilities 11%
--------------------------------------------------
Bar Chart:
1999-2000 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
9/99 0.07
10/99 0.07
11/99 0.07
12/99 0.0715
1/00 0.0715
2/00 0.0715
3/00 0.0715
4/00 0.0715
5/00 0.0715
6/00 0.0695
7/00 0.0695
8/00 0.0695
Line Chart:
SHARE PRICE PERFORMANCE
9/3/99 15.69
15.44
14.88
14.69
14.88
14.56
14.25
13.25
13.5
13.63
13.69
13.88
13.63
13.69
13.44
13.38
13.38
12.94
12.5
12.75
13.06
13.63
13.56
13.63
13.5
13.38
13.5
14.13
14.31
14.13
13.88
13.69
13.88
14.19
14.13
14.13
13.94
13.94
14
14
14.13
14.25
14.5
14.44
14.5
14.38
14.44
14.69
14.75
14.69
14.63
8/31/00 14.625
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 37.5%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 1999 of $0.0373 per share.
<PAGE>
NCL
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
Performance
OVERVIEW As of August 31, 2000
PORTFOLIO STATISTICS
--------------------------------------------------
Inception Date 3/93
--------------------------------------------------
Share Price $14
--------------------------------------------------
Net Asset Value $14.09
--------------------------------------------------
Market Yield 5.53%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.01%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.85%
--------------------------------------------------
Fund Net Assets ($000) $272,977
--------------------------------------------------
Average Effective Maturity (Years) 19.45
--------------------------------------------------
Leverage-Adjusted Duration 11.76
--------------------------------------------------
ANNUALIZED TOTAL RETURN
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 3.58% 9.21%
--------------------------------------------------
5-Year 10.09% 7.32%
--------------------------------------------------
Since Inception 4.91% 5.71%
--------------------------------------------------
TOP FIVE SECTORS (AS A % OF TOTAL INVESTMENTS)
--------------------------------------------------
Tax Obligation/Limited 38%
--------------------------------------------------
Transportation 10%
--------------------------------------------------
Tax Obligation/General 10%
--------------------------------------------------
Water and Sewer 8%
--------------------------------------------------
U.S.Guaranteed 8%
--------------------------------------------------
Bar Chart:
1999-2000 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
9/99 0.0665
10/99 0.0665
11/99 0.0665
12/99 0.0665
1/00 0.0665
2/00 0.0665
3/00 0.0665
4/00 0.0665
5/00 0.0665
6/00 0.0645
7/00 0.0645
8/00 0.0645
Line Chart:
SHARE PRICE PERFORMANCE
9/3/99 14.31
14.13
13.88
13.69
13.63
13.5
13.19
13.13
13.19
13.38
12.94
12.81
12.56
12.75
12.56
12.25
11.69
11.81
11.75
11.69
11.81
12.5
12.63
12.44
12.63
12.44
12.06
12.25
12.38
12.88
13.19
13.25
13.25
13.25
13.06
12.81
12.56
12.75
12.81
12.88
12.88
12.81
13.13
13.38
13.5
13.38
13.38
13.69
13.63
13.69
13.75
8/31/00 14.625
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 37.5%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 1999 of $0.0081 per share.
<PAGE>
NCU
Nuveen California Premium Income Municipal Fund
Performance
OVERVIEW As of August 31, 2000
PORTFOLIO STATISTICS
--------------------------------------------------
Inception Date 6/93
--------------------------------------------------
Share Price $13 5/16
--------------------------------------------------
Net Asset Value $13.34
--------------------------------------------------
Market Yield 5.77%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.36%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 9.23%
--------------------------------------------------
Fund Net Assets ($000) $119,878
--------------------------------------------------
Average Effective Maturity (Years) 18.28
--------------------------------------------------
Leverage-Adjusted Duration 12.69
--------------------------------------------------
ANNUALIZED TOTAL RETURN
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 5.93% 7.63%
--------------------------------------------------
5-Year 10.59% 7.31%
--------------------------------------------------
Since Inception 4.34% 5.13%
--------------------------------------------------
TOP FIVE SECTORS (AS A % OF TOTAL INVESTMENTS)
--------------------------------------------------
Tax Obligation/Limited 20%
--------------------------------------------------
Tax Obligation/General 16%
--------------------------------------------------
Healthcare 16%
--------------------------------------------------
Housing/Multifamily 14%
--------------------------------------------------
U.S.Guaranteed 10%
--------------------------------------------------
Bar Chart:
1999-2000 MONTHLY TAX-FREE DIVIDENDS PER SHARE
9/99 0.066
10/99 0.066
11/99 0.066
12/99 0.067
1/00 0.067
2/00 0.067
3/00 0.067
4/00 0.067
5/00 0.067
6/00 0.064
7/00 0.064
8/00 0.064
Line Chart:
SHARE PRICE PERFORMANCE
9/3/99 13.5
13.5
13.25
13.25
13.25
13.19
12.5
12.31
12.5
12.5
12.56
12.63
12.31
12.31
12.19
12.94
12.88
13
12.75
12.75
12.5
12.56
12.5
12.5
12.56
12.44
12.44
12.44
12.44
12.63
12.69
12.56
12.38
12.38
12.25
12.38
12.31
12.19
12.5
12.56
12.56
12.69
12.75
13
13.06
13
13
13.13
13.13
13.19
13.19
8/31/00 14.625
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 31%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 37.5%.
