--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
--------------------------------------------------------------------------------
July 14, 1995
Dear Shareholder:
The fixed income markets benefitted from extremely bullish sentiment and
rallied during the semi-annual period between January 1, 1995 and June 30, 1995.
The U.S. economy appears to have responded to the Fed's vigilance toward
inflation with low absolute levels of inflation and moderate rates of growth.
This scenario is suggestive of a "soft landing" for the economy, which has
sparked a significant Treasury market rally and resulted in overall strength in
most fixed income markets. Closed-end bond funds responded to the broader
markets by staging a significant rebound during the first six months of 1995
from their all-time low stock prices during the fourth quarter of 1994.
BlackRock Financial Management, Inc., your Trust's investment adviser, is
pleased to report that its acquisition by PNC Bank, N.A. ("PNC") was officially
completed on February 28, 1995. PNC is a commercial bank whose principal office
is in Pittsburgh, Pennsylvania and is wholly-owned by PNC Bank Corp., a bank
holding company. The merger was structured to assure continuity of performance
and service through stability of our organization. BlackRock retains its name
and continues to operate out of its New York office. All members of BlackRock's
management team have signed long-term employment contracts and will continue to
be responsible for managing BlackRock's business so that shareholders will
notice no changes in the management of the Trust.
You will note several enhancements to the Trust's semi-annual report designed
to improve the report's usefulness to you. The letter to shareholders which
reviews the markets and the Trust's investment strategy over the semi-annual
period is provided by the Trust's portfolio managers. In addition, we have
included an investment summary section which provides a synopsis of the Trust's
investment objectives and guidelines and reviews its investment strategy. We
appreciate your investment in The BlackRock California Insured Municipal 2008
Term Trust Inc. and look forward to continuing to serve your financial needs.
Sincerely,
/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
July 14, 1995
Dear Shareholder,
We are pleased to present the semi-annual report for The BlackRock California
Insured Municipal 2008 Term Trust Inc. ("BFC" or the "Trust") for the period
ended June 30, 1995. The past six months have witnessed a tremendous turnaround
from the poor performance of fixed income markets during 1994. At December 31,
1994, the Trust was trading at a stock price of $12.00, but had risen to $14.00
as of June 30, 1995. The net asset value of the fund has responded to the rally
in the municipal markets and has increased since the start of the year from
$13.66 to $14.92 at the end of the second quarter.
As of the date of this letter, the Trust had a stock price of $14.00 per
share, and was trading at a 7.65% discount to its net asset value of $15.16 per
share. This discount reflects the weakness in stock prices of closed-end
municipal bond funds, with more than 90% of such funds currently trading at
discounts to net asset value according to Lipper Analytical Services, Inc. The
Trust's current monthly dividend per share is $0.07125, which is equivalent to
an annualized yield of 6.11% on the current stock price and a taxable equivalent
yield of 11.36% based on a combined Federal and California State 46.4% tax
bracket.
The Trust's dividend has remained unchanged since its inception in September
1992 despite the extreme volatility of the fixed income markets. In addition,
the Trust remains on track to achieve its primary objective to return $15 per
share to investors on or about December 31, 2008.
The following summary provides a review of the fixed income markets over the
past six months as well as the trading activity in the Trust's portfolio that
has taken place since our last Shareholder's Report. This information should
provide you with a greater understanding of the types of active management
strategies we employ at BlackRock.
THE FIXED INCOME MARKETS
In sharp contrast to 1994, the fixed income markets have rallied
substantially year-to-date, largely the result of a general comfort level with
the rate of inflation. In fact, the Federal Reserve recently eased its monetary
policy, modestly lowering the Federal funds target rate by 25 basis points (or
0.25%) to 5.75% on July 7, after one and a half years of exercising tighter
monetary control through seven consecutive interest rate increases. The move
comes as a response to successive weak economic reports on unemployment and
manufacturing inventories which imply a slow rate of growth in the economy and
the Federal Reserve's concern over a possible recession.
The municipal market showed strong performance for the first two quarters of
1995, but remained overshadowed by the rally in the Treasury market. From
December 31, 1994 to March 31, 1995, yields across maturities of AAA general
obligation bonds fell over 63 basis points. However, during the second quarter
the AAA muni curve steepened as short and intermediate term municipal securities
rallied and the yield on 30 year AAA municipal bonds remained virtually
unchanged, despite an 81 basis point fall in the Treasury long bond.
The demand for shorter paper stems principally from current concerns about
tax reform proposals, particularly the creation of a "flat tax." Some versions
of this proposal would eliminate the taxation of all investment income, which
would eliminate the current tax benefits of municipal bonds versus Treasuries
and other taxable investments. This could result in the underperformance of the
municipal market if the flat tax becomes a pivotal 1996 Presidential campaign
issue. While actual tax reform is at best two years away, we will continue to
actively follow the situation because investor concerns about tax reform could
cause dislocations in the municipal market, creating possible buying
opportunities for the Trust. At the close of the second quarter, the municipal
market had priced in a 20-21% flat tax rate on investment income. BlackRock
believes that the flat tax reform will not pass in its current form of
pre-election year rhetoric, but also believes it is essential to be aware of its
effects upon the trading environment for municipal securities.
The municipal market had anticipated benefits from seasonal summer demand of
approximately $65 billion in coupon payments and redemptions in June and July
looking for reinvestment, but this demand did not fully materialize as the
rallying stock market drew the attention of retail investors. Supply was very
low, as new issuance of municipal debt is
2
<PAGE>
expected to be 35% lower than last year. The fears of tax reform outweigh these
factors as municipal securities currently trade relatively cheap to their
taxable counterparts.
