UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10197
---------------------
Nuveen California Dividend Advantage Municipal Fund 2
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
-------------------
Date of fiscal year end: August 31
------------------
Date of reporting period: August 31, 2006
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT August 31, 2006
Nuveen Investments
Municipal Closed-End Funds
NUVEEN INSURED
CALIFORNIA PREMIUM
INCOME MUNICIPAL
FUND, INC.
NPC
NUVEEN INSURED
CALIFORNIA PREMIUM
INCOME MUNICIPAL
FUND 2, INC.
NCL
NUVEEN CALIFORNIA
PREMIUM INCOME
MUNICIPAL FUND
NCU
NUVEEN CALIFORNIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NAC
NUVEEN CALIFORNIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NVX
NUVEEN CALIFORNIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND 3
NZH
NUVEEN INSURED
CALIFORNIA DIVIDEND
ADVANTAGE
MUNICIPAL FUND
NKL
NUVEEN INSURED
CALIFORNIA TAX-FREE
ADVANTAGE
MUNICIPAL FUND
NKX
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KEEP.(R)
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Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Chairman's
LETTER TO SHAREHOLDERS
Once again, I am pleased to report that over the twelve-month period
covered by this report your Fund continued to provide you with attractive
monthly tax-free income. For more details about the management strategy and
performance of your Fund, please read the Portfolio Manager's Comments, the
Dividend and Share Price Information, and the Performance Overview sections
of this report.
For some time, I've used these letters to remind you that municipal bonds
can be an important building block in a well balanced investment portfolio.
In addition to providing attractive tax-free monthly income, a municipal
bond investment like your Fund may help you achieve and benefit from
greater portfolio diversification. Portfolio diversification is a
recognized way to try to reduce some of the risk that comes with investing.
For more information about this important investment strategy, I encourage
you to contact your personal financial advisor.
"IN ADDITION TO PROVIDING ATTRACTIVE TAX-FREE MONTHLY INCOME, A MUNICIPAL BOND
INVESTMENT LIKE YOUR FUND MAY HELP YOU ACHIEVE AND BENEFIT FROM GREATER
PORTFOLIO DIVERSIFICATION."
We also are pleased to be able to offer you a choice concerning how you
receive your shareholder reports and other Fund information. As an
alternative to mailed copies, you can sign up to receive future Fund
reports and other Fund information by e-mail and the Internet. The inside
front cover of this report contains information on how you can sign up.
We are grateful that you have chosen us as a partner as you pursue your
financial goals, and we look forward to continuing to earn your trust in
the months and years ahead. At Nuveen Investments, our mission continues to
be to assist you and your financial advisor by offering investment services
and products that can help you to secure your financial objectives.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 16, 2006
Nuveen Investments California Municipal Closed-End Funds
(NPC, NCL, NCU, NAC, NVX, NZH, NKL, NKX)
Portfolio Manager's
COMMENTS
Portfolio manager Scott Romans reviews economic and municipal market conditions
at both the national and state levels, key investment strategies and the annual
performance of these eight Funds. Scott, who joined Nuveen Investments in 2000,
has managed NCU, NAC, NVX, NZH, NKL, and NKX since 2003. He assumed portfolio
management responsibility for NPC and NCL in 2005.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL
REPORTING PERIOD ENDED AUGUST 31, 2006?
During this reporting period, we saw increases in interest rates across
virtually the entire yield curve, resulting in a general decline in bond prices.
Through much of the period, however, rates at the longer end of the curve
remained more stable than those at the short end. Between September 1, 2005 and
August 31, 2006, the Federal Reserve announced increases in the fed funds rate
at seven of its eight Open Market Committee meetings, leaving the rate unchanged
at the August 8, 2006 session. These seven 0.25% increases raised the short-term
target by 175 basis points, from 3.50% to 5.25%, its highest level since March
2001. By comparison, the yield on the benchmark 10-year U.S. Treasury note rose
71 basis points during this period to end August 2006 at 4.73%. As short-term
rates approached and exceeded the levels of long-term rates, the yield curve
flattened and then inverted.
In the municipal market, the yield on the Bond Buyer 25 Revenue Bond Index, a
widely followed measure of longer-term municipal market rates, stood at 4.91% at
the end of August 2006, an increase of just four basis points from the end of
August 2005.
Despite rising interest rates, elevated energy prices and a softening housing
market, the overall economy remained relatively resilient. After expanding at a
rate of 4.2% in the third quarter of 2005, the U.S. gross domestic product (GDP)
growth rate slowed to 1.8% in the fourth quarter of 2005, then rebounded sharply
to 5.6% in the first quarter of 2006 (all GDP numbers annualized). In the second
quarter of 2006, GDP growth moderated to 2.6% with the deceleration reflecting a
decline in federal spending as well as a major downturn in residential
investment. In general, the jobs picture remained positive, with national
unemployment at 4.7% in August 2006, down from 4.9% in August 2005. However, the
markets continued to keep a close eye on inflation trends, as the year-
4
over-year increase in the Consumer Price Index registered 3.8% in August 2006.
During the first eight months of 2006, the increase in inflation was driven
mainly by higher energy and transportation costs, rising at an annualized rate
of 4.6%, compared with 3.4% for all of 2005.
Over the 12 months ended August 2006, municipal bond issuance nationwide totaled
$368.2 billion, down 7% from the previous 12 months. This total reflected the
general decrease in the supply of municipal securities during 2006. During the
first eight months of 2006, $235.5 billion in new securities came to market, off
15% from the same period in 2005. A major factor in 2006's drop-off was the
sharp reduction in pre-refunding volume, which fell more than 56% from 2005
levels as rising interest rates made advance refundings less economically
attractive. Overall, demand for municipal bonds, especially those offering
higher yields, continued to be strong and broad-based, with individual
investors, property and casualty insurance companies, and hedge funds all
participating in the market.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN CALIFORNIA DURING THIS PERIOD?
California ranked as the 15th fastest growing state economy in the nation in
2005, led by the leisure and hospitality sector, professional and business
services, and construction. California's $1.6 trillion economy remained diverse,
with international trade, technology, financial services and defense serving as
additional key drivers. Over the past six months, the state's ports benefited
from the nearly 10% growth in Asian trade, while Mexico remained California's
largest international trading partner. In August 2006, California's unemployment
rate was 4.9%, down from 5.2% in August 2005. While approximately 20% of the
jobs created in California during the 12-month period were generated by the
construction industry, concerns about the disproportionate impact of a housing
slowdown on the California economy have not yet been realized. Population trends
in the state, with growth of more than 8% over the past five years, remained
positive.
5
Due to strong revenue growth resulting from economic expansion, California's
fiscal condition improved over the past 12 months, as personal income tax
receipts for fiscal 2006 surpassed the previous peak posted in 2001. The state's
general fund ended fiscal 2006 with an estimated balance of $6.5 billion, and
plans call for carrying forward the majority of these funds into fiscal 2007 to
offset a $3.7 billion deficit in the $125.6 billion fiscal 2007 budget and
prepay internal and external debt. Even withimprovements, however, California's
budget remained structurally imbalanced, and deficits in excess of $3 billion
were forecast for fiscal 2008 and 2009. Citing the improved tax revenue trends,
both Moody's and Standard & Poor's upgraded California's general obligation
bonds to A1 and A+, respectively, from A2 and A in May 2006. For the 12 months
ended August 31, 2006, municipal issuance in California totaled $51.0 billion,
on par with issuance for the previous 12 months. During the first eight months
of 2006, however, California supply declined sharply, falling 20% from that of
January-August 2005, to $30.3 billion. California remained the largest state
issuer in the nation for both the 12-month and year-to-date periods. A
referendum authorizing the issuance of $37 billion of additional general
obligation debt, down from the original proposal of $68 billion, is scheduled to
appear on the state's November 2006 ballot. If passed, this referendum would
increase California's general fund-supported debt by 67%.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE CALIFORNIA FUNDS DURING THIS
REPORTING PERIOD?
As short term interest rates rose and the municipal bond yield curve flattened
during this 12-month period, we continued to emphasize a disciplined approach to
duration1 management and yield curve positioning. Over this period, two factors
caused the durations of some of these California Funds to shorten more quickly
relative to the general market. First, with the flattening of the curve, we saw
a major acceleration in advance refunding2 activity during the first half of
this period. While these pre-refundings benefited the Funds' performance in the
short-term, they also had a shortening effect on the Funds' durations. The
second factor was the natural tendency of a bond's duration to shorten as time
passes. During the second half of this period, we took a proactive
1 Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
2 Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older, existing bonds. This process often results in
lower borrowing costs for bond issuers.
6
approach to mitigating some of the potential risks associated with these changes
in duration. (A fund's price performance can also be hampered if the fund's
duration is too short during a period when the market rallies.)
Because interest rates at the longer end of the yield curve remained relatively
low over this period, we believed the most prudent approach to maintaining the
Funds' durations within our preferred strategic range was the use of forward
interest rate swaps, a type of derivative financial instrument. As discussed in
previous shareholder reports, we began using these swaps strategies in late 2004
in an effort to control interest rate risk, that is, to reduce the impact of
movements in interest rates on the value of the Funds' investments. The swaps
are not an attempt to profit from correctly predicting the timing and direction
of interest rate movements. Instead, our sole objective is to manage the
durations of these Funds without having a negative impact on their income
streams or common share dividends over the short term. In line with this
objective, we placed swaps on NAC in June 2006, and NPC, NCL, and NVX in July
2006. These swaps performed as expected for the remainder of the period. In NKL
and NKX, where we had implemented swaps in a previous period, the natural
reduction in duration that occurs with the passage of time had brought these
funds close enough to duration targets to allow us to remove the swaps during
this period. (NCU and NZH did not use swaps during this period because we
believed their durations were appropriate relative to the general market.) We
also purchased a small number of U.S. Treasury note futures contracts for NAC.
This strategy also enhanced our management of the Funds' yield curve
positioning. Because of the low, longer term interest rate environment over the
past few years that, as noted, made advance refundings more attractive, the
potential call exposure for bonds in these Funds had become unevenly distributed
along the yield curve. Forward interest rate swaps provided a way to smooth out
these distributions and neutralize the Funds' over or under exposure to certain
parts of the yield curve.
7
Overall, portfolio turnover was relatively light during much of this period,
because the rate environment was not advantageous for active trading. In
addition, as previously mentioned, issuance in California declined sharply
during the first eight months of 2006. In watching the market for potential new
additions for our portfolios, we focused mainly on attractively priced, premium
coupon3 bonds maturing in 15 to 25 years. Overall, we believed that bonds in
this part of the yield curve offered strong performance potential, better value,
and attractive reward opportunities without excessive risk. Since California is
a relatively high-quality state, much of the new supply was highly rated and/or
insured, and the majority of our new purchases were higher-rated credits. One of
our major purchases during this period was A+ rated bonds issued by the
California Statewide Community Development Authority for the Kaiser Permanente
Hospital System, which we added to NCU, NAC, NVX and NZH.
We also continued to emphasize maintaining weightings of lower-quality bonds in
the four uninsured Funds (NCU, NAC, NVX, and NZH) and NKL and NKX (which can
invest up to 20% of their assets in non AAA rated insured investment-grade
quality securities). However, as credit spreads continued to narrow and
municipal supply tightened in 2006, we generally found fewer attractively
structured lower-rated credit opportunities in the California market, and we
added very little in the way of new positions at the lower end of the credit
spectrum. Overall, these California Funds continued to have good exposure to the
lower-rated credit categories.
Given market concerns about oil prices, inflation and the actions of the Federal
Reserve over the past 12 months, we did see some volatility in longer term
yields over this period, with rates peaking in October 2005 and again in June
2006. These spikes in rates provided us with opportunities to sell a few of our
holdings that were purchased when yields were lower and replace them with
similar, newer credits with comparatively higher yields. This allowed us to
maintain much of the Funds' current favorable portfolio characteristics while
strengthening their future income streams. We also sold some of our holdings of
state of California general obligation bonds (G.O.) when we believed that
current prices made these bonds attractive sales candidates.
3 Premium coupon bonds are credits that, at the time of purchase, are trading
above their par values because their coupons are higher than the current
coupon levels of par bonds with similar durations. Historically, these
bonds have held their value better than current coupon bonds when interest
rates rise.
8
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen California Funds, as well as relevant index
and peer group information, are presented in the accompanying table.
TOTAL RETURNS ON NET ASSET VALUE*
For periods ended 8/31/06
UNINSURED FUNDS 1-YEAR 5-YEAR 10-YEAR
--------------------------------------------------------------------------------
NCU 2.72% 6.62% 7.43%
--------------------------------------------------------------------------------
NAC 3.63% 7.00% NA
--------------------------------------------------------------------------------
NVX 3.82% 6.48% NA
--------------------------------------------------------------------------------
NZH 3.81% NA NA
--------------------------------------------------------------------------------
Lehman Brothers
CA Tax-Exempt
Bond Index4 3.32% 5.02% 6.13%
--------------------------------------------------------------------------------
Lipper CA
Municipal Debt
Funds Average5 4.10% 6.27% 6.66%
--------------------------------------------------------------------------------
INSURED FUNDS
--------------------------------------------------------------------------------
NPC 2.23% 5.74% 6.79%
--------------------------------------------------------------------------------
NCL 2.91% 5.83% 7.03%
--------------------------------------------------------------------------------
NKL 3.62% NA NA
--------------------------------------------------------------------------------
NKX 3.43% NA NA
--------------------------------------------------------------------------------
Lehman Brothers Insured
CA Tax-Exempt
Bond Index4 3.42% 4.95% 6.20%
--------------------------------------------------------------------------------
Lipper Insured
CA Municipal Debt
Funds Average6 3.63% 5.17% 6.48%
--------------------------------------------------------------------------------
*Annualized.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the 12 months ended August 31, 2006, the total returns on NAV for NAC, NVX
and NZH exceeded the return on the Lehman Brothers California Tax-Exempt Bond
Index, while NCU trailed this measure. The returns on all four uninsured Funds
underperformed the Lipper California peer group. Among the insured Funds, NKL
outperformed the return on the Lehman Brothers Insured California Tax-Exempt
Bond Index, while NKX performed
4 The Lehman Brothers California Tax-Exempt Bond Index is an unleveraged,
unmanaged index comprising a broad range of investment-grade California
municipal bonds, while the Lehman Brothers Insured California Tax-Exempt
Bond Index is an unleveraged, unmanaged index containing a broad range of
insured California municipal bonds. Results for the Lehman indexes do not
reflect any expenses.
5 The Lipper California Municipal Debt Funds category average is calculated
using the returns of all closed-end funds in this category for each period
as follows: 1 year, 26 funds; 5 years, 15 funds ; and 10 years, 13 funds.
Fund and Lipper returns assume reinvestment of dividends.
6 The Lipper Insured California Municipal Debt Funds average is calculated
using the returns of all closed-end funds in its category for each period
as follows: 1 year, 13 funds ; 5 years, 8 funds; and 10 years, 6 funds.
Fund and Lipper returns assume reinvestment of dividends.
9
in line with the index return and NPC and NCL lagged the index return. The
return on NKL performed relatively in line with the average return for the
Lipper Insured California peer group, while NPC, NCL and NKX trailed the group
average.
Factors that influenced the Funds' returns during this period included yield
curve positioning and duration management; allocations to lower-rated credits in
the four uninsured Funds, NKL, and NKX; and pre-refunding activity. The use of
hedges in NPC, NCL, NAC, NVX, NKL and NKX was also a positive contributor to the
performances of these Funds.
As the yield curve continued to flatten over the course of this period, bonds
with effective maturities between two and six years were the most adversely
impacted, generally underperforming long-intermediate bonds (those with
maturities between 17 and 22 years) and longer bonds (those with maturities of
at least 22 years). Yield curve positioning or, more specifically, greater
exposure to those parts of the yield curve that performed well helped the
performances of these Funds during this period.
Bonds rated BBB or lower and non-rated bonds generally outperformed other credit
quality sectors during this period and the four uninsured Funds as well as NKL
and NKX (which can invest up to 20% of their assets in non AAA rated insured
investment-grade quality securities) benefited from their allocations of
lower-quality credits. The performance of this sector was largely the result of
investor demand for the higher yields typically associated with lower-quality
bonds, which drove up their value. As of August 31, 2006, bonds rated BBB or
lower and non-rated bonds accounted for 15% to 18% of the of the four noninsured
Funds, while NKL and NKX each had an allocation of 6% to bonds rated BBB. This
allocation accounted for much of the performance differential between NKL and
NKX and NPC and NCL, which, as 100% insured Funds, cannot hold any lower-rated
credits.
Among the lower-rated holdings making positive contributions to the total
returns of NCU, NAC, NVX, NZH, NKL and NKX during this period were industrial
development bonds and health care (including hospitals) credits, which ranked as
the top performing
10
revenue sectors in the Lehman Brothers municipal index, as well as bonds backed
by the 1998 master tobacco settlement agreement, which comprised approximately
1% to 4% of the portfolios of these six Funds as of August 31, 2006.
As noted earlier, we continued to see a number of advance refundings, which can
benefit the Funds through price appreciation and enhanced credit quality. During
this reporting period, advance refundings ranged from 5% to 12% of these Funds'
portfolios, with NPC and NCU representing the lower end of the range, which
hampered their performance.
While advance refundings generally enhanced performance for this 12-month
period, the rising interest rate environment meant that the Funds' holdings of
previously pre-refunded bonds tended to underperform the general municipal
market. A higher number of bond calls affecting approximately 4.5% of NCU's
portfolio (compared with approximately 1% in NAC, NVX and NZH) also detracted
from this Fund's performance.
HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF
AUGUST 31, 2006?
We continued to believe that maintaining strong credit quality was an important
requirement. As of August 31, 2006, the four uninsured Funds continued to offer
excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed
and AA ranging from 69% in NAC and NZH to 72% in NVX and NCU. NPC and NCL
continued to be 100% invested in insured and/or U.S. guaranteed securities,
while NKL and NKX, which can invest up to 20% of their assets in non AAA rated
insured investment-grade quality securities, had allocated 83% and 84% of their
portfolios, respectively, to insured and U.S. guaranteed bonds.
As of August 31, 2006, potential call exposure for the period September 2006
through the end of 2008 ranged from 4% in NZH to 6% in NKL, to 10% in NVX and
NKX, 12% in NAC, 13% in NPC and NCU, and 15% in NCL. The number of actual bond
calls in all of these Funds depends largely on future market interest rates.
11
Dividend and Share Price
INFORMATION
All of the Funds in this report use leverage to potentially enhance
opportunities for additional income for common shareholders. The benefits of
leveraging are tied in part to the short-term rates leveraged Funds pay their
MuniPreferred(R) shareholders. During periods of low short-term rates, these
Funds generally pay lower dividends to their MuniPreferred shareholders, which
can leave more earnings to support common share dividends. Conversely, when
short-term interest rates rise, as they did during this reporting period, the
Funds' borrowing costs also rise, reducing the extent of the benefits of
leveraging and impacting the Funds' income streams and total returns. The Funds'
income streams were also affected as the proceeds from older, higher-yielding
bonds that matured or were called were reinvested into bonds currently available
in the market, which generally offered lower yields. These factors resulted in a
single monthly dividend reduction in NKL and NKX and two in NPC, NCL, NCU, NAC,
NVX and NZH over the 12-month period ended August 31, 2006.
Due to capital gains generated by normal portfolio activity, common shareholders
of the following Funds received capital gains and net ordinary income
distributions at the end of December 2005, as follows:
LONG-TERM CAPITAL GAINS ORDINARY INCOME
(PER SHARE) (PER SHARE)
--------------------------------------------------------------------------------
NPC $0.1367 $0.0109
--------------------------------------------------------------------------------
NCU $0.0122 --
--------------------------------------------------------------------------------
NAC $0.0334 --
--------------------------------------------------------------------------------
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of August 31, 2006, NPC, NCL,
NCU, NAC, NVX, and NZH had positive UNII balances for both financial statement
and tax purposes, while NKL and NKX had negative UNII balances for financial
statement purposes and positive UNII balances for tax purposes.
12
At the end of the reporting period, the Funds' share prices were trading at
premiums or discounts to their NAVs as shown in the accompanying chart:
8/31/06 12-MONTH AVERAGE
PREMIUM/DISCOUNT PREMIUM/DISCOUNT
--------------------------------------------------------------------------------
NPC -3.21% - 1.74%
--------------------------------------------------------------------------------
NCL -5.34% - 3.09%
--------------------------------------------------------------------------------
NCU -4.24% - 4.65%
--------------------------------------------------------------------------------
NAC +2.44% +.62%
--------------------------------------------------------------------------------
NVX -2.67% - 4.26%
--------------------------------------------------------------------------------
NZH -1.26% - 4.13%
--------------------------------------------------------------------------------
NKL +1.29% - 2.03%
--------------------------------------------------------------------------------
NKX -4.36% - 4.07%
--------------------------------------------------------------------------------
13
Nuveen Insured California Premium Income Municipal Fund, Inc.
NPC
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 71%
U.S. Guaranteed 29%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Sep 0.0705
Oct 0.0705
Nov 0.0705
Dec 0.0705
Jan 0.0705
Feb 0.0705
Mar 0.067
Apr 0.067
May 0.067
Jun 0.0635
Jul 0.0635
Aug 0.0635
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 15.91
16.08
16.14
16.21
16.21
16.35
16.2
16
16.14
16.04
16.04
15.87
15.82
15.76
15.71
15.71
15.65
15.64
15.64
15.6
15.67
15.7
15.61
15.61
15.61
15.53
15.62
15.54
15.55
15.4
15.29
15.45
15.46
15.46
15.3
15.45
15.42
15.15
15.08
14.94
14.99
15
15
15.03
14.89
15.01
14.83
14.97
14.9
14.93
14.93
14.93
14.85
14.98
14.95
15.07
15.09
15.23
15.12
15.12
15.02
15.04
14.95
14.89
14.9
14.78
14.86
14.97
14.87
14.8
14.8
14.52
14.39
14.42
14.43
14.4
14.66
14.52
14.54
14.56
14.74
14.74
14.84
14.95
14.95
15
15.15
15.36
15.44
15.45
15.44
15.41
15.46
15.51
15.75
15.7
15.76
15.75
15.87
15.7
15.47
15.38
15.4
15.29
15.34
15.5
15.73
15.89
15.88
15.88
15.87
15.8
15.8
16.1
16.1
16.25
16.2
16.05
15.68
16.08
15.59
15.72
15.9
16.04
16.25
16.29
15.9
15.86
15.85
15.85
15.87
15.62
15.41
15.5
15.3
15.25
15.2799
15.34
15.21
15.24
15.35
15.35
15.35
15.42
15.57
15.23
15.39
15.4
15.46
15.5
15.65
15.42
15.45
15.85
15.8
15.84
15.34
15.34
15.65
15.76
15.51
15.3
15.49
15.85
15.85
15.61
15.61
15.67
15.6
15.45
15.7
15.86
15.8
15.57
15.43
15.24
15.69
15.53
15.6799
15.41
15.4101
15.4101
15.43
15.42
15.41
15.35
15.03
14.67
14.55
14.69
14.73
14.74
14.72
14.78
14.81
14.83
14.85
14.73
14.71
14.71
14.82
14.71
14.76
14.73
14.82
14.77
14.8
14.66
14.84
14.63
14.68
14.8
14.76
14.88
14.83
14.73
14.74
14.7
14.62
14.6105
14.68
14.64
14.64
14.61
14.61
14.58
14.69
14.69
14.7601
14.78
14.66
14.83
14.76
14.79
14.79
14.81
14.88
14.89
15.02
14.97
14.84
14.8001
14.85
14.88
14.95
15.01
15.09
15.11
15.11
15.07
14.98
15
14.98
8/31/06 15.08
FUND SNAPSHOT
------------------------------------
Common Share Price $15.08
------------------------------------
Common Share
Net Asset Value $15.58
------------------------------------
Premium/(Discount) to NAV -3.21%
------------------------------------
Market Yield 5.05%
------------------------------------
Taxable-Equivalent Yield1 7.71%
------------------------------------
Net Assets Applicable
to Common Shares ($000) $100,581
------------------------------------
Average Effective Maturity
on Securities (Years) 15.37
------------------------------------
Leverage-Adjusted Duration 8.26
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/19/92)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 1.00% 2.23%
------------------------------------
5-Year 5.66% 5.74%
------------------------------------
10-Year 7.04% 6.79%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 29.3%
------------------------------------
Tax Obligation/General 21.8%
------------------------------------
Tax Obligation/Limited 17.8%
------------------------------------
Water and Sewer 17.7%
------------------------------------
Education and Civic
Organizations 6.0%
------------------------------------
Other 7.4%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income
distributions in December 2005 of $0.1476 per share.
14
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
NCL
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 74%
U.S. Guaranteed 26%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.066
Oct 0.066
Nov 0.066
Dec 0.066
Jan 0.066
Feb 0.066
Mar 0.0625
Apr 0.0625
May 0.0625
Jun 0.059
Jul 0.059
Aug 0.059
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 15.13
15.21
15.32
15.25
15.29
15.2
15.2
15.18
15.08
15.15
15.18
15.08
14.91
14.96
14.99
14.98
15
14.89
15.09
15.03
15.15
15.1
15.11
15.17
15.15
14.97
15.05
14.9
14.82
14.78
14.65
14.65
14.62
14.7
14.67
14.8
14.79
14.61
14.8
14.55
14.49
14.5
14.46
14.4
14.3
14.45
14.45
14.43
14.4
14.19
14
13.99
13.86
13.9
13.8701
13.86
13.82
13.84
13.78
13.78
13.85
13.78
13.74
13.85
13.98
13.89
13.9
13.92
13.87
13.8
13.76
13.73
13.69
13.62
13.67
13.68
13.72
13.76
13.78
13.8
13.89
13.92
13.99
14.2
14.2
14.48
14.39
14.44
14.44
14.46
14.44
14.4
14.5
14.45
14.38
14.4
14.54
14.54
14.53
14.54
14.47
14.54
14.59
14.7
14.69
14.71
14.77
14.81
14.85
14.8
14.86
14.9
14.89
14.87
14.81
15
15
15.15
15.01
14.98
14.98
14.96
14.95
15.09
15.17
15.11
15.05
14.9
14.8
14.82
14.8
14.71
14.77
14.699
14.68
14.77
14.76
14.82
14.71
14.74
14.69
14.66
14.39
14.47
14.55
14.45
14.62
14.57
14.65
14.67
14.53
14.53
14.54
14.75
14.82
14.79
14.64
14.59
14.52
14.45
14.5
14.56
14.5399
14.55
14.45
14.42
14.42
14.59
14.53
14.53
14.46
14.46
14.46
14.35
14.28
14.19
14.18
14.36
14.5
14.25
14.14
14.13
13.95
13.97
13.97
14.08
14.1299
14.12
14.06
14.04
14.12
14.13
14.07
14.16
14.1
14.15
14.16
14.15
13.98
14.02
13.97
13.91
13.88
13.96
14.06
14.03
13.79
13.79
13.8899
13.79
13.7899
13.89
13.9
13.86
13.9699
13.99
14.05
13.8901
13.83
13.69
13.7199
13.52
13.6501
13.71
13.69
13.78
13.91
13.94
13.95
14.14
13.98
13.95
14.06
14.12
14.21
14.1
14
14.07
14.1
14.12
14.1
14.11
14.15
14.16
14.19
14.14
14.22
14.11
14.1
14.21
14.16
14.18
14.2399
8/31/06 14.1899
FUND SNAPSHOT
------------------------------------
Common Share Price $14.19
------------------------------------
Common Share
Net Asset Value $14.99
------------------------------------
Premium/(Discount) to NAV -5.34%
------------------------------------
Market Yield 4.99%
------------------------------------
Taxable-Equivalent Yield1 7.62%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $190,571
------------------------------------
Average Effective Maturity
on Securities (Years) 15.20
------------------------------------
Leverage-Adjusted Duration 8.44
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -0.63% 2.91%
------------------------------------
5-Year 5.00% 5.83%
------------------------------------
10-Year 7.19% 7.03%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 27.3%
------------------------------------
U.S. Guaranteed 25.9%
------------------------------------
Water and Sewer 15.8%
------------------------------------
Tax Obligation/General 14.3%
------------------------------------
Utilities 6.6%
------------------------------------
Other 10.1%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
15
Nuveen California Premium Income Municipal Fund
NCU
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 66%
AA 6%
A 10%
BBB 13%
BB or Lower 4%
N/R 1%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Sep 0.067
Oct 0.067
Nov 0.067
Dec 0.067
Jan 0.067
Feb 0.067
Mar 0.0635
Apr 0.0635
May 0.0635
Jun 0.0595
Jul 0.0595
Aug 0.0595
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 14.43
14.43
14.48
14.5
14.44
14.48
14.5
14.35
14.3
14.23
14.1
14.06
14.03
14.09
14.19
13.89
13.91
13.79
13.95
13.9
13.87
13.98
13.95
13.96
13.95
13.95
14
13.9
13.92
13.88
13.9
13.88
13.92
13.9
13.92
13.96
14.05
14.09
14
14.03
14
14.02
14.07
14.07
13.95
13.92
13.94
13.82
13.69
13.69
13.7
13.55
13.8
13.8
13.76
13.76
13.7
13.49
13.45
13.4
13.5
13.55
13.5
13.57
13.9
13.78
13.83
13.81
13.74
13.77
13.77
13.9
14.11
14
13.92
13.87
13.73
13.66
13.67
13.64
13.51
13.49
13.54
13.62
13.62
13.651
13.75
13.88
14
14
14.02
14.2
14.12
14.1
13.96
14
14.02
14.13
14.12
14.15
14.15
14.3
14.2
14.2
14.23
14.5
14.23
14.24
14.5
14.45
14.6
14.5
14.44
14.3
14.28
14.26
14.25
14.26
14
14.03
14.02
14.18
14.12
14.15
14.25
14.2
13.96
14.03
13.99
14.08
14.0001
13.92
13.85
13.92
13.92
14.11
14.03
14.06
14.04
14.02
14.099
14.1
14
14.02
13.95
13.86
13.9
14.01
13.9
14.05
13.901
13.87
13.92
13.8
13.82
13.67
13.6
13.55
13.46
13.58
13.55
13.65
13.69
13.8
13.65
13.66
13.66
13.82
13.83
14.05
13.99
14.05
13.97
14.05
14.05
14.02
14.04
13.95
13.76
13.7401
13.88
13.95
13.81
13.9
13.72
13.7301
13.85
13.83
13.8
13.85
13.98
13.91
13.86
13.72
13.73
13.67
13.65
13.5416
13.44
13.51
13.4
13.36
13.37
13.28
13.11
13.11
13.17
13.03
13.07
13.06
13.16
13.22
13.21
13.22
13.32
13.28
13.22
13.25
13.3
13.3
13.28
13.2899
13.3
13.35
13.4
13.54
13.62
13.58
13.6301
13.83
13.98
13.89
13.87
13.88
13.88
13.96
13.95
14
13.87
13.66
13.65
13.83
13.85
13.86
13.97
13.95
13.95
13.95
13.88
13.99
13.99
13.91
13.95
8/31/06 14.01
FUND SNAPSHOT
------------------------------------
Common Share Price $14.01
------------------------------------
Common Share
Net Asset Value $14.63
------------------------------------
Premium/(Discount) to NAV -4.24%
------------------------------------
Market Yield 5.10%
------------------------------------
Taxable-Equivalent Yield1 7.79%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $84,467
------------------------------------
Average Effective Maturity
on Securities (Years) 16.85
------------------------------------
Leverage-Adjusted Duration 7.86
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 3.14% 2.72%
------------------------------------
5-Year 6.05% 6.62%
------------------------------------
10-Year 7.86% 7.43%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 32.6%
------------------------------------
Tax Obligation/General 19.8%
------------------------------------
Water and Sewer 12.1%
------------------------------------
U.S. Guaranteed 11.2%
------------------------------------
Health Care 9.6%
------------------------------------
Other 14.7%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2005 of
$0.0122 per share.