<PAGE>
Report of
INDEPENDENT AUDITORS
The Boards of Directors, Trustees and Shareholders
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Insured California Premium Income Municipal
Fund, Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc. and
Nuveen California Premium Income Municipal Fund as of August 31, 2000, and the
related statements of operations, changes in net assets and the financial
highlights for the years 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 auditing standards generally accepted
in the United States. 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, 2000, 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, 2000, and the results of their operations,
changes in their net assets and financial highlights for the years indicated
therein in conformity with accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
Chicago, Illinois
October 18, 2000
<PAGE>
<TABLE>
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Portfolio of
INVESTMENTS August 31, 2000
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION AND CIVIC ORGANIZATIONS - 2.8%
$ 1,000 California Educational Facilities Authority, Revenue Bonds 11/08 at 101 Aaa $ 954,400
(University of the Pacific), Series 1998, 5.000%, 11/01/23
1,000 California Educational Facilities Authority, Revenue Bonds 10/09 at 101 Aaa 940,410
(University of San Diego), Series 1998, 5.000%, 10/01/28
2,000 California Educational Facilities Authority, Revenue Bonds 9/06 at 102 AAA 2,056,100
(Santa Clara University), Series 1996, 5.750%, 9/01/26
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 9.5%
3,000 California Health Facilities Financing Authority, Insured Revenue 8/08 at 101 AAA 2,947,320
Bonds (Sutter Health), Series 1998A, 5.375%, 8/15/30
California Statewide Communities Development Authority, Sutter
Health Obligated Group, Certificates of Participation:
1,500 5.500%, 8/15/19 8/09 at 101 AAA 1,532,835
4,000 6.125%, 8/15/22 8/02 at 102 AAA 4,131,360
4,800 The Regents of the University of California, Hospital Revenue 7/06 at 101 AAA 4,910,352
Bonds (UC Davis Medical Center), Series 1996, 5.750%, 7/01/24
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.2%
1,000 ABAG Finance Authority for Nonprofit Corporations, Multifamily 9/09 at 100 AAA 1,014,550
Housing Revenue Bonds (Civic Center Drive Apartments Project),
1999 Series A, 5.800%, 9/01/20 (Alternative Minimum Tax)
3,650 California Housing Finance Agency, Multi-Unit Rental Housing 2/03 at 102 Aa2 3,724,387
Revenue Bonds, Series 1992A-II, 6.625%, 2/01/24 (Alternative
Minimum Tax)
4,000 The City of Los Angeles (California), Tax-Exempt Mortgage Revenue 7/02 at 102 AAA 4,074,120
Refunding Bonds, Series 1993A (FHA-Insured Mortgage Loans -
Section 8 Assisted Projects), 6.300%, 1/01/25
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.3%
2,010 California Housing Finance Agency, Single Family Mortgage 2/07 at 102 AAA 2,074,139
Bonds II, 1997 Series A-1, 6.000%, 8/01/20 (Alternative
Minimum Tax)
California Housing Finance Agency, Home Mortgage Revenue Bonds,
Series 1998E:
2,690 5.150%, 8/01/19 2/09 at 101 1/2 AAA 2,573,308
1,500 5.250%, 2/01/33 (Alternative Minimum Tax) 2/09 at 101 1/2 AAA 1,401,075
3,000 California Housing Finance Agency, Home Mortgage Revenue 8/08 at 101 AAA 2,931,180
Bonds, Series 1998Q, 5.050%, 8/01/17
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.1%
State of California, Various Purpose General Obligation Bonds:
7,995 5.750%, 3/01/22 3/10 at 101 AAA 8,311,282
2,000 5.750%, 3/01/27 3/10 at 101 AAA 2,068,500
1,225 Fresno Unified School District (Fresno County, California), 2/13 at 103 AAA 1,435,859
1998 General Obligation Refunding Bonds, Series A, 6.550%, 8/01/20
500 Los Angeles Unified School District, California, General Obligation 7/10 at 100 AAA 499,960
Bonds, Election of 1997, Series 2000-D, 5.375%, 7/01/25
3,000 Pomona Unified School District, General Obligation Refunding 8/11 at 103 AAA 3,437,040
Bonds, Series 1997-A, 6.500%, 8/01/19
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.1%
4,000 Anaheim Public Financing Authority, Lease Revenue Bonds No Opt. Call AAA 1,190,560
(Anaheim Public Improvements Project), Subordinate Lease
Revenue Bonds, 1997 Series C, 0.000%, 9/01/22
2,000 State Public Works Board of the State of California, Lease Revenue 11/09 at 101 AAA 2,074,100
Bonds (California Department of Health Services), 1999 Series A
(Richmond Laboratory Project), 5.750%, 11/01/24
4,000 Los Angeles County Metropolitan Transportation Authority 7/03 at 100 AAA 3,847,000
(California), Proposition A, Sales Tax Revenue Refunding Bonds,
Series 1993-A, 5.000%, 7/01/21
4,000 Norco Redevelopment Agency, Norco Redevelopment Project Area 3/02 at 102 AAA 4,149,520
No. One, 1992 Refunding Tax Allocation Bonds, 6.250%, 3/01/19
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/LIMITED (continued)
$ 750 Puerto Rico Highway and Transportation Authority, Transportation 7/10 at 101 AAA $ 786,270
Revenue Bonds, Series B, 5.875%, 7/01/35
2,135 City of San Buenaventura, California, 1993 Refunding Certificates 1/03 at 100 AAA 2,158,784
of Participation (Capital Improvements Project), 5.500%, 1/01/17
9,500 Redevelopment Agency of the City of San Jose, Merged Area 2/04 at 102 AAA 8,610,705
Redevelopment Project, Tax Allocation Bonds, Series 1993,
4.750%, 8/01/24
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.1%
2,750 Harbor Department of the City of Los Angeles (California), Revenue 11/06 at 101 AAA 2,738,505
Refunding Bonds, Issue of 1996, Series C, 5.375%, 11/01/25
1,545 Airports Commission of the City and County of San Francisco, 5/03 at 102 AAA 1,612,455
California, San Francisco International Airport, Second Series
Refunding Revenue Bonds, Issue 4, 6.200%, 5/01/20 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 18.0%
6,000 Huntington Park Redevelopment Agency, Single Family Residential No Opt. Call AAA 7,908,600
Mortgage Revenue Refunding Bonds, 1986 Series A,
8.000%, 12/01/19
5,135 Community Redevelopment Agency of the City of Palmdale, No Opt. Call AAA 6,629,747
California, Single Family Mortgage Revenue Bonds,
Series 1986A Restructured, 8.000%, 3/01/16 (Alternative
Minimum Tax)
6,220 County of Riverside, California, Single Family Mortgage Revenue No Opt. Call AAA 8,833,457
Bonds (GNMA Mortgage-Backed Securities Program), Issue A
of 1987, 9.000%, 5/01/21 (Alternative Minimum Tax)
1,485 City of San Jose, California, Single Family Mortgage Revenue No Opt. Call AAA 2,132,638
Bonds, 1985 Series A, 9.500%, 10/01/13
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.7%
4,000 California Pollution Control Financing Authority, Pollution Control 12/02 at 102 AAA 4,170,080
Revenue Bonds (Southern California Edison Company),
1992 Series B, 6.400%, 12/01/24 (Alternative Minimum Tax)
4,000 City of Chula Vista, Industrial Development Revenue Bonds 12/02 at 102 A-1+ 4,141,400
(San Diego Gas and Electric Company), 1992 Series A,
6.400%, 12/01/27 (Alternative Minimum Tax)
2,000 Sacramento Municipal Utility District (California), Electric Revenue 8/02 at 100 AAA 2,041,940
Refunding Bonds, 1992 Series A, 5.750%, 8/15/13
5,000 Sacramento Municipal Utility District (California), Electric Revenue 7/04 at 101 AAA 4,881,700
Refunding Bonds, 1999 Series M, 5.250%, 7/01/28
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.2%
2,000 Cucamonga County Water District (San Bernardino County, 9/01 at 102 AAA 2,082,600
California), Certificates of Participation (1992 Water Facilities
Refinancing), 6.300%, 9/01/12
