<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
January 31, 1997
Dear Trust Shareholder,
The domestic fixed income markets over the past twelve months were once
again greatly influenced by interest rate volatility. Significant swings in the
pace of U.S. economic growth influenced the bond market's performance, as every
release of economic data led to market participant speculation regarding the
direction of Federal Reserve monetary policy.
Despite strong growth and rising wage pressures, the Fed's decision not to
raise interest rates at their two most recent policy meetings has markedly
increased the stakes in the bond market. The rationale behind the Fed's decision
not to raise interest rates appears to focus on the benign inflation data
released during the third quarter. Should economic growth slow and inflation
remain benign, the Fed will be proven correct in their inaction and the market
should be expected to rally significantly. On the other hand, signs of a
stronger economy could result in weaker bond prices as the likelihood of a Fed
tightening would increase.
BlackRock maintains a positive view on the bond market. On balance, the
outlook for moderate inflation remains intact, suggesting that further declines
in interest rates are likely. In addition to this favorable fundamental
backdrop, foreign demand for U.S. bonds has increased due to the renewed
attractiveness of the U.S. bond market on a global basis.
This annual report is designed to help you stay informed about your
investment and represents our ongoing commitment to improving our communication
with you. We hope you find this report useful now and in the future. We
appreciate your confidence and look forward to helping you achieve your
long-term investment goals.
Sincerely,
[SIG]
[SIG]
Ralph L. Schlosstein
Laurence D. Fink
President
Chairman
1
<PAGE>
January 31, 1997
Dear Shareholder:
We are pleased to present the annual report for The BlackRock California
Insured Municipal 2008 Term Trust Inc. ("the Trust") for the year ended December
31, 1996. We would like to take this opportunity to review the Trust's stock
price and net asset value (NAV) performance, summarize developments in the fixed
income markets and discuss recent portfolio management activity.
The Trust is a non-diversified closed-end bond fund whose shares are traded
on the New York Stock Exchange under the symbol "BFC". The Trust's investment
objective is to manage a portfolio of municipal debt securities that will return
$15 per share (an amount equal to the Trust's initial public offering price) to
investors on or about December 31, 2008, while providing high current income
exempt from regular federal and California income tax. The Trust seeks to
achieve this objective by investing in high credit quality ("AAA" or insured to
"AAA") California tax-exempt general obligation and revenue bonds issued by
city, county and state municipalities.
The table below summarizes the changes in the Trust's stock price and net
asset value over the past year:
<TABLE>
<CAPTION>
12/31/96 12/31/95 CHANGE HIGH LOW
<S> <C> <C> <C> <C> <C>
STOCK PRICE $ 14.625 $ 13.625 7.34% $ 14.875 $ 13.375
NET ASSET VALUE (NAV) $ 15.86 $ 15.92 (0.38%) $ 16.28 $ 14.97
</TABLE>
THE FIXED INCOME MARKETS
While 1996 featured several major shifts in sentiment and some dramatically
sharp market moves, the net year-over-year yield changes turned out to be
modest. Yields rose sharply across the Treasury yield curve throughout the first
half of the year in response to data indicating accelerating economic growth,
including a sharp rise in commodity prices, which rekindled inflationary
concerns. The possibility of a stronger economy dampened investor expectations
of continued Federal Reserve easing of monetary policy and initiated whispers of
a potentially more restrictive Fed policy.
Largely softer economic data and continued moderation in the broad inflation
measures during the third and fourth quarters allowed the Fed to leave short
term interest rates unchanged at their most recent policy meetings.
Additionally, a stronger dollar, large foreign buying of U.S. Treasuries and
balanced budget hopes following the November elections also supported the
market. However, Alan Greenspan's mention of "irrational exuberance in the
financial markets" on December 4, 1996 rattled the Treasury market, leading to a
monthlong rise in rates. A resilient housing market and strong consumer
confidence also contributed to the market decline in late December.