16
Nuveen California Dividend Advantage Municipal Fund
NAC
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 66%
AA 3%
A 16%
BBB 8%
N/R 7%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Sep 0.0785
Oct 0.0785
Nov 0.0785
Dec 0.0785
Jan 0.0785
Feb 0.0785
Mar 0.0745
Apr 0.0745
May 0.0745
Jun 0.0705
Jul 0.0705
Aug 0.0705
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 16.09
16.14
16.12
16.16
16.11
16.2
16.15
16.06
16.04
15.89
15.85
15.83
15.77
15.89
15.81
15.65
15.63
15.59
15.65
15.61
15.67
15.71
15.72
15.67
15.64
15.56
15.54
15.59
15.28
15.03
14.99
15
14.97
14.95
14.9
15
15.08
15.06
14.98
14.9
14.97
15.03
15
14.99
15.08
14.95
15.04
15
15.04
14.91
14.92
14.89
14.89
14.94
14.9401
14.91
14.99
15.06
15.2
15.3
15.35
15.26
15.35
15.63
15.64
15.55
15.6
15.6
15.73
15.87
15.8
15.8
15.94
15.85
15.87
16.05
15.86
15.89
15.9
15.96
15.96
15.96
16.0299
16.1399
16.1399
16.29
16.35
16.27
16.3
16.27
16.2
16.18
16.1
16.01
15.97
15.97
16.1
16.1
16.15
16.16
16.16
16.15
16.24
16.21
16.21
16.32
16.3199
16.34
16.31
16.15
16.15
16.05
16.05
15.89
15.9
16.04
15.981
15.93
16.03
15.91
15.9
15.9
15.98
16.01
16.16
16.03
16.01
15.93
15.98
16.03
16.2
16
15.89
15.76
15.84
15.87
15.84
15.85
15.7
15.6
15.65
15.65
15.6
15.58
15.67
15.67
15.74
15.82
15.67
15.64
15.71
15.57
15.46
15.19
15.15
15.01
15.01
15.18
15.3
15.29
15.23
15.3
15.26
15.25
15.25
15.24
15.24
15.41
15.43
15.4
15.44
15.63
15.5
15.54
15.84
15.57
15.34
15.48
15.33
15.2
15.25
15.23
15.37
15.44
15.5
15.57
15.7
15.56
15.52
15.78
15.87
15.77
15.83
15.85
15.7
15.63
15.55
15.22
15.2899
15.31
15.25
15.34
15.35
15.28
15.3
15.21
15.12
15.1
15.15
15.15
15.18
15.34
15.26
15.28
15.45
15.3651
15.32
15.14
15.16
15.28
15.24
15.23
15.41
15.4
15.45
15.41
15.37
15.35
15.44
15.46
15.6901
15.71
15.74
15.84
15.89
15.89
15.82
15.7
15.89
15.8699
15.66
15.74
15.65
15.67
15.53
15.58
15.68
15.6
15.79
15.73
15.77
15.88
15.91
8/31/06 15.97
FUND SNAPSHOT
------------------------------------
Common Share Price $15.97
------------------------------------
Common Share
Net Asset Value $15.59
------------------------------------
Premium/(Discount) to NAV 2.44%
------------------------------------
Market Yield 5.30%
------------------------------------
Taxable-Equivalent Yield1 8.09%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $365,516
------------------------------------
Average Effective Maturity
on Securities (Years) 16.87
------------------------------------
Leverage-Adjusted Duration 7.73
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/26/99)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 5.47% 3.63%
------------------------------------
5-Year 8.03% 7.00%
------------------------------------
Since
Inception 7.33% 7.51%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 24.5%
------------------------------------
U.S. Guaranteed 15.0%
------------------------------------
Tax Obligation/General 13.6%
------------------------------------
Transportation 12.8%
------------------------------------
Health Care 7.3%
------------------------------------
Education and Civic
Organizations 7.3%
------------------------------------
Housing/Multifamily 5.5%
------------------------------------
Utilities 5.4%
------------------------------------
Water and Sewer 5.3%
------------------------------------
Other 3.3%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2005 of
$0.0334 per share.
17
Nuveen California Dividend Advantage Municipal Fund 2
NVX
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 71%
AA 1%
A 12%
BBB 9%
N/R 7%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.0725
Oct 0.0725
Nov 0.0725
Dec 0.0725
Jan 0.0725
Feb 0.0725
Mar 0.0685
Apr 0.0685
May 0.0685
Jun 0.0655
Jul 0.0655
Aug 0.0655
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 15.16
15.25
15.17
15.24
15.1
15.12
15.14
15.05
14.95
14.87
14.85
14.94
14.9
14.98
14.95
14.7
14.6
14.43
14.49
14.68
14.57
14.6
14.65
14.64
14.52
14.4
14.42
14.23
14.09
13.97
13.75
13.86
13.86
13.91
13.97
13.97
14.11
13.98
13.9
14.16
14.12
14.14
14.14
14.24
14.17
14.12
14.19
14.19
14.2
14.11
13.95
13.9
14.03
14
14.05
14.06
14.12
14.04
14.16
14.19
14.2
14.25
14.2
14.21
14.25
14.2
14.25
14.35
14.34
14.5
14.5
14.44
14.44
14.6
14.47
14.46
14.54
14.57
14.6
14.59
14.57
14.6
14.67
14.52
14.52
14.75
14.82
14.85
15
15.24
15.32
15.05
15.21
15.35
15.14
15.27
15.14
15.2
15.17
15.35
15
15.06
15.2
15.07
15.11
15.23
15.23
15.1
15.1
14.84
14.99
15.04
14.92
14.8
14.75
14.8
14.8
14.84
14.9
14.8
14.82
14.9
14.79
14.92
14.9
14.949
14.63
14.75
14.76
14.57
14.57
14.67
14.67
14.62
14.5
14.52
14.55
14.6
14.53
14.47
14.55
14.51
14.43
14.59
14.52
14.54
14.55
14.6
14.4
14.4
14.42
14.41
14.41
14.6
14.45
14.35
14.3
14.38
14.45
14.3576
14.42
14.42
14.2
14.19
14.28
14.35
14.35
14.4
14.29
14.31
14.38
14.65
14.72
14.85
14.75
14.54
14.67
14.8
14.73
14.65
14.76
14.75
14.78
14.65
14.8
14.7
14.73
14.68
14.72
14.77
14.9
14.93
14.92
14.94
14.77
14.75
14.68
14.45
14.48
14.43
14.49
14.54
14.36
14.26
14.13
14.14
14.07
14.07
14.14
14.1
14.15
14.28
14.15
14.18
14.2
14.19
14.12
14.09
14.09
14.19
14.1
14
14.11
14.05
14.17
14.31
14.23
14.44
14.52
14.7
14.68
14.7
14.7
14.74
14.81
14.74
14.68
14.77
14.7701
14.69
14.52
14.66
14.67
14.77
14.75
14.68
14.66
14.68
14.75
14.8
14.8
14.87
14.9
8/31/06 14.95
FUND SNAPSHOT
------------------------------------
Common Share Price $14.95
------------------------------------
Common Share
Net Asset Value $15.36
------------------------------------
Premium/(Discount) to NAV -2.67%
------------------------------------
Market Yield 5.26%
------------------------------------
Taxable-Equivalent Yield1 8.03%
------------------------------------
Net Assets Applicable
to Common Shares ($000) $227,160
------------------------------------
Average Effective Maturity
on Securities (Years) 14.99
------------------------------------
Leverage-Adjusted Duration 8.42
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 4.19% 3.82%
------------------------------------
5-Year 6.10% 6.48%
------------------------------------
Since
Inception 6.25% 7.38%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 20.0%
------------------------------------
U.S. Guaranteed 16.9%
------------------------------------
Tax Obligation/General 12.9%
------------------------------------
Education and Civic
Organizations 10.3%
------------------------------------
Water and Sewer 9.7%
------------------------------------
Health Care 8.5%
------------------------------------
Housing/Multifamily 7.9%
------------------------------------
Transportation 6.8%
------------------------------------
Other 7.0%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
18
Nuveen California Dividend Advantage Municipal Fund 3
NZH
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 68%
AA 1%
A 15%
BBB 8%
N/R 8%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Feb 0.072
Mar 0.068
Apr 0.068
May 0.068
Jun 0.0655
Jul 0.0655
Aug 0.0655
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 14.5
14.64
14.65
14.72
14.73
14.75
14.71
14.67
14.57
14.46
14.41
14.53
14.53
14.45
14.19
14.08
14.1
13.86
14
14.04
14.01
14
14.02
13.89
13.86
13.9
14
13.95
13.83
13.66
13.8
13.69
13.7
13.73
13.64
13.73
13.62
13.58
13.57
13.61
13.69
13.74
13.8
13.84
13.9
13.78
13.99
13.8
13.69
13.66
13.57
13.65
13.76
13.67
13.83
13.71
13.641
13.66
13.62
13.85
13.88
14.03
13.89
13.88
13.84
13.83
14
14.05
14.01
13.95
14.04
13.95
14.05
14.02
13.93
13.9
14.06
14.08
14.15
14.13
14.18
14.2001
14.39
14.45
14.45
14.48
14.49
14.5
14.66
14.64
14.71
14.64
14.57
14.64
14.58
14.52
14.54
14.58
14.53
14.59
14.65
14.85
14.77
14.67
14.54
14.6
14.65
14.74
14.65
14.51
14.5
14.59
14.57
14.47
14.3
14.42
14.56
14.56
14.55
14.49
14.46
14.5
14.5
14.64
14.71
14.75
14.56
14.53
14.43
14.42
14.4
14.4
14.3
14.25
14.21
14.29
14.41
14.25
14.23
14.2
14.38
14.29
14.39
14.4
14.5
14.5
14.5
14.6
14.5
14.5
14.55
14.5
14.43
14.35
14.19
14.2
14.01
14.08
14.22
14.1
14.11
14.14
14.11
14.15
14.2
14.3
14.3
14.4
14.42
14.24
14.45
14.39
14.41
14.45
14.48
14.36
14.31
14.42
14.3
14.18
14.33
14.38
14.35
14.26
14.24
14.35
14.45
14.47
14.43
14.53
14.52
14.45
14.5
14.52
14.46
14.43
14.5
14.19
14.1
14.12
14.22
14.1932
14.26
14.12
14.05
14.07
14.02
14.02
14.05
14.01
14.11
14.2
14.2
14.24
14.16
14.15
14.09
14.05
14.08
14.13
14.08
14.06
14.2
14.09
14.22
14.28
14.21
14.28
14.31
14.4
14.5
14.53
14.56
14.49
14.54
14.61
14.56
14.66
14.58
14.55
14.39
14.49
14.5226
14.52
14.6
14.52
14.58
14.6
14.64
14.67
14.74
14.83
14.82
8/31/06 14.84
FUND SNAPSHOT
------------------------------------
Common Share Price $14.84
------------------------------------
Common Share
Net Asset Value $15.03
------------------------------------
Premium/(Discount) to NAV -1.26%
------------------------------------
Market Yield 5.30%
------------------------------------
Taxable-Equivalent Yield1 8.09%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $362,473
------------------------------------
Average Effective Maturity
on Securities (Years) 16.56
------------------------------------
Leverage-Adjusted Duration 7.81
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 8.50% 3.81%
------------------------------------
Since
Inception 6.08% 6.98%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 27.6%
------------------------------------
Tax Obligation/General 16.5%
------------------------------------
Health Care 11.0%
------------------------------------
Water and Sewer 9.1%
------------------------------------
U.S. Guaranteed 8.0%
------------------------------------
Transportation 7.1%
------------------------------------
Housing/Multifamily 6.7%
------------------------------------
Utilities 6.1%
------------------------------------
Education and Civic
Organizations 5.2%
------------------------------------
Other 2.7%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
19
Nuveen Insured California Dividend Advantage Municipal Fund
NKL
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 74%
U.S. Guaranteed 9%
GNMA/FNMA Guaranteed 1%
AA (Uninsured) 3%
A (Uninsured) 7%
BBB (Uninsured) 6%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Feb 0.072
Mar 0.072
Apr 0.072
May 0.072
Jun 0.068
Jul 0.068
Aug 0.068
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 15.01
15.07
15.1
15.16
15.22
15.25
15.33
15.31
15.31
15.26
15.3
15.23
15.22
15.04
14.89
14.97
14.92
14.82
15
14.99
14.97
14.86
14.99
15.03
15.03
14.96
15.01
14.96
14.63
14.5
14.25
14.32
14.3
14.39
14.36
14.47
14.71
14.65
14.6
14.67
14.6
14.59
14.56
14.52
14.54
14.42
14.45
14.42
14.45
14.35
14.35
14.25
14.24
14.12
14.1
14.12
14.15
14.2001
14.2
14.25
14.38
14.29
14.2899
14.35
14.41
14.41
14.57
14.53
14.6
14.71
14.79
14.661
14.89
14.88
14.95
14.91
14.99
15.01
14.89
14.88
14.88
14.98
15.02
15.1
15.1
15.0801
15.14
15.01
15.21
15.25
15.23
15.22
15.18
15.37
15.23
15.23
15.24
15.2
15.2
15.09
15.15
15.0701
15.14
15.07
15.12
15.3
15.16
15.2999
15.22
15.21
15.17
15.13
15.24
15.18
15.19
15.16
15.16
15.14
15.16
15.06
15.35
15.3101
15.36
15.25
15.25
15.29
15.2
15.25
15.3199
15.3
15.25
15.27
15.16
15.069
15.08
15.1
15.09
15.18
15.25
15.2
15.34
15.41
15.26
15.3
15.32
15.22
15.28
15.34
15.25
15.35
15.34
15.2
15.33
15.35
15.25
15.239
15.18
15.23
15.33
15.42
15.36
15.1
15.1
15.26
15.25
15.29
15.29
15.14
15.25
15.34
15.48
15.4
15.27
15.45
15.5
15.4
15.35
15.38
15.42
15.16
15.15
15.14
15.24
15.13
15.39
15.31
15.42
15.43
15.46
15.57
15.46
15.37
15.52
15.43
15.34
15.46
15.4
15.01
15.0599
14.98
15.02
14.89
14.9999
14.96
14.93
14.85
14.65
14.6
14.66
14.64
14.5701
14.78
14.9
14.78
14.85
14.8001
14.82
14.74
14.9
14.92
14.74
14.81
14.7899
14.85
14.86
15.06
14.93
15.06
15.15
15.08
15.25
15.34
15.35
15.56
15.3
15.3599
15.39
15.46
15.36
15.35
15.35
15.4
15.4099
15.41
15.46
15.46
15.42
15.46
15.41
15.51
15.5
15.57
15.5999
8/31/06 15.7
FUND SNAPSHOT
------------------------------------
Common Share Price $15.70
------------------------------------
Common Share
Net Asset Value $15.50
------------------------------------
Premium/(Discount) to NAV 1.29%
------------------------------------
Market Yield 5.20%
------------------------------------
Taxable-Equivalent Yield1 7.94%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $236,525
------------------------------------
Average Effective Maturity
on Securities (Years) 18.34
------------------------------------
Leverage-Adjusted Duration 7.58
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 10.72% 3.62%
------------------------------------
Since
Inception 7.54% 8.11%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 28.6%
------------------------------------
Tax Obligation/General 20.6%
------------------------------------
Water and Sewer 11.8%
------------------------------------
Utilities 11.5%
------------------------------------
U.S. Guaranteed 9.0%
------------------------------------
Education and Civic
Organizations 5.8%
------------------------------------
Other 12.7%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
20
Nuveen Insured California Tax-Free Advantage Municipal Fund
NKX
Performance
OVERVIEW As of August 31, 2006
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 81%
U.S. Guaranteed 3%
A (Uninsured) 10%
BBB (Uninsured) 6%
Bar Chart:
2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.063
Oct 0.063
Nov 0.063
Dec 0.063
Jan 0.063
Feb 0.063
Mar 0.063
Apr 0.063
May 0.063
Jun 0.059
Jul 0.059
Aug 0.059
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/01/05 14.44
14.59
14.5
14.64
14.66
14.61
14.67
14.7
14.57
14.42
14.41
14.41
14.46
14.46
14.56
14.59
14.7
14.51
14.53
14.21
14.35
14.5
14.55
14.6
14.6
14.26
14.28
14.45
14.31
14.3
14.31
14.31
14.3
14.25
14.16
14.2
13.92
13.87
13.83
13.84
13.89
14.08
14
13.93
13.77
13.95
13.82
13.93
13.93
13.63
13.89
13.8501
13.6
13.5799
13.55
13.49
13.4
13.54
13.54
13.6
13.59
13.46
13.67
13.62
13.55
13.49
13.45
13.44
13.45
13.45
13.74
13.45
13.42
13.37
13.43
13.36
13.44
13.51
13.48
13.58
13.95
13.67
13.52
13.689
13.689
13.76
13.93
14.07
14.2
14.25
14.27
14.3
14.3
14.24
14.31
14.43
14.45
14.35
14.6
14.48
14.52
14.41
14.41
14.48
14.34
14.44
14.42
14.74
14.6599
14.6
14.41
14.41
14.44
14.39
14.35
14.3
14.25
14.04
14.2
14.22
14.16
14.17
14.1601
14.46
14.4
14.48
14.47
14.35
14.6
14.26
14.36
14.32
14.21
14.3199
14.31
14.4
14.13
14.35
14.25
14.28
14.3
14.37
14.28
14.39
14.361
14.37
14.4
14.48
14.49
14.5
14.51
14.52
14.32
14.52
14.39
14.49
14.45
14.41
14.39
14.32
14.3
14.31
14.43
14.48
14.39
14.43
14.43
14.46
14.52
14.67
14.53
14.49
14.37
14.48
14.42
14.1
14.02
14.06
14.4
14.2
14.15
14.15
14.06
14.1
14.11
14.11
14.18
14.34
14.29
14.51
14.8899
14.47
14.4
14.16
14.3
14.43
14.34
14
13.9
13.8
14
13.92
13.95
14.08
13.62
13.69
13.42
13.4
13.51
13.5675
13.68
13.83
13.76
13.83
13.79
13.71
13.71
13.7
13.76
13.36
13.68
13.72
13.8
14
13.99
14.05
14.39
14.3
14.4
14.28
14.26
14.25
14.66
14.35
14.45
14.5399
14.5
14.56
14.51
14.54
14.32
14.31
14.25
14.2
14.05
14.08
14.09
14.09
14
13.96
14.12
14.12
14.19
8/31/06 14.27
FUND SNAPSHOT
------------------------------------
Common Share Price $14.27
------------------------------------
Common Share
Net Asset Value $14.92
------------------------------------
Premium/(Discount) to NAV -4.36%
------------------------------------
Market Yield 4.96%
------------------------------------
Taxable-Equivalent Yield1 7.57%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $87,775
------------------------------------
Average Effective Maturity
on Securities (Years) 18.80
------------------------------------
Leverage-Adjusted Duration 7.56
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/21/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 4.56% 3.43%
------------------------------------
Since
Inception 4.49% 6.90%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 31.5%
------------------------------------
Tax Obligation/Limited 29.0%
------------------------------------
Transportation 9.4%
------------------------------------
Health Care 8.7%
------------------------------------
Water and Sewer 8.1%
------------------------------------
Other 13.3%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
21
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 3
NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Insured California Premium Income
Municipal Fund, Inc., Nuveen Insured California Premium Income Municipal Fund 2,
Inc., Nuveen California Premium Income Municipal Fund, Nuveen California
Dividend Advantage Municipal Fund, Nuveen California Dividend Advantage
Municipal Fund 2, Nuveen California Dividend Advantage Municipal Fund 3, Nuveen
Insured California Dividend Advantage Municipal Fund and Nuveen Insured
California Tax-Free Advantage Municipal Fund (the "Funds"), as of August 31,
2006, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2006, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. 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., Nuveen California Premium
Income Municipal Fund, Nuveen California Dividend Advantage Municipal Fund,
Nuveen California Dividend Advantage Municipal Fund 2, Nuveen California
Dividend Advantage Municipal Fund 3, Nuveen Insured California Dividend
Advantage Municipal Fund and Nuveen Insured California Tax-Free Advantage
Municipal Fund at August 31, 2006, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Chicago, Illinois
October 13, 2006
22
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 8.5% (6.0% OF TOTAL INVESTMENTS)
$ 2,125 California Educational Facilities Authority, Student Loan Revenue 3/08 at 102.00 Aaa $ 2,201,819
Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 -
MBIA Insured (Alternative Minimum Tax)
2,500 California State University, Systemwide Revenue Bonds, 5/14 at 100.00 AAA 2,684,025
Series 2004A, 5.000%, 11/01/18 - FSA Insured
1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 AAA 1,589,130
Series 2005A, 5.000%, 11/01/25 - AMBAC Insured
2,000 University of California, Revenue Bonds, Multi-Purpose Projects, 9/10 at 101.00 AAA 2,097,220
Series 2002O, 5.125%, 9/01/31 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
8,125 Total Education and Civic Organizations 8,572,194
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 4.7% (3.3% OF TOTAL INVESTMENTS)
3,000 California Health Facilities Financing Authority, Insured Revenue 8/08 at 101.00 AAA 3,113,160
Bonds, Sutter Health, Series 1998A, 5.375%, 8/15/30 -
MBIA Insured
1,500 California Statewide Community Development Authority, 8/09 at 101.00 AAA 1,588,755
Certificates of Participation, Sutter Health Obligated Group,
Series 1999, 5.500%, 8/15/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,500 Total Health Care 4,701,915
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.1% (0.2% OF TOTAL INVESTMENTS)
130 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 133,215
Bonds II, Series 1997A-1, 6.000%, 8/01/20 - MBIA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 31.2% (21.8% OF TOTAL INVESTMENTS)
Bonita Unified School District, San Diego County, California,
General Obligation Bonds, Series 2004A:
1,890 5.250%, 8/01/23 - MBIA Insured 8/14 at 100.00 AAA 2,055,583
1,250 5.250%, 8/01/25 - MBIA Insured 8/14 at 100.00 AAA 1,359,513
2,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 2,037,740
Series 2001BZ, 5.375%, 12/01/24 - MBIA Insured
(Alternative Minimum Tax)
El Segundo Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2004:
2,580 5.250%, 9/01/21 - FGIC Insured 9/14 at 100.00 AAA 2,813,696
1,775 5.250%, 9/01/22 - FGIC Insured 9/14 at 100.00 AAA 1,935,780
1,225 Fresno Unified School District, Fresno County, California, 2/13 at 103.00 AAA 1,450,633
General Obligation Refunding Bonds, Series 1998A,
6.550%, 8/01/20 - MBIA Insured
1,180 Jurupa Unified School District, Riverside County, California, 8/13 at 100.00 AAA 1,254,600
General Obligation Bonds, Series 2004, 5.000%, 8/01/21 -
FGIC Insured
1,130 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,200,501
California, General Obligation Bonds, Series 2005A,
5.000%, 8/01/24 - FSA Insured
3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AAA 3,460,260
General Obligation Refunding Bonds, Series 1997A,
6.500%, 8/01/19 - MBIA Insured
160 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 169,371
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
3,000 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aaa 3,174,300
California, General Obligation Bonds, Series 2005,
5.000%, 7/01/27 - MBIA Insured
23
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
San Diego Unified School District, San Diego County, California,
General Obligation Bonds, Election of 1998, Series 2001C:
$ 1,335 5.000%, 7/01/21 - FSA Insured 7/11 at 102.00 AAA $ 1,437,288
3,500 5.000%, 7/01/22 - FSA Insured 7/11 at 102.00 AAA 3,768,170
4,895 5.000%, 7/01/23 - FSA Insured 7/11 at 102.00 AAA 5,270,055
------------------------------------------------------------------------------------------------------------------------------------
28,920 Total Tax Obligation/General 31,387,490
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 25.5% (17.8% OF TOTAL INVESTMENTS)
1,000 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 1,046,110
California, Certificates of Participation Refunding,
Series 2002A, 5.125%, 8/01/26 - FSA Insured
California Infrastructure Economic Development Bank,
Revenue Bonds, North County Center for Self-Sufficiency
Corporation, Series 2004:
1,215 5.000%, 12/01/19 - AMBAC Insured 12/13 at 100.00 AAA 1,288,070
1,615 5.000%, 12/01/21 - AMBAC Insured 12/13 at 100.00 AAA 1,702,678
195 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 206,667
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
1,900 Corona-Norco Unified School District, Riverside County, 9/12 at 100.00 AAA 2,024,488
California, Special Tax Bonds, Community Facilities
District 98-1, Series 2002, 5.100%, 9/01/25 - AMBAC Insured
5,000 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 5,196,700
Department of Public Services Facility Phase II, Series 2001,
5.250%, 1/01/34 - AMBAC Insured
150 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 159,669
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
1,400 Indian Wells Redevelopment Agency, California, Tax Allocation 9/13 at 100.00 AAA 1,477,308
Bonds, Consolidated Whitewater Project Area, Series 2003A,
5.000%, 9/01/20 - AMBAC Insured
345 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 358,634
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
895 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 951,815
Tax Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - FSA Insured
1,000 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA 1,067,970
California, Proposition A First Tier Senior Sales Tax Revenue
Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured
165 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 AAA 171,608
Merged Project Area, Series 2005A, 5.000%, 9/01/35 -
XLCA Insured
205 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 213,936
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
3,000 Santa Clara County Financing Authority, California, Lease 11/07 at 102.00 AAA 3,094,380
Revenue Bonds, VMC Facility Replacement Project,
Series 1997A, 5.000%, 11/15/22 - AMBAC Insured
3,565 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 3,750,986
Authority, California, Special Tax Revenue Bonds,
Series 2005A, 5.000%, 9/01/25 (WI/DD, Settling 9/01/06) -
FSA Insured
2,805 Yucaipa-Calimesa Joint Unified School District, San Bernardino 10/11 at 100.00 AAA 2,887,888
County, California, General Obligation Refunding Bonds,
Series 2001A, 5.000%, 10/01/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
24,455 Total Tax Obligation/Limited 25,598,907
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.4% (1.7% OF TOTAL INVESTMENTS)
2,400 San Diego Unified Port District, California, Revenue Bonds, 9/14 at 100.00 AAA 2,508,576
Series 2004B, 5.000%, 9/01/29 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 41.9% (29.3% OF TOTAL INVESTMENTS) (4)
2,000 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 2,154,400
Department of Health Services, Series 1999A, 5.750%, 11/01/24
(Pre-refunded 11/01/09) - MBIA Insured
California, Various Purpose General Obligation Bonds, Series 2000:
7,995 5.750%, 3/01/22 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 8,668,739
2,000 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 2,163,720
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 2,500 Fresno Unified School District, Fresno County, California, 8/09 at 102.00 AAA $ 2,628,025
General Obligation Bonds, Series 2001A, 5.125%, 8/01/26 -
FSA Insured (ETM)
6,000 Huntington Park Redevelopment Agency, California, Single No Opt. Call AAA 8,445,420
Family Residential Mortgage Revenue Refunding Bonds,
Series 1986A, 8.000%, 12/01/19 (ETM)
5,135 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 6,781,076
Single Family Restructured Mortgage Revenue Bonds,
Series 1986A, 8.000%, 3/01/16 (Alternative Minimum
Tax) (ETM)
6,220 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 9,309,346
Securities Program Single Family Mortgage Revenue Bonds,
Series 1987A, 9.000%, 5/01/21 (Alternative Minimum
Tax) (ETM)
1,485 San Jose, California, Single Family Mortgage Revenue Bonds, No Opt. Call AAA 2,012,873
Series 1985A, 9.500%, 10/01/13 (ETM)
------------------------------------------------------------------------------------------------------------------------------------
33,335 Total U.S. Guaranteed 42,163,599
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.2% (2.2% OF TOTAL INVESTMENTS)
345 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 364,079
Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
2,600 Sacramento Municipal Utility District, California, Electric No Opt. Call AAA 2,830,802
Revenue Refunding Bonds, Series 2003S, 5.000%, 11/15/13 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
2,945 Total Utilities 3,194,881
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 25.3% (17.7% OF TOTAL INVESTMENTS)
5,255 El Dorado Irrigation District, California, Water and Sewer 3/13 at 100.00 AAA 5,564,572
Certificates of Participation, Series 2003A, 5.000%, 3/01/20 -
FGIC Insured
1,230 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 1,298,819
Certificates of Participation, Series 2004A, 5.000%, 3/01/21 -
FGIC Insured
235 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 246,764
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
220 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 231,339
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
1,500 Placerville Public Financing Authority, California, Wastewater 9/16 at 100.00 AAA 1,572,435
System Refinancing and Improvement Project Revenue Bonds,
Series 2006, 5.000%, 9/01/34 - XLCA Insured
750 Sacramento County Sanitation District Financing Authority, 12/14 at 100.00 AAA 799,770
California, Revenue Bonds, Series 2004A, 5.000%, 12/01/21 -
AMBAC Insured
3,400 San Diego Public Facilities Financing Authority, California, 5/07 at 101.00 AAA 3,467,150
Sewerage Revenue Bonds, Series 1997A, 5.250%, 5/15/22 -
FGIC Insured
2,150 Santa Clara Valley Water District, California, Water Utility 6/10 at 100.00 AAA 2,231,055
System Revenue Bonds, Series 2000A, 5.125%, 6/01/31 -
FGIC Insured
1,310 Santa Fe Springs Public Financing Authority, California, 5/13 at 100.00 AAA 1,375,369
Water Revenue Bonds, Series 2003A, 5.000%, 5/01/33 -
MBIA Insured
1,345 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AAA 1,425,108
Certificates of Participation, Series 2003A, 5.000%, 8/01/20 -
MBIA Insured
25
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,000 Westlands Water District, California, Revenue Certificates 3/15 at 100.00 AAA $ 2,085,060
of Participation, Series 2005A, 5.000%, 9/01/30 - MBIA Insured
5,000 Wheeler Ridge-Maricopa Water District, Kern County, 11/06 at 102.00 AAA 5,116,250
California, Water Revenue Refunding Bonds, Series 1996,
5.700%, 11/01/15 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
24,395 Total Water and Sewer 25,413,691
------------------------------------------------------------------------------------------------------------------------------------
$ 129,205 Total Investments (cost $133,619,422) - 142.8% 143,674,468
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.9% 1,906,201
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (44.7)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 100,580,669
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006:
FIXED RATE FLOATING RATE UNREALIZED
NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $4,900,000 5.681% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/12 $(106,401)
JPMorgan 7,700,000 5.630% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/10 (112,708)
JPMorgan 3,100,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 189,309
Morgan Stanley 7,300,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 359,290
------------------------------------------------------------------------------------------------------------------------------------
$ 329,490
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates)
All of the bonds in the Portfolio of Investments 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.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
(5) Represents the annualized rate paid or received by the
Fund.