The California state economy has been improving over the last six months,
adding jobs during months when national employment was declining. Increased
export demand for manufactured goods from Europe and Asia has also benefited the
state's manufacturing sector. Aside from the Orange County bankruptcy
proceedings, the market for other California municipal issuers continues to be
orderly. The Trust has no uninsured exposure to any Orange County paper or to
any issuer that is a creditor in the bankruptcy proceedings.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust invests in a portfolio of high credit quality (AAA) triple
tax-exempt general obligation and revenue bonds of California issues. The
securities in the portfolio are insured as to timely payment of interest and
principal, and currently 100% are not subject to the Alternative Minimum Tax
(AMT). BlackRock has managed the Trust's portfolio to selectively modify its
allocation to certain sectors, issuers, revenue sources, and types of bonds.
The following chart illustrates the changes in the sector allocation of the
portfolio since the end of the last fiscal year.
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
SECTOR JUNE 30, 1995 DECEMBER 31, 1994
Water & Sewer 19% 22%
Transportation 14% 12%
Lease Revenue 14% 14%
Certificates of Participation 13% 13%
County, City & State 12% 11%
Utility 9% 8%
Tax Revenue 8% 11%
Hospital 5% 4%
Special District 3% 3%
Education 1% 1%
Other 2% 1%
Consistent with the Trust's objective to return $15 on or about December 31,
2008, the Trust's portfolio consists of securities with average maturities of
approximately 13 years and ratings of "AAA" by Standard & Poor's Corporation or
Moody's Investors Services or securities that are insured by a municipal bond
insurance company whose long-term obligations are rated "AAA." In addition, the
Trust is rated AAAf by Standard & Poor's.
To enhance income, the Trust utilizes leverage through the issuance of
preferred stock, through which we can borrow at short-term tax-exempt rates and
earn the difference between that cost of borrowing and the yield on longer-term
assets purchased with those borrowings. The degree to which the Trust can
benefit from its use of leverage affects the ability of the Trust to pay high
monthly income and, as a result, sustained large increases in short-term rates
would negatively impact the amount of income that the Trust can derive from its
use of leverage. We will keep you informed of the effects, if any, on the
Trust's dividend paying abilities over time.
3
<PAGE>
We thank you for your investment in The BlackRock California Insured
Municipal 2008 Term Trust Inc. Please feel free to contact us at (800) 227-7BFM
(7236) if you have specific questions which were not addressed in this report.
/s/ Robert S. Kapito /s/ Kevin Klingert
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Principal and Municipal Portfolio
BlackRock Financial Management, Inc. Manager
BlackRock Financial Management, Inc.
<TABLE><CAPTION>
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
<S> <C>
Symbol on New York Stock Exchange: BFC
Initial Offering Date: September 18, 1992
Closing Stock Price as of 6/30/95: $14.00
Net Asset Value as of 6/30/95: $14.92
Yield on Closing Stock Price as of 6/30/95 ($14.00)1: 6.11%
Current Monthly Distribution per Common Share2: $0.07125
Current Annualized Distribution per Common Share2: $0.855
</TABLE>
--------------
1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2 Distribution is not constant and is subject to change.
4
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
PRINCIPAL
AMOUNT VALUE
RATING** (000) DESCRIPTION (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS--147.4%
AAA $ 6,850 California Hlth. Facs. Fin. Auth. Rev., Marin Gen. Hosp., Ser. A, $ 6,865,138
5.75%, 8/01/09, FSA................................................
California St., G.O., MBIA:
AAA 3,000 5.50%, 4/01/07.................................................... 3,017,790
AAA 3,000 5.50%, 4/01/09.................................................... 2,968,350
AAA 15,000 6.30%, 9/01/08.................................................... 16,054,350
California St. Pub. Wks. Brd.:
AAA 2,100 Energy Efficiency, Ser. A, 5.625%, 10/01/08, AMBAC................ 2,102,541
AAA 10,255 Lease Rev. 6.40%, 9/01/08, MBIA................................... 10,751,855
AAA 9,165 California St. Wide Cmnty. Dev. Auth., Lease Rev. 6.00%, 10/01/10, 9,154,827
AMBAC..............................................................
AAA 2,600 Castaic Lake Wtr. Agcy. C.O.P., Wtr. Sys. Imp. Proj., Ser. A, 3,001,154
7.25%, 8/01/10, MBIA...............................................
AAA 5,515 Central Coast Wtr. Auth. Rev., St. Wtr. Proj. Reg. Facs., 6.40%, 5,829,631
10/01/08, AMBAC....................................................
AAA 13,740 East Bay Mun. Utils. Dist., Wtr. Sys. Rev., 6.00%, 6/01/09, 13,833,295
AMBAC..............................................................
AAA 4,025 Elsinore Valley Mun. Wtr. Dist., C.O.P., Ser. A, 6.00%, 7/01/09, 4,159,998
FGIC...............................................................
AAA 3,475 Los Angeles Arpt. Dept. Rev., Ser. A, 5.50%, 5/15/08, FGIC......... 3,440,007
Los Angeles Cnty. Asset Leasing Corp. Rev., AMBAC:
AAA 2,910 3.80%++, 12/01/07................................................. 2,970,237
AAA 3,090 3.85%++, 12/01/08................................................. 3,145,620
AAA 8,600 4.05%++, 12/01/09, AMBAC.......................................... 8,746,114
AAA 1,760 Los Angeles Cnty. Pension Oblig. Cert., Ser. A, 6.875%, 6/30/07, 1,826,422
MBIA...............................................................