Municipal bond performance as measured by the LEHMAN MUNICIPAL BOND INDEX
outpaced that of taxable bonds (represented by the LEHMAN AGGREGATE INDEX),
returning 4.43% versus 3.63% for taxables. This strong performance is the result
of the relative scarcity of new municipal bond issuance combined with increased
retail demand due to the end of "flat tax" reform concerns. In particular, the
third quarter of 1996 witnessed approximately $60 billion in cash (in the form
of calls, maturities and interest payments) returned to investors and recycled
back into the municipal bond market. As the fourth quarter progressed, however,
retail demand moderated in response to a strengthening stock market and
declining interest rate levels. The municipal market finished 1996 on a strong
note, outperforming taxables during the latter half of November and into
December.
2
<PAGE>
The California economy continued its recovery over the past year, leading us
to have a favorable outlook for the state and its debt market. In particular,
the state's credit outlook is positive, as the morass of the Orange County
debacle retreats from the minds of investors. Though California new issuance has
been moderate, good fundamental conditions in the market have allowed California
municipal bonds to outperform the national markets. Of note is Proposition 218,
which was passed by California voters in November. This proposition would limit
the ability of municipalities to raise fees for services and public projects
(e.g. new tolls and community charges for projects) by requiring two-thirds
majority voter approval. This measure is currently being challenged and
interpreted in the California legal system. It is not clear how this proposition
will affect the California municipal bond market; however, it will almost
certainly limit the future revenue-generating capacity of municipalities.
Looking forward, we believe municipal bonds may perform well in early 1997.
The "January effect", which refers to the significant amount of cash returned to
individual municipal bond investors in the form of bond calls, maturities and
coupon payments in January, could increase demand for municipals as this cash is
reinvested in the municipal market.
THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors,
credits and coupons.
Additionally, the Trust employs leverage to enhance its income by borrowing
at short term municipal rates and investing the proceeds in longer maturity
issues which have higher yields. The degree to which the Trust can benefit from
its use of leverage may affect its ability to pay high monthly income. The
Federal Reserve's decision not to increase short interest rates at their August
and September policy meetings has benefited the Trust, as short term municipal
rates (which determine the Trust's borrowing costs) fell.
The following chart compares the Trust's current and December 31, 1995 asset
composition:
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
<TABLE>
<CAPTION>
SECTOR DECEMBER 31, 1996 DECEMBER 31, 1995
<S> <C> <C>
Water & Sewer 19% 20%
Lease Revenue 19% 19%
Transportation 14% 14%
County, City & State 12% 10%
Certificates of Participation 10% 10%
Utility/Power 9% 9%
Tax Revenue 6% 8%
Hospital 5% 5%
Special District 3% 3%
Education 2% 1%
Other 1% 1%
</TABLE>
3
<PAGE>
We appreciate your continued confidence and look forward to managing The
BlackRock California Insured Municipal 2008 Term Trust Inc. in the coming years
to realize its investment objectives. Please feel free to contact the mutual
fund specialists at BlackRock's marketing center at (800) 227-7BFM (7236) if you
have any questions that are not answered in this report. Additionally, you can
reach us via e-mail at [email protected].
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
Robert S. Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
</TABLE>
<TABLE>
<S> <C>
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
Symbol on New York Stock Exchange: BFC
Initial Offering Date: September 18, 1992
Closing Stock Price as of 12/31/96: $14.625
Net Asset Value as of 12/31/96: $15.86
Yield on Closing Stock Price as of 12/31/96 ($14.625)(1): 5.28%
Current Monthly Distribution per Common Share(2): $0.064375
Current Annualized Distribution per Common Share(2): $0.7725
</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
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPTION
CALL
RATING* PRINCIPAL PROVISIONS+++ VALUE
(UNAUDITED) AMOUNT (000) DESCRIPTION (UNAUDITED) (NOTE 1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS -- 145.2%
California Hlth. Facs. Fin. Auth. Rev.,
AAA $ 6,850 Marin Gen. Hosp., Ser. A, 5.75%, 8/01/09, FSA....................... 08/03 at 102 $7,046,458
AAA 2,000 Sutter Hlth. Care Sys., 5.70%, 8/15/09, MBIA........................ 08/06 at 102 2,064,320
California St., G.O.