(6) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
26
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.6% (3.8% OF TOTAL INVESTMENTS)
$ 620 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa $ 672,539
University of the Pacific, Series 2000, 5.875%, 11/01/20 -
MBIA Insured
2,125 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 2,201,819
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax)
1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 AAA 1,589,130
Series 2005A, 5.000%, 11/01/25 - AMBAC Insured
6,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 6,282,960
Projects, Series 2003A, 5.000%, 5/15/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
10,245 Total Education and Civic Organizations 10,746,448
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 1.8% (1.2% OF TOTAL INVESTMENTS)
1,450 California Health Facilities Financing Authority, Insured 1/07 at 102.00 AAA 1,481,624
Health Facility Revenue Refunding Bonds, Mark Twain
St. Joseph's Healthcare Corporation, Series 1996A, 6.000%,
7/01/19 - MBIA Insured
1,755 University of California, Hospital Revenue Bonds, UCLA 5/12 at 101.00 AAA 1,927,903
Medical Center, Series 2004A, 5.500%, 5/15/18 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
3,205 Total Health Care 3,409,527
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,100 California Housing Finance Agency, Single Family Mortgage 8/07 at 101.50 AAA 1,126,532
Bonds, Series 1997C-2-II, 5.625%, 8/01/20 - MBIA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 21.1% (14.3% OF TOTAL INVESTMENTS)
1,460 ABC Unified School District, Los Angeles County, California, 8/10 at 101.00 AAA 1,589,385
General Obligation Bonds, Series 2000B, 5.750%, 8/01/16 -
FGIC Insured
1,425 Bassett Unified School District, Los Angeles County, 8/16 at 100.00 AAA 1,541,081
California, General Obligation Bonds, Series 2006B,
5.250%, 8/01/30 - FGIC Insured
4,400 California, General Obligation Bonds, Series 2003, 2/13 at 100.00 AAA 4,564,692
5.000%, 2/01/31 - MBIA Insured
California, General Obligation Bonds, Series 2004:
1,000 5.000%, 2/01/18 - AMBAC Insured 2/14 at 100.00 AAA 1,069,560
2,250 5.000%, 4/01/31 - AMBAC Insured 4/14 at 100.00 AAA 2,347,223
3,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 3,056,610
Series 2001BZ, 5.375%, 12/01/24 - MBIA Insured
(Alternative Minimum Tax)
1,910 Fresno Unified School District, Fresno County, California, No Opt. Call AAA 2,366,337
General Obligation Bonds, Series 2002A, 6.000%, 8/01/26 -
MBIA Insured
1,255 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,333,299
California, General Obligation Bonds, Series 2005A,
5.000%, 8/01/24 - FSA Insured
2,200 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 2,356,772
Obligation Bonds, Series 2003F, 5.000%, 7/01/17 -
FSA Insured
Los Rios Community College District, Sacramento, El Dorado and
Yolo Counties, California, General Obligation Bonds, Series 2006C:
2,110 5.000%, 8/01/21 - FSA Insured 8/14 at 102.00 AAA 2,273,209
3,250 5.000%, 8/01/22 - FSA Insured 8/14 at 102.00 AAA 3,493,132
3,395 5.000%, 8/01/23 - FSA Insured 8/14 at 102.00 AAA 3,637,505
1,270 Merced City School District, Merced County, California, 8/13 at 100.00 AAA 1,343,127
General Obligation Bonds, Series 2004, 5.000%, 8/01/22 -
FGIC Insured
305 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 322,864
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
27
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,500 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aaa $ 2,645,250
California, General Obligation Bonds, Series 2005,
5.000%, 7/01/27 - MBIA Insured
1,125 San Diego Unified School District, California, General No Opt. Call AAA 586,485
Obligation Bonds, Election of 1998, Series 1999A,
0.000%, 7/01/21 - FGIC Insured
2,000 San Francisco Community College District, California, 6/10 at 102.00 Aaa 2,094,960
General Obligation Bonds, Series 2002A,
5.000%, 6/15/26 - FGIC Insured
1,000 San Ramon Valley Unified School District, Contra Costa 8/14 at 100.00 AAA 1,056,480
County, California, General Obligation Bonds, Series 2004,
5.000%, 8/01/24 - FSA Insured
2,445 Washington Unified School District, Yolo County, California, 8/13 at 100.00 AAA 2,599,573
General Obligation Bonds, Series 2004A, 5.000%, 8/01/21 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
38,300 Total Tax Obligation/General 40,277,544
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 40.4% (27.3% OF TOTAL INVESTMENTS)
Anaheim Public Finance Authority, California, Subordinate Lease
Revenue Bonds, Public Improvement Project, Series 1997C:
5,130 0.000%, 9/01/18 - FSA Insured No Opt. Call AAA 3,086,157
8,000 0.000%, 9/01/21 - FSA Insured No Opt. Call AAA 4,140,160
California Infrastructure Economic Development Bank, Revenue
Bonds, North County Center for Self-Sufficiency Corporation,
Series 2004:
1,535 5.000%, 12/01/20 - AMBAC Insured 12/13 at 100.00 AAA 1,622,280
1,780 5.000%, 12/01/23 - AMBAC Insured 12/13 at 100.00 AAA 1,867,523
3,725 California State Public Works Board, Lease Revenue Bonds, 1/16 at 100.00 AAA 4,041,290
Department of Corrections, Series 2005J, 5.000%, 1/01/17 -
AMBAC Insured
380 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 402,735
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
4,000 Contra Costa County, California, Certificates of Participation 11/07 at 102.00 AAA 4,156,040
Refunding, Merrithew Memorial Hospital Replacement,
Series 1997, 5.500%, 11/01/22 - MBIA Insured
6,000 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 6,198,840
Department of Public Services Facility Phase II, Series 2001,
5.000%, 1/01/21 - AMBAC Insured
8,280 Fontana Public Financing Authority, California, Tax Allocation 10/15 at 100.00 AAA 8,661,046
Revenue Bonds, North Fontana Redevelopment Project,
Series 2005A, 5.000%, 10/01/32 - AMBAC Insured
3,000 Galt Schools Joint Powers Authority, Sacramento County, 11/07 at 102.00 AAA 3,136,800
California, Revenue Refunding Bonds, High School and
Elementary School Facilities, Series 1997A,
5.875%, 11/01/24 - MBIA Insured
285 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 303,371
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
1,810 Kern County Board of Education, California, Certificates of 5/08 at 102.00 AAA 1,880,029
Participation Refunding, Series 1998A, 5.200%, 5/01/28 -
MBIA Insured
5,000 La Quinta Redevelopment Agency, California, Tax Allocation 9/07 at 102.00 AAA 5,157,950
Refunding Bonds, Redevelopment Project Area 1, Series 1998,
5.200%, 9/01/28 - AMBAC Insured
2,300 Long Beach Bond Finance Authority, California, Multiple Project 8/15 at 100.00 AAA 2,420,727
Tax Allocation Bonds, Housing and Gas Utility Financing
Project Areas, Series 2005A-1, 5.000%, 8/01/25 -
AMBAC Insured
685 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 712,071
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
1,000 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 1,063,480
Tax Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - FSA Insured
1,250 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA 1,334,963
California, Proposition A First Tier Senior Sales Tax Revenue
Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured
4,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 4,146,840
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
2,780 Pittsburg Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 2,986,109
Refunding Bonds, Los Medanos Community Development
Project, Series 2003A, 5.000%, 8/01/12 - MBIA Insured
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 4,140 Plumas County, California, Certificates of Participation, 6/13 at 101.00 AAA $ 4,333,172
Capital Improvement Program, Series 2003A,
5.000%, 6/01/28 - AMBAC Insured
2,000 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 AAA 2,186,920
Refunding Bonds, Paguay Redevelopment Project, Series 2000,
5.750%, 6/15/33 - MBIA Insured
325 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 AAA 338,016
Merged Project Area, Series 2005A, 5.000%, 9/01/35 -
XLCA Insured
1,000 Rocklin Unified School District, Placer County, California, 9/13 at 100.00 AAA 1,052,860
Special Tax Bonds, Community Facilities District 1,
Series 2004, 5.000%, 9/01/25 - MBIA Insured
405 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 422,654
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
5,000 San Bernardino Joint Powers Financing Authority, California, 9/09 at 102.00 AAA 5,353,000
Certificates of Participation Refunding, Police Station
Financing Project, Series 1999, 5.500%, 9/01/20 -
MBIA Insured
5,510 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 5,763,956
Authority, California, Special Tax Revenue Bonds,
Series 2005A, 5.000%, 9/01/28 (WI/DD, Settling
9/01/06) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
83,185 Total Tax Obligation/Limited 76,768,989
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.9% (4.7% OF TOTAL INVESTMENTS)
6,500 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 65.32 AAA 3,687,125
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/18 - MBIA Insured
4,000 Orange County Transportation Authority, California, Toll Road 8/13 at 100.00 AAA 4,284,600
Revenue Bonds, 91 Express Lanes Project, Series 2003A,
5.000%, 8/15/18 - AMBAC Insured
5,000 San Francisco Airports Commission, California, Revenue 5/11 at 100.00 AAA 5,171,900
Refunding Bonds, San Francisco International Airport,
Second Series 2001, Issue 27A, 5.250%, 5/01/31 -
MBIA Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
15,500 Total Transportation 13,143,625
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 38.3% (25.9% OF TOTAL INVESTMENTS) (4)
1,380 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa 1,508,326
University of the Pacific, Series 2000, 5.875%, 11/01/20
(Pre-refunded 11/01/10) - MBIA Insured
California Infrastructure Economic Development Bank, Revenue
Bonds, Asian Art Museum of San Francisco, Series 2000:
1,295 5.500%, 6/01/19 (Pre-refunded 6/01/10) - MBIA Insured 6/10 at 101.00 AAA 1,398,859
1,000 5.500%, 6/01/20 (Pre-refunded 6/01/10) - MBIA Insured 6/10 at 101.00 AAA 1,080,200
3,450 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 3,716,340
Department of Health Services, Series 1999A,
5.750%, 11/01/24 (Pre-refunded 11/01/09) - MBIA Insured
2,500 California, Various Purpose General Obligation Bonds, 9/09 at 101.00 AAA 2,669,075
Series 1999, 5.500%, 9/01/24 (Pre-refunded 9/01/09) -
FSA Insured
California, Various Purpose General Obligation Bonds, Series 2000:
7,995 5.750%, 3/01/22 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 8,668,739
1,900 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 2,055,534
2,580 Central Unified School District, Fresno County, California, 9/06 at 100.00 AAA 2,606,626
General Obligation Bonds, Series 1993, 5.625%, 3/01/18 -
AMBAC Insured (ETM)
3,000 Escondido Union High School District, San Diego County, 11/06 at 102.00 AAA 3,069,900
California, General Obligation Bonds, Series 1996,
5.700%, 11/01/10 - MBIA Insured (ETM)
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Series 2001F:
1,065 5.125%, 8/01/21 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,124,789
1,160 5.125%, 8/01/22 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,225,122
1,220 5.125%, 8/01/23 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,288,491
1,500 Hacienda La Puente Unified School District, Los Angeles 8/10 at 101.00 AAA 1,610,910
County, California, General Obligation Bonds, Series 2000A,
5.250%, 8/01/25 (Pre-refunded 8/01/10) - MBIA Insured
Kern Community College District, California, General Obligation
Bonds, Series 2003A:
3,655 5.000%, 11/01/20 (Pre-refunded 11/01/13) - FGIC Insured 11/13 at 100.00 AAA 3,976,019
2,665 5.000%, 11/01/21 (Pre-refunded 11/01/13) - FGIC Insured 11/13 at 100.00 AAA 2,899,067
29
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 3,190 Kern County Board of Education, California, Certificates of 5/08 at 102.00 AAA $ 3,342,546
Participation Refunding, Series 1998A, 5.200%, 5/01/28
(Pre-refunded 5/01/08) - MBIA Insured
1,750 Lake Tahoe Unified School District, El Dorado County, California, 8/09 at 100.00 AAA 1,840,510
General Obligation Bonds, Series 1999A, 5.250%, 8/01/24
(Pre-refunded 8/01/09) - FGIC Insured
3,865 Los Angeles County Metropolitan Transportation Authority, 7/10 at 101.00 AAA 4,145,792
California, Proposition C Second Senior Lien Sales Tax
Revenue Bonds, Series 2000A, 5.250%, 7/01/30 (Pre-refunded
7/01/10) - FGIC Insured
Manteca Unified School District, San Joaquin County, California,
General Obligation Bonds, Series 2004:
1,000 5.250%, 8/01/21 (Pre-refunded 8/01/14) - FSA Insured 8/14 at 100.00 AAA 1,109,260
1,000 5.250%, 8/01/22 (Pre-refunded 8/01/14) - FSA Insured 8/14 at 100.00 AAA 1,109,260
3,215 Modesto Irrigation District, California, Revenue Refunding 10/06 at 102.00 AAA 3,285,859
Bonds, Series 1996A, 6.000%, 10/01/15 (Pre-refunded
10/01/06) - MBIA Insured
2,500 Oakland, California, Insured Revenue Bonds, 1800 Harrison 1/10 at 100.00 AAA 2,699,375
Foundation - Kaiser Permanente, Series 1999A,
6.000%, 1/01/29 (Pre-refunded 1/01/10) - AMBAC Insured
4,320 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 5,861,030
Securities Program Single Family Mortgage Revenue Bonds,
Series 1987B, 8.625%, 5/01/16 (Alternative Minimum
Tax) (ETM)
1,690 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 1,842,083
Improvement Revenue Bonds, Solid Waste and
Redevelopment Projects, Series 1999, 5.800%, 12/01/19
(Pre-refunded 12/01/09) - AMBAC Insured
1,000 Sacramento County Sanitation District Financing Authority, 12/10 at 101.00 AAA 1,088,490
California, Revenue Bonds, Series 2000A, 5.500%, 12/01/20
(Pre-refunded 12/01/10) - AMBAC Insured
3,500 San Francisco Bay Area Rapid Transit District, California, 7/09 at 101.00 AAA 3,727,115
Sales Tax Revenue Bonds, Series 1999, 5.500%, 7/01/34
(Pre-refunded 7/01/09) - FGIC Insured
4,000 Visalia, California, Certificates of Participation Refunding, 12/06 at 102.00 AAA 4,098,520
Motor Vehicle License Fee Enhancement, Series 1996A,
5.375%, 12/01/26 (Pre-refunded 12/01/06) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
63,530 Total U.S. Guaranteed 73,047,837
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.8% (6.6% OF TOTAL INVESTMENTS)
3,740 California Pollution Control Financing Authority, Revenue 9/09 at 101.00 AAA 3,930,291
Refunding Bonds, Southern California Edison Company,
Series 1999B, 5.450%, 9/01/29 - MBIA Insured
670 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 707,051
Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
3,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 3,707,445
Series 2002II, 5.125%, 7/01/26 - FSA Insured
100 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 108,485
Improvement Revenue Bonds, Solid Waste and Redevelopment
Projects, Series 1999, 5.800%, 12/01/19 - AMBAC Insured
1,950 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,041,123
Bonds, Series 2002, 5.250%, 8/01/27 - AMBAC Insured
(Alternative Minimum Tax)
Santa Clara, California, Subordinate Electric Revenue Bonds,
Series 2003A:
2,800 5.000%, 7/01/24 - MBIA Insured 7/13 at 100.00 AAA 2,942,072
5,000 5.000%, 7/01/28 - MBIA Insured 7/13 at 100.00 AAA 5,230,650
------------------------------------------------------------------------------------------------------------------------------------
17,760 Total Utilities 18,667,117
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 23.3% (15.8% OF TOTAL INVESTMENTS)
1,700 Castaic Lake Water Agency, California, Revenue Certificates 8/14 at 100.00 AAA 1,804,261
of Participation, Series 2004A, 5.000%, 8/01/20 -
AMBAC Insured
2,975 Chino Basin Regional Finance Authority, California, Sewerage 2/07 at 100.00 AAA 2,980,831
System Revenue Bonds, Inland Empire Utilities Agency,
Series 1994, 6.000%, 8/01/16 - AMBAC Insured
2,000 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,111,900
Certificates of Participation, Series 2004A, 5.000%, 3/01/21 -
FGIC Insured
460 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 483,028
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,700 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA $ 2,872,233
California, Senior Revenue Bonds, Capital Projects,
Series 2003A, 5.000%, 10/01/21 - FSA Insured
430 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 452,162
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
12,000 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 12,472,079
of Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured
2,775 Pomona Public Financing Authority, California, Revenue Bonds, 5/09 at 101.00 AAA 2,915,609
Water Facilities Project, Series 1999AC, 5.500%, 5/01/29 -
FGIC Insured
750 Sacramento County Sanitation District Financing Authority, 12/14 at 100.00 AAA 799,770
California, Revenue Bonds, Series 2004A, 5.000%, 12/01/21 -
AMBAC Insured
1,520 San Buenaventura, California, Water Revenue Certificates 10/14 at 100.00 AAA 1,595,650
of Participation, Series 2004, 5.000%, 10/01/25 -
AMBAC Insured
3,675 San Dieguito Water District, California, Water Revenue Bonds, 10/14 at 100.00 AAA 3,896,603
Series 2004, 5.000%, 10/01/23 - FGIC Insured
Santa Clara Valley Water District, California, Certificates
of Participation, Series 2004A:
1,400 5.000%, 2/01/19 - FGIC Insured 2/14 at 100.00 AAA 1,486,632
445 5.000%, 2/01/20 - FGIC Insured 2/14 at 100.00 AAA 470,814
465 5.000%, 2/01/21 - FGIC Insured 2/14 at 100.00 AAA 490,756
2,130 Santa Rosa, Sonoma County, California, Wastewater Revenue 9/14 at 100.00 AAA 2,292,732
Bonds, Series 2004B, 5.000%, 9/01/18 - FGIC Insured
2,500 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AAA 2,604,425
Certificates of Participation, Series 2003A, 5.000%, 8/01/30 -
MBIA Insured
Yorba Linda Water District, California, Certificates of
Participation, Highland Reservoir Renovation, Series 2003:
2,010 5.000%, 10/01/28 - FGIC Insured 10/13 at 100.00 AAA 2,105,696
2,530 5.000%, 10/01/33 - FGIC Insured 10/13 at 100.00 AAA 2,637,854
------------------------------------------------------------------------------------------------------------------------------------
42,465 Total Water and Sewer 44,473,035
------------------------------------------------------------------------------------------------------------------------------------
$ 275,290 Total Investments (cost $267,368,873) - 147.8% 281,660,654
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.1% 3,910,577
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.9)% (95,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 190,571,231
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006:
FIXED RATE FLOATING RATE UNREALIZED
NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan $4,900,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 $299,230
Morgan Stanley 6,200,000 3 Month USD-LIBOR 5.811% Semi-Annually Quarterly 7/27/07 7/27/24 273,219
Morgan Stanley 5,400,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 265,777
------------------------------------------------------------------------------------------------------------------------------------
$838,226
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates)
All of the bonds in the Portfolio of Investments 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.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
(5) Represents the annualized rate paid or received by the
Fund.
(6) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
31
Nuveen California Premium Income Municipal Fund (NCU)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.5% (4.4% OF TOTAL INVESTMENTS)
$ 1,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 1,559,280
Settlement Asset-Backed Bonds, Alameda County Tobacco
Asset Securitization Corporation, Series 2002, 5.750%, 6/01/29
310 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB 301,432
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
3,540 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 Baa3 3,656,537
Asset-Backed Bonds, Pooled Tobacco Securitization Program,
Series 2002A, 5.625%, 5/01/29
------------------------------------------------------------------------------------------------------------------------------------
5,350 Total Consumer Staples 5,517,249
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 2.1% (1.4% OF TOTAL INVESTMENTS)
70 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 71,874
University of Redlands, Series 2005A, 5.000%, 10/01/35
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
45 5.000%, 11/01/21 11/15 at 100.00 A2 47,660
60 5.000%, 11/01/25 11/15 at 100.00 A2 62,989
1,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 1,617,975
Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
1,675 Total Education and Civic Organizations 1,800,498
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 14.3% (9.6% OF TOTAL INVESTMENTS)
4,705 California Health Facilities Financing Authority, Hospital 11/06 at 100.00 BB 4,706,035
Revenue Bonds, Downey Community Hospital, Series 1993,
5.750%, 5/15/15
480 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A3 492,288
Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34
1,500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 1,588,185
Bonds, Kaiser Hospital Assistance LLC, Series 2001A,
5.550%, 8/01/31
2,180 California Statewide Community Development Authority, 3/16 at 100.00 A+ 2,231,666
Revenue Bonds, Kaiser Permanante System, Series 2006,
5.000%, 3/01/41
730 California Statewide Community Development Authority, 8/16 at 100.00 A+ 771,887
Revenue Bonds, Kaiser Permanente System, Series 2001C,
5.250%, 8/01/31
2,100 California Statewide Community Development Authority, No Opt. Call AAA 2,250,024
Revenue Bonds, Sherman Oaks Health System, Series 1998A,
5.000%, 8/01/22 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
11,695 Total Health Care 12,040,085
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.9% (1.3% OF TOTAL INVESTMENTS)
1,600 California Statewide Community Development Authority, 7/08 at 101.00 BBB 1,642,336
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 5.250%, 5/15/25 (Mandatory
put 5/15/13)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.4% (0.1% OF TOTAL INVESTMENTS)
240 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 245,935
Bonds II, Series 1997A-1, 6.000%, 8/01/20 - MBIA Insured
(Alternative Minimum Tax)
35 California Rural Home Mortgage Finance Authority, No Opt. Call AAA 35,647
Mortgage-Backed Securities Program Single Family
Mortgage Revenue Bonds, Series 1996C, 7.500%, 8/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
275 Total Housing/Single Family 281,582
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS)
500 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 515,250
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 29.4% (19.8% OF TOTAL INVESTMENTS)
California, General Obligation Bonds, Series 2003:
$ 1,000 5.250%, 11/01/19 - RAAI Insured 11/13 at 100.00 AA $ 1,081,700
1,500 5.000%, 2/01/31 - MBIA Insured 2/13 at 100.00 AAA 1,556,145
California, General Obligation Bonds, Series 2004:
1,750 5.000%, 4/01/22 4/14 at 100.00 A+ 1,838,323
1,400 5.200%, 4/01/26 4/14 at 100.00 A+ 1,493,912
4,000 California, General Obligation Veterans Welfare Bonds, 12/06 at 100.00 A1 4,002,040
Series 1999BR, 5.300%, 12/01/29 (Alternative Minimum Tax)
1,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 1,063,040
General Obligation Bonds, Series 2002A, 5.000%, 8/01/21 -
FGIC Insured
6,000 Hartnell Community College District, California, General 6/16 at 100.00 AAA 6,363,117
Obligation Bonds, Series 2006B, 5.000%, 6/01/29 -
FSA Insured
2,250 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 2,379,105
Obligation Bonds, Series 2003A, 5.000%, 7/01/22 -
FSA Insured
3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AAA 3,419,970
General Obligation Refunding Bonds, Series 1997A,
6.150%, 8/01/15 - MBIA Insured
15 Riverside Community College District, California, General 8/14 at 100.00 AAA 16,346
Obligation Bonds, Series 2004A, 5.250%, 8/01/22 -
MBIA Insured
135 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 142,907
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
1,355 San Jose-Evergreen Community College District, Santa Clara 9/15 at 100.00 AAA 1,438,156
County, California, General Obligation Bonds, Series 2005A,
5.000%, 9/01/25 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
23,405 Total Tax Obligation/General 24,794,761
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 48.4% (32.6% OF TOTAL INVESTMENTS)
1,000 Bell Community Redevelopment Agency, California, Tax 10/13 at 100.00 AA 1,077,920
Allocation Bonds, Bell Project Area, Series 2003,
5.625%, 10/01/33 - RAAI Insured
985 Beverly Hills Public Financing Authority, California, Lease 6/13 at 100.00 Aaa 1,074,665
Revenue Refunding Bonds, Series 2003A, 5.250%, 6/01/15 -
MBIA Insured
California Infrastructure Economic Development Bank, Revenue
Bonds, North County Center for Self-Sufficiency Corporation,
Series 2004:
1,695 5.000%, 12/01/22 - AMBAC Insured 12/13 at 100.00 AAA 1,783,767
1,865 5.000%, 12/01/24 - AMBAC Insured 12/13 at 100.00 AAA 1,951,965
5,920 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 6,306,872
Department of Veterans Affairs, Southern California Veterans
Home - Chula Vista Facility, Series 1999A, 5.600%, 11/01/19 -
AMBAC Insured
905 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 981,129
5.000%, 7/01/15
165 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 174,872
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
130 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 138,380
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
80 5.000%, 9/01/26 9/06 at 103.00 N/R 80,721
185 5.125%, 9/01/36 9/06 at 103.00 N/R 187,020
2,500 Kern County Board of Education, California, Certificates of 6/16 at 100.00 AAA 2,624,800
Participation, Series 2006A, 5.000%, 6/01/31 - MBIA Insured
3,500 Livermore Redevelopment Agency, California, Tax Allocation 8/11 at 100.00 AAA 3,609,760
Revenue Bonds, Livermore Redevelopment Project Area,
Series 2001A, 5.000%, 8/01/26 - MBIA Insured
310 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 322,251
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
1,595 Los Angeles Community Redevelopment Agency, California, 12/06 at 100.00 BBB- 1,596,818
Tax Allocation Multifamily Housing Bonds, Grand Central
Square/Bunker Hill Project, Series 1993A, 5.750%, 12/01/13
(Alternative Minimum Tax)
33
Nuveen California Premium Income Municipal Fund (NCU) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA $ 2,135,940
California, Proposition A First Tier Senior Sales Tax Revenue
Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured
3,230 Murrieta Redevelopment Agency, California, Tax Allocation 8/15 at 100.00 AAA 3,363,076
Bonds, Series 2005, 5.000%, 8/01/35 - MBIA Insured
2,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 2,208,120
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/15 - FGIC Insured
1,000 Poway, California, Community Facilities District 88-1, 8/08 at 102.00 N/R 1,056,990
Special Tax Refunding Bonds, Parkway Business Centre,
Series 1998, 6.500%, 8/15/09
155 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 161,208
Bonds, Merged Project Area, Series 2005A,
5.000%, 9/01/35 - XLCA Insured
190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 198,282
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 1,680,900
Revenue Refunding Bonds, Series 1993A, 5.400%, 11/01/20 -
MBIA Insured
3,000 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AA- 3,299,580
Refunding Bonds, Series 1993B, 5.400%, 11/01/20
San Marcos Public Facilities Authority, California, Revenue
Refunding Bonds, Series 1998:
1,500 5.800%, 9/01/18 9/08 at 101.00 Baa3 1,561,050
1,000 5.800%, 9/01/27 9/08 at 101.00 Baa3 1,040,700
2,050 Santa Barbara County, California, Certificates of Participation, 12/11 at 102.00 AAA 2,227,592
Series 2001, 5.250%, 12/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
38,460 Total Tax Obligation/Limited 40,844,378
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.3% (2.3% OF TOTAL INVESTMENTS)
780 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 822,799
San Francisco Bay Area Toll Bridge, Series 2006,
5.000%, 4/01/31
2,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- 2,001,440
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
------------------------------------------------------------------------------------------------------------------------------------
2,780 Total Transportation 2,824,239
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.6% (11.2% OF TOTAL INVESTMENTS) (4)
California Department of Water Resources, Power Supply Revenue
Bonds, Series 2002A:
400 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA 440,756
2,250 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 2,450,588
1,200 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 1,306,620
Cedars-Sinai Medical Center, Series 1999A, 6.125%, 12/01/30
(Pre-refunded 12/01/09)
3,000 California Infrastructure Economic Development Bank, No Opt. Call AAA 3,324,990
First Lien Revenue Bonds, San Francisco Bay Area Toll Bridge,
Series 2003A, 5.000%, 7/01/22 - FSA Insured (ETM)
Golden State Tobacco Securitization Corporation, California,
Enhanced Tobacco Settlement Asset-Backed Bonds,
Series 2003B:
1,000 5.625%, 6/01/33 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,113,040
1,000 5.500%, 6/01/33 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,105,640
2,000 Puerto Rico, General Obligation and Public Improvement 7/10 at 100.00 AAA 2,153,680
Bonds, Series 2000, 5.750%, 7/01/21 (Pre-refunded 7/01/10) -
MBIA Insured
2,000 Vista, California, Mobile Home Park Revenue Bonds, Vista 3/24 at 100.00 N/R (4) 2,140,960
Manor Mobile Home Park Project, Series 1999A,
5.750%, 3/15/29 (Pre-refunded 3/15/24)
------------------------------------------------------------------------------------------------------------------------------------
12,850 Total U.S. Guaranteed 14,036,274
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.6% (4.4% OF TOTAL INVESTMENTS)
275 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 292,317
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
34
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 295 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA $ 311,314
Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
4,580 Sacramento Municipal Utility District, California, Electric 8/12 at 100.00 AAA 4,947,362
Revenue Refunding Bonds, Series 2002Q, 5.250%, 8/15/20 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,150 Total Utilities 5,550,993
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.7% (12.0% OF TOTAL INVESTMENTS)
1,125 Burbank, California, Wastewater System Revenue Bonds, 6/14 at 100.00 AAA 1,186,605
Series 2004A, 5.000%, 6/01/23 - AMBAC Insured
1,095 California Statewide Community Development Authority, 10/13 at 100.00 AAA 1,173,435
Water and Wastewater Revenue Bonds, Pooled Financing
Program, Series 2003A, 5.250%, 10/01/23 - FSA Insured
5,000 Culver City, California, Wastewater Facilities Revenue Refunding 9/09 at 102.00 AAA 5,359,250
Bonds, Series 1999A, 5.700%, 9/01/29 - FGIC Insured
205 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 215,262
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
3,495 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 3,740,244
of Participation, Series 2003, 5.250%, 2/01/21 - FGIC Insured
370 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 390,576
California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 -
FGIC Insured
1,000 Sacramento County Water Financing Authority, California, 6/13 at 100.00 AAA 1,057,130
Revenue Bonds, Agency Zones 40-41 System Projects,
Series 2003, 5.000%, 6/01/22 - AMBAC Insured
1,795 Woodbridge Irrigation District, California, Certificates 7/13 at 100.00 BBB+ 1,868,936
of Participation, Water Systems Project, Series 2003,
5.500%, 7/01/33
------------------------------------------------------------------------------------------------------------------------------------
14,085 Total Water and Sewer 14,991,438
------------------------------------------------------------------------------------------------------------------------------------
$ 117,825 Total Long-Term Investments (cost $118,969,909) - 147.8% 124,839,083
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.7% (0.5% OF TOTAL INVESTMENTS)
200 California Department of Water Resources, Power Supply A-1+ 200,000
Revenue Bonds, Variable Rate Demand Obligations,
Series 2002C-7, 3.270%, 5/01/22 - FSA Insured (5)
200 City and County of San Francisco Finance Corporation, A-1+ 200,000
California, Moscone Center Expansion Project, Lease
Revenue Bonds, Series 2000-2, Variable Rate Demand
Obligations, 3.260%, 4/01/30 - AMBAC Insured (5)
200 East Bay Municipal Utility District, Alameda and Contra A-1+ 200,000
Costa Counties, California, Water System Subordinated
Revenue Bonds, Variable Rate Demand Obligations,
Series 2005B-2, 3.260%, 6/01/38 - XLCA Insured (5)
------------------------------------------------------------------------------------------------------------------------------------
$ 600 Total Short-Term Investments (cost $600,000) 600,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $119,569,909) - 148.5% 125,439,083
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 2,027,933
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.9)% (43,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 84,467,016
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) Investment has a maturity of more than one year, but
has variable rate and demand features which qualify it
as a short-term investment. The rate disclosed is that
in effect at the end of the reporting period. This rate
changes periodically based on market conditions or a
specified market index.