AAA 1,000 Los Angeles Dept. Arpt. Rev., Ser. A, 5.50%, 5/15/10, FGIC......... 966,430
AAA 1,000 Los Angeles Elec. Rev., 5.75%, 9/01/12, FGIC....................... 982,790
AAA 5,765 Los Angeles Wastewtr. Sys. Rev., Ser. B, 6.25%, 6/01/08, AMBAC..... 6,024,944
AAA 3,075 Marysville Hosp. Rev., Fremont-Rideout Hlth. Group, Ser. A, 6.20%, 3,221,062
1/01/09, AMBAC.....................................................
AAA 8,000 Modesto Irrig. Dist. Fin. Rev., Dom. Wtr. Proj., Ser. A, 6.00%, 8,055,200
9/01/09, AMBAC.....................................................
Northern California Pwr. Agcy., Multiple Cap. Facs. Rev., Ser. A,
MBIA:
AAA 1,000 6.40%, 8/01/07.................................................... 1,066,580
AAA 3,045 6.50%, 8/01/08.................................................... 3,246,823
AAA 1,500 Northern California Transm. Rev., California-Oregon Proj., Ser. A, 1,460,295
5.25%, 5/01/08, MBIA...............................................
AAA 5,600 Pittsburg Redev. Agcy. Tax Alloc. Rev., Los Medanos Cmnty. Dev. 5,603,640
Proj., 5.50%, 8/01/07, FGIC.......................................
AAA 3,075 Riverside Cnty., Trans. Comm. Sales Tax Rev., Ser. A, 6.50%, 3,227,889
6/01/09, MBIA......................................................
Sacramento Mun. Utils. Dist., Elec. Rev., Ser. C:
AAA 2,500 5.75%, 11/15/07, MBIA............................................. 2,546,950
AAA 6,250 5.75%, 11/15/08, FGIC............................................. 6,312,625
AAA 4,700 5.75%, 11/15/09, MBIA............................................. 4,709,729
AAA 5,700 San Bernardino Cnty. C.O.P., Arpt. Impvt., 6.00%, 7/01/07, MBIA.... 5,823,120
AAA 5,000 San Bernardino Cnty. Trans. Auth., Sales Tax Rev., 6.00%, 3/01/10, 5,002,750
FGIC...............................................................
San Diego Cnty. Regl. Trans. Cmnty. Sales Tax Rev., Ser. A:
AAA 7,830 6.00%, 4/01/08, MBIA.............................................. 7,975,873
AAA 2,500 6.00%, 4/01/08, FGIC.............................................. 2,546,575
AAA 7,650 San Diego Redev. Agcy. Rev., Tax Alloc.-Centre City Proj., 6.00%, 7,767,733
9/01/08, AMBAC.....................................................
AAA 1,045 San Joaquin Cnty. C.O.P., Cap. Facs. Proj., 4.90%, 11/15/08, 962,821
MBIA...............................................................
San Jose Arpt. Rev., MBIA:
AAA 8,010 6.00%, 3/01/09.................................................... 8,174,045
AAA 3,000 6.00%, 3/01/10.................................................... 3,034,770
AAA 3,755 6.10%, 3/01/07.................................................... 3,924,726
AAA 2,865 Santa Clara Cnty. Fin. Auth., Fac. Replacement, Proj. A, 6.50%, 3,109,700
11/15/07, AMBAC....................................................
AAA 2,820 Santa Rosa Wtr. Rev., Ser. B, 6.20%, 9/01/09, FGIC................. 2,907,166
AAA 5,000 So. California Rapid Trans. Dist. C.O.P., Workers Comp. Fund, 4,985,250
6.00%, 7/01/10, MBIA...............................................
</TABLE>
5
<PAGE>
--------------------------------------------------------------------------------
<TABLE><CAPTION>
PRINCIPAL
AMOUNT VALUE
RATING** (000) DESCRIPTION (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
So. California Rapid Trans. Dist. Rev., Spec. Benefit Assmt. Dist.
A1, AMBAC:
AAA $ 5,750 5.50%, 9/01/09.................................................... $ 5,627,755
AAA 5,500 6.00%, 9/01/08.................................................... 5,576,835
AAA 8,500 Sonoma Cnty. C.O.P., Capital Rites-Detention Fac., 3.45%++, 8,280,445
11/15/10, AMBAC....................................................
AAA 2,000 Univ. of California Rev., Multi-Purpose Projs., Ser. B-1989, 6.80%, 2,214,200
9/01/99+, AMBAC....................................................
West & Central Basin Fin. Auth. Rev., AMBAC:
AAA 1,680 6.125%, 8/01/08................................................... 1,723,999
AAA 1,780 6.125%, 8/01/09................................................... 1,822,827
AAA 2,160 West Sacramento Fin. Auth., Wtr. Sys. Impvt. Rev., 5.25%, 8/01/08, 2,088,461
FGIC...............................................................
------------------
Total Long-Term Investments (cost $220,185,792).................... 228,841,337
------------------
SHORT-TERM INVESTMENTS*--0.7%
A1+ 800 California Hlth. Facs. Fin. Auth. Rev., St. Joseph Hlth., Ser. A, 800,000
4.05%, 7/03/95, FRDD...............................................
A1+ 300 California Poll. Ctrl. Fin. Auth. Rev., Shell Oil Co., Proj. B, 300,000
4.10%, 7/03/95, FRDD...............................................
------------------
Total Short-Term Investments (cost $1,100,000)..................... 1,100,000
------------------
TOTAL INVESTMENTS--148.1% (cost $221,285,792)...................... 229,941,337
Other assets in excess of liabilities--2.1%........................ 3,368,508
Liquidation value of preferred stock--(50.2)%...................... (78,000,000)
------------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100%................. $ 155,309,845
------------------
------------------
</TABLE>
------------
<TABLE>
<C> <S>
* For purposes of amortized cost valuation, the maturity date of these instruments is
considered to be the later of the next date on which the security can be redeemed at par or
the next date on which the rate of interest is adjusted.