AAA 2,000 6.25%, 9/01/08, FGIC................................................ No Opt. Call 2,204,940
AAA 3,000 5.50%, 4/01/09, MBIA................................................ No Opt. Call 3,115,320
AAA 15,000 6.30%, 9/01/08, MBIA................................................ No Opt. Call 16,756,800
California St. Pub. Wks. Brd.,
AAA 2,100 Energy Efficiency, Ser. A, 5.625%, 10/01/08, AMBAC.................. 10/05 at 102 2,185,701
AAA 10,255 Lease Rev., 6.40%, 9/01/08, MBIA.................................... 09/01 at 102 11,033,662
AAA 9,165 California St. Wide Cmnty. Dev. Auth., Lease Rev., 6.00%, 10/01/10,
AMBAC............................................................... 10/02 at 102 9,579,166
AAA 2,600 Castaic Lake Wtr. Agcy. C.O.P., Wtr. Sys. Impvt. Proj., Ser. A, 7.25%,
8/01/10, MBIA....................................................... No Opt. Call 3,108,040
AAA 5,515 Central Coast Wtr. Auth. Rev., St. Wtr. Proj. Reg. Facs., 6.40%,
10/01/02+, AMBAC.................................................... No Opt. Call 6,139,353
AAA 5,500 Clovis Unified Sch. Dist., Ser. B., Zero Coupon, 8/01/08, FGIC........ No Opt. Call 2,992,550
AAA 13,740 East Bay Mun. Utils. Dist., Wtr. Sys. Rev., 6.00%, 6/01/09, AMBAC..... 06/02 at 102 14,467,808
AAA 4,025 Elsinore Valley Mun. Wtr. Dist., C.O.P., Ser. A, 6.00%, 7/01/09,
FGIC................................................................ No Opt. Call 4,328,284
Los Angeles Cnty. Asset Leasing Corp. Rev., AMBAC,
AAA 2,910 5.95%, 12/01/07..................................................... No Opt. Call 3,198,090
AAA 8,090 6.00%, 12/01/08..................................................... No Opt. Call 8,753,137
AAA 8,600 6.05%, 12/01/09..................................................... No Opt. Call 9,303,308
AAA 1,000 Los Angeles Elec. Rev., 5.75%, 9/01/12, FGIC.......................... 09/03 at 102 1,015,000
AAA 5,765 Los Angeles Wastewtr. Sys. Rev., Ser. B, 6.25%, 6/01/08, AMBAC........ 06/02 at 102 6,166,244
AAA 500 MSR Pub. Pwr. Agcy. San Juan Proj., Rev., Ser. C, 6.875%, 7/01/19,
AMBAC............................................................... 01/97 at 102 515,150
AAA 3,075 Marysville Hosp. Rev., Fremont-Rideout Hlth. Group, Ser. A, 6.20%,
1/01/09, AMBAC...................................................... 01/03 at 102 3,267,926
AAA 8,000 Modesto Irrig. Dist. Fin. Rev., Domestic Wtr. Proj., Ser. A, 6.00%,
9/01/09, AMBAC...................................................... 09/02 at 102 8,409,760
Northern California Pwr. Agcy., Multiple Cap. Facs. Rev., Ser. A,
MBIA,
AAA 1,000 6.40%, 8/01/07...................................................... 08/02 at 102 1,088,360
AAA 3,045 6.50%, 8/01/08...................................................... 08/02 at 102 3,305,408
AAA 1,000 Orange Cnty. Local Trans Auth. Sales Tax Rev., 6.00%, 2/15/09, MBIA... No Opt. Call 1,073,620
AAA 5,600 Pittsburg Redev. Agcy. Tax Alloc. Rev., Los Medanos Cmnty. Dev. Proj.,
5.50%, 8/01/07, FGIC................................................ 08/02 at 102 5,763,856
AAA 3,075 Riverside Cnty., Trans. Comm. Sales Tax Rev., Ser. A, 6.50%, 6/01/01+,
MBIA................................................................ No Opt. Call 3,394,554
Sacramento Mun. Utils. Dist., Elec. Rev., Ser. C,
AAA 2,500 5.75%, 11/15/07, MBIA............................................... 11/02 at 102 2,615,650