1,000 East Bay Municipal Utility District (Alameda and Contra 6/08 at 101 AAA 898,390
Costa Counties, California), Water System Subordinated Revenue
Bonds, Series 1998, 4.750%, 6/01/28
7,000 The City of Los Angeles, California, Wastewater System 11/03 at 102 AAA 6,485,920
Revenue Bonds, Series 1993-D, 4.700%, 11/01/19
1,900 Public Facilities Financing Authority of the City of San Diego 5/09 at 101 AAA 1,785,639
(California), Sewer Revenue Bonds, Series 1999B, 5.000%, 5/15/29
1,690 City of Santa Monica, Wastewater Enterprise Revenue Bonds 1/04 at 102 AAA 1,600,025
(Hyperion Project), 1993 Refunding Series, 4.500%, 1/01/15
5,000 Wheeler Ridge-Maricopa Water Storage District (Kern County, 11/06 at 102 AAA 5,303,150
California), 1996 Water Refunding Bonds, 5.700%, 11/01/15
3,425 City of Woodland (Yolo County, California), Certificates 3/03 at 100 AAA 3,460,380
of Participation (1992 Wastewater System Refunding Project),
5.500%, 3/01/18
------------------------------------------------------------------------------------------------------------------------------------
$ 136,405 Total Investments (cost $130,556,354) - 99.0% 140,541,742
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 1,360,797
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $141,902,539
====================================================================================================================
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Portfolio of
INVESTMENTS August 31, 2000
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION AND CIVIC ORGANIZATIONS - 3.5%
California Educational Facilities Authority, Revenue Bonds
(Santa Clara University), Series 1996:
$ 2,400 5.750%, 9/01/21 9/06 at 102 AAA $ 2,483,112
3,000 5.750%, 9/01/26 9/06 at 102 AAA 3,084,150
2,000 California Educational Facilities Authority, Revenue Bonds 11/10 at 100 Aaa 2,117,540
(University of the Pacific), Series 2000, 5.875%, 11/01/20
1,900 The Regents of the University of California, University 11/03 at 102 AAA 1,937,012
of California Housing System Revenue Bonds, Series A,
5.500%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 4.1%
2,000 California Health Facilities Financing Authority, Kaiser Permanente 6/08 at 102 AAA 1,882,020
Revenue Bonds, Series 1998A, 5.000%, 6/01/24
1,450 California Health Facilities Financing Authority, Insured Health 7/06 at 102 AAA 1,535,695
Facility Refunding Revenue Bonds (Mark Twain/St. Joseph's
Healthcare), 1996 Series A, 6.000%, 7/01/19
5,000 California Health Facilities Financing Authority, Insured Health 7/06 at 102 AAA 5,229,750
Facility Refunding Revenue Bonds (Catholic Healthcare West),
1996 Series A, 6.000%, 7/01/25
2,500 City of Oakland, California, Insured Revenue Bonds 1/10 at 100 AAA 2,637,700
(1800 Harrison Foundation - Kaiser Permanente), Series 1999A,
6.000%, 1/01/29
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.5%
ABAG Finance Authority for Nonprofit Corporations, Multifamily
Housing Revenue Bonds (Civic Center Drive Apartments Project),
1999 Series A:
4,000 5.800%, 9/01/20 (Alternative Minimum Tax) 9/09 at 100 AAA 4,058,200
1,370 5.875%, 3/01/32 (Alternative Minimum Tax) 9/09 at 100 AAA 1,372,370
4,360 The Community Redevelopment Agency of the City of Los Angeles, 6/05 at 105 AAA 4,786,103
California, Multifamily Housing Revenue Refunding Bonds,
1995 Series A (Angelus Plaza Project), 7.400%, 6/15/10
7,400 Housing Authority of the County of Santa Cruz, Tax-Exempt 5/03 at 102 Aaa 7,457,868
Multifamily Housing Revenue Refunding Bonds, Series 1993A
(GNMA Collateralized-Meadowview Apartments), 6.125%, 5/20/28
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.1%
5,305 California Housing Finance Agency, Single Family Mortgage 8/07 at 101 1/2 AAA 5,347,228
Bonds II, 1997 Series C-2, 5.625%, 8/01/20
(Alternative Minimum Tax)
1,395 California Housing Finance Agency, Home Mortgage Revenue 2/06 at 102 AAA 1,408,950
Bonds, 1996 Series E, 6.150%, 8/01/25 (Alternative Minimum Tax)
2,000 California Housing Finance Agency, Home Mortgage Revenue 2/09 at 101 AAA 1,875,780
Bonds, Series 1998N, 5.250%, 8/01/29
15,000 California Housing Finance Agency, Home Mortgage Revenue 2/09 at 32 1/8 AAA 2,553,900
Bonds, Series 1999B, 0.000%, 2/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.6%
1,460 ABC Unified School District (Los Angeles County, California), 8/10 at 101 AAA 1,569,690
General Obligation Bonds (Election 1997), Series B,
5.750%, 8/01/16
485 State of California, Veterans General Obligation Bonds, 12/03 at 102 AAA 483,346
Series 1997BH, 5.500%, 12/01/24 (Alternative Minimum Tax)
State of California, Various Purpose General Obligation Bonds:
7,995 5.750%, 3/01/22 3/10 at 101 AAA 8,311,282
2,500 5.500%, 9/01/24 9/09 at 101 AAA 2,527,775
2,000 5.750%, 3/01/27 3/10 at 101 AAA 2,068,500
2,575 Calipatria Unified School District, Imperial County, California, 8/06 at 102 AAA 2,745,723
1996 Series A, General Obligation Bonds, 5.625%, 8/01/13
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/GENERAL (continued)
$ 3,000 Escondido Union High School District, San Diego County, 11/06 at 102 AAA $ 3,246,690
California, General Obligation Bonds (1996 Election),
5.700%, 11/01/10
1,750 Lake Tahoe Unified School District, El Dorado County, California, 8/09 at 100 AAA 1,706,863
General Obligation Bonds (1999 Election), Series A,
5.250%, 8/01/24
4,950 Murrieta Valley Unified School District (Riverside County, No Opt. Call AAA 1,566,329
California), 1998 Series A, General Obligation Bonds,
0.000%, 9/01/21
1,850 Sacramento City Unified School District (Sacramento County, 7/09 at 102 Aaa 1,967,216
California), General Obligation Bonds, Series 2000A,
5.750%, 7/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.0%
3,705 County of Alameda, California, Alameda County Public Facilities 9/06 at 102 AAA 3,929,301
Corporation, Certificates of Participation (1991 Financing
Project), 6.000%, 9/01/21
6,985 County of Alameda, California, 1993 Refunding Certificates of 12/03 at 102 AAA 7,305,053
Participation (Santa Rita Jail Project), 5.700%, 12/01/14
Anaheim Public Financing Authority, Lease Revenue Bonds (Anaheim
Public Improvements Project), Subordinate Lease Revenue Bonds,
1997 Series C:
5,130 0.000%, 9/01/18 No Opt. Call AAA 1,957,403
8,000 0.000%, 9/01/21 No Opt. Call AAA 2,531,440
0.000%, 9/01/22 No Opt. Call AAA 446,460
1,800 California Public School District Financing Authority, Lease 9/06 at 102 AAA 1,885,410
Revenue Bonds (Richgrove Elementary School District Projects),
Series 1996B, 5.800%, 9/01/16
5,250 State Public Works Board of California, Lease Revenue Bonds 1/06 at 100 AAA 5,226,848
(Department of Corrections), 1996 Series A (California Substance
Abuse Treatment Facility and State Prison at Corcoran
(Corcoran II)), 5.250%, 1/01/21
3,450 State Public Works Board of California, Lease Revenue Bonds 11/09 at 101 AAA 3,577,823
(California Department of Health Services), 1999 Series A
(Richmond Laboratory Project), 5.750%, 11/01/24
5,000 Community Redevelopment Agency of the City of Compton, 8/05 at 102 AAA 5,529,650
California, Compton Redevelopment Project, Refunding Tax
Allocation Bonds, Series 1995A (Project Tax Revenues, Subventions
and Housing Tax Revenues) (Insured/Tax-Exempt), 6.500%, 8/01/13
4,000 County of Contra Costa, California, Certificates of Participation 11/07 at 102 AAA 4,032,600
(Merrithew Memorial Hospital Replacement Project), Refunding
Series of 1997, 5.500%, 11/01/22
3,000 Galt Schools Joint Powers Authority (Sacramento County, 11/07 at 102 AAA 3,135,900