** Rating using the higher of Standard & Poor's, Moody's or Fitch's.
+ This bond is prerefunded. See glossary for definition.
++ This bond contains embedded caps. See glossary for definition.
</TABLE>
KEY TO ABBREVIATIONS
AMBAC--American Municipal Bond Assurance Corporation
C.O.P.--Certificate of Participation
FGIC--Financial Guaranty Insurance Company
FRDD--Floating Rate Daily Demand*
FSA--Financial Security Assurance
G.O.--General Obligation Bond
MBIA--Municipal Bond Insurance Association
See Notes to Financial Statements
6
<PAGE>
----------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(UNAUDITED)
----------------------------------------------
ASSETS
Investments, at value (cost
$221,285,792) (Note 1)........... $229,941,337
Cash.............................. 74,107
Interest receivable............... 3,686,434
Deferred organization expenses and
other assets..................... 45,960
------------
233,747,838
------------
LIABILITIES
Dividends payable-common stock.... 103,598
Dividends payable-preferred
stock............................ 100,459
Advisory fee payable (Note 2)..... 68,351
Administration fee payable (Note 2) 19,529
Other accrued expenses............ 146,056
------------
437,993
------------
NET INVESTMENT ASSETS............. $233,309,845
------------
------------
Net investment assets were
comprised of:
Common stock:
Par value (Note 4)............. $ 104,071
Paid-in capital in excess of
par........................... 144,619,829
Preferred stock (Note 4)......... 78,000,000
------------
222,723,900
Undistributed net investment
income........................ 2,214,873
Accumulated net realized loss.... (284,473)
Net unrealized appreciation...... 8,655,545
------------
Net investment assets, June 30,
1995.......................... $233,309,845
------------
------------
Net assets applicable to common
shareholders.................. $155,309,845
------------
------------
Net asset value per common share:
($155,309,845/10,407,093 shares
of common stock issued and
outstanding)..................... $14.92
----------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
----------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned..... $ 6,652,651
------------
Expenses
Investment advisory.............. 402,838
Administration................... 115,097
Auction agent.................... 97,000
Custodian........................ 35,000
Reports to shareholders.......... 22,000
Directors........................ 19,300
Audit............................ 12,500
Transfer agent................... 10,000
Legal............................ 4,000
Miscellaneous.................... 80,984
------------
Total expenses................... 798,719
------------
Net investment income............. 5,853,932
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
(NOTE 3)
Net realized gain on
investments...................... 352,926
Net change in unrealized
appreciation on investments...... 12,897,294
------------
Net gain on investments........... 13,250,220
------------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM
OPERATIONS....................... $ 19,104,152
------------
------------
See Notes to Financial Statements.
7
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
Operations:
Net investment income................................................. $ 5,853,932 $ 11,670,917
Net realized gain (loss) on investments............................... 352,926 (637,399)
Net change in unrealized appreciation (depreciation) on investments... 12,897,294 (25,201,049)
------------------ ------------------
Net increase (decrease) in net investment assets resulting from
operations........................................................... 19,104,152 (14,167,531)
Dividends and distributions:
To common shareholders from net investment income..................... (4,448,948 ) (8,898,065)
To preferred shareholders from net investment income.................. (1,509,870 ) (2,209,788)
Capital stock transactions:
Additional capital charge with respect to initial public offering of
shares............................................................... -- 613
------------------ ------------------
Total increase (decrease).......................................... 13,145,334 (25,274,771)
NET INVESTMENT ASSETS
Beginning of period.................................................... 220,164,511 245,439,282
------------------ ------------------
End of period.......................................................... $ 233,309,845 $ 220,164,511
------------------ ------------------
------------------ ------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE><CAPTION>
SIX MONTHS SEPTEMBER 28,
ENDED YEAR ENDED DECEMBER 31, 1992* THROUGH
JUNE 30, ------------------------ DECEMBER 31,
1995 1994 1993 1992
----------- -------- -------- -------------
<S> <C> <C> <C> <C>
PER COMMON SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................... $ 13.66 $ 16.09 $ 14.18 $ 14.10
----------- -------- -------- -------------
Net investment income.................................. .56 1.12 1.14 .16
Net realized and unrealized gain(loss) on
investments........................................... 1.28 (2.48) 1.81 .20
----------- -------- -------- -------------
Net increase(decrease) from investment operations....... 1.84 (1.36) 2.95 .36
----------- -------- -------- -------------
Dividends from net investment income to:
Preferred shareholders................................. (.15) (.21) (.18) (.02)
Common shareholders.................................... (.43) (.86) (.85) (.07)
Distributions from capital gains to:
Preferred shareholders................................. -- -- -- ** --
Common shareholders.................................... -- -- (.01) --
----------- -------- -------- -------------
Total dividends and distributions....................... (.58) (1.07) (1.04) (.09)
----------- -------- -------- -------------
Capital charge with respect to issuance of shares....... -- -- **** -- (.19)
----------- -------- -------- -------------
Net asset value, end of period***....................... $ 14.92 $ 13.66 $ 16.09 $ 14.18#
----------- -------- -------- -------------
----------- -------- -------- -------------
Market value, end of period***.......................... $ 14.00 $ 12.00 $ 15.125 $ 13.875
----------- -------- -------- -------------
----------- -------- -------- -------------
TOTAL INVESTMENT RETURN+................................ 20.27% (15.59)% 14.79% (1.11)%
----------- -------- -------- -------------
----------- -------- -------- -------------
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:+++
Expenses................................................ 1.05%++ 1.08% .96% .86%++
Net investment income................................... 7.70%++ 7.70% 7.33% 4.65%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in
thousands)............................................. $ 153,403 $151,669 $160,350 $ 141,249
Portfolio turnover...................................... 10% 17% 8% 0%
Net assets of common shareholders, end of period (in
thousands)............................................. $ 155,310 $142,165 $167,439 $ 147,610
Preferred stock outstanding (in thousands).............. $ 78,000 $ 78,000 $ 78,000 $ 78,000
Asset coverage per share of preferred stock, end of
period................................................. $ 149,558 $141,131 $157,333 $ 144,500
</TABLE>
------------
* Commencement of investment operations.