AAA 6,250 5.75%, 11/15/08, FGIC............................................... 11/02 at 102 6,497,938
AAA 4,700 5.75%, 11/15/09, MBIA............................................... 11/02 at 102 4,855,711
</TABLE>
See Notes to Financial Statements
5
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPTION
CALL
RATING* PRINCIPAL PROVISIONS+++ VALUE
(UNAUDITED) AMOUNT (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA $ 5,700 San Bernardino Cnty. C.O.P., Arpt. Impvt., 6.00%, 7/01/07, MBIA....... 07/02 at 102 $6,059,727
AAA 5,000 San Bernardino Cnty. Trans. Auth., Sales Tax Rev., 6.00%, 3/01/10,
FGIC................................................................ No Opt. Call 5,241,900
San Diego Cnty. Regl. Trans. Cmnty. Sales Tax Rev., Ser. A,
AAA 7,830 6.00%, 4/01/08, MBIA................................................ 04/01 at 102 8,245,068
AAA 2,500 6.00%, 4/01/08, FGIC................................................ No Opt. Call 2,674,000
AAA 7,650 San Diego Redev. Agcy. Rev., Tax Allocation-Centre City Proj., 6.00%,
9/01/08, AMBAC...................................................... 09/02 at 102 8,091,405
San Jose Arpt. Rev., MBIA,
AAA 8,010 6.00%, 3/01/09...................................................... 03/03 at 102 8,442,460
AAA 3,000 6.00%, 3/01/10...................................................... 03/03 at 102 3,141,630
AAA 3,755 6.10%, 3/01/07...................................................... 03/03 at 102 4,030,166
AAA 2,865 Santa Clara Cnty. Fin. Auth., Fac. Replacement, Proj. A, 6.50%,
11/15/07, AMBAC..................................................... 11/04 at 102 3,204,359
AAA 2,820 Santa Rosa Wtr. Rev., Ser. B, 6.20%, 9/01/09, FGIC.................... 09/02 at 101.5 2,990,159
AAA 5,000 So. California Rapid Trans. Dist. C.O.P., Workers Comp. Fund, 6.00%,
7/01/10, MBIA....................................................... 01/01 at 102.5 5,214,650
So. California Rapid Trans. Dist. Rev., Spec. Benefit Assmt. Dist. A1,
AMBAC,
AAA 5,750 5.50%, 9/01/09...................................................... 09/02 at 100 5,795,080
AAA 5,500 6.00%, 9/01/08...................................................... 09/02 at 102 5,817,350
AAA 8,500 Sonoma Cnty. C.O.P., Capital Rites-Detention Fac., 3.45%++, 11/15/10,
AMBAC............................................................... No Opt. Call 8,447,980
AAA 2,000 Univ. of California Rev., Multi-Purpose Projs., Ser. B-1989, 6.80%,
9/01/99+, AMBAC..................................................... No Opt. Call 2,172,840
West & Central Basin Fin. Auth. Rev., AMBAC,
AAA 1,680 6.125%, 8/01/08..................................................... 08/02 at 102 1,789,150
AAA 1,780 6.125%, 8/01/09..................................................... 08/02 at 102 1,884,201
AAA 2,160 West Sacramento Fin. Auth. Rev., Wtr. Sys. Impvt., 5.25%, 8/01/08,
FGIC................................................................ 08/02 at 102 2,175,984
----------
TOTAL INVESTMENTS -- 145.2% (cost $222,606,975)....................... 239,664,223
Other assets in excess of liabilities -- 2.1%......................... 3,374,257
Liquidation value of preferred stock -- (47.3%)....................... (78,000,000)
----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS -- 100%.................. $165,038,480
----------
----------
</TABLE>
- ---------------
* 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.