California), 1997 Refunding Revenue Bonds, Series A (High School
and Elementary School Facilities), 5.875%, 11/01/24
2,500 Lancaster Housing Authority (California), Lease Refunding Revenue 4/08 at 102 AAA 2,221,100
Bonds (Brierwood Mobilehome Park Project), Issue of 1999,
5.000%, 4/01/24
3,585 Los Angeles County Transportation Commission (California), 7/01 at 102 AAA 3,726,106
Sales Tax Revenue Refunding Bonds, Series 1991-B,
6.500%, 7/01/13
2,060 Menifee Union School District (Riverside County, California), 9/06 at 102 AAA 2,189,656
Certificates of Participation (1996 School Project),
6.125%, 9/01/24
2,690 Norwalk Community Facilities Financing Authority (Los Angeles 9/05 at 102 AAA 2,881,259
County, California), Tax Allocation Refunding Revenue Bonds,
1995 Series A, 6.000%, 9/01/15
4,000 Oakland State Building Authority, Lease Revenue Bonds 4/08 at 101 AAA 3,820,080
(Elihu M. Harris State Office Building), 1998 Series A,
5.000%, 4/01/23
2,000 Poway Redevelopment Agency, Paguay Redevelopment Project, 12/10 at 102 AAA 2,066,640
Tax Allocation Refunding Bonds, Series 2000, 5.750%, 6/15/33
3,000 Puerto Rico Highway and Transportation Authority, Highway 7/03 at 101 1/2 AAA 2,848,830
Revenue Bonds, Series X, 5.000%, 7/01/22
1,000 Puerto Rico Highway and Transportation Authority, Transportation 7/10 at 101 AAA 1,048,360
Revenue Bonds, Series B, 5.875%, 7/01/35
9,000 City of Redlands, California, Certificates of Participation 9/03 at 102 AAA 9,337,230
(1993 Refunding of 1986 and 1987 Projects), 5.800%, 9/01/17
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/LIMITED (continued)
$ 5,000 City of San Bernardino, California Refunding Certificates of 9/09 at 102 AAA $ 5,118,150
Participation (Police Station, South Valle Refundings and 201
Building Projects), San Bernardino Joint Powers Financing
Authority, 5.500%, 9/01/20
3,500 San Francisco Bay Area Rapid Transit District (California), Sales 7/09 at 101 AAA 3,513,160
Tax Revenue Bonds, Series 1999, 5.500%, 7/01/34
1,930 Santa Margarita/Dana Point Authority, Orange County, California, No Opt. Call AAA 2,198,598
Revenue Bonds, Series A (1994 Improvement Districts
Nos. 1, 2, 2A and 8 General Obligation Bond Refinancing),
7.250%, 8/01/05
South Orange County Public Financing Authority (California),
Special Tax Revenue Bonds, 1994 Series C (Foothill Area):
3,000 8.000%, 8/15/08 No Opt. Call AAA 3,751,440
7,330 8.000%, 8/15/09 No Opt. Call AAA 9,324,933
3,935 Redevelopment Agency of the City of Suisun City, Suisun City 10/03 at 102 AAA 4,070,876
Redevelopment Project, 1993 Tax Allocation Refunding Bonds
(County of Solano, California), 5.900%, 10/01/23
5,450 City of Visalia, California (Motor Vehicle License Fee 12/06 at 102 AAA 5,441,880
Enhancement), Visalia Public Finance Authority, Refunding
Certificates of Participation, Series 1996A, 5.375%, 12/01/26
2,400 Yorba Linda Redevelopment Agency (Orange County, California), No Opt. Call AAA 500,880
Yorba Linda Redevelopment Project, 1998 Tax Allocation Parity
Refunding Bonds, Series A, 0.000%, 9/01/28
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.2%
6,500 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 65 5/16 AAA 2,484,170
Toll Road Refunding Revenue Bonds, Series 1999,
0.000%, 1/15/18
5,750 Harbor Department of the City of Los Angeles (California), Revenue 11/06 at 101 AAA 5,725,965
Refunding Bonds, Issue of 1996, Series C, 5.375%, 11/01/25
10,000 Airports Commission of the City and County of San Francisco, 5/09 at 101 AAA 9,573,400
California, San Francisco International Airport, Second
Series Revenue Bonds, Issue 23B Bonds, 5.125%, 5/01/30
6,500 San Joaquin Hills Transportation Corridor Agency, Toll Road 1/07 at 102 AAA 6,314,815
Refunding Revenue Bonds, Series 1997A, 5.250%, 1/15/30
3,750 City of San Jose, California, Airport Revenue Bonds, Series 3/03 at 102 AAA 3,811,913
of 1993, 5.700%, 3/01/18 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 7.5%
3,000 Central Unified School District (Fresno County, California), 3/03 at 102 AAA 3,142,410
General Obligation Bonds (1992 Election), 5.625%, 3/01/18
(Pre-refunded to 3/01/03)
4,320 County of Riverside, California, Single Family Mortgage Revenue No Opt. Call AAA 5,871,960
Bonds (GNMA Mortgage-Backed Securities Program),
Issue B of 1987, 8.625%, 5/01/16 (Alternative Minimum Tax)
9,000 Airports Commission of the City and County of San Francisco, 5/04 at 101 AAA 9,711,090
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 8B, 6.100%, 5/01/20 (Pre-refunded
to 5/01/04)
1,625 City of Torrance, Floating Rate Demand Hospital Revenue Bonds 12/05 at 100 AAA 1,741,448
(Little Company of Mary Hospital), 1985 Series A,
7.100%, 12/01/15 (Pre-refunded to 12/01/05)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.3%
2,500 California Pollution Control Financing Authority, Pollution Control 9/09 at 101 AAA 2,506,150
Refunding Revenue Bonds (Southern California Edison Company),
1999 Series C, 5.450%, 9/01/29
3,215 Modesto Irrigation District Financing Authority, Refunding Revenue 10/06 at 102 AAA 3,472,457
Bonds, Series A, 6.000%, 10/01/15
1,790 Sacramento City Financing Authority (California), 1999 Capital 12/09 at 102 AAA 1,895,324
Improvement Revenue Bonds (Solid Waste and Redevelopment
Projects), 5.800%, 12/01/19
3,500 Sacramento Municipal Utility District (California), Electric 8/06 at 102 AAA 3,558,485
Revenue Bonds, 1996 Series J, 5.600%, 8/15/24
6,650 Turlock Irrigation District (California), Revenue Refunding Bonds, 7/02 at 100 AAA 6,732,926
1992 Series A, 5.750%, 1/01/18
2,000 Turlock Irrigation District (California), Revenue Refunding Bonds, 1/08 at 102 AAA 1,894,080
1998 Series A, 5.000%, 1/01/26
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER AND SEWER - 8.3%
$ 3,530 Castaic Lake Water Agency (California), Refunding Revenue No Opt. Call AAA $ 4,028,083
Certificates of Participation (Water System Improvement
Projects), Series 1994A, 8.000%, 8/01/04
2,975 Chino Basin Regional Financing Authority, Revenue Bonds, 8/04 at 102 AAA 3,146,539
Series 1994 (Chino Basin Municipal Water District Sewer
System Project), 6.000%, 8/01/16
1,000 The City of Los Angeles, California, Wastewater System Revenue 6/08 at 101 AAA 939,310
Bonds, Series 1998-A, 5.000%, 6/01/28
2,775 Pomona Public Financing Authority (California), 1999 Revenue 5/09 at 101 AAA 2,789,236
Bonds, Series AC (Water Facilities Project), 5.500%, 5/01/29
1,000 Sacramento County Sanitation Districts Financing Authority, 6/10 at 101 AAA 1,025,650
Revenue Bonds, Series 2000A (Sacramento Regional County
Sanitation District), 5.500%, 12/01/20
2,900 City and County of San Francisco, Sewer Revenue Refunding 10/02 at 102 AAA 2,957,650
Bonds, Series 1992, 5.500%, 10/01/15
2,000 South San Joaquin Irrigation District (San Joaquin County, 1/03 at 102 AAA 2,051,300
California), 1993 Refunding Revenue Certificates of
Participation (1987 Project and 1992 Project), 5.500%, 1/01/15
5,410 City of Tulare, California, 1996 Sewer Revenue Bonds, 11/06 at 102 AAA 5,600,752
5.750%, 11/15/21
------------------------------------------------------------------------------------------------------------------------------------
$ 291,535 Total Investments (cost $260,089,362) - 99.1% 270,552,971
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 2,423,782
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $272,976,753
====================================================================================================================
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of
principal and interest.