** Actual amount paid to preferred shareholders was $0.00073 per common share.
*** Net asset value and market value for each Friday and month-end are
published in The Wall Street Journal.
**** Actual amount was $0.00006 per common share.
+ Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of the period. Dividends and distributions, if any,
are assumed for the purposes of this calculation, to be reinvested at prices
obtained under the Trust's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions. Total investment returns for
periods of less than a year are not annualized.
++ Annualized.
+++ Ratios calculated on the basis of income and expenses applicable to both
the common and preferred stock relative to the average net assets of common
shareholders. Ratios do not reflect the effect of dividend payments to
preferred shareholders.
# Net asset value immediately after the closing of the first public offering
was $14.06.
The information above represents the unaudited operating performance for a share
of common stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the periods indicated. This information
has been determined based upon financial information provided in the financial
statements and market value data for the Trust's shares.
See Notes to Financial Statements.
9
<PAGE>
----------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
----------------------------------------------
Note 1. Accounting The BlackRock
Policies California Insured
Municipal 2008 Term
Trust Inc. (the
"Trust") was
organized in Maryland on August 7, 1992 as a non-diversified closed-end
management investment company. The Trust's investment objective is to manage a
non-diversified portfolio of high quality securities that will return $15 per
share to investors on or about December 31, 2008 while providing current income
exempt from regular Federal and California State income taxes. The ability of
issuers of debt securities held by the Trust to meet their obligations may be
affected by economic developments in the state, a specific industry or region.
No assurance can be given that the Trust's investment objective will be
achieved.
The following is a summary of significant accounting policies followed by the
Trust.
SECURITIES VALUATION: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase is 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
FINANCIAL FUTURES CONTRACTS: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
The Trust may invest in financial futures contracts primarily for the purpose
of hedging its existing portfolio securities or securities the Trust intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets.
SHORT SALES: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. When the Trust makes a
short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount, will be recognized upon the termination of a short sale if the
market price is greater or less than the proceeds originally received.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis and the
Trust amortizes premium and accretes discount on securities purchased using the
interest method.
FEDERAL INCOME TAXES: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient net income to shareholders. Therefore, no
Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, and
other sources, if necessary. Net capital gains, if any, in excess of loss
carryforwards may be distributed annually. Dividends and distributions are
recorded on the ex-dividend date. Dividends and distributions to preferred
shareholders are accrued and determined as described in Note 4.
DEFERRED ORGANIZATION EXPENSES: A total of $45,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a
10
<PAGE>
period of sixty months from the date the Trust commenced investment operations.
Note 2. Agreements The Trust has an
Investment Advisory
Agreement with
BlackRock Financial
Management, Inc. (the "Adviser") and an Administration Agreement with Middlesex
Administrators L.P. (the "Administrator"), an indirect wholly owned subsidiary
of Merrill Lynch & Co., Inc.
The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.35% of the Trust's average weekly net
investment assets. The administration fee paid to the Administrator is also
computed weekly and payable monthly at an annual rate of 0.10% of the Trust's
average weekly net investment assets.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Adviser. The Administrator pays occupancy and
certain clerical and accounting costs of the Trust. The Trust bears all other
costs and expenses.
Note 3. Portfolio Purchases and sales of
Securities investment securities,
other than short- term
investments, for the
six months ended June 30, 1995 aggregated $24,651,990 and $23,551,683,
respectively.
The Federal income tax basis of the Trust's investments at June 30, 1995 was
substantially the same as the basis for financial reporting, and accordingly,
net unrealized appreciation for Federal income tax purposes was $8,655,545
(gross unrealized appreciation--$8,851,396; gross unrealized depreciation--
$195,851).
For Federal income tax purposes, the Trust had a capital loss carryforward at
December 31, 1994 of approximately $191,000 which will expire in 2002.
Accordingly, no capital gain distribution is expected to be paid to shareholders
until net gains have been realized in excess of such amounts.
The Trust incurred approximately $446,000 of realized losses on investments
in the post-October period of the year ended December 31, 1994. A tax election
was made to defer all of these losses to the year ending December 31, 1995.
Note 4. Capital There are 200 million
shares of $.01 par
value common stock
authorized. Of the 10,407,093 common shares outstanding at June 30, 1995, the
Adviser owned 7,093 shares.
Offering costs ($377,236) incurred in connection with the Trust's
underwriting of the Trust's common stock have been charged to paid-in capital in
excess of par of the common stock.
The Trust may classify or reclassify any unissued shares of common stock into
one or more series of preferred stock. On November 23, 1992, the Trust
reclassified 1,560 shares of common stock and issued 2 series of Auction Market
Preferred Stock ("Preferred Stock") as follows: Series W28--780 shares, Series
W7--780 shares. The Preferred Stock has a liquidation value of $50,000 per share
plus any accumulated but unpaid dividends.
The underwriting discount ($1,365,000) and offering costs ($273,875) incurred
in connection with the Preferred Stock offering have been charged to paid-in
capital in excess of par of the common stock.
Dividends on Series W7 are cumulative at a rate which is reset every 7 days
based on the results of an auction. Dividends on Series W28 are also cumulative
at a rate which is reset every 28 days based on the results of an auction.
Dividend rates ranged from 3.20% to 6.25% for the six months ended June 30,
1995.