+++ Option call provisions: date (month/year) and prices of the earliest
optional call or redemption. There may be other call provisions at varying
prices at later dates.
<TABLE>
<S> <C> <C>
KEY TO ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
C.O.P. -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
G.O. -- General Obligation Bond
MBIA -- Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements
6
<PAGE>
- ---------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- ----------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost
$222,606,975) (Note 1)........... $239,664,223
Interest receivable................ 3,703,013
Cash............................... 43,755
Deferred organization expenses and
other assets..................... 21,784
----------
243,432,775
----------
LIABILITIES
Advisory fee payable (Note 2)...... 72,572
Dividends payable--common stock.... 68,441
Dividends payable--preferred
stock............................ 68,392
Administration fee payable (Note
2)............................... 20,735
Other accrued expenses............. 164,155
----------
394,295
----------
NET INVESTMENT ASSETS.............. $243,038,480
----------
----------
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........................... 3,254,833
Accumulated net realized gain...... 2,499
Net unrealized appreciation........ 17,057,248
----------
Net investment assets, December 31,
1996............................. $243,038,480
----------
----------
Net assets applicable to common
shareholders..................... $165,038,480
----------
----------
Net asset value per common share:
($165,038,480 DIVIDED BY
10,407,093 shares of common stock
issued and outstanding).......... $ 15.86
----------
----------
</TABLE>
- ---------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ----------------------------------------------
<TABLE>
<S> <C>
NET INVESTMENT INCOME
Income
Interest and discount earned..... $13,170,078
----------
Expenses
Investment advisory.............. 843,985
Administration................... 241,139
Auction agent.................... 216,000
Reports to shareholders.......... 70,000
Custodian........................ 68,000
Audit............................ 32,000
Directors........................ 28,000
Transfer agent................... 19,000
Legal............................ 8,000
Miscellaneous.................... 143,325
----------
Total expenses................... 1,669,449
----------
Net investment income.............. 11,500,629
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain on investments... 149,344
Net change in unrealized
appreciation on investments...... (1,762,159)
----------
Net loss on investments............ (1,612,815)
----------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM OPERATIONS... $9,887,814
----------
----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS
Operations:
Net investment income................................................................... $ 11,500,629 $ 11,693,184
Net realized gain on investments........................................................ 149,344 602,078
Net change in unrealized appreciation (depreciation) on investments..................... (1,762,159) 23,061,156
-------------- --------------
Net increase in net investment assets resulting from operations......................... 9,887,814 35,356,418
-------------- --------------
Dividends and distributions:
To common shareholders from net investment income....................................... (7,980,442) (8,875,142)
To common shareholders from net realized gain on investments............................ (45,406) --
To common shareholders in excess of net realized gain on investments.................... (13,529) (22,795)
To preferred shareholders from net investment income.................................... (2,510,203) (2,896,935)
To preferred shareholders from net realized gain on investments......................... (14,102) --
To preferred shareholders in excess of net realized gain on investments................. (4,196) (7,513)
-------------- --------------
(10,567,878) (11,802,385)
-------------- --------------
Total increase (decrease)......................................................... (680,064) 23,554,033
NET INVESTMENT ASSETS
Beginning of year......................................................................... $ 243,718,544 220,164,511
-------------- --------------
End of year............................................................................... $ 243,038,480 $ 243,718,544
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
PER COMMON SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of the period............................................. $ 15.92 $ 13.66 $ 16.09
----------- ----------- -----------
Net investment income.............................................................. 1.11 1.12 1.12
Net realized and unrealized gain (loss) on investments............................. (0.16) 2.27 (2.48)
----------- ----------- -----------
Net increase (decrease) from investment operations................................... 0.95 3.39 (1.36)
----------- ----------- -----------
Dividends from net investment income to:
Preferred shareholders............................................................. (0.24) (0.28) (0.21)
Common shareholders................................................................ (0.77) (0.85) (0.86)
Distributions from net realized gain on investments to:
Preferred shareholders............................................................. -- ** -- --