N/R Not rated.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
35
Nuveen California Dividend Advantage Municipal Fund (NAC)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.9% (1.3% OF TOTAL INVESTMENTS)
$ 1,330 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 1,293,239
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
5,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 5,708,404
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.250%, 6/01/33
------------------------------------------------------------------------------------------------------------------------------------
6,530 Total Consumer Staples 7,001,643
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 10.6% (7.3% OF TOTAL INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 297,763
University of Redlands, Series 2005A, 5.000%, 10/01/35
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
200 5.000%, 11/01/21 11/15 at 100.00 A2 211,824
265 5.000%, 11/01/25 11/15 at 100.00 A2 278,200
615 California Statewide Community Development Authority, 10/13 at 100.00 N/R 659,391
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 100.00 AAA 3,254,310
Revenue Refunding Bonds, Long Beach Aquarium of the
South Pacific, Series 2001, 5.500%, 11/01/17 - AMBAC Insured
700 University of California, Certificates of Participation, 1/10 at 101.00 Aa2 729,918
San Diego and Sacramento Campus Projects, Series 2002A,
5.250%, 1/01/22
6,000 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 AA 6,217,740
Projects, Series 2000K, 5.000%, 9/01/12
University of California, Revenue Bonds, Multi-Purpose
Projects, Series 2002O:
10,770 5.000%, 9/01/20 - FGIC Insured 9/10 at 101.00 AAA 11,355,350
11,305 5.000%, 9/01/21 - FGIC Insured 9/10 at 101.00 AAA 11,919,427
3,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 3,775,275
Projects, Series 2003A, 5.125%, 5/15/17- AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
36,645 Total Education and Civic Organizations 38,699,198
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 10.6% (7.3% OF TOTAL INVESTMENTS)
2,160 California Health Facilities Financing Authority, Health Facility 3/13 at 100.00 A 2,268,691
Revenue Bonds, Adventist Health System/West,
Series 2003A, 5.000%, 3/01/15
1,990 California Health Facilities Financing Authority, Revenue 11/15 at 100.00 A3 2,040,944
Bonds, Cedars-Sinai Medical Center, Series 2005,
5.000%, 11/15/34
9,280 California Statewide Community Development Authority, 3/16 at 100.00 A+ 9,499,936
Revenue Bonds, Kaiser Permanante System, Series 2006,
5.000%, 3/01/41
3,095 California Statewide Community Development Authority, 8/16 at 100.00 A+ 3,272,591
Revenue Bonds, Kaiser Permanente System, Series 2001C,
5.250%, 8/01/31
8,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 8,383,600
Certificates of Participation, Community Hospitals of Central
California Obligated Group, Series 2000, 6.000%, 2/01/30
10,500 Duarte, California, Certificates of Participation, City of 4/09 at 101.00 A- 10,766,385
Hope National Medical Center, Series 1999A,
5.250%, 4/01/31
2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,669,050
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
37,525 Total Health Care 38,901,197
------------------------------------------------------------------------------------------------------------------------------------
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.1% (5.5% OF TOTAL INVESTMENTS)
$ 5,170 California Statewide Community Development Authority, 8/12 at 105.00 Aaa $ 5,768,893
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
7,250 California Statewide Community Development Authority, 7/08 at 101.00 BBB 7,345,120
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 4.900%, 5/15/25 (Mandatory
put 5/15/08)
5,000 Contra Costa County, California, Multifamily Housing Revenue 6/09 at 102.00 N/R 5,233,250
Bonds, Delta View Apartments Project, Series 1999C,
6.750%, 12/01/30 (Alternative Minimum Tax)
320 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 324,915
Mobile Home Park Revenue Bonds, San Juan Mobile Estates
Project, Series 2006A, 5.850%, 5/15/41
1,725 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,870,590
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
1,120 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,204,515
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
7,500 San Bernardino County Housing Authority, California, No Opt. Call A- 7,712,100
Multifamily Housing Revenue Refunding Bonds, Equity
Residential Properties/Redlands Lawn and Tennis
Apartments, Series 1999A, 5.200%, 6/15/29 (Mandatory
6/15/09)
------------------------------------------------------------------------------------------------------------------------------------
28,085 Total Housing/Multifamily 29,459,383
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.7% (0.4% OF TOTAL INVESTMENTS)
2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 2,061,000
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.4% (1.6% OF TOTAL INVESTMENTS)
8,500 Riverside County Public Financing Authority, California, 5/09 at 101.00 BBB- 8,799,795
Certificates of Participation, Air Force Village West,
Series 1999, 5.800%, 5/15/29
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 19.8% (13.6% OF TOTAL INVESTMENTS)
2,000 California, General Obligation Bonds, Series 2003, 11/13 at 100.00 AA 2,163,400
5.250%, 11/01/19 - RAAI Insured
California, General Obligation Bonds, Series 2004:
5,000 5.125%, 4/01/23 4/14 at 100.00 A+ 5,332,650
4,150 5.125%, 4/01/25 4/14 at 100.00 A+ 4,409,417
California, General Obligation Refunding Bonds, Series 2002:
8,000 5.000%, 2/01/12 No Opt. Call A+ 8,511,280
4,435 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 5,211,657
5,000 Coast Community College District, Orange County, California, 8/16 at 100.00 AAA 5,340,350
General Obligation Bonds, Series 2006B, 5.000%, 8/01/24 -
FSA Insured
5,000 Fresno Unified School District, Fresno County, California, No Opt. Call AAA 6,194,600
General Obligation Bonds, Series 2002A, 6.000%, 8/01/26 -
MBIA Insured
10,845 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,510,883
Obligation Bonds, Series 2002E, 5.000%, 7/01/19 -
MBIA Insured
3,335 Moreno Valley Unified School District, Riverside County, 8/14 at 100.00 AAA 3,634,283
California, General Obligation Bonds, Series 2004A,
5.250%, 8/01/21 - FSA Insured
5,210 Oak Valley Hospital District, Stanislaus County, California, 7/14 at 101.00 Aaa 5,422,881
General Obligation Bonds, Series 2005, 5.000%, 7/01/35 -
FGIC Insured
1,750 Oakland Unified School District, Alameda County, California, 8/08 at 101.00 AAA 1,813,140
General Obligation Bonds, Series 2001, 5.125%, 8/01/21 -
FSA Insured
575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 608,678
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
5,000 San Diego Unified School District, San Diego County, 7/13 at 101.00 AAA 5,479,000
California, General Obligation Bonds, Series 2003E,
5.250%, 7/01/20 - FSA Insured
2,865 San Ramon Valley Unified School District, Contra Costa 8/16 at 100.00 AAA 3,086,608
County, California, General Obligation Bonds, Series 2006,
5.000%, 8/01/21 - MBIA Insured
37
Nuveen California Dividend Advantage Municipal Fund (NAC) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,605 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA $ 3,827,681
County, California, General Obligation Bonds, Series 2003B,
5.000%, 8/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
66,770 Total Tax Obligation/General 72,546,508
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 35.7% (24.5% OF TOTAL INVESTMENTS)
Beaumont Financing Authority, California, Local Agency Revenue
Bonds, Series 2004D:
1,000 5.500%, 9/01/24 9/14 at 102.00 N/R 1,051,430
615 5.800%, 9/01/35 9/14 at 102.00 N/R 650,123
1,990 Brentwood Infrastructure Financing Authority, California, 9/12 at 100.00 AAA 2,094,853
Infrastructure Revenue Refunding Bonds, Series 2002A,
5.125%, 9/02/24 - FSA Insured
Brentwood Infrastructure Financing Authority, Contra Costa
County, California, Capital Improvement Revenue Bonds,
Series 2001:
1,110 5.375%, 11/01/18 - FSA Insured 11/11 at 100.00 AAA 1,196,547
1,165 5.375%, 11/01/19 - FSA Insured 11/11 at 100.00 AAA 1,255,835
3,895 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 4,222,647
5.000%, 7/01/15
2,000 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 2,117,520
Special Tax Bonds, Community Facilities District 90-2 -
Talega, Series 2003, 6.000%, 9/01/33
710 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 752,479
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
3,490 Fontana, California, Senior Special Tax Refunding Bonds, 9/08 at 102.00 AAA 3,659,963
Heritage Village Community Facilities District 2,
Series 1998A, 5.250%, 9/01/17 - MBIA Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,194,244
Facilities District 22, Series 2004, 6.000%, 9/01/34
3,980 Garden Grove, California, Certificates of Participation, 3/12 at 101.00 AAA 4,326,738
Financing Project, Series 2002A, 5.500%, 3/01/22 -
AMBAC Insured
Hesperia Community Redevelopment Agency, California,
Tax Allocation Bonds, Series 2005A:
540 5.000%, 9/01/20 - XLCA Insured 9/15 at 100.00 AAA 574,808
2,850 5.000%, 9/01/35 - XLCA Insured 9/15 at 100.00 AAA 2,959,839
4,500 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 5,022,945
Refunding Bonds, Merged Area Redevelopment Project,
Series 1998A, 5.250%, 5/01/23 - AMBAC Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
345 5.000%, 9/01/26 9/06 at 103.00 N/R 348,108
795 5.125%, 9/01/36 9/06 at 103.00 N/R 803,681
675 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 682,371
Community Facilities District 2002, Mountain House Special
Tax Bonds, Series 2006, 5.125%, 9/01/35
2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 2,225,660
Tax Bonds, Community Facilities District 1 of Sycamore Creek,
Series 2003, 6.500%, 9/01/24
1,985 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,200,214
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
1,360 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,452,018
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
1,290 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 1,340,981
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
5,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 5,137,100
California, Proposition C Second Senior Lien Sales Tax
Revenue Refunding Bonds, Series 1998A, 5.000%, 7/01/23 -
AMBAC Insured
3,555 Los Angeles County Public Works Financing Authority, 10/07 at 101.00 AA 3,641,493
California, Revenue Bonds, Regional Park and Open Space
District, Series 1997A, 5.000%, 10/01/16
1,530 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,603,532
California, Certificates of Participation, Series 2005,
5.000%, 3/01/24 - FSA Insured
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 9,200 Norco Redevelopment Agency, California, Tax Allocation 3/11 at 102.00 AAA $ 9,707,472
Refunding Bonds, Project Area 1, Series 2001,
5.000%, 3/01/19 - MBIA Insured
5,545 Oakland Joint Power Financing Authority, California, Lease No Opt. Call AAA 6,230,473
Revenue Refunding Bonds, Oakland Convention Centers,
Series 2001, 5.500%, 10/01/14 - AMBAC Insured
3,290 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,636,371
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/16 - FGIC Insured
5,600 Palm Springs Financing Authority, California, Lease Revenue 11/11 at 101.00 AAA 5,862,976
Refunding Bonds, Convention Center Project, Series 2001A,
5.000%, 11/01/22 - MBIA Insured
1,000 Palmdale Community Redevelopment Agency, California, 12/14 at 100.00 AAA 1,052,020
Tax Allocation Bonds, Merged Redevelopment Project Areas,
Series 2004, 5.000%, 12/01/24 - AMBAC Insured
1,055 Poway Redevelopment Agency, California, Tax Allocation 12/11 at 101.00 AAA 1,148,927
Bonds, Paguay Redevelopment Project, Series 2001,
5.375%, 12/15/16 - AMBAC Insured
8,100 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 AAA 8,857,026
Refunding Bonds, Paguay Redevelopment Project,
Series 2000, 5.750%, 6/15/33 - MBIA Insured
620 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 644,831
Bonds, Merged Project Area, Series 2005A,
5.000%, 9/01/35 - XLCA Insured
1,860 Riverside Redevelopment Agency, California, Tax Allocation 8/13 at 100.00 AAA 1,990,516
Refunding Bonds, Merged Project Areas, Series 2003,
5.250%, 8/01/22 - MBIA Insured
770 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 803,564
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
2,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 2,831,475
Revenue Refunding Bonds, Series 1993A,
5.400%, 11/01/20 - AMBAC Insured
1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 1,229,362
Community Facilities District 4, Series 2003C, 6.000%, 9/01/33
2,695 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA 2,901,464
Refunding Bonds, Civic Center Project, Series 2002B,
5.250%, 6/01/19 - AMBAC Insured
24,060 San Jose Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 A 24,765,680
Bonds, Merged Area Redevelopment Project, Series 1998,
5.250%, 8/01/29
1,595 San Marcos Public Facilities Authority, California, 9/09 at 102.00 N/R 1,672,134
Special Tax Bonds, Community Facilities District 99-1,
Series 2003B, 6.000%, 9/01/24
2,810 West Patterson Financing Authority, California, 9/13 at 103.00 N/R 3,172,237
Special Tax Bonds, Community Facilities District 01-1,
Series 2003B, 7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, 9/13 at 102.00 N/R 2,139,800
Special Tax Bonds, Community Facilities District 01-1,
Series 2004B, 6.000%, 9/01/39
1,350 West Patterson Financing Authority, California, 9/13 at 103.00 N/R 1,461,753
Special Tax Bonds, Community Facilities District 2001-1,
Series 2004A, 6.125%, 9/01/39
------------------------------------------------------------------------------------------------------------------------------------
122,705 Total Tax Obligation/Limited 130,623,210
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 18.7% (12.8% OF TOTAL INVESTMENTS)
1,430 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 1,508,464
San Francisco Bay Area Toll Bridge, Series 2006,
5.000%, 4/01/31
8,150 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 101.00 BBB- 8,474,370
Toll Road Revenue Refunding Bonds, Series 1999,
5.750%, 1/15/40
8,515 Los Angeles Harbors Department, California, Revenue 8/11 at 100.00 AAA 9,085,505
Refunding Bonds, Series 2001B, 5.500%, 8/01/18 -
AMBAC Insured (Alternative Minimum Tax)
120 Palm Springs Financing Authority, California, Palm Springs 7/14 at 102.00 N/R 122,881
International Airport Revenue Bonds, Series 2006,
5.450%, 7/01/20 (Alternative Minimum Tax)
23,000 Port of Oakland, California, Revenue Bonds, Series 2000K, 5/10 at 100.00 AAA 24,338,600
5.750%, 11/01/29 - FGIC Insured (Alternative Minimum Tax)
23,275 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 24,929,387
Bonds, San Francisco International Airport, Second
Series 2000, Issue 24A, 5.750%, 5/01/30 - FSA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
64,490 Total Transportation 68,459,207
------------------------------------------------------------------------------------------------------------------------------------
39
Nuveen California Dividend Advantage Municipal Fund (NAC) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.9% (15.0% OF TOTAL INVESTMENTS) (4)
California Department of Water Resources, Power Supply
Revenue Bonds, Series 2002A:
$ 1,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA $ 1,652,835
9,750 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 10,619,213
15,000 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 16,332,750
Cedars-Sinai Medical Center, Series 1999A, 6.125%, 12/01/30
(Pre-refunded 12/01/09)
8,400 California Health Facilities Financing Authority, Revenue Bonds, 10/08 at 101.00 AAA 8,762,124
Kaiser Permanente System, Series 1998B,
5.250%, 10/01/14 (ETM)
5,000 California Statewide Community Development Authority, 11/09 at 102.00 N/R (4) 5,653,950
Certificates of Participation, Pride Industries and Pride
One Inc., Series 1999, 7.250%, 11/01/29 (Pre-refunded
11/01/09)
10,900 Los Angeles Unified School District, California, General 7/09 at 101.00 AAA 11,534,271
Obligation Bonds, Series 1999C, 5.250%, 7/01/24
(Pre-refunded 7/01/09) - MBIA Insured
Northern California Tobacco Securitization Authority, Tobacco
Settlement Asset-Backed Bonds, Series 2001A:
2,500 5.250%, 6/01/31 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 2,685,825
4,500 5.375%, 6/01/41 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA
5,840 Orange County Water District, California, Revenue 8/09 at 101.00 AA+ (4) 6,183,976
Certificates of Participation, Series 1999A,
5.375%, 8/15/29 (ETM)
4,000 Orange County Water District, California, Revenue 8/09 at 101.00 AA+ (4) 4,253,600
Certificates of Participation, Series 1999A,
5.375%, 8/15/29 (Pre-refunded 8/15/09)
4,000 Puerto Rico, General Obligation and Public Improvement 7/10 at 100.00 AAA 4,307,360
Bonds, Series 2000, 5.750%, 7/01/16
(Pre-refunded 7/01/10) - MBIA Insured
2,860 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 3,100,640
Tobacco Settlement Asset-Backed Bonds, San Diego
County Tobacco Asset Securitization Corporation,
Senior Series 2001A, 5.250%, 6/01/27 (Pre-refunded 6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
74,250 Total U.S. Guaranteed 79,945,419
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.8% (5.4% OF TOTAL INVESTMENTS)
3,630 Imperial Irrigation District, California, Certificates 11/13 at 100.00 AAA 3,883,265
of Participation, Electric System Revenue Bonds,
Series 2003, 5.250%, 11/01/23 - FSA Insured
7,000 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 7,409,080
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/21 - FSA Insured
8,370 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 8,971,468
Power System Revenue Bonds, Series 2001A-2,
5.375%, 7/01/19 - MBIA Insured
1,200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 1,275,564
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
5,500 Los Angeles Department of Water and Power, California, 7/15 at 100.00 AAA 5,790,510
Power System Revenue Bonds, Series 2005A-1,
5.000%, 7/01/31 - FSA Insured
1,270 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 1,340,231
Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
26,970 Total Utilities 28,670,118
------------------------------------------------------------------------------------------------------------------------------------
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.7% (5.3% OF TOTAL INVESTMENTS)
$ 9,165 California Department of Water Resources, Water System 12/11 at 100.00 AAA $ 9,769,065
Revenue Bonds, Central Valley Project, Series 2001W,
5.250%, 12/01/22 - FSA Insured
875 Healdsburg Public Financing Authority, California, 4/16 at 100.00 AAA 918,803
Wastewater Revenue Bonds, Series 2006, 5.000%, 4/01/36 -
MBIA Insured
835 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 878,036
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
8,250 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 8,865,450
Series 2001A, 6.250%, 12/01/32
2,250 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 2,382,480
California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 -
FGIC Insured
5,115 San Francisco City and County Public Utilities Commission, 11/12 at 100.00 AAA 5,445,017
California, Water Revenue Bonds, Series 2002A,
5.000%, 11/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
26,490 Total Water and Sewer 28,258,851
------------------------------------------------------------------------------------------------------------------------------------
$ 500,960 Total Investments (cost $503,466,600) - 145.9% 533,425,529
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 7,090,635
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.9)% (175,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 365,516,164
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006:
FIXED RATE FLOATING RATE UNREALIZED
NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan $44,000,000 5.547% 3 Month USD-LIBOR Semi-Annually Quarterly 7/10/07 7/10/11 $ (643,790)
JPMorgan 14,500,000 3 Month USD-LIBOR 5.813% Semi-Annually Quarterly 7/10/07 7/10/27 679,122
Morgan Stanley 24,500,000 5.560% 3 Month USD-LIBOR Semi-Annually Quarterly 7/10/07 7/10/12 (410,279)
Morgan Stanley 31,200,000 3 Month USD-LIBOR 5.691% Semi-Annually Quarterly 7/10/07 7/10/37 1,213,376
------------------------------------------------------------------------------------------------------------------------------------
$ 838,429
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates)
FUTURES CONTRACTS OUTSTANDING AT AUGUST 31, 2006:
UNREALIZED
CONTRACT NUMBER OF CONTRACT ORIGINAL VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION VALUE AUGUST 31, 2006 (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
U.S. 10-Year Treasury Notes Long 51 12/06 $5,448,786 $5,476,125 $27,339
====================================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) Represents the annualized rate paid or received by the
Fund.