The Trust may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at $50,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared if certain requirements relating to the
composition of the assets and liabilities of the Trust as set forth in the
Articles of Incorporation are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of
common stock (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Trust's directors. In addition, the Investment
Company Act of 1940 requires that along with approval by stockholders that might
otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the Preferred
Stock, and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
On May 16, 1995 shareholders approved a proposal to split each share of the
Trust's Auction Rate Municipal Preferred Stock into two shares and
simultaneously reduce each share's liquida-tion preference from $50,000 to
$25,000. It is expected that the stock split will occur after the close of
business on July 24, 1995.
Note 5. Dividends Subsequent to June 30,
1995, the Board of
Directors of the Trust
declared a dividend
from undistributed earnings of $0.07125 per common share payable July 31, 1995
to shareholders of record on July 14, 1995.
For the period July 1, 1995 to July 14, 1995, dividends declared on Preferred
Stock totalled $114,685 in aggregate for the two outstanding Preferred Stock
series.
11
<PAGE>
Note 6. Quarterly Data
<TABLE><CAPTION>
NET INCREASE (DECREASE) IN
NET REALIZED AND
UNREALIZED NET INVESTMENT
NET INVESTMENT INCOME GAINS (LOSSES) ON ASSETS RESULTING
INVESTMENTS FROM OPERATIONS
PER PER PER
QUARTERLY TOTAL COMMON COMMON COMMON
PERIOD INCOME AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
<S> <C> <C> <C> <C> <C> <C> <C>
January 1,
1993 to
March 31,
1993...... $ 3,299,535 $ 2,895,378 $ .28 $ 7,636,146 $ .74 $ 10,531,524 $ 1.02
April 1,
1993 to
June 30,
1993...... 3,293,257 2,871,414 .28 5,731,668 .55 8,603,082 .83
July 1,
1993 to
September
30,
1993...... 3,341,897 2,903,844 .28 6,458,647 .62 9,362,491 .90
October 1,
1993 to
December
31,
1993...... 3,347,317 3,076,547 .30 (970,775) (.10 ) 2,105,772 .20
January 1,
1994 to
March 31,
1994...... 3,341,481 2,913,946 .28 (17,764,132) (1.71 ) (14,850,186) (1.43)
April 1,
1994 to
June 30,
1994...... 3,335,165 2,884,232 .28 (174,529) (.02 ) 2,709,703 .26
July 1,
1994 to
September
30,
1994...... 3,313,202 2,883,366 .28 (1,594,966) (.15 ) 1,288,400 .13
October 1,
1994 to
December
31,
1994...... 3,319,643 2,989,373 .28 (6,304,821) (.60 ) (3,315,448) (.32)
January 1,
1995 to
March 31,
1995...... 3,300,526 2,905,171 .28 12,336,610 1.19 15,241,781 1.47
April 1,
1995 to
June 30,
1995...... 3,352,125 2,948,761 .28 913,610 .09 3,862,371 .37
<CAPTION>
DIVIDENDS & DISTRIBUTIONS
COMMON SHARES PREFERRED SHARES*
PER PER SHARE PRICE OF PERIOD
QUARTERLY COMMON PREFERRED COMMON STOCK END NET
PERIOD AMOUNT SHARE AMOUNT SHARE HIGH LOW ASSET VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
January 1,
1993 to
March 31,
1993...... $ 2,224,516 $ .21 $ 441,163 $ .04 $ 15.250 $ 13.875 $ 14.94
April 1,
1993 to
June 30,
1993...... 2,224,517 .22 455,348 .05 15.125 14.375 15.51
July 1,
1993 to
September
30,
1993...... 2,224,515 .21 463,202 .04 15.750 14.625 16.15
October 1,
1993 to
December
31,
1993...... 2,260,317 .22 480,472 .05 15.625 14.750 16.09
January 1,
1994 to
March 31,
1994...... 2,224,516 .22 418,936 .04 15.375 13.750 14.41
April 1,
1994 to
June 30,
1994...... 2,224,516 .21 524,336 .05 14.375 13.500 14.40
July 1,
1994 to
September
30,
1994...... 2,224,516 .21 561,821 .05 14.125 13.125 14.26
October 1,
1994 to
December
31,
1994...... 2,224,517 .22 704,695 .07 13.750 11.500 13.66
January 1,
1995 to
March 31,
1995...... 2,224,420 .21 755,620 .08 14.000 12.125 14.84
April 1,
1995 to
June 30,
1995...... 2,224,528 .22 754,250 .07 14.500 13.750 14.92
</TABLE>
------------
* For the period ended June 30, 1995, the average annualized rate paid to
preferred shareholders was 3.90%.
12
<PAGE>
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), shareholders
may elect to have all distributions of dividends and capital gains automatically
reinvested by State Street Bank & Trust Company (the "Plan Agent") in Trust
shares. Shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in United States dollars mailed directly to
the shareholders of record (or if the shares are held in street or other nominee
name, then to the nominee) by the custodian, as dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue shares
under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal income tax that may be payable on
such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 699-1BFM. The address is on the front of
this report.
13
<PAGE>
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders. There have been no
changes in the Trust's charter or by-laws. There have been no changes in the
principal risk factors associated with investment in the Trust. There have been
no changes in the persons who are primarily responsible for the day-to-day
management of the Trust's portfolio.