* Optional Call Provisions (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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Nuveen California Premium Income Municipal Fund (NCU)
Portfolio of
INVESTMENTS August 31, 2000
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTHCARE - 15.7%
$ 5,150 California Health Facilities Financing Authority, Hospital Revenue 5/03 at 102 BBB+ $ 4,949,562
Bonds (Downey Community Hospital), Series 1993, 5.750%, 5/15/15
4,000 California Statewide Communities Development Authority, 8/02 at 102 A2 4,235,800
Certificates of Participation (Cedars-Sinai Medical Center),
6.500%, 8/01/15
8,100 California Statewide Community Development Authority, No Opt. Call AAA 7,721,244
Revenue Refunding Bonds (Sherman Oaks Project),
Series 1998A, 5.000%, 8/01/22
2,000 City of Loma Linda California, Hospital Revenue Bonds 12/03 at 102 N/R 1,875,860
(Loma Linda University Medical Center Project),
Series 1993-A, 6.000%, 12/01/06
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 13.7%
2,000 California Statewide Communities Development Authority, 7/08 at 101 BBB 1,956,340
Apartment Development Revenue Refunding Bonds
(Irvine Apartment Communities, L.P.), Series 1998A,
5.250%, 5/15/25 (Mandatory put 5/15/13)
7,825 The Community Redevelopment Agency of the City of 6/05 at 105 AAA 8,589,737
Los Angeles, California, Multifamily Housing Revenue Refunding
Bonds, 1995 Series A (Angelus Plaza Project), 7.400%, 6/15/10
3,960 City of Stanton Multifamily Housing Revenue Bonds (Continental 8/07 at 102 AAA 4,016,588
Gardens Apartments), Series 1997, 5.625%, 8/01/29 (Alternative
Minimum Tax) (Mandatory put 8/01/09)
2,000 City of Vista, California, Mobile Home Park Subordinate Revenue 3/09 at 102 N/R 1,803,960
Bonds (Vista Manor Mobile Home Park Project), Series 1999B,
5.750%, 3/15/29
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.1%
3,755 California Housing Finance Agency, Single Family Mortgage 2/07 at 102 AAA 3,874,822
Bonds II, 1997 Series A-1, 6.000%, 8/01/20
(Alternative Minimum Tax)
1,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 8/04 at 102 Aa 1,028,490
1994 Series A, 6.550%, 8/01/26
1,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 8/05 at 102 AAA 1,016,830
1994 Series F-3, 6.100%, 8/01/15 (Alternative Minimum Tax)
2,000 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/07 at 102 AAA 2,089,820
1997 Series B, 6.000%, 8/01/16 (Alternative Minimum Tax)
1,530 California Rural Home Mortgage Finance Authority, Single Family No Opt. Call AAA 1,714,105
Mortgage Revenue Bonds, (Mortgage-Backed Securities Program),
1996 Series C, 7.500%, 8/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 15.9%
6,500 State of California, Veterans General Obligation Bonds, Series BR, 6/04 at 101 AA- 6,180,135
5.300%, 12/01/29 (Alternative Minimum Tax)
3,000 State of California, Various Purpose General Obligation Bonds, 8/09 at 101 AAA 2,818,980
5.000%, 8/01/29
3,000 Pomona Unified School District, General Obligation Refunding 8/11 at 103 AAA 3,381,030
Bonds, Series 1997-A, 6.150%, 8/01/15
6,500 Commonwealth of Puerto Rico, Public Improvement Bonds 7/10 at 100 AAA 6,754,215
of 2000 (General Obligation Bonds), 5.750%, 7/01/21
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.5%
4,500 Bonita Canyon Public Facilities Financing Authority (California), 9/00 at 103 N/R 4,084,155
Community Facilities District No. 98-1 Special Tax Bonds,
Series 1998, 5.375%, 9/01/28
5,920 State Public Works Board of the State of California, Lease 11/09 at 101 AAA 6,159,464
Revenue Bonds (Department of Veterans Affairs, Southern
California Veterans Home - Chula Vista Facility), 1999 Series A,
5.600%, 11/01/19
2,500 City of Carlsbad (California), Assessment District No. 96-1 9/00 at 102 1/2 N/R 2,317,125
(Rancho Carillo), Limited Obligation Improvement Bonds,
5.500%, 9/02/28
1,000 Carson Redevelopment Agency (California), Redevelopment 10/03 at 102 BBB 1,039,480
Project Area No. 2, Refunding Tax Allocation Bonds,
Series 1993, 5.875%, 10/01/09
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/LIMITED (continued)
$ 2,160 Community Redevelopment Financing Authority of the Community 6/03 at 102 BB $ 2,052,216
Redevelopment Agency of the City of Los Angeles, California,
Grand Central Square Multifamily Housing Bonds, 1993 Series A,
5.750%, 12/01/13 (Alternative Minimum Tax)
1,000 Community Facilities District No. 88-1 of the City of Poway, 8/08 at 102 N/R 1,093,230
California (Parkway Business Center), Special Tax Refunding
Bonds, Series 1998, 6.500%, 8/15/09
1,200 City of Richmond, Limited Obligation Refunding Improvement 9/00 at 103 N/R 1,239,612
Bonds, Reassessment District No. 855 (Atlas Road West
and Interchange), 6.600%, 9/02/19
2,100 Sacramento City Finance Authority, Lease Revenue Refunding No Opt. Call A+ 2,129,568
Bonds, Series 1993 B, 5.400%, 11/01/20
San Marcos Public Facilities Authority (California), Refunding
Revenue Bonds Series 1998:
1,500 5.800%, 9/01/18 9/08 at 101 N/R 1,452,030
2,000 5.800%, 9/01/27 9/08 at 101 N/R 1,892,040
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.2%
2,750 Airports Commission of the City and County of San Francisco, 5/04 at 102 AAA 2,953,858
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 5, 6.500%, 5/01/24 (Alternative Minimum Tax)
2,000 Airports Commission of the City and County of San Francisco, 5/06 at 102 AAA 2,026,940
California, San Francisco International Airport, Second Series
Revenue Bonds, Issue 10A, 5.700%, 5/01/26 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 10.3%
1,500 ABAG Finance Authority for Nonprofit Corporations, Certificates 11/03 at 102 AAA 1,469,730
of Participation (Stanford University Hospital), California,
Series 1993, 5.250%, 11/01/20
3,200 State Public Works Board of the State of California, Lease 10/04 at 102 A+*** 3,527,168
Revenue Bonds (The Trustees of the California State
University), 1994 Series A (Various California State University
Projects), 6.375%, 10/01/14 (Pre-refunded to 10/01/04)
4,100 Imperial Irrigation District, California, Certificates of 11/04 at 102 AAA 4,478,635
Participation (1994 Electric System Project), 6.000%,
11/01/15 (Pre-refunded to 11/01/04)
2,655 City of Torrance, Floating Rate Demand Hospital Revenue Bonds 12/05 at 100 AAA 2,845,257
(Little Company of Mary Hospital), 1985 Series A,
7.100%, 12/01/15 (Pre-refunded to 12/01/05)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.5%
1,000 California Pollution Control Financing Authority, Pollution 12/02 at 102 AAA 1,042,520
Control Revenue Bonds (Southern California Edison Company),
1992 Series B, 6.400%, 12/01/24 (Alternative Minimum Tax)
2,000 Department of Water and Power of the City of Los Angeles 9/03 at 102 AAA 1,981,760
(California), Electric Plant Refunding Revenue Bonds,
Issue of 1993, 5.375%, 9/01/23
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.5%