(6) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
N/R Not rated.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
41
Nuveen California Dividend Advantage Municipal Fund 2 (NVX)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.0% (2.7% OF TOTAL INVESTMENTS)
$ 825 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 802,197
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
4,625 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 4,750,569
Settlement Asset-Backed Bonds, Stanislaus County Tobacco
Funding Corporation, Series 2002A, 5.500%, 6/01/33
3,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 3,512,864
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.250%, 6/01/33
------------------------------------------------------------------------------------------------------------------------------------
8,650 Total Consumer Staples 9,065,630
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.1% (10.3% OF TOTAL INVESTMENTS)
2,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 2,112,680
Stanford University, Series 2001Q, 5.250%, 12/01/32
180 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 184,819
University of Redlands, Series 2005A, 5.000%, 10/01/35
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
125 5.000%, 11/01/21 11/15 at 100.00 A2 132,390
165 5.000%, 11/01/25 11/15 at 100.00 A2 173,219
6,375 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 6,605,456
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax)
California State Public Works Board, Lease Revenue Bonds,
University of California, UCLA Replacement Hospital Project,
Series 2002A:
8,880 5.375%, 10/01/16 - FSA Insured 10/12 at 100.00 AAA 9,699,535
10,570 5.375%, 10/01/18 - FSA Insured 10/12 at 100.00 AAA 11,445,406
620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 664,752
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 101.00 AAA 3,171,120
Revenue Refunding Bonds, Long Beach Aquarium of the
South Pacific, Series 2001, 5.250%, 11/01/30 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
31,915 Total Education and Civic Organizations 34,189,377
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 12.4% (8.5% OF TOTAL INVESTMENTS)
2,000 California Health Facilities Financing Authority, Revenue 4/12 at 100.00 BBB+ 2,146,060
Bonds, Casa Colina Inc., Series 2001, 6.000%, 4/01/22
1,240 California Health Facilities Financing Authority, Revenue 11/15 at 100.00 A3 1,271,744
Bonds, Cedars-Sinai Medical Center, Series 2005,
5.000%, 11/15/34
500 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 529,395
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
955 California State Public Works Board, Revenue Bonds, 11/14 at 100.00 AAA 1,005,615
University of California - Davis Medical Center,
Series 2004II-A, 5.000%, 11/01/22 - MBIA Insured
2,185 California Statewide Community Development Authority, No Opt. Call A+ 2,390,237
Health Facility Revenue Refunding Bonds, Memorial Health
Services, Series 2003A, 6.000%, 10/01/11
2,500 California Statewide Community Development Authority, 6/13 at 100.00 AAA 2,690,925
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/18 - FSA Insured
5,775 California Statewide Community Development Authority, 3/16 at 100.00 A+ 5,911,868
Revenue Bonds, Kaiser Permanante System, Series 2006,
5.000%, 3/01/41
1,925 California Statewide Community Development Authority, 8/16 at 100.00 A+ 2,035,457
Revenue Bonds, Kaiser Permanente System, Series 2001C,
5.250%, 8/01/31
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 5,355 California Statewide Community Development Authority, No Opt. Call A+ $ 5,459,369
Revenue Bonds, Kaiser Permanente System, Series 2002E,
4.700%, 11/01/36 (Mandatory put 6/01/09)
3,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 3,143,850
Certificates of Participation, Community Hospitals of
Central California Obligated Group, Series 2000,
6.000%, 2/01/30
1,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 1,601,430
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
26,935 Total Health Care 28,185,950
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 11.5% (7.9% OF TOTAL INVESTMENTS)
2,450 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 2,542,267
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.250%, 8/15/30 (Mandatory put 8/15/08)
3,445 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 3,844,069
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
5,962 California Statewide Community Development Authority, 6/11 at 102.00 AAA 6,486,358
Multifamily Housing Revenue Refunding Bonds, Claremont
Village Apartments, Series 2001D, 5.500%, 6/01/31
(Mandatory put 6/01/16) (Alternative Minimum Tax)
3,250 California Statewide Community Development Authority, 7/08 at 101.00 BBB 3,292,640
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 4.900%, 5/15/25
(Mandatory put 5/15/08)
4,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 4,399,120
Mobile Home Park Revenue Bonds, Franciscan Mobile
Home Park Project, Series 2002A, 5.850%, 12/15/32
205 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 208,149
Mobile Home Park Revenue Bonds, San Juan Mobile
Estates Project, Series 2006A, 5.850%, 5/15/41
1,055 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,144,042
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
700 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 752,822
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
3,045 Yucaipa Redevelopment Agency, California, Mobile Home 5/11 at 102.00 N/R 3,400,352
Park Revenue Bonds, Rancho del Sol and Grandview,
Series 2001A, 6.750%, 5/15/36
------------------------------------------------------------------------------------------------------------------------------------
24,112 Total Housing/Multifamily 26,069,819
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.3% (0.1% OF TOTAL INVESTMENTS)
710 California Rural Home Mortgage Finance Authority, 6/11 at 102.00 AAA 721,907
Mortgage-Backed Securities Program Single Family
Mortgage Revenue Bonds, Series 2001A, 5.650%, 12/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,250 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,288,125
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,550 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 1,612,744
Insured Revenue Bonds, Northern California Retired Officers
Community Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.8% (12.9% OF TOTAL INVESTMENTS)
1,000 California, General Obligation Bonds, Series 2004, 5.125%, 2/01/27 2/14 at 100.00 A+ 1,056,110
5,000 California, General Obligation Refunding Bonds, Series 2002, No Opt. Call A+ 5,319,550
5.000%, 2/01/12
4,225 California, General Obligation Veterans Welfare Bonds, 12/06 at 101.00 AAA 4,273,250
Series 2001BV, 5.600%, 12/01/32 - FSA Insured
3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 AAA 3,995,623
California, General Obligation Bonds, Series 2002A,
5.500%, 8/01/22 - FGIC Insured
Contra Costa County Community College District, California,
General Obligation Bonds, Series 2002:
3,005 5.000%, 8/01/21 - FGIC Insured 8/12 at 100.00 AAA 3,191,911
3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AAA 3,489,519
43
Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,325 Golden West Schools Financing Authority, California, No Opt. Call AAA $ 1,567,952
General Obligation Revenue Refunding Bonds, School
District Program, Series 1998A, 6.650%, 8/01/13 -
MBIA Insured
10,840 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,505,575
Obligation Bonds, Series 2002E, 5.000%, 7/01/19 -
MBIA Insured
1,250 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 1,359,287
Obligation Bonds, Series 2003A, 5.250%, 7/01/20 -
FSA Insured
2,000 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call AAA 2,308,180
Series 2001A, 5.500%, 7/01/20 - MBIA Insured
355 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 375,792
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
4,050 Santa Rosa High School District, Sonoma County, California, 5/11 at 101.00 AAA 4,312,319
General Obligation Bonds, Series 2001, 5.300%, 5/01/26 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
39,965 Total Tax Obligation/General 42,755,068
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 29.3% (20.0% OF TOTAL INVESTMENTS)
Beaumont Financing Authority, California, Local Agency
Revenue Bonds, Series 2004D:
650 5.500%, 9/01/24 9/14 at 102.00 N/R 683,430
385 5.800%, 9/01/35 9/14 at 102.00 N/R 406,987
4,900 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 5,411,168
Department of Corrections, Series 2003C, 5.500%, 6/01/16
2,105 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 2,282,073
5.000%, 7/01/15
1,200 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 1,270,512
Special Tax Bonds, Community Facilities District 90-2 -
Talega, Series 2003, 6.000%, 9/01/33
435 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 461,026
Special Tax Bonds, Community Facilities District,
Series 2005, 5.000%, 9/01/24 - FGIC Insured
4,845 Encinitas Public Financing Authority, California, Lease Revenue 4/08 at 102.00 AAA 5,037,734
Bonds, Acquisition Project, Series 2001A, 5.250%, 4/01/31 -
MBIA Insured
750 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 796,163
Facilities District 22, Series 2004, 6.000%, 9/01/34
1,785 Hawthorne Community Redevelopment Agency, California, 9/16 at 100.00 AAA 1,913,395
Project Area 2 Tax Allocation Bonds, Series 2006,
5.250%, 9/01/36 - XLCA Insured
335 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 356,594
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
4,000 Industry Urban Development Agency, California, Tax Allocation 5/07 at 101.50 AAA 4,107,320
Refunding Bonds, Civic, Recreational and Industrial
Redevelopment Project 1, Series 2002, 5.500%, 5/01/19 -
MBIA Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
215 5.000%, 9/01/26 9/06 at 103.00 N/R 216,937
495 5.125%, 9/01/36 9/06 at 103.00 N/R 500,405
2,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 2,168,020
Revenue Refunding Bonds, Series 2003H, 6.000%, 10/01/20
415 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 419,532
Community Facilities District 2002, Mountain House Special
Tax Bonds, Series 2006, 5.125%, 9/01/35
1,265 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 1,407,730
Tax Bonds, Community Facilities District 1 of Sycamore Creek,
Series 2003, 6.500%, 9/01/24
1,195 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,324,562
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
905 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 966,232
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
800 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 831,616
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 8,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA $ 8,219,360
California, Proposition C Second Senior Lien Sales Tax
Revenue Refunding Bonds, Series 1998A,
5.000%, 7/01/23 - AMBAC Insured
5,000 Los Angeles County Metropolitan Transportation Authority, No Opt. Call AAA 5,503,550
California, Proposition C Second Senior Lien Sales Tax
Revenue Refunding Bonds, Series 2003A, 5.250%, 7/01/13 -
MBIA Insured
3,295 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,641,898
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/16 - FGIC Insured
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 2,065,240
Facilities District 02-1 of Ladera Ranch, Series 2003A,
5.550%, 8/15/33
2,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB- 2,366,900
Appropriation Bonds, Series 2002E, 6.000%, 8/01/26
385 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 400,419
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 -
XLCA Insured
6,000 Riverside County Redevelopment Agency, California, 10/11 at 102.00 AAA 6,350,280
Tax Allocation Bonds, Jurupa Valley Project Area, Series 2001,
5.250%, 10/01/35 - AMBAC Insured
475 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 495,705
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
700 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 748,307
Community Facilities District 4, Series 2003C, 6.000%, 9/01/33
975 San Marcos Public Facilities Authority, California, Special 9/09 at 102.00 N/R 1,022,151
Tax Bonds, Community Facilities District 99-1, Series 2003B,
6.000%, 9/01/24
1,530 San Marcos Public Facilities Authority, California, Tax 8/15 at 100.00 AAA 1,590,756
Allocation Bonds, Project Areas 2 and 3, Series 2005C,
5.000%, 8/01/35 - AMBAC Insured
1,930 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 2,152,568
Tax Bonds, Community Facilities District 01-1, Series 2003B,
6.750%, 9/01/30
500 West Patterson Financing Authority, California, Special 9/13 at 102.00 N/R 534,950
Tax Bonds, Community Facilities District 01-1, Series 2004B,
6.000%, 9/01/39
850 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 920,363
Tax Bonds, Community Facilities District 2001-1, Series 2004A,
6.125%, 9/01/39
------------------------------------------------------------------------------------------------------------------------------------
62,320 Total Tax Obligation/Limited 66,573,883
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.0% (6.8% OF TOTAL INVESTMENTS)
1,930 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 2,035,899
San Francisco Bay Area Toll Bridge, Series 2006,
5.000%, 4/01/31
7,000 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 6,300,700
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/27
5,585 Port of Oakland, California, Revenue Bonds, Series 2002N, 11/12 at 100.00 AAA 5,876,984
5.000%, 11/01/16 - MBIA Insured (Alternative Minimum Tax) (7)
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue
29A:
2,430 5.250%, 5/01/18 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,582,410
2,555 5.250%, 5/01/19 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,704,110
1,000 San Francisco Airports Commission, California, Revenue Bonds, 5/13 at 100.00 AAA 1,070,770
San Francisco International Airport, Second Series 2003,
Issue 29B, 5.125%, 5/01/17 - FGIC Insured
2,000 San Francisco Airports Commission, California, Revenue 5/12 at 100.00 AAA 2,115,660
Refunding Bonds, San Francisco International Airport,
Second Series 2002, Issue 28A, 5.250%, 5/01/17 -
MBIA Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
22,500 Total Transportation 22,686,533
------------------------------------------------------------------------------------------------------------------------------------
45
Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 24.6% (16.9% OF TOTAL INVESTMENTS) (4)
$ 9,000 Anitoch Area Public Facilities Financing Agency, California, 8/11 at 100.00 AAA $ 9,707,579
Special Tax Bonds, Community Facilities District 1989-1,
Series 2001, 5.250%, 8/01/25 (Pre-refunded 8/01/11) -
MBIA Insured
6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 Aaa 6,534,900
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
(Pre-refunded 5/01/12)
7,530 Los Angeles Unified School District, California, General 7/10 at 100.00 AAA 8,044,525
Obligation Bonds, Series 2000D, 5.375%, 7/01/25
(Pre-refunded 7/01/10) - FGIC Insured
1,375 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 Aaa 1,525,233
California, General Obligation Bonds, Series 2004A,
5.250%, 8/01/21 (Pre-refunded 8/01/14) - FGIC Insured
3,000 Northern California Tobacco Securitization Authority, 6/11 at 100.00 AAA 3,239,250
Tobacco Settlement Asset-Backed Bonds, Series 2001A,
5.375%, 6/01/41 (Pre-refunded 6/01/11)
12,090 Santa Clara Valley Transportation Authority, California, 6/11 at 100.00 AAA 12,879,355
Sales Tax Revenue Bonds, Series 2001A, 5.000%, 6/01/25
(Pre-refunded 6/01/11) - MBIA Insured
1,160 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,249,784
General Obligation Bonds, Series 2002A, 5.000%, 8/01/21
(Pre-refunded 8/01/12) - FGIC Insured
6,200 Southwestern Community College District, San Diego County, 8/11 at 101.00 AAA 6,774,492
California, General Obligation Bonds, Series 2001,
5.375%, 8/01/25 (Pre-refunded 8/01/11) - AMBAC Insured
2,710 Southwestern Community College District, San Diego County, 8/14 at 100.00 AAA 2,959,889
California, General Obligation Bonds, Series 2004,
5.000%, 8/01/21 (Pre-refunded 8/01/14) - FGIC Insured
2,800 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 3,071,656
Tobacco Settlement Asset-Backed Bonds, San Diego County
Tobacco Asset Securitization Corporation, Senior
Series 2001A, 5.500%, 6/01/36 (Pre-refunded 6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
51,865 Total U.S. Guaranteed 55,986,663
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.8% (3.3% OF TOTAL INVESTMENTS)
5,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 5,411,700
Electric Distribution Revenue Bonds, Series 2004,
5.250%, 10/01/21 - MBIA Insured
Los Angeles Department of Water and Power, California, Power
System Revenue Bonds, Series 2003A-2:
750 5.000%, 7/01/21 - MBIA Insured 7/13 at 100.00 AAA 797,228
1,000 5.000%, 7/01/23 - MBIA Insured 7/13 at 100.00 AAA 1,054,880
500 Los Angeles Department of Water and Power, California, 7/15 at 100.00 AAA 526,410
Power System Revenue Bonds, Series 2005A-1,
5.000%, 7/01/31 - FSA Insured
790 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 833,687
Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
2,000 Santa Clara, California, Subordinate Electric Revenue Bonds, 7/13 at 100.00 AAA 2,172,360
Series 2003A, 5.250%, 7/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
10,040 Total Utilities 10,796,265
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.1% (9.7% OF TOTAL INVESTMENTS)
2,740 California Department of Water Resources, Water System 12/12 at 100.00 AAA 2,918,895
Revenue Bonds, Central Valley Project, Series 2002Z,
5.000%, 12/01/18 - FGIC Insured
4,900 East Bay Municipal Utility District, Alameda and Contra 6/11 at 100.00 AAA 5,094,726
Costa Counties, California, Water System Subordinated
Revenue Bonds, Series 2001, 5.000%, 6/01/26 - MBIA Insured
2,655 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,810,583
Certificates of Participation, Series 2004A, 5.000%, 3/01/20 -
FGIC Insured
545 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 572,283
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
750 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 794,160
California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 -
FGIC Insured
1,700 San Buenaventura, California, Wastewater Revenue 3/14 at 100.00 AAA 1,781,702
Certificates of Participation, Series 2004, 5.000%, 3/01/24 -
MBIA Insured
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 6,885 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 AAA $ 7,313,247
Subordinate Lien Water Revenue Bonds, Series 2002,
5.000%, 8/01/21 - MBIA Insured
10,000 San Francisco City and County Public Utilities Commission, 4/13 at 100.00 AAA 10,846,299
California, Clean Water Revenue Refunding Bonds,
Series 2003A, 5.250%, 10/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
30,175 Total Water and Sewer 32,131,895
------------------------------------------------------------------------------------------------------------------------------------
$ 311,987 Total Investments (cost $315,496,436) - 146.2% 332,063,859
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 5,096,014
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.4)% (110,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 227,159,873
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006:
FIXED RATE FLOATING RATE UNREALIZED
NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $38,500,000 5.681% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/12 $(836,012)
JPMorgan 12,000,000 5.716% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/14 (326,975)
JPMorgan 6,500,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 396,938
Morgan Stanley 13,700,000 3 Month USD-LIBOR 5.811% Semi-Annually Quarterly 7/27/07 7/27/24 603,726
Morgan Stanley 18,500,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 910,532
------------------------------------------------------------------------------------------------------------------------------------
$ 748,209
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates)
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
(5) Represents the annualized rate paid or received by the
Fund.
(6) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
(7) Portion of the investment, with an aggregate market
value of $705,028, has been pledged to collateralize
the net payment obligations under forward swap
contracts.
N/R Not rated.
See accompanying notes to financial statements.
47
Nuveen California Dividend Advantage Municipal Fund 3 (NZH)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.2% (1.5% OF TOTAL INVESTMENTS)
$ 1,340 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 1,302,962
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
6,100 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 6,696,397
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.250%, 6/01/33
------------------------------------------------------------------------------------------------------------------------------------
7,440 Total Consumer Staples 7,999,359
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.9% (5.2% OF TOTAL INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 297,763
University of Redlands, Series 2005A, 5.000%, 10/01/35
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
200 5.000%, 11/01/21 11/15 at 100.00 A2 211,824
270 5.000%, 11/01/25 11/15 at 100.00 A2 283,449
3,825 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 3,963,274
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax)
3,600 California State Public Works Board, Lease Revenue Bonds, 10/12 at 100.00 AAA 3,898,152
University of California, UCLA Replacement Hospital Project,
Series 2002A, 5.375%, 10/01/17 - FSA Insured
620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 664,752
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
7,595 San Francisco State University Foundation Inc., California, 9/11 at 100.00 AAA 7,967,687
Auxiliary Organization Student Housing Revenue Bonds,
Series 2001, 5.000%, 9/01/26 - MBIA Insured
2,990 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 AA 3,060,355
Projects, Series 2000K, 5.000%, 9/01/23
4,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 4,218,320
Projects, Series 2003A, 5.000%, 5/15/23 - AMBAC Insured
3,820 University of California, Revenue Bonds, Research Facilities, 9/09 at 101.00 AAA 3,956,527
Series 2001E, 5.000%, 9/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
27,210 Total Education and Civic Organizations 28,522,103
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 16.4% (11.0% OF TOTAL INVESTMENTS)
California Health Facilities Financing Authority, Revenue Bonds,
Casa Colina Inc., Series 2001:
4,000 6.000%, 4/01/22 4/12 at 100.00 BBB+ 4,292,120
2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 2,138,940
2,020 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A3 2,071,712
Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34
9,000 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 9,529,110
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
6,525 California Statewide Community Development Authority, No Opt. Call A+ 7,249,275
Health Facility Revenue Refunding Bonds, Memorial Health
Services, Series 2003A, 6.000%, 10/01/12
6,450 California Statewide Community Development Authority, 6/13 at 100.00 AAA 6,942,587
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/18 - FSA Insured
7,665 California Statewide Community Development Authority, 11/09 at 102.00 A 8,045,874
Insured Mortgage Hospital Revenue Bonds, Mission
Community Hospital, Series 2001, 5.375%, 11/01/21
9,425 California Statewide Community Development Authority, 3/16 at 100.00 A+ 9,648,373
Revenue Bonds, Kaiser Permanante System, Series 2006,
5.000%, 3/01/41
3,145 California Statewide Community Development Authority, 8/16 at 100.00 A+ 3,325,460
Revenue Bonds, Kaiser Permanente System, Series 2001C,
5.250%, 8/01/31
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
Central California Joint Powers Health Finance Authority,
Certificates of Participation, Community Hospitals of Central
California Obligated Group, Series 2000:
$ 1,770 6.000%, 2/01/20 2/10 at 101.00 Baa2 $ 1,865,173
1,740 6.000%, 2/01/30 2/10 at 101.00 Baa2 1,823,433
2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,669,050
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
56,240 Total Health Care 59,601,107
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 10.0% (6.7% OF TOTAL INVESTMENTS)
4,750 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 4,926,035
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.400%, 8/15/30 (Mandatory put 8/15/08) (Alternative
Minimum Tax)
4,000 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 4,150,640
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.250%, 8/15/30 (Mandatory put 8/15/08)
5,165 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 5,763,314
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
2,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 2,183,180
Mobile Home Park Revenue Bonds, Franciscan Mobile
Home Park Project, Series 2002A, 5.800%, 12/15/25
325 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 329,992
Mobile Home Park Revenue Bonds, San Juan Mobile
Estates Project, Series 2006A, 5.850%, 5/15/41
1,735 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,881,434
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
1,125 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,209,893
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
3,610 San Bernardino County Housing Authority, California, 11/11 at 105.00 Aaa 3,944,900
GNMA Collateralized Multifamily Mortgage Revenue Bonds,
Pacific Palms Mobile Home Park, Series 2001A,
6.700%, 12/20/41
7,500 San Bernardino County Housing Authority, California, No Opt. Call A- 7,712,100
Multifamily Housing Revenue Refunding Bonds, Equity
Residential Properties/Redlands Lawn and Tennis
Apartments, Series 1999A, 5.200%, 6/15/29 (Mandatory
6/15/09)
San Jose, California, Multifamily Housing Revenue Bonds, GNMA
Mortgage-Backed Securities Program, Lenzen Housing, Series 2001B:
1,250 5.350%, 2/20/26 (Alternative Minimum Tax) 8/11 at 102.00 AAA 1,299,675
2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 AAA 2,978,525
------------------------------------------------------------------------------------------------------------------------------------
34,340 Total Housing/Multifamily 36,379,688
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.6% (0.3% OF TOTAL INVESTMENTS)
2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 2,061,000
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.5% (0.9% OF TOTAL INVESTMENTS)
2,450 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 2,549,176
Insured Revenue Bonds, Northern California Retired Officers
Community Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
California Health Facilities Financing Authority, Insured Senior
Living Revenue Bonds, Aldersly Project, Series 2002A:
1,500 5.125%, 3/01/22 3/12 at 101.00 A+ 1,562,190
1,315 5.250%, 3/01/32 3/12 at 101.00 A+ 1,367,192
------------------------------------------------------------------------------------------------------------------------------------
5,265 Total Long-Term Care 5,478,558
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 24.8% (16.5% OF TOTAL INVESTMENTS)
9,335 California, General Obligation Bonds, Series 2002, No Opt. Call AAA 10,966,198
6.000%, 2/01/16 - FSA Insured
1,750 California, General Obligation Bonds, Series 2004, 2/14 at 100.00 A+ 1,848,193
5.125%, 2/01/27
49
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
California, General Obligation Refunding Bonds, Series 2002:
$ 8,450 5.000%, 2/01/12 No Opt. Call A+ $ 8,990,040
2,780 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 3,266,834
10 California, General Obligation Veterans Welfare Bonds, 12/06 at 102.00 AA- 10,227
Series 1997BJ, 5.500%, 12/01/18 (Alternative Minimum Tax)
14,300 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 14,566,551
Series 2001BZ, 5.350%, 12/01/21 - MBIA Insured
(Alternative Minimum Tax)
3,000 Contra Costa County Community College District, California, 8/12 at 100.00 AAA 3,164,820
General Obligation Bonds, Series 2002, 5.000%, 8/01/23 -
FGIC Insured
2,500 Fullerton Joint Union High School District, Orange County, 8/12 at 100.00 Aaa 2,621,875
California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/23 - FSA Insured
2,260 Jurupa Unified School District, Riverside County, California, 8/11 at 101.00 AAA 2,405,567
General Obligation Bonds, Series 2002, 5.125%, 8/01/22 -
FGIC Insured
Los Angeles Unified School District, California, General
Obligation Bonds, Series 2003A:
3,750 5.250%, 7/01/20 - FSA Insured 7/13 at 100.00 AAA 4,077,862
7,200 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 7,613,136
870 Puerto Rico, General Obligation and Public Improvement 7/11 at 100.00 AAA 910,568
Bonds, Series 2001, 5.000%, 7/01/24 - FSA Insured
Riverside Community College District, California, General
Obligation Bonds, Series 2005:
2,675 5.000%, 8/01/21 - FSA Insured 8/15 at 100.00 AAA 2,864,551
5,000 5.000%, 8/01/24 - FSA Insured 8/15 at 100.00 AAA 5,311,950
575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 608,678
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
10,810 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 11,638,262
California, General Obligation Bonds, Election of 1998,
Series 2001C, 5.000%, 7/01/26 - FSA Insured
4,000 San Diego Unified School District, San Diego County, 7/12 at 101.00 AAA 4,351,440
California, General Obligation Bonds, Election of 1998,
Series 2002D, 5.250%, 7/01/21 - FGIC Insured
2,715 San Jose-Evergreen Community College District, 9/15 at 100.00 AAA 2,881,620
Santa Clara County, California, General Obligation Bonds,
Series 2005A, 5.000%, 9/01/25 - MBIA Insured
1,630 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA 1,722,943
County, California, General Obligation Bonds, Series 2003C,
5.000%, 8/01/22 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
83,610 Total Tax Obligation/General 89,821,315
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 41.4% (27.6% OF TOTAL INVESTMENTS)
4,000 Beaumont Financing Authority, California, Local Agency 9/12 at 102.00 N/R 4,422,880
Revenue Bonds, Series 2002A, 6.750%, 9/01/25
7,135 Brentwood Infrastructure Financing Authority, Contra Costa 11/11 at 100.00 AAA 7,498,671
County, California, Capital Improvement Revenue Bonds,
Series 2001, 5.000%, 11/01/25 - FSA Insured
8,210 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 9,066,467
Department of Corrections, Series 2003C, 5.500%, 6/01/16
3,350 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 3,614,885
Department of General Services, Capital East End Project,
Series 2002A, 5.250%, 12/01/17 - AMBAC Insured
4,000 California State Public Works Board, Lease Revenue Bonds, 3/12 at 100.00 AAA 4,144,760
Department of General Services, Series 2002B,
5.000%, 3/01/27 - AMBAC Insured
4,510 California State Public Works Board, Lease Revenue Bonds, 12/11 at 102.00 AAA 4,723,143
Department of Mental Health, Hospital Addition,
Series 2001A, 5.000%, 12/01/26 - AMBAC Insured
2,815 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA- 3,051,798
Series 2004A, 5.000%, 7/01/15
Capistrano Unified School District, Orange County, California,
Special Tax Bonds, Community Facilities District 90-2 - Talega,
Series 2003:
1,750 5.875%, 9/01/23 9/13 at 100.00 N/R 1,865,552
550 6.000%, 9/01/33 9/13 at 100.00 N/R 582,318
715 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 757,778
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,810 Cerritos Public Financing Authority, California, Tax Allocation No Opt. Call AAA $ 1,972,049
Revenue Bonds, Los Cerritos Redevelopment Projects,
Series 2002A, 5.000%, 11/01/14 - AMBAC Insured
1,270 Coalinga Public Financing Authority, California, Local No Opt. Call AAA 1,515,491
Obligation Senior Lien Revenue Bonds, Series 1998A,
6.000%, 9/15/18 - AMBAC Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,194,244
Facilities District 22, Series 2004, 6.000%, 9/01/34
1,000 Fullerton Community Facilities District 1, California, Special 9/12 at 100.00 N/R 1,066,380
Tax Bonds, Amerige Heights, Series 2002, 6.100%, 9/01/22
550 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 585,453
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
350 5.000%, 9/01/26 9/06 at 103.00 N/R 353,154
805 5.125%, 9/01/36 9/06 at 103.00 N/R 813,791
3,000 Lake Elsinore Public Finance Authority, California, Local 10/13 at 102.00 N/R 3,252,030
Agency Revenue Refunding Bonds, Series 2003H,
6.000%, 10/01/20
685 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 692,480
Community Facilities District 2002, Mountain House Special
Tax Bonds, Series 2006, 5.125%, 9/01/35
5,250 Lammersville School District, San Joaquin County, California, 9/12 at 101.00 N/R 5,684,175
Special Tax Bonds, Community Facilities District of Mountain
House, Series 2002, 6.300%, 9/01/24
2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 2,225,660
Tax Bonds, Community Facilities District 1 of Sycamore
Creek, Series 2003, 6.500%, 9/01/24
1,985 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,200,214
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
1,360 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,452,018
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
5,425 Lodi, California, Certificates of Participation, Public 10/12 at 100.00 AAA 5,639,450
Improvement Financing Project, Series 2002,
5.000%, 10/01/26 - MBIA Insured
1,310 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 1,361,771
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
3,075 Los Angeles County Metropolitan Transportation Authority, No Opt. Call AAA 3,384,683
California, Proposition C Second Senior Lien Sales Tax
Revenue Refunding Bonds, Series 2003A, 5.250%, 7/01/13 -
MBIA Insured
1,000 Monterey County, California, Certificates of Participation, 8/11 at 100.00 Aaa 1,068,510
Master Plan Financing, Series 2001, 5.250%, 8/01/15 -
MBIA Insured
1,675 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,751,129
California, Certificates of Participation, Series 2005,
5.000%, 3/01/26 - FSA Insured
3,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,301,260
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/19 - FGIC Insured
4,520 Ontario Redevelopment Financing Authority, California, 8/11 at 101.00 AAA 4,760,102
Lease Revenue Bonds, Capital Projects, Series 2001,
5.000%, 8/01/24 - AMBAC Insured
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 2,065,240
Facilities District 02-1 of Ladera Ranch, Series 2003A,
5.550%, 8/15/33
11,165 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 11,715,993
Revenue Refunding Bonds, Project Area 1, Series 2002,
5.100%, 4/01/30 - MBIA Insured
3,250 Pomona Public Financing Authority, California, Revenue 2/11 at 100.00 AAA 3,347,760
Refunding Bonds, Merged Redevelopment Projects,
Series 2001AD, 5.000%, 2/01/27 - MBIA Insured
625 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 650,031
Bonds, Merged Project Area, Series 2005A,
5.000%, 9/01/35 - XLCA Insured
780 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 814,000
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,700 Roseville, California, Special Tax Bonds, Community 9/09 at 103.00 N/R 1,798,889
Facilities District 1 - Crocker, Series 2003, 6.000%, 9/01/27
51
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R $ 1,229,362
Community Facilities District 4, Series 2003C, 6.000%, 9/01/33
14,505 San Diego Redevelopment Agency, California, Subordinate 9/11 at 101.00 AAA 15,084,619
Lien Tax Allocation Bonds, Centre City Project, Series 2001A,
5.000%, 9/01/26 - FSA Insured
8,725 San Francisco Bay Area Rapid Transit District, California, 7/11 at 100.00 AAA 9,077,316
Sales Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 -
AMBAC Insured
1,595 San Marcos Public Facilities Authority, California, Special 9/09 at 102.00 N/R 1,672,134
Tax Bonds, Community Facilities District 99-1, Series 2003B,
6.000%, 9/01/24
8,710 South Orange County Public Financing Authority, California, 8/15 at 100.00 AAA 9,154,384
Special Tax Revenue Bonds, Ladera Ranch, Series 2005A,
5.000%, 8/15/32 - AMBAC Insured
2,810 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 3,172,237
Tax Bonds, Community Facilities District 01-1, Series 2003B,
7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, Special 9/13 at 102.00 N/R 2,139,800
Tax Bonds, Community Facilities District 01-1, Series 2004B,
6.000%, 9/01/39
1,375 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 1,488,823
Tax Bonds, Community Facilities District 2001-1, Series 2004A,
6.125%, 9/01/39
2,500 Yucaipa-Calimesa Joint Unified School District, 10/11 at 100.00 AAA 2,584,250
San Bernardino County, California, General Obligation
Refunding Bonds, Series 2001A, 5.000%, 10/01/26 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
141,120 Total Tax Obligation/Limited 149,997,134
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.6% (7.1% OF TOTAL INVESTMENTS)
1,690 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 1,782,730
San Francisco Bay Area Toll Bridge, Series 2006,
5.000%, 4/01/31
11,750 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 10,554,907
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/28
3,000 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 AAA 3,241,260
5.250%, 11/01/20 - FGIC Insured
1,500 Port of Oakland, California, Revenue Refunding Bonds, 11/07 at 102.00 AAA 1,562,895
Series 1997I, 5.600%, 11/01/19 - MBIA Insured
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue
29B:
4,110 5.125%, 5/01/17 - FGIC Insured 5/13 at 100.00 AAA 4,400,865
10,625 5.125%, 5/01/18 - FGIC Insured 5/13 at 100.00 AAA 11,338,363
5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 AAA 5,469,628
------------------------------------------------------------------------------------------------------------------------------------
37,815 Total Transportation 38,350,648
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 11.9% (8.0% OF TOTAL INVESTMENTS) (4)
11,240 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 (4) 12,166,625
Settlement Asset-Backed Bonds, Merced County Tobacco
Funding Corporation, Series 2002A, 5.500%, 6/01/33
(Pre-refunded 6/01/12)
California Department of Water Resources, Power Supply
Revenue Bonds, Series 2002A:
3,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA 3,856,615
9,000 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 9,802,350
1,840 Compton Unified School District, Los Angeles County, California, 9/13 at 100.00 AAA 2,026,981
General Obligation Bonds, Series 2003A, 5.250%, 9/01/18
(Pre-refunded 9/01/13) - MBIA Insured
1,525 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 Aaa 1,691,622
California, General Obligation Bonds, Series 2004A,
5.250%, 8/01/22 (Pre-refunded 8/01/14) - FGIC Insured
5,500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 5,995,660
Revenue Bonds, Series 2002D, 5.375%, 7/01/36
(Pre-refunded 7/01/12)
1,000 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,077,400
General Obligation Bonds, Series 2002A, 5.000%, 8/01/24
(Pre-refunded 8/01/12) - FGIC Insured
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,905 Southwestern Community College District, San Diego County, 8/14 at 100.00 AAA $ 2,080,660
California, General Obligation Bonds, Series 2004,
5.000%, 8/01/22 (Pre-refunded 8/01/14) - FGIC Insured
4,200 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 4,607,484
Tobacco Settlement Asset-Backed Bonds, San Diego County
Tobacco Asset Securitization Corporation, Senior Series 2001A,
5.500%, 6/01/36 (Pre-refunded 6/01/12)
------------------------------------------------------------------------------------------------------------------------------------
39,710 Total U.S. Guaranteed 43,305,397
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.1% (6.1% OF TOTAL INVESTMENTS)
15,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 AAA 16,061,246
Revenue Bonds, Pacific Gas and Electric Company,
Series 1996A, 5.350%, 12/01/16 - MBIA Insured
(Alternative Minimum Tax)
1,200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 1,275,564
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
1,285 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 1,356,061
Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
5,000 Merced Irrigation District, California, Revenue Certificates 9/13 at 102.00 Baa3 5,275,300
of Participation, Electric System Project, Series 2003,
5.700%, 9/01/36
2,250 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,341,688
Bonds, Series 2002, 5.125%, 8/01/22 - AMBAC Insured
(Alternative Minimum Tax)
6,085 Southern California Public Power Authority, Revenue Bonds, 7/13 at 100.00 AAA 6,643,846
Magnolia Power Project, Series 2003-1A, 5.250%, 7/01/16 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
30,820 Total Utilities 32,953,705
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.6% (9.1% OF TOTAL INVESTMENTS)
1,070 Burbank, California, Wastewater System Revenue Bonds, 6/14 at 100.00 AAA 1,131,504
Series 2004A, 5.000%, 6/01/22 - AMBAC Insured
5,000 California Department of Water Resources, Water System 6/13 at 100.00 AAA 5,492,700
Revenue Bonds, Central Valley Project, Series 2003Y,
5.250%, 12/01/13 - FGIC Insured
7,000 Carmichael Water District, Sacramento County, California, 9/09 at 102.00 AAA 7,262,150
Water Revenue Certificates of Participation, Series 1999,
5.125%, 9/01/29 - MBIA Insured
2,000 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,117,200
Certificates of Participation, Series 2004A, 5.000%, 3/01/20 -
FGIC Insured
890 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 934,553
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
850 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 893,809
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
1,000 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 1,074,600
Series 2001A, 6.250%, 12/01/32
1,380 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 1,456,742
California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 -
FGIC Insured
1,000 San Buenaventura, California, Wastewater Revenue 3/14 at 100.00 AAA 1,048,060
Certificates of Participation, Series 2004, 5.000%, 3/01/24 -
MBIA Insured
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,637,350
6,260 5.000%, 8/01/24 - MBIA Insured 8/12 at 100.00 AAA 6,593,470
53
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
San Francisco City and County Public Utilities Commission,
California, Clean Water Revenue Refunding Bonds, Series 2003A:
$ 3,315 5.250%, 10/01/18 - MBIA Insured 4/13 at 100.00 AAA $ 3,595,548
12,000 5.250%, 10/01/19 - MBIA Insured 4/13 at 100.00 AAA 13,015,559
1,955 Westlands Water District, California, Revenue Certificates 3/15 at 100.00 AAA 2,059,397
of Participation, Series 2005A, 5.000%, 9/01/23 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
46,220 Total Water and Sewer 49,312,642
------------------------------------------------------------------------------------------------------------------------------------
$ 511,790 Total Investments (cost $521,149,817) - 150.0% 543,782,656
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 5,690,101
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.6)% (187,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 362,472,757
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
See accompanying notes to financial statements.