At a special meeting of Trust shareholders held on February 15, 1995 to
approve the Trusts' advisory agreement with BlackRock Financial Management,
Inc., shareholders approved the agreement. The result of the voting was as
follows:
<TABLE>
<S> <C> <C>
VOTES* FOR 8,247,057 VOTES* AGAINST 140,163 VOTES* WITHHELD 374,779
</TABLE>
The Annual Meeting of Trust shareholders was held May 16, 1995 to vote on the
following matters:
(1) To elect two Directors to serve as follows:
<TABLE><CAPTION>
DIRECTOR CLASS TERM EXPIRING
------------------------------------------------------------------ ----- -------- --------
<S> <C> <C> <C>
Ralph L. Schlosstein.............................................. II 3 years 1998
Kent Dixon........................................................ III 1 year 1996
and to elect two Directors to represent the interests of the preferred shareholders as follows:
DIRECTOR CLASS TERM EXPIRING
------------------------------------------------------------------ ----- -------- --------
Frank J. Fabozzi.................................................. II 3 years 1998
Richard E. Cavanagh............................................... I 2 years 1997
Directors whose term of office continues beyond this meeting are Andrew F. Brimmer, James
Grosfeld, James Clayburn La Force, Jr. and Laurence D. Fink.
</TABLE>
(2) To consider and act on a proposal to split each share of the Trust's
Auction Rate Preferred Stock (Preferred) into two shares and
simultaneously reduce each share's liquidation preference, as provided in
the Trust's Articles Supplementary, from $50,000 to $25,000.
(3) To ratify the selection of Deloitte & Touche LLP as independent public
accountants for the Trust for the fiscal year ending December 31, 1995.
Shareholders elected the four Directors, approved the proposal to split each
Preferred share into two shares and ratified the selection of Deloitte & Touche
LLP. The results of the voting was as follows:
<TABLE><CAPTION>
VOTES* FOR VOTES* AGAINST VOTES* WITHHELD
---------- -------------- ---------------
<S> <C> <C> <C>
Ralph L. Schlosstein................................... 7,760,497 -- 161,679
Kent Dixon............................................. 7,768,557 -- 153,619
Frank J. Fabozzi....................................... 1,071 -- 2
Richard E. Cavanagh.................................... 1,071 -- 2
Preferred Share Split.................................. 1,036 15 22
Deloitte & Touche LLP.................................. 7,687,364 53,486 181,326
</TABLE>
------------
* The votes represent common and preferred shareholders voting as a single class
except for the election of Richard E. Cavanagh and Frank J. Fabozzi, and the
approval of the preferred share split which represents the votes of only the
preferred shareholders.
14
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST
INVESTMENT SUMMARY
--------------------------------------------------------------------------------
THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to provide current income exempt from
regular Federal and California income tax and to return $15 per share (the
initial public offering price per share) to investors on or shortly before
December 31, 2008.
WHO MANAGES THE TRUST?
BlackRock Financial Management, Inc. (BlackRock or the Adviser) is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages over $32
billion of assets across the government, mortgage, corporate and municipal
sectors. These assets are managed on behalf of institutional and individual
investors in 21 closed-end funds, several open-end funds and separate accounts
for more than 80 clients in the U.S. and overseas. BlackRock is a subsidiary of
PNC Asset Management Group, Inc. which is a division of PNC Bank, N.A., the
nation's twelfth largest banking organization.
WHAT CAN THE TRUST INVEST IN?
The Trust may invest in fixed income securities rated AAA. The Trust intends
to invest at least 80% of its total assets in California municipal obligations
insured as to the timely payment of principal and interest. The Trust may invest
up to 20% in uninsured California municipal obligations which are rated Aaa by
Moody's or AAA by S&P, or are determined by the Adviser to be of comparable
credit quality (guaranteed, escrowed or backed in trust).
WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will seek to meet the Trust's investment objective by managing
the assets of the Trust so as to return the initial offering price ($15 per
share) at maturity. The Trust will implement a conservative strategy that will
seek to closely match the maturity of the assets of the portfolio with the
future return of the initial investment at the end of 2008. At the Trust's
termination, BlackRock expects that the value of the securities which have
matured, combined with the value of the securities that are sold and the value
of securities that are purchased, if any will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
its objective by actively managing its assets portfolio of California municipal
obligtions and retaining a small amount of income each year.
In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide current income exempt from regular Federal and California
income tax to investors. The portfolio managers will attempt to achieve this
objective by investing in securities that provide competitive income. In
addition, leverage will be used (in an amount up to 35% of the portfolio assets)
to enhance the income of the portfolio. In order to maintain competitive yields
as the Trust approaches maturity and depending on market conditions, the Adviser
will attempt to purchase securities with call protection or maturities as close
to the Trust's maturity date as possible. Securities with call protection should
provide the portfolio with some degree of protection against reinvestment risk
during times of lower prevailing interest rates. Since the Trust's primary goal
is to return the initial offering price at maturity, any cash that the Trust
receives prior to its maturity date will be reinvested in securities with
maturities which coincide with the remaining term of the Trust. Since
shorter-term securities typically yield less than longer-term securities, this
strategy will likely result in a decline in the Trust's income over time. It is
important to note that the Trust will be managed so as to preserve the integrity
of the return of the initial offering price. If market conditions, such as high
interest rate volatility, force a choice between current income and risking the
return of the initial offering price, it is likely that the return of the
initial offering price will be emphasized.
15
<PAGE>
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.
LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the issuance of preferred
stock. Leverage permits the Trust to borrow money at short-term rates and
reinvest that money in longer-term assets which typically offer higher interest
rates. The difference between the cost of the borrowed funds and the income
earned on the proceeds that are invested in longer term assets is the benefit to
the Trust from leverage. In general, the portfolio is typically leveraged at
approximately 35% of total assets.
Leverage also increases the duration (or price volatility of the net assets)
of the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rapidly rising rate environment. BlackRock's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should BlackRock consider
that reduction to be in the best interests of the shareholders.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
___The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
RETURN OF INITIAL INVESTMENT. Although the objective of the Trust is to
return its initial offering price upon termination, there can be no assurance
that this objective will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are
likely to decline to some extent over the term of the Trust due to the
anticipated shortening of the dollar-weighted average maturity of the Trust's
assets.