5,000 City of Culver City, California, Wastewater Facilities Refunding 9/09 at 102 AAA 5,139,500
Revenue Bonds, 1999 Series A, 5.700%, 9/01/29
1,000 Eastern Municipal Water District (Riverside County, California), 7/01 at 101 AAA 1,020,530
Water and Sewer Revenue Refunding Certificates of
Participation, Series 1991A, 6.300%, 7/01/20
1,000 City of Riverside, California, Water Revenue Bonds, Issue No Opt. Call AA 1,052,710
of 1991, 9.000%, 10/01/01
1,000 Sacramento County Sanitation Districts Financing Authority, No Opt. Call AA 1,114,070
Revenue Bonds, Series 2000A (Sacramento Regional County
Sanitation District), 5.750%, 12/01/09
1,965 Public Facilities Financing Authority of the City of San Diego 5/09 at 101 AAA 1,846,727
(California), Sewer Revenue Bonds, Series 1999A,
5.000%, 5/15/29
------------------------------------------------------------------------------------------------------------------------------------
$ 116,370 Total Investments (cost $116,008,614) - 98.4% 117,965,843
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 1,911,836
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $119,877,679
====================================================================================================================
* 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.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of
NET ASSETS August 31, 2000
<CAPTION>
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
(NPC) (NCL) (NCU)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value $140,541,742 $270,552,971 $117,965,843
Cash -- -- 352,585
Receivables:
Interest 2,117,220 4,178,108 1,810,800
Investments sold -- 120,000 309,000
Other assets 10,153 8,967 342
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 142,669,115 274,860,046 120,438,570
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 140,149 792,797 --
Accrued expenses:
Management fees 77,388 147,421 65,532
Other 94,669 93,486 115,658
Preferred share dividends payable 7,394 35,127 10,842
Common share dividends payable 446,976 814,462 368,859
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 766,576 1,883,293 560,891
-----------------------------------------------------------------------------------------------------------------------------------
Net assets $141,902,539 $272,976,753 $119,877,679
===================================================================================================================================
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 6,425,832 12,627,413 5,763,653
===================================================================================================================================
Net asset value per Common share outstanding
(net assets less Preferred shares
at liquidation value,
divided by Common shares outstanding) $ 15.08 $ 14.09 $ 13.34
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of
OPERATIONS Year Ended August 31, 2000
<CAPTION>
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME
(NPC) (NCL) (NCU)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income $ 8,144,882 $14,971,138 $6,924,521
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 885,611 1,688,402 754,763
Preferred shares - auction fees 112,809 238,149 107,794
Preferred shares - dividend disbursing agent fees 10,028 20,053 10,028
Shareholders' servicing agent fees and expenses 8,933 11,652 4,406
Custodian's fees and expenses 40,234 57,380 44,549
Directors'/Trustees' fees and expenses 4,164 5,698 3,307
Professional fees 9,212 6,828 20,388
Shareholders' reports - printing and mailing expenses 16,343 26,616 20,689
Stock exchange listing fees 16,158 24,284 15,380
Investor relations expense 12,301 22,909 10,424
Portfolio insurance expense 12,854 6,642 --
Other expenses 19,347 30,268 14,768
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 1,147,994 2,138,881 1,006,496
Custodian fee credit (11,171) (21,581) (9,893)
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,136,823 2,117,300 996,603
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 7,008,059 12,853,838 5,927,918
-----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investment transactions (2,371,822) (491,139) 156,785
Change in net unrealized appreciation (depreciation) of investments 4,320,269 5,822,864 686,745
-----------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 1,948,447 5,331,725 843,530
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 8,956,506 $18,185,563 $6,771,448
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Statement of
CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) CALIFORNIA PREMIUM INCOME (NCU)
---------------------------- ------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/00 8/31/99 8/31/00 8/31/99 8/31/00 8/31/99
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 7,008,059 $ 7,013,184 $ 12,853,838 $ 12,704,555 $ 5,927,918 $ 5,736,493
Net realized gain (loss) from
investment transactions (2,371,822) 2,811,060 (491,139) 1,092,203 156,785 953,072
Change in net unrealized
appreciation (depreciation)
of investments 4,320,269 (12,837,818) 5,822,864 (15,444,517) 686,745 (7,444,796)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
from operations 8,956,506 (3,013,574) 18,185,563 (1,647,759) 6,771,448 (755,231)
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From undistributed net
investment income:
Common shareholders (5,683,474) (5,336,428) (10,102,279) (9,879,332) (4,561,523) (4,435,082)
Preferred shareholders (1,550,742) (1,268,146) (3,064,024) (2,643,521) (1,340,162) (1,186,689)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (7,234,216) (6,604,574) (13,166,303) (12,522,853) (5,901,685) (5,621,771)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 89,174 231,305 124,695 604,259 130,708 188,040
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets 1,811,464 (9,386,843) 5,143,955 (13,566,353) 1,000,471 (6,188,962)
Net assets at the
beginning of year 140,091,075 149,477,918 267,832,798 281,399,151 118,877,208 125,066,170
-----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $141,902,539 $140,091,075 $272,976,753 $267,832,798 $119,877,679 $118,877,208
===================================================================================================================================
Balance of undistributed net
investment income
at the end of year $ 499,867 $ 726,024 $ 425,494 $ 737,959 $ 385,545 $ 359,312
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The California Funds (the "Funds") covered in this report and their
corresponding stock exchange symbols are Nuveen Insured California Premium
Income Municipal Fund, Inc. (NPC), Nuveen Insured California Premium Income
Municipal Fund 2, Inc. (NCL) and Nuveen California Premium Income Municipal Fund
(NCU). Insured California Premium Income (NPC) and Insured California Premium
Income 2 (NCL) are traded on the New York Stock Exchange while California
Premium Income (NCU) is traded on the American Stock Exchange.