54
Nuveen Insured California Dividend Advantage Municipal Fund (NKL)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.3% (1.6% OF TOTAL INVESTMENTS)
$ 4,500 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 5,463,450
Tobacco Settlement Asset-Backed Revenue Bonds,
Series 2003A-2, 7.900%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 8.7% (5.8% OF TOTAL INVESTMENTS)
1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,743,407
University of San Diego, Series 2002A, 5.250%, 10/01/30
9,000 California State University, Systemwide Revenue Bonds, 11/12 at 100.00 AAA 9,497,700
Series 2002A, 5.125%, 11/01/26 - AMBAC Insured
9,000 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 AA 9,250,110
Projects, Series 2000K, 5.300%, 9/01/30
------------------------------------------------------------------------------------------------------------------------------------
19,675 Total Education and Civic Organizations 20,491,217
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 5.6% (3.8% OF TOTAL INVESTMENTS)
5,000 ABAG Finance Authority for Non-Profit Corporations, 4/12 at 100.00 A 5,329,850
California, Cal-Mortgage Insured Revenue Bonds,
Sansum-Santa Barbara Medical Foundation Clinic,
Series 2002A, 5.600%, 4/01/26
2,815 California Health Facilities Financing Authority, Revenue 8/13 at 100.00 AAA 2,964,308
Bonds, Lucile Salter Packard Children's Hospital,
Series 2003C, 5.000%, 8/15/20 - AMBAC Insured
1,090 California State Public Works Board, Revenue Bonds, 11/14 at 100.00 AAA 1,150,081
University of California - Davis Medical Center,
Series 2004II-A, 5.000%, 11/01/21 - MBIA Insured
3,380 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 3,753,186
Revenue Bonds, Eisenhower Medical Center, Series 2004,
5.875%, 7/01/26
------------------------------------------------------------------------------------------------------------------------------------
12,285 Total Health Care 13,197,425
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.2% (0.8% OF TOTAL INVESTMENTS)
1,000 California Statewide Community Development Authority, 8/12 at 100.00 A 1,053,790
Student Housing Revenue Bonds, EAH - Irvine East Campus
Apartments, LLC Project, Series 2002A, 5.500%, 8/01/22 -
ACA Insured
1,905 Los Angeles, California, GNMA Mortgage-Backed Securities 7/11 at 102.00 AAA 1,995,316
Program Multifamily Housing Revenue Bonds, Park Plaza
West Senior Apartments, Series 2001B, 5.300%, 1/20/21
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,905 Total Housing/Multifamily 3,049,106
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.3% (0.8% OF TOTAL INVESTMENTS)
3,000 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB+ 3,198,060
Disposal Revenue Bonds, Republic Services Inc.,
Series 2002C, 5.250%, 6/01/23 (Mandatory put
12/01/17) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.5% (2.4% OF TOTAL INVESTMENTS)
3,000 ABAG Finance Authority for Non-Profit Corporations, 11/12 at 100.00 A 3,137,340
California, Insured Senior Living Revenue Bonds,
Odd Fellows Home of California, Series 2003A,
5.200%, 11/15/22
5,000 California Statewide Community Development Authority, 11/13 at 100.00 A 5,222,750
Revenue Bonds, Jewish Home for the Aging, Series 2003,
5.000%, 11/15/18
------------------------------------------------------------------------------------------------------------------------------------
8,000 Total Long-Term Care 8,360,090
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 30.6% (20.6% OF TOTAL INVESTMENTS)
5,920 Cajon Valley Union School District, San Diego County, 8/10 at 102.00 AAA 6,235,714
California, General Obligation Bonds, Series 2002B,
5.125%, 8/01/32 - MBIA Insured
2,900 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/21 8/13 at 100.00 A+ 3,061,965
1,750 California, General Obligation Bonds, Series 2004, 5.125%, 2/01/27 2/14 at 100.00 A+ 1,848,193
8,250 California, General Obligation Refunding Bonds, Series 2002, 2/12 at 100.00 AAA 8,601,037
5.000%, 2/01/22 - MBIA Insured
55
Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
Compton Community College District, Los Angeles County,
California, General Obligation Bonds, Series 2004A:
$ 1,315 5.250%, 7/01/22 - MBIA Insured 7/14 at 100.00 AAA $ 1,431,917
2,560 5.250%, 7/01/23 - MBIA Insured 7/14 at 100.00 AAA 2,782,208
230 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 AAA 240,497
California, General Obligation Bonds, Series 2003A,
5.000%, 6/01/28 - FSA Insured
10,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 10,526,500
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FGIC Insured
5,000 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 5,263,200
Obligation Bonds, Series 2002E, 5.125%, 1/01/27 -
MBIA Insured
Los Angeles Unified School District, California, General
Obligation Bonds, Series 2003A:
3,700 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 3,912,306
3,500 5.000%, 1/01/28 - MBIA Insured 7/13 at 100.00 AAA 3,679,480
1,000 Los Rios Community College District, Sacramento, 8/14 at 102.00 AAA 1,066,400
El Dorado and Yolo Counties, California, General Obligation
Bonds, Series 2006C, 5.000%, 8/01/25 - FSA Insured
1,500 Madera Unified School District, Madera County, California, 8/12 at 100.00 AAA 1,561,035
General Obligation Bonds, Series 2002, 5.000%, 8/01/28 -
FSA Insured
2,500 Oakland Unified School District, Alameda County, California, 8/12 at 100.00 AAA 2,699,325
General Obligation Bonds, Series 2002, 5.250%, 8/01/21 -
FGIC Insured
375 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 396,964
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
3,250 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 3,499,015
California, General Obligation Bonds, Election of 1998,
Series 2001C, 5.000%, 7/01/22 - FSA Insured
1,160 San Gabriel Unified School District, Los Angeles County, 8/15 at 100.00 AAA 1,239,506
California, General Obligation Bonds, Series 2005,
5.000%, 8/01/22 - FSA Insured
3,500 San Mateo County Community College District, California, 9/12 at 100.00 AAA 3,671,745
General Obligation Bonds, Series 2002A, 5.000%, 9/01/26 -
FGIC Insured
10,000 Vista Unified School District, San Diego County, California, 8/12 at 100.00 AAA 10,549,400
General Obligation Bonds, Series 2002A, 5.000%, 8/01/23 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
68,410 Total Tax Obligation/General 72,266,407
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 42.4% (28.6% OF TOTAL INVESTMENTS)
1,450 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 1,524,197
Sales Tax and Tax Allocation Bonds, Puente Merced
Redevelopment Project, Series 2003, 5.250%, 8/01/21
6,895 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 7,212,928
California, Certificates of Participation Refunding,
Series 2002A, 5.125%, 8/01/26 - FSA Insured
2,290 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 2,472,353
Refunding Bonds, Golden State Redevelopment Project,
Series 2003A, 5.250%, 12/01/19 - AMBAC Insured
2,200 California Infrastructure Economic Development Bank, 9/13 at 101.00 AAA 2,310,154
Los Angeles County, Revenue Bonds, Department of
Public Social Services, Series 2003, 5.000%, 9/01/28 -
AMBAC Insured
3,100 California State Public Works Board, Lease Revenue Bonds, 11/15 at 100.00 AAA 3,240,058
Department of Health Services, Richmond Lab, Series 2005B,
5.000%, 11/01/30 - XLCA Insured
465 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 492,821
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
7,035 Corona-Norco Unified School District, Riverside County, 9/13 at 100.00 AAA 7,349,394
California, Special Tax Bonds, Community Facilities
District 98-1, Series 2003, 5.000%, 9/01/28 - MBIA Insured
3,145 Culver City Redevelopment Agency, California, Tax Allocation 5/11 at 101.00 AAA 3,284,512
Revenue Bonds, Redevelopment Project, Series 2002A,
5.125%, 11/01/25 - MBIA Insured
8,720 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 9,008,981
Department of Public Services Facility Phase II, Series 2001,
5.000%, 1/01/21 - AMBAC Insured
4,000 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 AAA 4,228,080
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 -
AMBAC Insured
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 355 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA $ 377,883
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
2,115 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 2,360,784
Refunding Bonds, Merged Area Redevelopment Project,
Series 1998A, 5.250%, 5/01/23 - AMBAC Insured
3,500 La Quinta Redevelopment Agency, California, Tax Allocation 9/11 at 102.00 AAA 3,667,930
Bonds, Redevelopment Project Area 1, Series 2001,
5.100%, 9/01/31 - AMBAC Insured
3,400 La Quinta Redevelopment Agency, California, Tax Allocation 9/12 at 102.00 AAA 3,593,868
Bonds, Redevelopment Project Area 1, Series 2002,
5.000%, 9/01/22 - AMBAC Insured
845 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 878,394
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
4,690 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 4,818,600
California, Proposition C Second Senior Lien Sales Tax
Revenue Refunding Bonds, Series 1998A, 5.000%, 7/01/23 -
AMBAC Insured
1,460 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 1,513,597
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
7,000 Los Angeles, California, Certificates of Participation, 4/12 at 100.00 AAA 7,345,310
Series 2002, 5.200%, 4/01/27 - AMBAC Insured
8,470 Ontario Redevelopment Financing Authority, California, 8/11 at 101.00 AAA 8,988,195
Lease Revenue Bonds, Capital Projects, Series 2001,
5.200%, 8/01/29 - AMBAC Insured
5,000 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 5,235,800
Revenue Refunding Bonds, Project Area 1, Series 2002,
5.000%, 4/01/25 - MBIA Insured
405 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 421,220
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 -
XLCA Insured
4,475 Riverside County, California, Asset Leasing Corporate Leasehold 6/12 at 101.00 AAA 4,726,629
Revenue Bonds, Riverside County Hospital Project,
Series 1997B, 5.000%, 6/01/19 - MBIA Insured
505 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 527,013
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
3,175 San Buenaventura, California, Certificates of Participation, 2/11 at 101.00 AAA 3,331,147
Series 2001C, 5.250%, 2/01/31 - AMBAC Insured
3,730 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 3,859,991
Lien Tax Increment and Parking Revenue Bonds, Centre City
Project, Series 2003B, 5.250%, 9/01/26
4,000 San Jose Financing Authority, California, Lease Revenue 9/11 at 100.00 AAA 4,213,360
Refunding Bonds, Convention Center Project, Series 2001F,
5.000%, 9/01/19 - MBIA Insured
1,000 Shasta Joint Powers Financing Authority, California, Lease 4/13 at 100.00 AAA 1,064,840
Revenue Bonds, County Administration Building Project,
Series 2003A, 5.250%, 4/01/23 - MBIA Insured
2,160 Temecula Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 AAA 2,238,494
Revenue Bonds, Redevelopment Project 1, Series 2002,
5.125%, 8/01/27 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
95,585 Total Tax Obligation/Limited 100,286,533
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.9% (3.3% OF TOTAL INVESTMENTS)
7,500 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 6,728,100
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/29
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue
29A:
2,185 5.250%, 5/01/16 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,334,367
2,300 5.250%, 5/01/17 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,453,479
------------------------------------------------------------------------------------------------------------------------------------
11,985 Total Transportation 11,515,946
------------------------------------------------------------------------------------------------------------------------------------
57
Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 13.4% (9.0% OF TOTAL INVESTMENTS) (4)
$ 6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 Aaa $ 6,534,900
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
(Pre-refunded 5/01/12)
California Health Facilities Financing Authority, Revenue Bonds,
Cedars-Sinai Medical Center, Series 1999A:
2,500 6.125%, 12/01/30 (Pre-refunded 12/01/09) 12/09 at 101.00 A3 (4) 2,722,125
1,000 6.250%, 12/01/34 (Pre-refunded 12/01/09) 12/09 at 101.00 A3 (4) 1,092,490
2,250 California Infrastructure Economic Development Bank, 1/28 at 100.00 AAA 2,506,950
First Lien Revenue Bonds, San Francisco Bay Area Toll
Bridge, Series 2003A, 5.000%, 7/01/36 (Pre-refunded
1/01/28) - AMBAC Insured
2,185 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 Aaa 2,367,426
California, General Obligation Bonds, Series 2003A,
5.000%, 6/01/28 (Pre-refunded 6/01/13) - FSA Insured
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Series 2002B:
1,135 5.125%, 8/01/23 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,210,863
1,190 5.125%, 8/01/24 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,269,540
1,245 5.125%, 8/01/25 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,329,623
1,255 5.125%, 8/01/26 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,327,589
2,070 Fresno Unified School District, Fresno County, California, 8/10 at 102.00 AAA 2,189,729
General Obligation Bonds, Series 2002G, 5.125%, 8/01/26 -
FSA Insured (ETM)
3,000 Peralta Community College District, Alameda County, 8/09 at 102.00 AAA 3,184,620
California, General Obligation Bonds, Election of 2000,
Series 2001A, 5.000%, 8/01/31 (Pre-refunded 8/01/09) -
FGIC Insured
2,980 Santa Clarita Community College District, Los Angeles 8/11 at 101.00 AAA 3,222,721
County, California, General Obligation Bonds, Series 2002,
5.125%, 8/01/26 (Pre-refunded 8/01/11) - FGIC Insured
2,460 Vacaville Unified School District, Solano County, California, 8/11 at 101.00 AAA 2,646,591
General Obligation Bonds, Series 2002, 5.000%, 8/01/26
(Pre-refunded 8/01/11) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
29,270 Total U.S. Guaranteed 31,605,167
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 17.0% (11.5% OF TOTAL INVESTMENTS)
9,000 Anaheim Public Finance Authority, California, Revenue Bonds, 10/12 at 100.00 AAA 9,446,760
Electric System Distribution Facilities, Series 2002A,
5.000%, 10/01/27 - FSA Insured
10,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 AAA 10,707,496
Revenue Bonds, Pacific Gas and Electric Company,
Series 1996A, 5.350%, 12/01/16 - MBIA Insured
(Alternative Minimum Tax)
3,000 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 3,175,320
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/21 - FSA Insured
775 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 823,802
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
830 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 875,899
Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
6,000 Northern California Power Agency, Revenue Refunding Bonds, 7/08 at 101.00 AAA 6,194,640
Hydroelectric Project 1, Series 1998A, 5.200%, 7/01/32 -
MBIA Insured
3,000 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 AAA 3,124,020
Revenue Bonds, Series 2001N, 5.000%, 8/15/28 -
MBIA Insured
5,630 Southern California Public Power Authority, Subordinate 7/12 at 100.00 AAA 5,838,592
Revenue Refunding Bonds, Transmission Project,
Series 2002A, 4.750%, 7/01/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
38,235 Total Utilities 40,186,529
------------------------------------------------------------------------------------------------------------------------------------
58
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.4% (11.8% OF TOTAL INVESTMENTS)
$ 3,000 California Department of Water Resources, Water System 12/12 at 100.00 AAA $ 3,213,270
Revenue Bonds, Central Valley Project, Series 2002X,
5.150%, 12/01/23 - FGIC Insured
6,100 East Bay Municipal Utility District, Alameda and Contra 6/11 at 100.00 AAA 6,342,414
Costa Counties, California, Water System Subordinated
Revenue Bonds, Series 2001, 5.000%, 6/01/26 - MBIA Insured
9,000 Eastern Municipal Water District, California, Water and 7/11 at 100.00 AAA 9,261,900
Sewerage System Revenue Certificates of Participation,
Series 2001B, 5.000%, 7/01/30 - FGIC Insured
570 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 598,534
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
4,500 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA 4,749,750
California, Senior Revenue Bonds, Capital Projects,
Series 2003A, 5.000%, 10/01/23 - FSA Insured
3,050 Manteca Financing Authority, California, Sewerage Revenue 12/13 at 100.00 Aaa 3,056,009
Bonds, Series 2003B, 5.000%, 12/01/33 - MBIA Insured
500 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 525,770
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
9,185 Orange County Sanitation District, California, Certificates of 8/13 at 100.00 AAA 9,546,338
Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured
870 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 918,381
California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 -
FGIC Insured
Semitropic Water Storage District, Kern County, California,
Water Banking Revenue Bonds, Series 2004A:
1,315 5.500%, 12/01/20 - XLCA Insured 12/14 at 100.00 AAA 1,453,825
1,415 5.500%, 12/01/21 - XLCA Insured 12/14 at 100.00 AAA 1,563,334
------------------------------------------------------------------------------------------------------------------------------------
39,505 Total Water and Sewer 41,229,525
------------------------------------------------------------------------------------------------------------------------------------
$ 333,355 Total Investments (cost $329,482,118) - 148.3% 350,849,455
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 3,675,134
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.9)% (118,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 236,524,589
====================================================================================================================
At least 80% of the Fund's net assets (including net
assets attributable to Preferred shares) are invested
in municipal securities that are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance which ensures the timely payment of
principal and interest. Up to 20% of the Fund's net
assets (including net assets attributable to Preferred
shares) may be invested in municipal securities that
are (i) either backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities (also ensuring the timely payment of
principal and interest), or (ii) rated, at the time of
investment, within the four highest grades (Baa or BBB
or better by Moody's, S&P or Fitch) or unrated but
judged to be of comparable quality by the Adviser.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
59
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX)
Portfolio of
INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS)
$ 1,625 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 1,972,913
Tobacco Settlement Asset-Backed Revenue Bonds,
Series 2003A-2, 7.900%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 12.9% (8.7% OF TOTAL INVESTMENTS)
1,500 California Health Facilities Financing Authority, Revenue 11/08 at 101.00 AAA 1,545,015
Bonds, UCSF - Stanford Healthcare, Series 1998A,
5.000%, 11/15/31 - FSA Insured
1,800 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 1,905,822
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
2,000 California Statewide Community Development Authority, 6/13 at 100.00 AAA 2,130,040
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/23 - FSA Insured
4,060 California Statewide Community Development Authority, No Opt. Call AAA 4,350,046
Revenue Bonds, Sherman Oaks Health System,
Series 1998A, 5.000%, 8/01/22 - AMBAC Insured
1,260 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 1,399,117
Revenue Bonds, Eisenhower Medical Center, Series 2004,
5.875%, 7/01/26
------------------------------------------------------------------------------------------------------------------------------------
10,620 Total Health Care 11,330,040
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,165 Poway, California, Housing Revenue Bonds, Revenue Bonds, 5/13 at 102.00 BBB+ 1,183,349
Poinsettia Mobile Home Park, Series 2003, 5.000%, 5/01/23
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 5.7% (3.8% OF TOTAL INVESTMENTS)
1,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A 1,045,780
Insured Senior Living Revenue Bonds, Odd Fellows Home
of California, Series 2003A, 5.200%, 11/15/22
2,000 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 2,095,780
Insured Revenue Bonds, Northern California Retired Officers
Community Corporation - Paradise Valley Estates, Series 2002,
5.250%, 1/01/26
1,815 California Statewide Community Development Authority, 11/13 at 100.00 A 1,895,858
Revenue Bonds, Jewish Home for the Aging, Series 2003,
5.000%, 11/15/18
------------------------------------------------------------------------------------------------------------------------------------
4,815 Total Long-Term Care 5,037,418
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 47.0% (31.5% OF TOTAL INVESTMENTS)
2,000 Butte-Glenn Community College District, Butte and Glenn 8/12 at 101.00 Aaa 2,095,720
Counties, California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/26 - MBIA Insured
California, General Obligation Bonds, Series 2004:
1,000 5.125%, 2/01/27 2/14 at 100.00 A+ 1,056,110
500 5.250%, 4/01/34 4/14 at 100.00 A+ 530,775
California, General Obligation Refunding Bonds, Series 2002:
1,500 5.000%, 2/01/12 No Opt. Call A+ 1,595,865
3,750 5.000%, 4/01/27 - AMBAC Insured 4/12 at 100.00 AAA 3,922,500
3,000 5.250%, 4/01/30 - XLCA Insured 4/12 at 100.00 AAA 3,185,880
450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 473,693
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FGIC Insured
Hacienda La Puente Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2003B:
4,500 5.000%, 8/01/26 - FSA Insured 8/13 at 100.00 AAA 4,715,370
2,030 5.000%, 8/01/27 - FSA Insured 8/13 at 100.00 AAA 2,125,917
10,500 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 11,102,486
Obligation Bonds, Series 2003A, 5.000%, 7/01/22 -
FSA Insured
60
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,000 Los Angeles, California, General Obligation Bonds, 9/12 at 100.00 AAA $ 2,115,380
Series 2002A, 5.000%, 9/01/22 - MBIA Insured
1,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 AAA 1,048,390
California, General Obligation Bonds, Series 2003A,
5.000%, 9/01/26 - FGIC Insured
140 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 148,200
California, General Obligation Bonds, Series 2006B,
5.000%, 8/01/27 - FGIC Insured
3,000 San Diego Unified School District, California, General 7/10 at 100.00 AAA 3,158,460
Obligation Bonds, Election of 1998, Series 2000B,
5.125%, 7/01/22 - MBIA Insured
3,855 San Rafael City High School District, Marin County, 8/12 at 100.00 AAA 4,011,860
California, General Obligation Bonds, Series 2003A,
5.000%, 8/01/28 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
39,225 Total Tax Obligation/General 41,286,606
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 43.3% (29.0% OF TOTAL INVESTMENTS)
550 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 578,144
Sales Tax and Tax Allocation Bonds, Puente Merced
Redevelopment Project, Series 2003, 5.250%, 8/01/21
2,025 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 2,172,926
Refunding Bonds, Golden State Redevelopment Project,
Series 2003A, 5.250%, 12/01/22 - AMBAC Insured
2,000 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 2,208,640
Department of Corrections, Series 2003C, 5.500%, 6/01/16
4,000 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 4,164,000
Department of General Services, Capital East End Project,
Series 2002A, 5.000%, 12/01/27 - AMBAC Insured
170 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 180,171
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
1,610 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 AAA 1,701,802
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 -
AMBAC Insured
130 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 138,380
Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 -
XLCA Insured
5,540 Irvine Public Facilities and Infrastructure Authority, California, 9/06 at 103.00 AAA 5,730,244
Assessment Revenue Bonds, Series 2003C, 5.000%, 9/02/21 -
AMBAC Insured
315 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 327,449
Lease Revenue Bonds, Manchester Social Services Project,
Series 2005, 5.000%, 9/01/37 - AMBAC Insured
1,770 Los Angeles Unified School District, California, Certificates 10/12 at 100.00 AAA 1,838,995
of Participation, Administration Building Project II,
Series 2002C, 5.000%, 10/01/27 - AMBAC Insured
2,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 2,073,420
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
1,500 Los Osos, California, Improvement Bonds, Community 9/10 at 103.00 AAA 1,555,995
Services Wastewater Assessment District 1, Series 2002,
5.000%, 9/02/33 - MBIA Insured
500 Paramount Redevelopment Agency, California, Tax 8/13 at 100.00 AAA 531,455
Allocation Bonds, Redevelopment Project Area 1,
Series 2003, 5.000%, 8/01/19 - MBIA Insured
150 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 156,008
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 -
XLCA Insured
190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 198,282
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
San Buenaventura, California, Certificates of Participation,
Golf Course Financing Project, Series 2002D:
3,000 5.000%, 2/01/27 - AMBAC Insured 2/12 at 100.00 AAA 3,105,540
3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AAA 3,402,894
1,200 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 1,241,820
Lien Tax Increment and Parking Revenue Bonds, Centre
City Project, Series 2003B, 5.250%, 9/01/26
61
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX) (continued)
Portfolio of INVESTMENTS August 31, 2006
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,770 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA $ 2,864,402
Refunding Bonds, Civic Center Project, Series 2002B,
5.000%, 6/01/32 - AMBAC Insured
1,220 San Jose Redevelopment Agency, California, Tax Allocation 8/10 at 101.00 AAA 1,253,245
Bonds, Merged Area Redevelopment Project, Series 2002,
5.000%, 8/01/32 - MBIA Insured
2,390 Solano County, California, Certificates of Participation, 11/12 at 100.00 AAA 2,563,849
Series 2002, 5.250%, 11/01/24 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
36,330 Total Tax Obligation/Limited 37,987,661
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 14.0% (9.4% OF TOTAL INVESTMENTS)
5,480 Bay Area Governments Association, California, BART SFO 8/12 at 100.00 AAA 5,697,172
Extension, Airport Premium Fare Revenue Bonds,
Series 2002A, 5.000%, 8/01/26 - AMBAC Insured
2,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- 2,001,440
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
1,300 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 1,360,229
Bonds, San Francisco International Airport, Second
Series 2000, Issue 26B, 5.000%, 5/01/25 - FGIC Insured
3,135 San Francisco Airports Commission, California, Revenue 5/08 at 101.00 AAA 3,213,720
Bonds, San Francisco International Airport, Second Series
Issue 16B, 5.000%, 5/01/24 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
11,915 Total Transportation 12,272,561
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 4.8% (3.2% OF TOTAL INVESTMENTS) (4)
1,000 Berryessa Union School District, Santa Clara County, 8/12 at 100.00 AAA 1,077,400
California, General Obligation Bonds, Series 2003C,
5.000%, 8/01/21 (Pre-refunded 8/01/12) - FSA Insured
1,000 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 1,092,490
Cedars-Sinai Medical Center, Series 1999A, 6.250%, 12/01/34
(Pre-refunded 12/01/09)
1,940 California Statewide Community Development Authority, 8/08 at 102.00 AAA 2,032,519
Revenue Bonds, Sherman Oaks Health System, Series 1998A,
5.000%, 8/01/22 (Pre-refunded 8/01/08) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
3,940 Total U.S. Guaranteed 4,202,409
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.6% (3.8% OF TOTAL INVESTMENTS)
1,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 1,082,340
Electric Distribution Revenue Bonds, Series 2004,
5.250%, 10/01/21 - MBIA Insured
3,055 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 3,233,534
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/22 - FSA Insured
275 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 292,317
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
310 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 327,143
Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,640 Total Utilities 4,935,334
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 12.1% (8.1% OF TOTAL INVESTMENTS)
215 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 225,763
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
1,125 Manteca Financing Authority, California, Sewerage Revenue 12/13 at 100.00 Aaa 1,127,216
Bonds, Series 2003B, 5.000%, 12/01/33 - MBIA Insured
170 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 178,762
of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
370 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 390,576
California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 -
FGIC Insured
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
3,000 5.000%, 8/01/22 - MBIA Insured 8/12 at 100.00 AAA 3,172,290
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,637,350
62
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,180 South Feather Water and Power Agency, California, Water 4/13 at 100.00 BBB $ 1,232,416
Revenue Certificates of Participation, Solar Photovoltaic
Project, Series 2003, 5.375%, 4/01/24
1,600 Sunnyvale Financing Authority, California, Water and 10/11 at 100.00 AAA 1,655,392
Wastewater Revenue Bonds, Series 2001, 5.000%, 10/01/26 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
10,160 Total Water and Sewer 10,619,765
------------------------------------------------------------------------------------------------------------------------------------
$ 124,435 Total Long-Term Investments (cost $125,092,502) - 149.1% 130,828,056
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.1% (0.1% OF TOTAL INVESTMENTS)
100 California Department of Water Resources, Power Supply A-1+ 100,000
Revenue Bonds, Variable Rate Demand Obligations,
Series 2002C-7, 3.270%, 5/01/22 - FSA Insured (5)
------------------------------------------------------------------------------------------------------------------------------------
$ 100 Total Short-Term Investments (cost $100,000) 100,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $125,192,502) - 149.2% 130,928,056
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.1% 1,846,749
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.3)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 87,774,805
====================================================================================================================
At least 80% of the Fund's net assets (including net
assets attributable to Preferred shares) are invested
in municipal securities that are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance which ensures the timely payment of
principal and interest. Up to 20% of the Fund's net
assets (including net assets attributable to Preferred
shares) may be invested in municipal securities that
are (i) either backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities (also ensuring the timely payment of
principal and interest), or (ii) rated, at the time of
investment, within the four highest grades (Baa or BBB
or better by Moody's, S&P or Fitch) or unrated but
judged to be of comparable quality by the Adviser.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) Investment has a maturity of more than one year, but
has variable rate and demand features which qualify it
as a short-term investment. The rate disclosed is that
in effect at the end of the reporting period. This rate
changes periodically based on market conditions or a
specified market index.
See accompanying notes to financial statements.
63
Statement of
ASSETS AND LIABILITIES August 31, 2006
INSURED INSURED CALIFORNIA CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $133,619,422,
$267,368,873, $119,569,909 and
$503,466,600, respectively) $143,674,468 $281,660,654 $125,439,083 $533,425,529
Cash -- -- 564,998 --
Receivables:
Interest 2,350,526 3,635,322 1,584,183 7,501,106
Investments sold 3,082,986 5,508,000 -- 365,650
Variation margin on futures contracts -- -- -- 11,953
Unrealized appreciation on forward swaps 435,891 838,226 -- 838,429
Other assets 8,262 37,071 999 49,683
------------------------------------------------------------------------------------------------------------------------------------
Total assets 149,552,133 291,679,273 127,589,263 542,192,350
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 14,998 111,976 -- 1,268,553
Payable for investments purchased 3,733,339 5,745,167 -- --
Unrealized depreciation on forward swaps 106,401 -- -- --
Accrued expenses:
Management fees 78,025 151,357 68,539 214,436
Other 31,552 66,693 43,285 114,096
Preferred share dividends payable 7,149 32,849 10,423 79,101
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,971,464 6,108,042 122,247 1,676,186
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 45,000,000 95,000,000 43,000,000 175,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $100,580,669 $190,571,231 $ 84,467,016 $365,516,164
====================================================================================================================================
Common shares outstanding 6,455,666 12,716,370 5,774,216 23,450,261
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.58 $ 14.99 $ 14.63 $ 15.59
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 64,557 $ 127,164 $ 57,742 $ 234,503
Paid-in surplus 89,361,743 176,229,375 78,298,267 333,112,547
Undistributed (Over-distribution of) net investment income 422,103 129,491 34,045 136,735
Accumulated net realized gain (loss) from investments
and derivative transactions 347,730 (1,044,806) 207,788 1,207,682
Net unrealized appreciation (depreciation ) of investments
and derivative transactions 10,384,536 15,130,007 5,869,174 30,824,697
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $100,580,669 $190,571,231 $ 84,467,016 $365,516,164
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited Unlimited
Preferred 1,000,000 1,000,000 Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
64
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $315,496,436,
$521,149,817, $329,482,118 and
$125,192,502, respectively) $332,063,859 $543,782,656 $350,849,455 $130,928,056
Cash -- -- -- 474,536
Receivables:
Interest 4,347,136 7,564,105 4,035,483 1,451,477
Investments sold 226,600 365,650 -- --
Variation margin on futures contracts -- -- -- --
Unrealized appreciation on forward swaps 1,584,221 -- -- --
Other assets 29,233 26,464 28,248 3,520
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 338,251,049 551,738,875 354,913,186 132,857,589
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 53,237 1,933,247 197,805 --
Payable for investments purchased -- -- -- --
Unrealized depreciation on forward swaps 836,012 -- -- --
Accrued expenses:
Management fees 106,958 148,182 97,330 35,437
Other 63,326 110,423 63,397 21,463
Preferred share dividends payable 31,643 74,266 30,065 25,884
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,091,176 2,266,118 388,597 82,784
-----------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 110,000,000 187,000,000 118,000,000 45,000,000
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $227,159,873 $362,472,757 $236,524,589 $ 87,774,805
===================================================================================================================================
Common shares outstanding 14,790,660 24,112,833 15,264,555 5,883,302
===================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.36 $ 15.03 $ 15.50 $ 14.92
===================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 147,907 $ 241,128 $ 152,646 $ 58,833
Paid-in surplus 210,049,075 342,513,152 216,696,084 83,000,891
Undistributed (Over-distribution of) net investment income 53,273 283,661 (95,484) (166,320)
Accumulated net realized gain (loss) from investments
and derivative transactions (406,014) (3,198,023) (1,595,994) (854,153)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 17,315,632 22,632,839 21,367,337 5,735,554
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $227,159,873 $362,472,757 $236,524,589 $ 87,774,805
===================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
===================================================================================================================================
See accompanying notes to financial statements.