Common shareholders................................................................ -- ** -- --
Distributions in excess of net realized gain on investments to:
Preferred shareholders............................................................. -- ** -- ** --
Common shareholders................................................................ -- ** -- ** --
----------- ----------- -----------
Total dividends and distributions.................................................... (1.01) (1.13) (1.07)
----------- ----------- -----------
Capital charge with respect to issuance of shares.................................... -- -- ****
----------- ----------- -----------
Net asset value, end of period***.................................................... $ 15.86 $ 15.92 $ 13.66
----------- ----------- -----------
----------- ----------- -----------
Market value, end of period***....................................................... $ 14.625 $ 13.625 $ 12.00
----------- ----------- -----------
----------- ----------- -----------
TOTAL INVESTMENT RETURN+............................................................. 13.67% 20.57% (15.59)%
----------- ----------- -----------
----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:+++
Expenses............................................................................. 1.03 1.02% 1.08%
Net investment income................................................................ 7.11 7.46% 7.70%
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands)............................. $ 161,839 $ 156,774 $ 151,669
Portfolio turnover................................................................... 3% 13% 17%
Net assets of common shareholders, end of period (in thousands)...................... $ 165,038 $ 165,719 $ 142,165
Preferred stock outstanding (in thousands)........................................... $ 78,000 $ 78,000 $ 78,000
Asset coverage per share of preferred stock, end of period##......................... $ 77,897 $ 78,115 $ 141,131
<CAPTION>
SEPTEMBER 28,
1992*
THROUGH
DECEMBER 31,
1993 1992
----------- ----------------
<S> <C> <C>
PER COMMON SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of the period............................................. $ 14.18 $ 14.10
----------- ----------------
Net investment income.............................................................. 1.14 0.16
Net realized and unrealized gain (loss) on investments............................. 1.81 0.20
----------- ----------------
Net increase (decrease) from investment operations................................... 2.95 0.36
----------- ----------------
Dividends from net investment income to:
Preferred shareholders............................................................. (0.18) (0.02)
Common shareholders................................................................ (0.85) (0.07)
Distributions from net realized gain on investments to:
Preferred shareholders............................................................. -- ** --
Common shareholders................................................................ (0.01) --
Distributions in excess of net realized gain on investments to:
Preferred shareholders............................................................. -- --
Common shareholders................................................................ -- --
----------- ----------------
Total dividends and distributions.................................................... (1.04) (0.09)
----------- ----------------
Capital charge with respect to issuance of shares.................................... -- (0.19)
----------- ----------------
Net asset value, end of period***.................................................... $ 16.09 $ 14.18#
----------- ----------------
----------- ----------------
Market value, end of period***....................................................... $ 15.125 $ 13.875
----------- ----------------
----------- ----------------
TOTAL INVESTMENT RETURN+............................................................. 14.79% (1.11)%
----------- ----------------
----------- ----------------
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:+++
Expenses............................................................................. 0.96% 0.86 %++
Net investment income................................................................ 7.33% 4.65 %++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands)............................. $ 160,350 $ 141,249
Portfolio turnover................................................................... 8% 0%
Net assets of common shareholders, end of period (in thousands)...................... $ 167,439 $ 147,610
Preferred stock outstanding (in thousands)........................................... $ 78,000 $ 78,000
Asset coverage per share of preferred stock, end of period##......................... $ 157,333 $ 144,500
</TABLE>
- -----------------
* Commencement of investment operations.
** Actual amount paid from net realized gain on investments to preferred
shareholders was $0.00136 and $0.00344 per common share for the years ended
December 31, 1996, and 1993, respectively, and to common shareholders was
$0.004363 per share for the year ended December 31, 1996. Actual amount
paid in excess of net realized gain on investments to preferred
shareholders was $0.0004 and $0.0007 per common share for the years ended
December 31, 1996, and 1995, respectively, and to common shareholders was
$0.0013, and $0.0021, per share for the years ended December 31, 1996, and
1995, respectively.