Each Fund invests primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities within the state of California.
The Funds are registered under the Investment Company Act of 1940 as closed-end,
diversified management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers and general
market conditions. Temporary investments in securities that have variable rate
and demand features qualifying them as short-term securities are valued at
amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
August 31, 2000, the Funds had no such outstanding purchase commitments.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount realized from investment transactions. The
Funds currently consider significant net realized capital gains and/or market
discount as amounts in excess of $.01 per Common share. Furthermore, each Fund
intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal and California state income
taxes, to retain such tax-exempt status when distributed to shareholders of the
Funds. All monthly tax-exempt income dividends paid during the fiscal year ended
August 31, 2000, have been designated Exempt Interest Dividends. Net realized
capital gain and market discount distributions are subject to federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared monthly as a dividend and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month end. Net realized capital gains and/or market discount
from investment transactions are distributed to shareholders not less frequently
than annually. Furthermore, capital gains are distributed only to the extent
they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount, if any, are recorded on the ex-dividend
date. The amount and timing of distributions are determined in accordance with
federal income tax regulations, which may differ from accounting principles
generally accepted in the United States. Accordingly, temporary
over-distributions as a result of these differences may occur and will be
classified as either distributions in excess of net investment income,
distributions in excess of net realized gains and/or distributions in excess of
net ordinary taxable income from investment transactions, where applicable.
<PAGE>
Notes to
FINANCIAL STATEMENTS (continued)
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend rate
may change every seven days, as set by the Auction Agent. The number of shares
outstanding, by Series and in total, for each Fund is as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
--------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,720
Series T 1,800 1,900 --
Series Th -- 1,900 --
--------------------------------------------------------------------------------
Total 1,800 3,800 1,720
================================================================================
Insurance
Insured California Premium Income (NPC) and Insured California Premium Income 2
(NCL) invest in municipal securities which are either covered by insurance or
are backed by an escrow or trust account containing sufficient U.S. Government
or U.S. Government agency securities, both of which ensure the timely payment of
principal and interest. Each insured municipal security is covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. Such
insurance does not guarantee the market value of the municipal securities or the
value of the Funds' shares. Original Issue Insurance and Secondary Market
Insurance remain in effect as long as the municipal securities covered thereby
remain outstanding and the insurer remains in business, regardless of whether
the Funds ultimately dispose of such municipal securities. Consequently, the
market value of the municipal securities covered by Original Issue Insurance or
Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only while the municipal securities are held by
the Funds. Accordingly, neither the prices used in determining the market value
of the underlying municipal securities nor the net asset value of the Funds'
shares include value, if any, attributable to the Portfolio Insurance. Each
policy of the Portfolio Insurance does, however, give the Funds the right to
obtain permanent insurance with respect to the municipal security covered by the
Portfolio Insurance policy at the time of its sale.
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial instruments
including futures, forward, swap and option contracts, and other financial
instruments with similar characteristics. Although the Funds are authorized to
invest in such financial instruments, and may do so in the future, they did not
make any such investments during the fiscal year ended August 31, 2000.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results may differ from those estimates.
<PAGE>
2. FUND SHARES
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL)
----------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/00 8/31/99 8/31/00 8/31/99
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 6,092 14,390 13,473 36,233
=========================================================================================================
<CAPTION>
CALIFORNIA
PREMIUM INCOME (NCU)
---------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
8/31/00 8/31/99
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 10,118 13,023
=========================================================================================================
</TABLE>
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid October 2, 2000, to shareholders of record on
September 15, 2000, as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
--------------------------------------------------------------------------------
Dividend per share $.0695 $.0645 $.0640
================================================================================
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities during the fiscal year ended
August 31, 2000, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $36,040,885 $68,723,973 $22,169,643
Short-term municipal securities 9,900,000 25,050,000 1,700,000
Sales and maturities:
Long-term municipal securities 36,301,141 69,344,787 22,153,563
Short-term municipal securities 9,900,000 25,050,000 1,700,000
===============================================================================
At August 31, 2000, the identified cost of investments owned for federal income
tax purposes were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-------------------------------------------------------------------------------
$132,246,946 $262,289,614 $116,008,614
===============================================================================
<PAGE>
Notes to
FINANCIAL STATEMENTS (continued)
At August 31, 2000, the Funds had unused capital loss carryforwards available
for federal income tax purposes to be applied against future capital gains, if
any. If not applied, the carryforwards will expire as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-------------------------------------------------------------------------------
Expiration year:
2003 $ -- $ 323,810 $1,766,975
2004 -- 4,345,091 2,742,449
2005 165,897 1,283,948 1,049,994
2006 -- -- --
2007 -- -- --
2008 681,230 -- --
-------------------------------------------------------------------------------
Total $847,127 $5,952,849 $5,559,418
===============================================================================
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
for federal income tax purposes at August 31, 2000, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(NPC) (NCL) (NCU)
-------------------------------------------------------------------------------
Gross unrealized:
appreciation $10,536,133 $12,059,543 $ 3,948,822
depreciation (2,241,337) (3,796,186) (1,991,593)
-------------------------------------------------------------------------------
Net unrealized appreciation $ 8,294,796 $ 8,263,357 $ 1,957,229
===============================================================================
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 assets of each Fund as follows:
AVERAGE DAILY NET ASSETS MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .5875 of 1
================================================================================
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates.