65
Statement of
OPERATIONS Year Ended August 31, 2006
INSURED INSURED CALIFORNIA CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 7,066,532 $13,680,129 $ 6,142,005 $26,722,379
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 925,758 1,789,822 811,073 3,350,026
Preferred shares - auction fees 112,573 237,653 107,570 437,184
Preferred shares - dividend disbursing agent fees 10,000 20,000 10,000 20,000
Shareholders' servicing agent fees and expenses 10,766 16,116 8,242 5,812
Custodian's fees and expenses 35,356 76,028 40,385 135,251
Directors'/Trustees' fees and expenses 3,310 6,462 2,782 11,152
Professional fees 14,865 19,809 14,242 23,489
Shareholders' reports - printing and mailing expenses 12,018 31,201 11,458 40,411
Stock exchange listing fees 10,024 10,046 491 10,033
Investor relations expense 15,098 29,210 13,393 49,588
Other expenses 12,142 22,432 12,499 24,585
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 1,161,910 2,258,779 1,032,135 4,107,531
Custodian fee credit (10,773) (8,807) (12,314) (20,891)
Expense reimbursement -- -- -- (1,054,676)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,151,137 2,249,972 1,019,821 3,031,964
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 5,915,395 11,430,157 5,122,184 23,690,415
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 338,450 306,694 287,143 1,496,422
Net realized gain (loss) from futures -- -- -- 102,063
Net realized gain (loss) from forward swaps -- -- -- --
Change in net unrealized appreciation (depreciation)
of investments (3,110,907) (4,684,758) (2,003,316) (8,347,244)
Change in net unrealized appreciation (depreciation)
of futures -- -- -- 27,339
Change in net unrealized appreciation (depreciation)
of forward swaps 329,490 838,226 -- 838,429
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (2,442,967) (3,539,838) (1,716,173) (5,882,991)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (1,180,659) (2,543,117) (1,190,250) (4,964,723)
From accumulated net realized gains (120,330) -- (11,180) (111,335)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (1,300,989) (2,543,117) (1,201,430) (5,076,058)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares from operations $ 2,171,439 $ 5,347,202 $ 2,204,581 $12,731,366
====================================================================================================================================
See accompanying notes to financial statements.
66
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $15,970,147 $25,990,365 $17,082,231 $ 6,241,863
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 2,104,016 3,393,539 2,210,635 841,555
Preferred shares - auction fees 274,800 467,803 294,787 112,573
Preferred shares - dividend disbursing agent fees 20,000 20,000 20,000 10,000
Shareholders' servicing agent fees and expenses 2,967 4,860 2,929 1,248
Custodian's fees and expenses 85,029 127,319 87,202 35,729
Directors'/Trustees' fees and expenses 7,629 12,397 8,029 2,992
Professional fees 22,197 30,063 22,595 14,365
Shareholders' reports - printing and mailing expenses 29,838 41,504 30,189 14,086
Stock exchange listing fees 1,258 2,052 1,298 501
Investor relations expense 33,493 50,314 34,993 14,783
Other expenses 20,400 24,964 21,021 13,765
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 2,601,627 4,174,815 2,733,678 1,061,597
Custodian fee credit (13,983) (27,031) (11,031) (9,053)
Expense reimbursement (935,350) (1,637,956) (1,057,192) (421,856)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,652,294 2,509,828 1,665,455 630,688
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 14,317,853 23,480,537 15,416,776 5,611,175
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 686,754 1,057,466 106,122 38,746
Net realized gain (loss) from futures -- -- -- --
Net realized gain (loss) from forward swaps -- -- 772,782 297,454
Change in net unrealized appreciation (depreciation)
of investments (4,193,089) (5,851,121) (4,883,419) (1,917,395)
Change in net unrealized appreciation (depreciation)
of futures -- -- -- --
Change in net unrealized appreciation (depreciation)
of forward swaps 748,209 -- 191,673 72,274
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (2,758,126) (4,793,655) (3,812,842) (1,508,921)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (3,160,483) (5,401,864) (3,404,610) (1,222,097)
From accumulated net realized gains -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (3,160,483) (5,401,864) (3,404,610) (1,222,097)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ 8,399,244 $13,285,018 $ 8,199,324 $ 2,880,157
====================================================================================================================================
See accompanying notes to financial statements.
67
Statement of
CHANGES IN NET ASSETS
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) PREMIUM INCOME (NCU)
---------------------------- ------------------------------ ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,915,395 $ 6,103,373 $ 11,430,157 $ 11,662,340 $ 5,122,184 $ 5,201,876
Net realized gain (loss)
from investments 338,450 1,025,239 306,694 572,385 287,143 986,152
Net realized gain (loss)
from futures -- -- -- -- -- --
Net realized gain (loss) from
forward swaps -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation)
of investments (3,110,907) 347,962 (4,684,758) 3,008,579 (2,003,316) 2,456,342
Change in net unrealized
appreciation (depreciation)
of futures -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation)
of forward swaps 329,490 -- 838,226 -- -- --
Distributions to
Preferred shareholders:
From net investment income (1,180,659) (659,626) (2,543,117) (1,431,484) (1,190,250) (676,918)
From accumulated net
realized gains (120,330) (53,379) -- -- (11,180) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets applicable
to Common shares
from operations 2,171,439 6,763,569 5,347,202 13,811,820 2,204,581 7,967,452
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,325,135) (5,939,147) (9,670,803) (11,212,178) (4,451,921) (4,954,280)
From accumulated net
realized gains (881,569) (1,006,068) -- -- (70,445) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from
distributions to
Common shareholders (6,206,704) (6,945,215) (9,670,803) (11,212,178) (4,522,366) (4,954,280)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 106,152 73,727 -- 260,359 -- --
Preferred shares offering
costs adjustments -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 106,152 73,727 -- 260,359 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares (3,929,113) (107,919) (4,323,601) 2,860,001 (2,317,785) 3,013,172
Net assets applicable to
Common shares at the
beginning of year 104,509,782 104,617,701 194,894,832 192,034,831 86,784,801 83,771,629
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $100,580,669 $104,509,782 $190,571,231 $194,894,832 $84,467,016 $86,784,801
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of year $ 422,103 $ 1,022,294 $ 129,491 $ 935,376 $ 34,045 $ 556,302
====================================================================================================================================
See accompanying notes to financial statements.
68
CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND ADVANTAGE (NAC) DIVIDEND ADVANTAGE 2 (NVX) DIVIDEND ADVANTAGE 3 (NZH)
---------------------------- ------------------------------ ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 23,690,415 $ 24,302,547 $ 14,317,853 $ 14,459,716 $ 23,480,537 $ 23,508,682
Net realized gain (loss)
from investments 1,496,422 480,737 686,754 383,423 1,057,466 462,942
Net realized gain (loss)
from futures 102,063 -- -- -- -- --
Net realized gain (loss) from
forward swaps -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation)
of investments (8,347,244) 11,381,369 (4,193,089) 10,159,524 (5,851,121) 15,832,228
Change in net unrealized
appreciation (depreciation)
of futures 27,339 -- -- -- -- --
Change in net unrealized
appreciation (depreciation)
of forward swaps 838,429 -- 748,209 -- -- --
Distributions to
Preferred shareholders:
From net investment income (4,964,723) (2,855,101) (3,160,483) (1,768,569) (5,401,864) (3,098,457)
From accumulated net
realized gains (111,335) (64,137) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares
from operations 12,731,366 33,245,415 8,399,244 23,234,094 13,285,018 36,705,395
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (21,230,311) (23,037,818) (12,379,782) (13,489,083) (20,073,933) (20,833,488)
From accumulated net
realized gains (782,285) (1,086,300) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (22,012,596) (24,124,118) (12,379,782) (13,489,083) (20,073,933) (20,833,488)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 532,651 77,239 -- -- -- --
Preferred shares offering
costs adjustments -- -- -- -- -- 29,546
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 532,651 77,239 -- -- -- 29,546
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (8,748,579) 9,198,536 (3,980,538) 9,745,011 (6,788,915) 15,901,453
Net assets applicable to Common
shares at the beginning
of year 374,264,743 365,066,207 231,140,411 221,395,400 369,261,672 353,360,219
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $365,516,164 $374,264,743 $227,159,873 $231,140,411 $362,472,757 $369,261,672
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of year $ 136,735 $ 2,641,354 $ 53,273 $ 1,278,398 $ 283,661 $ 2,278,927
====================================================================================================================================
See accompanying notes to financial statements.
69
Statement of
CHANGES IN NET ASSETS (continued)
INSURED CALIFORNIA INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL) TAX-FREE ADVANTAGE (NKX)
------------------------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 15,416,776 $ 15,469,138 $ 5,611,175 $ 5,637,385
Net realized gain (loss) from investments 106,122 750,281 38,746 161,272
Net realized gain (loss) from futures -- -- -- --
Net realized gain (loss) from
forward swaps 772,782 (2,892,459) 297,454 (1,073,407)
Change in net unrealized appreciation
(depreciation) of investments (4,883,419) 9,357,072 (1,917,395) 4,006,973
Change in net unrealized appreciation
(depreciation) of futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of forward swaps 191,673 809,703 72,274 288,851
Distributions to Preferred shareholders:
From net investment income (3,404,610) (1,886,679) (1,222,097) (753,416)
From accumulated net realized
gains -- (45,704) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 8,199,324 21,561,352 2,880,157 8,267,658
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (13,002,466) (13,733,781) (4,377,177) (5,003,747)
From accumulated net realized gains -- (759,922) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (13,002,466) (14,493,703) (4,377,177) (5,003,747)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 73,640 -- -- --
Preferred shares offering
costs adjustments -- (54) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 73,640 (54) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (4,729,502) 7,067,595 (1,497,020) 3,263,911
Net assets applicable to Common
shares at the beginning of year 241,254,091 234,186,496 89,271,825 86,007,914
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $236,524,589 $241,254,091 $87,774,805 $89,271,825
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of year $ (95,484) $ 899,990 $ (166,320) $ (178,221)
====================================================================================================================================
See accompanying notes to financial statements.
70
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The California funds (the "Funds") covered in this report and their
corresponding Common share stock exchange symbols are Nuveen Insured California
Premium Income Municipal Fund, Inc. (NPC), Nuveen Insured California Premium
Income Municipal Fund 2, Inc. (NCL), Nuveen California Premium Income Municipal
Fund (NCU), Nuveen California Dividend Advantage Municipal Fund (NAC), Nuveen
California Dividend Advantage Municipal Fund 2 (NVX), Nuveen California Dividend
Advantage Municipal Fund 3 (NZH), Nuveen Insured California Dividend Advantage
Municipal Fund (NKL) and Nuveen Insured California Tax-Free Advantage Municipal
Fund (NKX). Common shares of Insured California Premium Income (NPC), Insured
California Premium Income 2 (NCL) and California Dividend Advantage (NAC) are
traded on the New York Stock Exchange while Common shares of California Premium
Income (NCU), California Dividend Advantage 2 (NVX), California Dividend
Advantage 3 (NZH), Insured California Dividend Advantage (NKL) and Insured
California Tax-Free Advantage (NKX) are traded on the American Stock Exchange.
The Funds are registered under the Investment Company Act of 1940, as amended,
as closed-end management investment companies.
Each Fund seeks to provide current income exempt from both regular federal and
California state income taxes, and in the case of Insured California Tax-Free
Advantage (NKX) the alternative minimum tax applicable to individuals, by
investing primarily in a diversified portfolio of municipal obligations issued
by state and local government authorities within the state of California or
certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment 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
market price quotes are not readily available (which is usually the case for
municipal securities), the pricing service establishes fair 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,
evaluations of anticipated cash flows or collateral and general market
conditions. Prices of forward swap contacts are also provided by an independent
pricing service approved by each Fund's Board of Directors/Trustees. Futures
contracts are valued using the closing settlement price, or, in the absence or
such a price, at the mean of the bid and asked prices. If the pricing service is
unable to supply a price for a municipal bond, forward swap contract or futures
contact, each Fund may use a market price or fair market value quote provided by
a major broker/dealer in such investments. If it is determined that the market
price or fair market value for an investment is unavailable or inappropriate,
the Board of Trustees of the Funds, or its designee, may establish a fair value
for the investment. Temporary investments in securities that have variable rate
and demand features qualifying them as short-term investments are valued at
amortized cost, which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At August 31, 2006, Insured
California Premium Income (NPC) and Insured California Premium Income 2 (NCL)
had outstanding when-issued/delayed delivery purchase commitments of $3,733,339
and $5,745,167, respectively. There were no such outstanding purchase
commitments in any of the other Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. 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, and in the case of Insured California Tax-Free Advantage (NKX) the
alternative minimum tax applicable to individuals, 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, 2006, have been
designated Exempt Interest Dividends. Net realized capital gains and ordinary
income distributions paid by the Funds are subject to federal taxation.
71
Notes to
FINANCIAL STATEMENTS (continued)
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common 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 U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one or more Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,720 --
Series T 1,800 1,900 -- --
Series TH -- 1,900 -- 3,500
Series F -- -- -- 3,500
---------------------------------------------------------------------------------------------------------
Total 1,800 3,800 1,720 7,000
=========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M 2,200 3,740 -- --
Series T -- -- 2,360 --
Series TH -- 3,740 -- 1,800
Series F 2,200 -- 2,360 --
---------------------------------------------------------------------------------------------------------
Total 4,400 7,480 4,720 1,800
=========================================================================================================
Insurance
Insured California Premium Income (NPC) and Insured California Premium Income 2
(NCL) invest only 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.
Insured California Dividend Advantage (NKL) and Insured California Tax-Free
Advantage (NKX) invest at least 80% of their net assets (including net assets
attributable to Preferred shares) in municipal securities that are covered by
insurance. Each Fund may also invest up to 20% of its net assets (including net
assets attributable to Preferred shares) in municipal securities which are
either (i) backed by an escrow or trust containing sufficient U.S. Government or
U.S. Government agency securities, or (ii) rated, at the time of investment,
within the four highest grades (Baa or BBB or better by Moody's, S&P or Fitch)
or unrated but judged to be of comparable quality by the Adviser.
72
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' Common 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, in contrast, 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 Common share net
asset value of the Funds 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.
Forward Swap Transactions
The Funds are authorized to invest in certain derivative financial instruments.
The Funds' use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount.
Futures Contracts
The Funds are authorized to invest in futures contracts for the purposes of
hedging against changes in values of a Fund's securities or changes in the
prevailing levels of interest rates, as a substitute for a position in the
underlying asset, or to enhance the portfolio's return. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed, a Fund records realized gains or losses equal to the
difference between the value of the contract on the closing date and value of
the contract when originally entered into.
Risks of investments in futures contracts include the possible adverse movement
of the value of the securities or indices underlying the contracts, the
possibility that there may not be a liquid secondary market for the contracts
and/or that a change in the value of the contract may not correlate with a
change in the value of the underlying securities or indices.
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.
Indemnifications
Under the Funds' organizational documents, their Officers and Directors/Trustees
are indemnified against certain liabilities arising out of the performance of
their duties to the Funds. In addition, in the normal course of business, the
Funds enter into contracts that provide general indemnifications to other
parties. The Funds' maximum exposure under these arrangements is unknown as this
would involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
73
Notes to
FINANCIAL STATEMENTS (continued)
2. FUND SHARES
Transactions in Common shares were as follows:
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) PREMIUM INCOME (NCU)
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05
---------------------------------------------------------------------------------------------------------
Common shares issued
to shareholders
due to reinvestment
of distributions 6,731 4,473 -- 16,994 -- --
=========================================================================================================
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND
ADVANTAGE (NAC) ADVANTAGE 2 (NVX) ADVANTAGE 3 (NZH)
----------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05
---------------------------------------------------------------------------------------------------------
Common shares issued
to shareholders
due to reinvestment
of distributions 33,399 4,849 -- -- -- --
=========================================================================================================
INSURED INSURED
CALIFORNIA DIVIDEND CALIFORNIA TAX-FREE
ADVANTAGE (NKL) ADVANTAGE (NKX)
---------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/06 8/31/05 8/31/06 8/31/05
---------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 4,796 -- -- --
=========================================================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended August 31, 2006, were
as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
---------------------------------------------------------------------------------------------------------
Purchases $15,633,431 $38,063,401 $25,282,371 $68,921,094
Sales and maturities 13,172,344 40,252,952 26,869,773 72,072,388
=========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------
Purchases $29,101,136 $52,091,968 $11,566,593 $4,749,929
Sales and maturities 30,856,789 54,390,357 12,318,501 5,629,297
=========================================================================================================
74
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions. To the extent that
differences arise that are permanent in nature, such amounts are reclassified
within the capital accounts on the Statement of Assets and Liabilities, based on
their Federal tax basis treatment and have no impact on the net asset value of
the Funds. Temporary differences do not require reclassification.
At August 31, 2006, the cost of investments was as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Cost of investments $133,583,833 $267,204,885 $119,512,129 $503,240,581
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Cost of investments $315,484,862 $521,162,872 $330,937,963 $125,670,971
============================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 2006, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $10,091,147 $14,503,375 $5,935,353 $30,199,111
Depreciation (512) (47,606) (8,399) (14,163)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments $10,090,635 $14,455,769 $5,926,954 $30,184,948
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $16,779,565 $23,164,411 $21,558,143 $5,747,342
Depreciation (200,568) (544,627) (1,646,651) (490,257)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments $16,578,997 $22,619,784 $19,911,492 $5,257,085
============================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at August 31, 2006, the Funds' tax year end,
were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $757,514 $744,833 $324,441 $1,642,940
Undistributed net ordinary income ** 46,081 3,783 -- 121
Undistributed net long-term capital gains 347,730 -- 213,601 1,235,021
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $1,042,127 $1,925,249 $782,973 $195,333
Undistributed net ordinary income ** -- -- -- --
Undistributed net long-term capital gains -- -- 49,448 --
============================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on August 1, 2006, paid on September 1, 2006.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
75
Notes to
FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the tax years ended August 31,
2006 and August 31, 2005, was designated for purposes of the dividends paid
deduction as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2006 (NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,489,050 $12,330,721 $5,697,561 $26,436,381
Distributions from net ordinary income ** 79,771 -- -- --
Distributions from net long-term capital gains *** 1,001,943 -- 81,625 893,620
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2006 (NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $15,681,327 $25,609,086 $16,451,218 $5,633,072
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains *** -- -- -- --
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2005 (NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,520,209 $12,725,281 $5,644,396 $25,851,246
Distributions from net ordinary income ** 377,496 -- -- --
Distributions from net long-term capital gains 785,476 -- -- 1,150,437
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2005 (NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $15,245,298 $23,895,351 $15,677,229 $5,801,023
Distributions from net ordinary income ** -- -- 116,229 --
Distributions from net long-term capital gains -- -- 689,397 --
============================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds designated as a long-term capital gain dividend, pursuant to
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the
earnings and profits of the Funds related to net capital gain to zero for
the tax year ended August 31, 2006.
76
At August 31, 2006, the following 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 CALIFORNIA
PREMIUM DIVIDEND DIVIDEND TAX-FREE
INCOME 2 ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NCL) (NVX) (NZH) (NKX)
------------------------------------------------------------------------------------------------------------
Expiration year:
2009 $ 585,620 $ -- $ -- $ --
2010 440,510 -- -- --
2011 -- -- 2,849,060 278,553
2012 -- 406,014 323,840 --
2013 -- -- -- --
2014 -- -- -- 85,788
------------------------------------------------------------------------------------------------------------
Total $1,026,130 $406,014 $3,172,900 $364,341
============================================================================================================
Insured California Premium Income 2 (NCL) elected to defer net realized losses
from investments incurred from November 1, 2005 through August 31, 2006
("post-October losses") in accordance with Federal income tax regulations.
Post-October losses of $18,677 were treated as having arisen on the first day of
the following year.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC)
AVERAGE DAILY NET ASSETS INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
(INCLUDING NET ASSETS CALIFORNIA PREMIUM INCOME (NCU)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
AVERAGE DAILY NET ASSETS INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
(INCLUDING NET ASSETS INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
77
Notes to
FINANCIAL STATEMENTS (continued)
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of August 31, 2006, the complex-level fee rate was .1863%.
COMPLEX-LEVEL
COMPLEX-LEVEL ASSETS(1) FEE RATE
--------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds
in the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level
fee rate for such complex-wide Managed Assets shall be .1400% until such
time as a different rate or rates is determined.
The management 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 its Officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
Directors/Trustees that enables Directors/Trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised Funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
Funds.
For the first ten years of California Dividend Advantage's (NAC) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JULY 31, JULY 31,
--------------------------------------------------------------------------------
1999* .30% 2005 .25%
2000 .30 2006 .20
2001 .30 2007 .15
2002 .30 2008 .10
2003 .30 2009 .05
2004 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage (NAC) for
any portion of its fees and expenses beyond July 31, 2009.
78
For the first ten years of California Dividend Advantage 2's (NVX) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 2 (NVX)
for any portion of its fees and expenses beyond March 31, 2011.
For the first ten years of California Dividend Advantage 3's (NZH) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 3 (NZH)
for any portion of its fees and expenses beyond September 30, 2011.
For the first ten years of Insured California Dividend Advantage's (NKL)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Dividend Advantage
(NKL) for any portion of its fees and expenses beyond March 31, 2012.
For the first eight years of Insured California Tax-Free Advantage's (NKX)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Tax-Free Advantage
(NKX) for any portion of its fees and expenses beyond November 30, 2010.
79
Notes to
FINANCIAL STATEMENTS (continued)
6. NEW ACCOUNTING PRONOUNCEMENT
Financial Accounting Standards Board Interpretation No. 48
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and does not expect the adoption of FIN 48
will have a significant impact on the net assets or results of operations of the
Funds.
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on October 2, 2006, to shareholders of record
on September 15, 2006, as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Dividend per share $.0605 $.0560 $.0565 $.0675
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Dividend per share $.0655 $.0655 $.0650 $.0590
================================================================================
80
Financial
HIGHLIGHTS
81
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- -----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $16.21 $ .92 $(.38) $(.18) $(.02) $ .34 $(.83) $(.14) $ (.97)
2005 16.23 .95 .22 (.10) (.01) 1.06 (.92) (.16) (1.08)
2004 15.59 .99 .68 (.05) -- 1.62 (.93) (.05) (.98)
2003 16.17 .99 (.45) (.06) (.01) .47 (.97) (.08) (1.05)
2002 16.04 1.05 .03 (.09) -- .99 (.86) -- (.86)
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.33 .90 (.28) (.20) -- .42 (.76) -- (.76)
2005 15.12 .91 .29 (.11) -- 1.09 (.88) -- (.88)
2004 14.60 .96 .53 (.06) -- 1.43 (.91) -- (.91)
2003 15.08 .99 (.51) (.07) -- .41 (.89) -- (.89)
2002 15.01 1.02 (.02) (.10) -- .90 (.83) -- (.83)
CALIFORNIA PREMIUM
INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.03 .89 (.30) (.21) -- .38 (.77) (.01) (.78)
2005 14.51 .90 .60 (.12) -- 1.38 (.86) -- (.86)
2004 13.66 .94 .85 (.06) -- 1.73 (.88) -- (.88)
2003 14.42 .96 (.78) (.07) -- .11 (.87) -- (.87)
2002 14.22 .99 .13 (.10) -- 1.02 (.82) -- (.82)
====================================================================================================================================
Total Returns
--------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
=========================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
-----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $ -- $15.58 $15.08 1.00% 2.23%
2005 -- 16.21 15.90 7.58 6.74
2004 -- 16.23 15.81 11.80 10.64
2003 -- 15.59 15.07 1.55 2.82
2002 -- 16.17 15.85 6.73 6.47
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
-----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 14.99 14.19 (.63) 2.91
2005 -- 15.33 15.05 5.10 7.42
2004 -- 15.12 15.18 12.71 10.02
2003 -- 14.60 14.32 2.69 2.71
2002 -- 15.08 14.80 5.57 6.29
CALIFORNIA PREMIUM
INCOME (NCU)
-----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 14.63 14.01 3.14 2.72
2005 -- 15.03 14.37 11.76 9.75
2004 -- 14.51 13.67 12.04 12.94
2003 -- 13.66 13.02 (.91) .69
2002 -- 14.42 14.00 4.84 7.48
=========================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------ ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=========================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $100,581 1.16% 5.89% 1.15% 5.90% 9%
2005 104,510 1.14 5.85 1.13 5.86 9
2004 104,618 1.17 6.17 1.16 6.17 25
2003 100,427 1.17 6.13 1.16 6.14 26
2002 104,137 1.21 6.65 1.19 6.66 30
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 190,571 1.20 6.05 1.19 6.05 14
2005 194,895 1.17 6.03 1.17 6.03 7
2004 192,035 1.19 6.38 1.19 6.38 35
2003 185,181 1.20 6.53 1.19 6.54 22
2002 190,870 1.23 6.83 1.22 6.84 6
CALIFORNIA PREMIUM
INCOME (NCU)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 84,467 1.23 6.09 1.21 6.10 20
2005 86,785 1.21 6.08 1.20 6.09 13
2004 83,772 1.23 6.62 1.22 6.63 19
2003 78,859 1.24 6.72 1.24 6.72 24
2002 83,249 1.27 7.07 1.26 7.08 10
=========================================================================================================================
Preferred Shares at End of Period
-----------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
======================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
----------------------------------------------------------------------
Year Ended 8/31:
2006 $45,000 $25,000 $80,878
2005 45,000 25,000 83,061
2004 45,000 25,000 83,121
2003 45,000 25,000 80,793
2002 45,000 25,000 82,854
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
----------------------------------------------------------------------
Year Ended 8/31:
2006 95,000 25,000 75,150
2005 95,000 25,000 76,288
2004 95,000 25,000 75,535
2003 95,000 25,000 73,732
2002 95,000 25,000 75,229
CALIFORNIA PREMIUM
INCOME (NCU)
----------------------------------------------------------------------
Year Ended 8/31:
2006 43,000 25,000 74,109
2005 43,000 25,000 75,456
2004 43,000 25,000 73,704
2003 43,000 25,000 70,848
2002 43,000 25,000 73,400
======================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, 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.
82-83 spread
Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- -----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $15.98 $1.01 $ (.25) $(.21) $ -- $ .55 $(.91) $(.03) $ (.94)
2005 15.59 1.04 .50 (.12) -- 1.42 (.98) (.05) (1.03)
2004 14.82 1.05 .76 (.06) -- 1.75 (.98) -- (.98)
2003 15.24 1.06 (.47) (.07) -- .52 (.94) -- (.94)
2002 15.13 1.07 -- (.10) -- .97 (.86) -- (.86)
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.63 .97 (.19) (.21) -- .57 (.84) -- (.84)
2005 14.97 .98 .71 (.12) -- 1.57 (.91) -- (.91)
2004 14.18 .99 .77 (.06) -- 1.70 (.91) -- (.91)
2003 14.79 1.00 (.62) (.07) -- .31 (.89) (.03) (.92)
2002 15.11 1.06 (.40) (.11) -- .55 (.87) -- (.87)
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.31 .97 (.20) (.22) -- .55 (.83) -- (.83)
2005 14.65 .97 .68 (.13) -- 1.52 (.86) -- (.86)
2004 13.72 .98 .88 (.07) -- 1.79 (.86) -- (.86)
2003 14.33 .98 (.66) (.08) -- .24 (.86) -- (.86)
2002(a) 14.33 .83 .09 (.08) -- .84 (.72) -- (.72)
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.81 1.01 (.25) (.22) -- .54 (.85) -- (.85)
2005 15.35 1.01 .52 (.12) -- 1.41 (.90) (.05) (.95)
2004 14.60 1.02 .84 (.06) (.01) 1.79 (.91) (.13) (1.04)
2003 15.14 .99 (.49) (.07) (.01) .42 (.91) (.05) (.96)
2002(b) 14.33 .34 .92 (.03) -- 1.23 (.30) -- (.30)
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 15.17 .95 (.25) (.21) -- .49 (.74) -- (.74)
2005 14.62 .96 .57 (.13) -- 1.40 (.85) -- (.85)
2004 13.79 .96 .84 (.06) -- 1.74 (.91) -- (.91)
2003(c) 14.33 .64 (.33) (.04) -- .27 (.60) -- (.60)
====================================================================================================================================
Total Returns
--------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
========================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $ -- $15.59 $15.97 5.47% 3.63%
2005 -- 15.98 16.07 14.62 9.41
2004 -- 15.59 15.00 12.07 12.11
2003 -- 14.82 14.30 4.79 3.37
2002 -- 15.24 14.55 3.67 6.75
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 15.36 14.95 4.19 3.82
2005 -- 15.63 15.19 14.98 10.80
2004 -- 14.97 14.08 13.60 12.11
2003 -- 14.18 13.24 (.95) 2.16
2002 -- 14.79 14.28 (.27) 3.90
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 15.03 14.84 8.50 3.81
2005 -- 15.31 14.49 15.75 10.69
2004 -- 14.65 13.33 11.97 13.36
2003 .01 13.72 12.71 (3.20) 1.68
2002(a) (.12) 14.33 14.00 (1.68) 5.32
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 15.50 15.70 10.72 3.62
2005 -- 15.81 15.00 9.00 9.46
2004 -- 15.35 14.67 12.54 12.53
2003 -- 14.60 14.00 (.35) 2.70
2002(b) (.12) 15.14 15.00 2.05 7.84
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
----------------------------------------------------------------------------------------
Year Ended 8/31:
2006 -- 14.92 14.27 4.56 3.43
2005 -- 15.17 14.38 7.46 9.84
2004 -- 14.62 14.19 11.54 12.86
2003(c) (.21) 13.79 13.56 (5.79) .34
========================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------ ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=======================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 $365,516 1.13% 6.22% .83% 6.51% 13
2005 374,265 1.12 6.22 .75 6.59 4
2004 365,066 1.14 6.38 .70 6.83 12
2003 346,918 1.15 6.44 .70 6.88 11
2002 356,821 1.18 6.76 .72 7.22 33
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 227,160 1.16 5.94 .73 6.36 9
2005 231,140 1.16 5.94 .70 6.40 3
2004 221,395 1.18 6.24 .72 6.70 13
2003 209,722 1.18 6.30 .73 6.75 40
2002 218,814 1.19 6.82 .73 7.28 32
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 362,473 1.16 6.08 .70 6.54 10
2005 369,262 1.17 6.05 .70 6.51 5
2004 353,360 1.20 6.32 .73 6.78 13
2003 330,829 1.20 6.33 .73 6.79 48
2002(a) 345,470 1.15* 6.01* .69* 6.47* 49
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 236,525 1.17 6.12 .71 6.58 3
2005 241,254 1.16 6.06 .71 6.51 4
2004 234,186 1.18 6.28 .72 6.74 14
2003 222,751 1.18 6.00 .72 6.46 71
2002(b) 231,062 1.10* 4.98* .60* 5.47* 12
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2006 87,775 1.22 5.97 .73 6.46 4
2005 89,272 1.21 5.95 .73 6.43 3
2004 86,008 1.23 6.17 .73 6.67 20
2003(c) 81,141 1.14* 5.25* .67* 5.72* 45
=======================================================================================================================
Preferred Shares at End of Period
----------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=====================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
---------------------------------------------------------------------
Year Ended 8/31:
2006 $175,000 $25,000 $77,217
2005 175,000 25,000 78,466
2004 175,000 25,000 77,152
2003 175,000 25,000 74,560
2002 175,000 25,000 75,974
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
---------------------------------------------------------------------
Year Ended 8/31:
2006 110,000 25,000 76,627
2005 110,000 25,000 77,532
2004 110,000 25,000 75,317
2003 110,000 25,000 72,664
2002 110,000 25,000 74,731
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
---------------------------------------------------------------------
Year Ended 8/31:
2006 187,000 25,000 73,459
2005 187,000 25,000 74,367
2004 187,000 25,000 72,241
2003 187,000 25,000 69,229
2002(a) 187,000 25,000 71,186
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
---------------------------------------------------------------------
Year Ended 8/31:
2006 118,000 25,000 75,111
2005 118,000 25,000 76,113
2004 118,000 25,000 74,616
2003 118,000 25,000 72,193
2002(b) 118,000 25,000 73,954
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
---------------------------------------------------------------------
Year Ended 8/31:
2006 45,000 25,000 73,764
2005 45,000 25,000 74,595
2004 45,000 25,000 72,782
2003(c) 45,000 25,000 70,078
====================================================================
* Annualized.
** Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, 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.
(a) For the period September 25, 2001 (commencement of operations) through
August 31, 2002.
(b) For the period March 25, 2002 (commencement of operations) through August
31, 2002.
(c) For the period November 21, 2002 (commencement of operations) through
August 31, 2003.
See accompanying notes to financial statements.
84-85 spread
Board Members
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger(1) Chairman of 1994 Chairman (since 1996) and Director of Nuveen Investments, 167
3/28/49 the Board Inc., Nuveen Investments, LLC, Nuveen Advisory Corp. and
333 W. Wacker Drive and Board Nuveen Institutional Advisory Corp.(3); formerly, Director
Chicago, IL 60606 Member (1996-2006) of Institutional Capital Corporation; Chairman
and Director (since 1997) of Nuveen Asset Management;
Chairman and Director of Rittenhouse Asset Management,
Inc. (since 1999); Chairman of Nuveen Investments
Advisers Inc. (since 2002).
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Lead Independent 1997 Private Investor and Management Consultant. 167
8/22/40 Board member
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice President of The 167
7/29/34 Northern Trust Company; Director (since 2002) Community
333 W. Wacker Drive Advisory Board for Highland Park and Highwood, United
Chicago, IL 60606 Way of the North Shore.
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 167
10/22/48 corporation (since 1996); Director and Vice Chairman, United
333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member,
Chicago, IL 60606 University of Iowa; Director, Gazette Companies; Life Trustee
of Coe College and Iowa College Foundation; formerly,
Director, Alliant Energy; formerly, Director, Federal Reserve
Bank of Chicago; formerly, President and Chief Operating Officer,
SCI Financial Group, Inc., a regional financial services firm.
------------------------------------------------------------------------------------------------------------------------------------
William C. Hunter Board member 2004 Dean, Tippie College of Business, University of Iowa (since 167
3/6/48 June 2006); formerly, Dean and Distinguished Professor of Finance,
333 W. Wacker Drive School of Business at the University of Connecticut (2003-2006);
Chicago, IL 60606 previously, Senior Vice President and Director of Research
at the Federal Reserve Bank of Chicago (1995-2003);
Director (since 1997), Credit Research Center at Georgetown
University; Director (since 2004) of Xerox Corporation;
Director, SS&C Technologies, Inc. (May 2005 - October 2005).
------------------------------------------------------------------------------------------------------------------------------------
David J. Kundert Board member 2005 Retired (since 2004) as Chairman, JPMorgan Fleming Asset 165
10/28/42 Management, President and CEO, Banc One Investment
333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual
Chicago, IL 60606 Funds; prior thereto, Executive Vice President, Banc One
Corporation and Chairman and CEO, Banc One Investment
Management Group; Board of Regents, Luther College;
member of the Wisconsin Bar Association; member of Board
of Directors, Friends of Boerner Botanical Gardens.
86
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider Board member 1997 Chairman of Miller-Valentine Partners Ltd., a real estate 167
9/24/44 investment company; formerly, Senior Partner and Chief
333 W. Wacker Drive Operating Officer (retired, 2004) of Miller-Valentine
Chicago, IL 60606 Group; formerly, Vice President, Miller-Valentine Realty;
Board Member, Chair of the Finance Committee and
member of the Audit Committee of Premier Health Partners,
the not-for-profit company of Miami Valley Hospital; Vice
President, Dayton Philharmonic Orchestra Association; Board
Member, Regional Leaders Forum, which promotes cooperation
on economic development issues; Director, Dayton Development
Coalition; formerly, Member, Community Advisory Board,
National City Bank, Dayton, Ohio and Business Advisory
Council, Cleveland Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale Board member 1997 Executive Director, Gaylord and Dorothy Donnelley 167
12/29/47 Foundation (since 1994); prior thereto, Executive Director,
333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994).
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance, 167
1/22/50 Northwestern University (since 1997); Director (since 2003),
333 W. Wacker Drive Chicago Board Options Exchange; formerly, Director
Chicago, IL 60606 National Mentor Holdings, a privately-held, national provider
of home and community-based services; Chairman
(since 1997), Board of Directors, Rubicon, a pure
captive insurance company owned by Northwestern
University; Director (since 1997), Evanston
Chamber of Commerce and Evanston Inventure, a
business development organization.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 167
9/9/56 Administrative Associate General Counsel, formerly, Vice President and
333 W. Wacker Drive Officer Assistant General Counsel, of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (2002-2004), General Counsel (1998-2004)
and Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.(3);
Managing Director (since 2002) and Assistant Secretary and
Associate General Counsel, formerly, Vice President
(since 1997), of Nuveen Asset Management; Managing Director
(since 2004) and Assistant Secretary (since 1994) of Nuveen
Investments, Inc.; Assistant Secretary of NWQ Investment
Management Company, LLC. (since 2002); Vice President and
Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Managing Director, Associate General Counsel
and Assistant Secretary of Rittenhouse Asset Management,
Inc. and Symphony Asset Management LLC (since 2003);
Assistant Secretary of Tradewinds NWQ Global Investors,
LLC (since 2006); Chartered Financial Analyst.
87
Board Members
AND OFFICERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Julia L. Antonatos Vice President 2004 Managing Director (since 2005), formerly Vice President 167
9/22/63 (since 2002); formerly, Assistant Vice President (since 2000)
333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 167
2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC.
333 W. Wacker Drive Secretary
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President and Treasurer of Nuveen Investments, LLC 167
11/28/67 and of Nuveen Investments, Inc. (since 1999); Vice President
333 W. Wacker Drive and Treasurer of Nuveen Asset Management (since 2002)
Chicago, IL 60606 and of Nuveen Investments Advisers Inc. (since 2002); Assistant
Treasurer of NWQ Investment Management Company, LLC.
(since 2002); Vice President and Treasurer of Nuveen
Rittenhouse Asset Management, Inc. and Symphony Asset
Management LLC (since 2003); Treasurer, Tradewinds NWQ
Global Investors, LLC (since 2006); formerly, Vice President and
Treasurer (1999-2004) of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
John N. Desmond Vice President 2005 Vice President, Director of Investment Operations, Nuveen 167
8/24/61 Investments, LLC (since January 2005); formerly, Director,
333 W. Wacker Drive Business Manager, Deutsche Asset Management (2003-2004),
Chicago, IL 60606 Director, Business Development and Transformation, Deutsche
Trust Bank Japan (2002-2003); previously, Senior Vice
President, Head of Investment Operations and Systems,
Scudder Investments Japan, (2000-2002), Senior Vice
President, Head of Plan Administration and Participant
Services, Scudder Investments (1995-2002).
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 1998 Vice President (since 2002), Assistant Secretary and 167
9/24/64 and Secretary Assistant General Counsel (since 1998) formerly, Assistant
333 W. Wacker Drive Vice President (since 1998) of Nuveen Investments, LLC;
Chicago, IL 60606 Vice President (2002-2004) and Assistant Secretary (1998-2004)
formerly, Assistant Vice President of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.(3); Vice President and
Assistant Secretary (since 2005) of Nuveen Asset Management.
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Managing Director (since 2004), formerly, Vice President of 167
10/24/45 Nuveen Investments, LLC, Managing Director (2004) formerly,
333 W. Wacker Drive Vice President (1998-2004) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing Director
(since 2005) of Nuveen Asset Management.
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002), formerly, Vice President of 167
3/2/64 Nuveen Investments; Managing Director (1997-2004) of
333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp.(3); Managing Director (since 2001) of Nuveen Asset
Management; Vice President (since 2002) of Nuveen
Investments Advisers Inc.; Chartered Financial Analyst.
88
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 167
5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and
333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Walter M. Kelly Chief 2003 Assistant Vice President and Assistant Secretary of the 167
2/24/70 Compliance Nuveen Funds (since 2003); Assistant Vice President and
333 West Wacker Drive Officer Assistant General Counsel (since 2003) of Nuveen Investments,
Chicago, IL 60606 LLC; previously, Associate (2001-2003) a the law firm of Vedder,
Price, Kaufman & Kammholz.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 167
3/22/63 LLC; Certified Public Accountant.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President of Nuveen Investments, LLC (since 1999). 167
8/27/61
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 167
7/27/51 and Assistant Counsel of Nuveen Investments, LLC; formerly, Vice President
333 W. Wacker Drive Secretary and Assistant Secretary of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp.(3); Vice President (since 2005)
and Assistant Secretary of Nuveen Investments, Inc.; Vice
President (since 2005) and Assistant Secretary (since 1997)
of Nuveen Asset Management; Vice President (since 2000),
Assistant Secretary and Assistant General Counsel (since
1998) of Rittenhouse Asset Management, Inc.; Vice President
and Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Assistant Secretary of NWQ Investment
Management Company, LLC (since 2002), Symphony Asset
Management LLC (since 2003) and Tradewinds NWQ Global
Investors, LLC (since 2006).
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member
of the Adviser.
(2) Board members serve an indefinite term until his/her successor is elected.
The year first elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
89
ANNUAL INVESTMENT
MANAGEMENT AGREEMENT
APPROVAL PROCESS
The Board of Trustees is responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to continue the advisory
arrangements. At a meeting held on May 23-25, 2006 (the "May Meeting"), the
Board of Trustees of the Funds, including the independent Trustees, unanimously
approved the continuance of the Investment Management Agreement between each
Fund and NAM (the "Fund Adviser").
THE APPROVAL PROCESS
During the course of the year, the Board received a wide variety of materials
relating to the services provided by the Fund Adviser and the performance of
each Fund. To assist the Board in its evaluation of the advisory contract with
the Fund Adviser at the May Meeting, the independent Trustees received extensive
materials in advance of their meeting which outlined, among other things:
o the nature, extent and quality of services provided by the Fund
Adviser;
o the organization and business operations of the Fund Adviser,
including the responsibilities of various departments and key
personnel;
o the Fund's past performance, the Fund's performance compared to funds
of similar investment objectives compiled by an independent third
party and to customized benchmarks;
o the profitability of the Fund Adviser and certain industry
profitability analyses for unaffiliated advisers;
o the expenses of the Fund Adviser in providing the various services;
o the advisory fees (gross and net management fees) and total expense
ratios of the Fund, including comparisons of such fees and expenses
with those of comparable, unaffiliated funds based on information and
data provided by Lipper (the "Peer Universe") as well as compared to a
subset of funds within the Peer Universe (the "Peer Group") to the
respective Fund (as applicable);
o the advisory fees the Fund Adviser assesses to other types of
investment products or clients;
o the soft dollar practices of the Fund Adviser, if any; and
o from independent legal counsel, a legal memorandum describing, among
other things, the duties of the Trustees under the Investment Company
Act of 1940 (the "1940 Act") as well as the general principles of
relevant state law in reviewing and approving advisory contracts; the
requirements of the 1940 Act in such matters; an adviser's fiduciary
duty with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company
boards of directors have fulfilled their duties; and factors to be
considered by the Board in voting on advisory agreements.
At the May Meeting, the Fund Adviser made a presentation to and responded to
questions from the Board. After the presentations and after reviewing the
written materials, the independent Trustees met privately with their legal
counsel to review the Board's duties in reviewing advisory contracts and
consider the renewal of the advisory contracts. It is with this background that
the Trustees considered the advisory contract with the Fund Adviser. The
independent Trustees, in consultation with independent counsel, reviewed the
factors set out in judicial decisions and SEC directives relating to the renewal
of advisory contracts. As outlined in more detail below, the Trustees considered
all factors they believed relevant with respect to each Fund, including the
following: (a) the nature, extent and quality of the services to be provided by
the Fund Adviser; (b) the investment performance of the Fund and the Fund
Adviser; (c) the costs of the services to be provided and profitability of the
Fund Adviser and its affiliates; (d) the extent to which economies of scale
would be realized as the Fund grows; and (e) whether fee levels reflect these
economies of scale for the benefit of Fund investors.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the Fund Adviser, the Trustees considered the nature, extent and
quality of the Fund Adviser's services. The Trustees reviewed materials
outlining, among other things, the Fund Adviser's organization and business; the
types of services that the Fund Adviser or its affiliates provide and are
expected to provide to the Funds; the performance record of the applicable Fund
(as described in further detail below); and any initiatives and enhancements
Nuveen has taken for its municipal fund product line. In connection with their
continued service as Trustees, the Trustees also have a good understanding of
the Fund Adviser's organization, operations and personnel. In this regard, the
Trustees are familiar with and have evaluated the professional experience,
qualifications and credentials of the Fund Adviser's personnel. The Trustees
further reviewed materials describing, among other things, the teams and
personnel involved in the investment, research, risk-management and operational
processes involved in managing municipal funds
90
and their respective functions. Given the Trustees' experience with the Funds
and Fund Adviser, the Trustees recognized the demonstrated history of care and
depth of experience of the respective personnel in managing these Funds. In this
regard, the Trustees considered the continued quality of the Fund Adviser's
investment process in making portfolio management decisions as well as
additional refinements and improvements adopted to the portfolio management
processes noted below. With respect to the services provided to municipal funds,
including the Funds, the Trustees noted that the Fund Adviser continues to make
refinements to its portfolio management process including, among other things,
the increased use of derivatives to enhance management of risk, additional
analytical software for research staff and improved municipal pricing processes.
In addition to advisory services, the independent Trustees considered the
quality of any administrative or non-advisory services provided. The Fund
Adviser provides the Funds with such administrative and other services
(exclusive of, and in addition to, any such services provided by others for the
Funds) and officers and other personnel as are necessary for the operations of
the respective Fund. In connection with the review of the Investment Management
Agreement, the Trustees considered the extent and quality of these other
services which include, among other things, providing: product management (e.g.,
product positioning, performance benchmarking, risk management); fund
administration (e.g., daily net asset value pricing and reconciliation, tax
reporting, fulfilling regulatory filing requirements); oversight of third party
service providers; administration of board relations (e.g., organizing board
meetings and preparing related materials); compliance (e.g., monitoring
compliance with investment policies and guidelines and regulatory requirements);
and legal support (e.g., helping prepare and file registration statements,
amendments thereto, proxy statements and responding to regulatory requests
and/or inquiries). As the Funds operate in a highly regulated industry and given
the importance of compliance, the Trustees considered, in particular, the
additions of experienced personnel to the compliance teams and the enhancements
to technology and related systems to support the compliance activities for the
Funds (including a new reporting system for quarterly portfolio holdings).
In addition to the foregoing, the Trustees also noted the additional services
that the Fund Adviser or its affiliates provide to closed-end funds, including,
in particular, secondary market support activities. The Trustees recognized
Nuveen's continued commitment to supporting the secondary market for the common
shares of its closed-end funds through a variety of initiatives designed to
raise investor and analyst awareness and understanding of closed-end funds.
These efforts include providing advertising and other media relations programs,
continued contact with analysts, maintaining and enhancing its website for
closed-end funds, and targeted advisor communication programs. With respect to
funds that utilize leverage through the issuance of preferred shares, the
Trustees noted Nuveen's continued support for the preferred shares by
maintaining, among other things, an in-house preferred trading desk; designating
a product manager whose responsibilities include creating and disseminating
product information and managing relations in connection with the preferred
share auction; and maintaining systems necessary to test compliance with rating
agency requirements.
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the Investment Management Agreement were of a high level and were
satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUND AND FUND ADVISER
The Board considered the investment performance for each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives identified by an independent third party (the
"Performance Peer Group") and portfolio level performance against customized
benchmarks, as described below. In evaluating the performance information, in
certain instances, the Trustees noted that the closest Performance Peer Group
for a Fund still may not adequately reflect such Fund's investment objectives,
strategies and portfolio duration, thereby limiting the usefulness of the
comparisons of such Fund's performance with that of the Performance Peer Group.
With respect to state specific municipal funds, the Trustees recognized that
certain state municipal funds do not have a corresponding state specific
Performance Peer Group in which case their performance is measured against a
more general municipal category for various states. The closed-end state
municipal funds that do not have corresponding state-specific Performance Peer
Groups are from Arizona, Connecticut, Georgia, Maryland, Massachusetts,
Missouri, North Carolina, Ohio, Texas, and Virginia. Further, due to a lack of
state-specific unleveraged categories, certain unleveraged state municipal funds
are included in their leveraged state category (such as, the Nuveen California
Select Tax-Free Income Fund, Nuveen California Municipal Value Fund, Nuveen New
York Select Tax-Free Income Fund and Nuveen New York Municipal Value Fund).
In reviewing performance, the Trustees reviewed performance information
including, among other things, total return information compared with the Fund's
Performance Peer Group for the one-, three- and five-year periods (as
applicable) ending December 31, 2005. The Trustees also reviewed the Fund's
portfolio level performance (which does not reflect fund level fees and
expenses) compared to customized portfolio-level benchmarks for the one- and
three-year periods ending December 31, 2005 (as applicable). This analysis is
designed to assess the efficacy of investment decisions against appropriate
measures of risk and total return, within specific market segments. This
information supplements the Fund performance information provided to the Board
at each of their quarterly meetings. Based on their review, the Trustees
determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
In evaluating the management fees and expenses of a Fund, the Board
reviewed, among other things, the Fund's advisory fees (net and gross
management fees) and total expense ratios (before and after expense
reimbursements and/or waivers) in absolute terms as well as comparisons to
the gross management fees (before waivers), net management fees (after
waivers) and total expense ratios (before and after waivers) of comparable
funds in the Peer Universe and the Peer Group. The Trustees reviewed data
regarding the construction of Peer Groups as well as the methods of
measurement for the fee and expense analysis and the performance analysis.
In certain cases, due to the small number of peers in the Peer Universe,
the Peer Universe and Peer Group may be the same. Further, the Trustees
recognized that in certain cases the closest Peer Universe and/or Peer
Group did not adequately reflect the Fund's investment objectives and
strategies limiting the usefulness of comparisons. In reviewing
comparisons,
91
ANNUAL INVESTMENT MANAGEMENT
AGREEMENT APPROVAL PROCESS (continued)
the Trustees also considered the size of the Peer Universe and/or Peer
Group, the composition of the Peer Group (including differences in the use
of leverage and insurance) as well as differing levels of fee waivers
and/or expense reimbursements. In this regard, the Trustees considered the
fund-level and complex-wide breakpoint schedules (described in further
detail below) and any fee waivers and reimbursements provided by Nuveen
(applicable, in particular, for certain funds launched since 1999). Based
on their review of the fee and expense information provided, the Trustees
determined that each Fund's net total expense ratio was within an
acceptable range compared to peers.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Trustees further reviewed data comparing the advisory fees of the Fund
Adviser with fees the Fund Adviser charges to other clients, including
municipal managed accounts. In general, the fees charged for separate
accounts are somewhat lower than the fees assessed to the Funds. The
Trustees recognized that the differences in fees are attributable to a
variety of factors, including the differences in services provided, product
distribution, portfolio investment policies, investor profiles, account
sizes and regulatory requirements. The Trustees noted, in particular, that
the range of services provided to the Funds is more extensive than that
provided to managed separate accounts. As described in further detail
above, such additional services include, but are not limited to, providing:
product management, fund administration, oversight of third party service
providers, administration of board relations, and legal support. Funds
further operate in a highly regulated industry requiring extensive
compliance functions compared to the other investment products. In addition
to the costs of the additional services, administrative costs may also be
greater for funds as the average account size for separate accounts is
notably larger than the retail accounts of funds. Given the differences in
the product structures, particularly the extensive services provided to
closed-end municipal funds, the Trustees believe such facts justify the
different levels of fees.
3. PROFITABILITY OF FUND ADVISER
In conjunction with its review of fees, the Trustees also considered the
profitability of Nuveen Investments for advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers). The Trustees
reviewed data comparing Nuveen's profitability with other fund sponsors
prepared by three independent third party service providers as well as
comparisons of the revenues, expenses and profits margins of various
unaffiliated management firms with similar amounts of assets under
management prepared by Nuveen. The Trustees further reviewed the 2005
Annual Report for Nuveen Investments. In considering profitability, the
Trustees recognized the inherent limitations in determining profitability
as well as the difficulties in comparing the profitability of other
unaffiliated advisers. Profitability may be affected by numerous factors,
including the methodology for allocating expenses, the adviser's business
mix, the types of funds managed, the adviser's capital structure and cost
of capital. Further, individual fund or product line profitability of other
sponsors is generally not publicly available. Accordingly, the
profitability information that is publicly available from various
investment advisory or management firms may not be representative of the
industry.
Notwithstanding the foregoing, in reviewing profitability, the Trustees reviewed
Nuveen's methodology and assumptions for allocating expenses across product
lines to determine profitability. In this regard, the methods of allocation used
appeared reasonable. The Trustees also, to the extent available, compared
Nuveen's profitability margins (including pre- and post-marketing profit
margins) with the profitability of various unaffiliated management firms. The
Trustees noted that Nuveen's profitability is enhanced due to its efficient
internal business model. The Trustees also recognized that while a number of
factors affect profitability, Nuveen's profitability may change as fee waivers
and/or expense reimbursement commitments of Nuveen to various funds in the
Nuveen complex expire. To keep apprised of profitability and developments that
may affect profitability, the Trustees have requested profitability analysis be
provided periodically during the year. Based on their review, the Trustees were
satisfied that the Fund Adviser's level of profitability was reasonable in light
of the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to the Fund Adviser as well as any indirect
benefits (such as soft dollar arrangements, if any) the Fund Adviser and its
affiliates are expected to receive that are directly attributable to their
management of the Funds, if any. See Section E below for additional information.
Based on their review of the overall fee arrangements of the applicable Fund,
the Trustees determined that the advisory fees and expenses of the respective
Fund were reasonable.
92
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Trustees recognized the potential
benefits resulting from the costs of a fund being spread over a larger asset
base as a fund grows. To help ensure the shareholders share in these benefits,
the Trustees have reviewed and considered the breakpoints in the advisory fee
schedules that reduce advisory fees as the applicable Fund's assets grow. In
addition to advisory fee breakpoints as assets in a respective Fund rise, after
lengthy discussions with management, the Board also approved a complex-wide fee
arrangement that was introduced on August 1, 2004. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the
Funds, are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Trustees considered, among
other things, the historic and expected fee savings to shareholders as assets
grow, the amount of fee reductions at various asset levels, and that the
arrangement would extend to all funds in the Nuveen complex. The Trustees noted
that 2005 was the first full year to reflect the fee reductions from the complex
wide fee arrangement. The Trustees also considered the impact, if any, the
complex-wide fee arrangement may have on the level of services provided. Based
on their review, the Trustees concluded that the breakpoint schedule and
complex-wide fee arrangement currently was acceptable and desirable in providing
benefits from economies of scale to shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Trustees also considered any indirect benefits or
profits the Fund Adviser or its affiliates may receive as a result of its
relationship with each Fund. In this regard, the Trustees considered revenues
received by affiliates of the Fund Adviser for serving as agent at Nuveen's
preferred trading desk and for serving as a co-manager in the initial public
offering of new closed-end exchange traded funds.
In addition to the above, the Trustees considered whether the Fund Adviser
received any benefits from soft dollar arrangements. With respect to NAM, the
Trustees noted that NAM does not currently have any soft dollar arrangements and
does not pay excess brokerage commissions (or spreads on principal transactions)
in order to receive research services; however, the Fund Adviser may from time
to time receive and have access to research generally provided to institutional
clients.
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including a majority of independent
Trustees, concluded that the terms of the Investment Management Agreements were
fair and reasonable, that the Fund Adviser's fees are reasonable in light of the
services provided to each Fund, and that the renewal of the Investment
Management Agreements should be approved.
93
Reinvest Automatically
EASILY AND CONVENIENTLY
Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Exchange-Traded Closed-End 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
the 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.
FLEXIBLE
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.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
94
Other Useful
INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2006, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
the annual CEO certification as required by Section 303A.12(a) of the NYSE
Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or market
price and reinvested dividends and capital gains distributions, if any) over the
time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
Fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over
which a bond's principal and interest will be paid, and consequently is a
measure of the sensitivity of a bond's or bond Fund's value to changes when
market interest rates change. Generally, the longer a bond's or Fund's duration,
the more the price of the bond or Fund will change as interest rates change.
Leverage-adjusted duration takes into account the leveraging process for a Fund
and therefore is longer than the duration of the Fund's portfolio of bonds.
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Eugene S. Sunshine
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071 Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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 period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
95
Photo of: 2 women looking at a photo album.
Nuveen Investments:
SERVING Investors
For GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing more than $149 billion in assets, Nuveen Investments offers access to a
number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under six distinct brands:
Nuveen, a leader in fixed-income investments; NWQ, a leader in value-style
equities; Rittenhouse, a leader in growth-style equities; and Symphony, a
leading institutional manager of market-neutral alternative investment
portfolios; Santa Barbara a leader in growth equities; and Tradewinds NWQ, a
leader in global equities.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For a prospectus, please
contact your securities representative or Nuveen Investments, 333 W. Wacker Dr.,
Chicago, IL 60606. Please read the prospectus carefully before you invest or
send money.
o Share prices
Learn more o Fund details
about Nuveen Funds at o Daily financial news
WWW.NUVEEN.COM/ETF o Investor education
o Interactive planning tools
Logo: NUVEEN Investments
EAN-B-0806D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen California Dividend Advantage Municipal Fund 2
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
----------------------------------------------------------------------------------------------------------------------
August 31, 2006 $ 14,426 $ 0 $ 400 $ 2,900
----------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------
August 31, 2005 $ 13,481 $ 0 $ 776 $ 2,700
----------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees", "Audit Related Fees", and "Tax Fees".
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS (1) SERVICE PROVIDERS
---------------------------------------------------------------------------------------------------
August 31, 2006 $ 0 $ 2,200 $ 0
---------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------
August 31, 2005 $ 0 $ 2,200 $ 0
---------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------
(1) The amounts reported for the Fund under the column heading "Tax Fees"
represents amounts billed to the Adviser exclusively for the preparation
for the Fund's tax return, the cost of which is borne by the Adviser. In
the aggregate, for all Nuveen funds for which Ernst & Young LLP serves as
independent registered public accounting firm, these fees amounted to
$275,000 in 2006 and $282,575 in 2005.
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEE OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
----------------------------------------------------------------------------------------------------------------------
August 31, 2006 $ 3,300 $ 2,200 $ 0 $ 5,500
August 31, 2005 $ 3,476 $ 2,200 $ 0 $ 5,676
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Lawrence H. Brown, Jack B.
Evans, William J. Schneider and Eugene S. Sunshine.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
FUND NAME
Scott R. Romans Nuveen California Dividend Advantage Municipal Fund 2
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
NUMBER OF
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS
-------------------------------------------------------------------------------------------
Scott R. Romans Registered Investment Company 28 $5.94 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 4 $.25 million
* Assets are as of August 31, 2006. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of August 30, 2006, the S&P/Investortools Municipal Bond index was
comprised of 47,346 securities with an aggregate current market value of $879
billion.
Base salary. Each portfolio manager is paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's investment process and
to the execution of investment strategies. The cash bonus component is also
impacted by the overall performance of Nuveen Investments, Inc. in achieving its
business objectives.
Long-term incentive compensation. Each portfolio manager is eligible to receive
bonus compensation in the form of equity-based awards issued in securities
issued by Nuveen Investments, Inc. The amount of such compensation is dependent
upon the same factors articulated for cash bonus awards but also factors in his
long-term potential with the firm.
Material Conflicts of Interest. Each portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address potential conflicts of
interest, including best execution and trade allocation policies that are
designed to ensure (1) that portfolio management is seeking the best price for
portfolio securities under the circumstances, (2) fair and equitable allocation
of investment opportunities among accounts over time and (3) compliance with
applicable regulatory requirements. All accounts are to be treated in a
non-preferential manner, such that allocations are not based upon account
performance, fee structure or preference of the portfolio manager. In addition,
NAM has adopted a Code of Conduct that sets forth policies regarding conflicts
of interest.
Beneficial Ownership of Securities. As of the August 31, 2006, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
---------------------------------------------------------------------------------------------------------------------------
DOLLAR
RANGE OF
DOLLAR EQUITY
RANGE OF SECURITIES
EQUITY BENEFICIALLY
SECURITIES OWNED IN
BENEFICIALLY THE
OWNED IN REMAINDER
FUND OF NUVEEN
FUNDS
MANAGED BY
NAM'S
MUNICIPAL
NAME OF PORTFOLIO INVESTMENT
MANAGER FUND TEAM
---------------------------------------------------------------------------------------------------------------------------
Scott R. Romans Nuveen California Dividend Advantage Municipal Fund 2 $0 $10,000-$50,000
---------------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGER BIO:
Scott R. Romans, PhD, joined Nuveen Investments in 2000 as a senior analyst in
the education sector. In 2003, he was assigned management responsibility for
several closed- and open-ended municipal bond funds most of which are state
funds covering California and other western states. Currently, he manages
investments for 29 Nuveen-sponsored investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen California Dividend Advantage Municipal Fund 2
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: November 8, 2006
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: November 8, 2006
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: November 8, 2006
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.