LEVERAGE. The Trust utilizes leverage through preferred stock which involves
special risks. The Trust's net asset value and market value may be more volatile
due to its use of leverage.
MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BFC) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. Investing in these securities involves special risks.
ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change
in the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
MUNICIPAL OBLIGATIONS. Municipal obligations include debt obligations issued
by states, cities, and local authorities, and possessions and certain
territories of the United States to obtain funds for various public purposes,
including the construction of public facilities, the refinancing of outstanding
obligations and the obtaining of funds for general operating expenses and for
loans to other public institutions and facilities. The value of municipal debt
securities generally varies inversely with changes in prevailing market interest
rates. Depending on the amount of call protection that the securities in the
Trust have, the Trust may be subject to certain reinvestment risks in
environments of declining interest rates.
ALTERNATIVE MINIMUM TAX (AMT). The Trust may invest in securities subject to
AMT. The Trust currently holds no securities that are subject to AMT.
16
<PAGE>
--------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
GLOSSARY
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLOSED-END FUND: Investment vehicle which initially offers a fixed number of shares and trades on a
stock exchange. The fund invests in a portfolio of securities in accordance with its
stated investment objectives and policies.
DISCOUNT: When a fund's net asset value is greater than its stock price the fund is said to be
trading at a discount.
DIVIDEND: Income generated by securities in a portfolio and distributed to shareholders after
the deduction of expenses. This Trust declares and pays dividends to common
shareholders on a monthly basis.
DIVIDEND REINVESTMENT: Shareholders may have all dividends and distributions of capital gains automatically
reinvested into additional shares of a fund.
EMBEDDED CAP BONDS: Also known as additional interest municipal bonds. These securities are intended to
protect the income that a fund earns through leverage from significant increases in
short-term rates. The coupon on these bonds will increase if short term rates rise
significantly.
MARKET PRICE: Price per share of a security trading in the secondary market. For a closed-end
fund, this is the price at which one share of the fund trades on the stock exchange.
If you were to buy or sell shares, you would pay or receive the market price.
NET ASSET VALUE (NAV): Net asset value is the total market value of all securities and other assets held by
the Trust, plus income accrued on its investments, minus any liabilities including
accrued expenses, divided by the total number of outstanding shares. It is the
underlying value of a single share on a given day. Net asset value for the Trust is
calculated weekly and published in Barron's on Saturday and The New York Times or
The Wall Street Journal each Monday.
PREMIUM: When a fund's stock price is greater than its net asset value, the fund is said to
be trading at a premium.
PREREFUNDED BONDS: These securities are collateralized by U.S. Government securities which are held in
escrow and are used to pay principal and interest on the tax exempt issue and retire
the bond in full at the date indicated, typically at a premium to par.
</TABLE>
17
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
--------------------------------------------------------------------------------
TAXABLE TRUSTS
--------------------------------------------------------------------------------
<TABLE><CAPTION>
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
------------ --------
<S> <C> <C>
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
</TABLE>
TAX-EXEMPT TRUSTS
--------------------------------------------------------------------------------
<TABLE><CAPTION>
MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
------------ --------
<S> <C> <C>
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc. RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc. RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
</TABLE>
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE CALL BLACKROCK AT (800) 227-7BFM
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
18
<PAGE>
--------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
--------------------------------------------------------------------------------
BlackRock Financial Management, Inc. ("BlackRock"), is a registered
investment adviser which specializes in managing high quality fixed income
securities, both taxable and tax-exempt. BlackRock currently manages over $32
billion of assets across the government, mortgage, corporate and municipal
sectors. These assets are managed on behalf of institutional and individual
investors in 21 closed-end funds, several open-end funds and over 75
institutional clients in the United States and overseas. BlackRock's
institutional investor base includes Chrysler Corporation Master Retirement
Trust, General Retirement System of the City of Detroit, State Treasurer of
Florida, General Electric Pension Trust and Unisys Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individual and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors' needs
and has been responsible for several major innovations in closed-end funds.
BlackRock introduced the first closed-end mortgage fund, the first taxable and
tax-exempt closed-end funds to offer a finite term, the first closed-end fund to
achieve a AAAf rating by Standard & Poor's, and the first closed-end fund to
invest primarily in North American Government securities. BlackRock's closed-end
funds currently have dividend reinvestment plans which are designed to provide
an ongoing source of demand for the stock in the secondary market. BlackRock
manages a ladder of alternative investment vehicles, with each fund having
specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all our
shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE CALL BLACKROCK AT (800) 227-7BFM
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
19
<PAGE>
DIRECTORS
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
THE [BLACKROCK "LOGO"]
James Clayburn La Force, Jr.
Ralph L. Schlosstein
OFFICERS
CALIFORNIA INSURED
Ralph L. Schlosstein, President
Keith T. Anderson, Vice President
MUNICIPAL 2008
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Kevin Klingert, Vice President
TERM TRUST INC.
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
----------------------------------------------
James Kong, Assistant Treasurer
Karen H. Sabath, Secretary
SEMI-ANNUAL REPORT
INVESTMENT ADVISER
BlackRock Financial Management, Inc.
JUNE 30, 1995
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
ADMINISTRATOR
Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
(800) 688-0928
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
AUCTION AGENT
Bankers Trust Company
4 Albany Street
New York, NY 10006
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of June 30, 1995 were not audited
and, accordingly, no opinion is expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in the
purchase or sale of any securities.
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
c/o Middlesex Administrators L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
(800) 227-7BFM
09247G 10 8
09247G 20 7
09247G 30 6