<PAGE>
7. COMPOSITION OF NET ASSETS
At August 31, 2000, net assets consisted of:
<TABLE>
<CAPTION>
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME
(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 64,258 126,274 57,637
Paid-in surplus 88,890,745 175,114,477 80,036,686
Balance of undistributed net investment income 499,867 425,494 385,545
Accumulated net realized gain (loss) from investment transactions (2,537,719) (8,153,101) (5,559,418)
Net unrealized appreciation of investments 9,985,388 10,463,609 1,957,229
------------------------------------------------------------------------------------------------------------
Net assets $141,902,539 $272,976,753 $119,877,679
------------------------------------------------------------------------------------------------------------
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
============================================================================================================
</TABLE>
<PAGE>
<TABLE>
Financial HIGHLIGHTS
Selected data for a Common share outstanding throughout each year ended August
31:
<CAPTION>
Investment Operations Less Distributions
------------------------------ ------------------------------------------------------------
Net Net
Net Investment Investment Capital Capital
Realized/ Income to Income to Gains to Gains to
Beginning Net Unrealized Common Preferred Common Preferred
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) Total holders holders+ holders holders+ Total
------------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $14.81 $1.09 $.30 $1.39 $(.88) $(.24) $-- $-- $(1.12)
1999 16.31 1.09 (1.56) (.47) (.83) (.20) -- -- (1.03)
1998 15.39 1.03 .92 1.95 (.81) (.22) -- -- (1.03)
1997 14.46 1.04 .93 1.97 (.81) (.23) -- -- (1.04)
1996 14.41 1.05 .02 1.07 (.79) (.23) -- -- (1.02)
INSURED CALIFORNIA
Premium Income 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 13.70 1.02 .41 1.43 (.80) (.24) -- -- (1.04)
1999 14.82 1.01 (1.14) (.13) (.78) (.21) -- -- (.99)
1998 14.06 .98 .77 1.75 (.75) (.24) -- -- (.99)
1997 13.27 .99 .77 1.76 (.74) (.23) -- -- (.97)
1996 13.01 1.00 .24 1.24 (.74) (.24) -- -- (.98)
CALIFORNIA PREMIUM
INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 13.19 1.03 .14 1.17 (.79) (.23) -- -- (1.02)
1999 14.30 1.00 (1.13) (.13) (.77) (.21) -- -- (.98)
1998 13.60 .98 .70 1.68 (.74) (.24) -- -- (.98)
1997 12.70 .99 .89 1.88 (.74) (.24) -- -- (.98)
1996 12.43 .98 .27 1.25 (.74) (.24) -- -- (.98)
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------
Total Returns Before Credit
----------------- ----------------------------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Expenses Income to Expenses Income to
Based to Average Average to Average Average
Ending Based on Ending Net Assets Net Assets Total Total
Net Ending on Net Net Applicable Applicable Net Assets Net Assets
Asset Market Market Asset Assets to Common to Common Including Including
Value Value Value* Value* (000) Shares++ Shares++ Preferred++ Preferred++
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 $15.08 $14.5625 .84% 8.34% $141,903 1.25% 7.65% .84% 5.13%
1999 14.81 15.3750 1.62 (4.35) 140,091 1.22 6.81 .85 4.74
1998 16.31 15.9375 15.85 11.51 149,478 1.22 6.49 .85 4.50
1997 15.39 14.5000 10.69 12.30 143,571 1.25 6.96 .85 4.74
1996 14.46 13.8750 15.39 5.83 137,610 1.26 7.08 .85 4.81
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 14.09 14.0000 3.58 9.21 272,977 1.28 7.65 .81 4.88
1999 13.70 14.3750 2.27 (2.50) 267,833 1.24 6.86 .82 4.53
1998 14.82 14.8125 15.70 10.95 281,399 1.25 6.79 .82 4.46
1997 14.06 13.5000 14.36 11.82 271,883 1.28 7.24 .83 4.67
1996 13.27 12.5000 15.36 7.76 261,851 1.29 7.39 .83 4.73
CALIFORNIA PREMIUM
INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 13.34 13.3125 5.93 7.63 119,878 1.38 8.09 .87 5.10
1999 13.19 13.3750 .81 (2.57) 118,877 1.30 7.08 .85 4.62
1998 14.30 14.0000 12.54 10.83 125,066 1.32 7.02 .86 4.57
1997 13.60 13.1250 17.16 13.20 120,995 1.34 7.47 .86 4.76
1996 12.70 11.8750 17.51 8.15 115,869 1.39 7.63 .88 4.83
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------------------------
Municipal Auction Rate Cumulative
After Credit** Preferred Stock at End of Year
------------------------------------------------------- --------------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Expenses Income to Expenses Income to
to Average Average to Average Average Liquidation
Net Assets Net Assets Total Total Aggregate and
Applicable Applicable Net Assets Net Assets Portfolio Amount Market Asset
to Common to Common Including Including Turnover Outstanding Value Coverage
Shares++ Shares++ Preferred++ Preferred++ Rate (000) Per Share Per Share
------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
Year Ended 8/31:
2000 1.24% 7.66% .83% 5.13% 27% $45,000 $25,000 $78,835
1999 1.22 6.82 .85 4.74 50 45,000 25,000 77,828
1998 1.22 6.49 .85 4.50 2 45,000 25,000 83,043
1997 1.25 6.96 .85 4.74 9 45,000 25,000 79,762
1996 1.26 7.08 .85 4.81 9 45,000 25,000 76,450
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 1.26 7.66 .81 4.89 26 95,000 25,000 71,836
1999 1.24 6.86 .82 4.53 35 95,000 25,000 70,482
1998 1.25 6.79 .82 4.46 13 95,000 25,000 74,052
1997 1.28 7.24 .83 4.67 24 95,000 25,000 71,548
1996 1.29 7.39 .83 4.73 27 95,000 25,000 68,908
CALIFORNIA PREMIUM
INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2000 1.36 8.10 .86 5.10 19 43,000 25,000 69,696
1999 1.30 7.08 .85 4.63 36 43,000 25,000 69,115
1998 1.32 7.02 .86 4.57 21 43,000 25,000 72,713
1997 1.34 7.47 .86 4.76 44 43,000 25,000 70,346
1996 1.39 7.63 .88 4.83 25 43,000 25,000 67,365
------------------------------------------------------------------------------------------------------------------------------------
* 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.
** After custodian fee credit, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
See accompanying notes to financial statements.
</TABLE>
[SPREAD] 26-27
<PAGE>
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
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.
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. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
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.
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 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 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 reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. 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 at (800)
257-8787.
<PAGE>
Fund
INFORMATION
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN, TRANSFER AGENT
AND SHAREHOLDER SERVICES
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
Each fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the 12-month period ended August 31, 2000. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
Serving Investors
FOR GENERATIONS
PHOTO OF: John Nuveen, Sr.
For over a century, generations of Americans have relied on Nuveen Investments
to help them grow and keep the money they've earned. Financial advisors,
investors and their families have associated Nuveen Investments with quality,
expertise and dependability since 1898. That is why financial advisors have
entrusted the assets of more than 1.3 million investors to Nuveen.
With the know-how that comes from a century of experience, Nuveen continues to
build upon its reputation for quality. Now, financial advisors and investors can
count on Nuveen Investments to help them design customized solutions that meet
the far-reaching financial goals unique to family wealth strategies - solutions
that can translate into legacies.
To find out more about how Nuveen Investments' products and services can help
you preserve your financial security, talk with your financial advisor, or call
us at (800) 257-8787 for more information, including a prospectus where
applicable. Please read that information carefully before you invest.
Invest well.
Look ahead.
LEAVE YOUR MARK.(SM)
Logo: NUVEEN Investments
Nuveen Investments o 333 West Wacker Drive FAN-2-8-00
Chicago, IL 60606 o www.nuveen.com