*** Net asset value and market value are published in THE WALL STREET JOURNAL
each Monday.
**** Actual amount was $0.00006 per common share.
# Net asset value immediately after the closing of the first public offering
was $14.06.
## A stock split occured on July 24, 1995 (Note 4).
+ 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 value on the last day of the period. Dividends and distributions, if
any, are assumed for 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
return for periods of less than a full year are not annualized.
++ Annualized.
+++ Ratios calculated on the basis of income and expenses applicable to both
the common and preferred shares relative to the average net assets of
common shareholders. Ratios do not reflect the effect of dividend payments
to preferred shareholders.
The information above represents the audited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for the period indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for Trust's shares.
See Notes to Financial Statements.
9
<PAGE>
- ---------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED
MUNICIPAL 2008 TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------
<TABLE>
<S> <C>
NOTE 1. ACCOUNTING The BlackRock California
POLICIES Insured Municipal 2008 Term
Trust Inc. (the "Trust") was
</TABLE>
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.
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 original issue 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. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, 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. 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 period of sixty months from the date the Trust
commenced investment operations.
RECLASSIFICATION OF CAPITAL ACCOUNTS: Effective January 1, 1994, the Trust began
accounting and reporting for permanent differences between financial and tax
reporting in accordance with the American Institute of Certified Public
Accountants' Statement of Position 93-2: Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. The cumulative effect of adopting the
statement for the year ended December 31, 1996 was to decrease accumulated net
realized loss and increase undistributed net investment income by $3,983. Net
investment income, net realized gains and net assets were not affected by this
change.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<TABLE>
<S> <C>
NOTE 2. AGREEMENTS The Trust has an Investment
Advisory Agreement with
BlackRock Financial Manage-
</TABLE>
ment, Inc. (the "Adviser"), a wholly-owned corporate subsidiary of PNC Asset
Management Group, Inc., the holding company for PNC's asset management
businesses and an Administration Agreement with Princeton Administrators, L.P.
(the "Administrator"), an indirect wholly-owned subsidiary of Merrill Lynch &
Co., Inc.
10
<PAGE>
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.
<TABLE>
<S> <C>
NOTE 3. PORTFOLIO Purchases and sales of
SECURITIES investment securities, other
than short-term investments,
for the
</TABLE>
year ended December 31, 1996 aggregated $8,449,830 and $7,785,006, respectively.
The Federal income tax basis of the Trust's investments at December 31, 1996
was substantially the same as the basis for financial reporting, and
accordingly, unrealized appreciation was $17,057,248 (on both a gross and net
basis).
<TABLE>
<S> <C>
NOTE 4. CAPITAL There are 200 million shares
of $.01 par value common
stock authorized. Of the
10,407,093
</TABLE>
common shares outstanding at December 31, 1996, the Adviser owned 7,093 shares.
As of December 31, 1996, there were 3,120 preferred shares outstanding as
follows: Series W28-1,560 and Series W7-1,560.
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 $25,000 per share
plus any accumulated but unpaid dividends.
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 liquidation preference from $50,000 to
$25,000 plus any accumulated but unpaid dividends. The stock split occurred on
July 24, 1995.
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 2.125% to 4.00% during the year ended December 31,
1996.
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 $25,000 per share plus any accumulated or
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $25,000 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.
11
<PAGE>
<TABLE>
<S> <C>
NOTE 5. DIVIDENDS Subsequent to December 31,
1996 the Board of Directors
of the Trust declared a
dividend
</TABLE>
from undistributed earnings of $0.064375 per common share payable January 31,
1997 to shareholders of record on January 16, 1997.
For the period January 1, 1997 to January 31, 1997, dividends declared on
Preferred Stock totalled $232,700 in aggregate for the two outstanding Preferred
Stock series.
<TABLE>
<S> <C>
NOTE 6. QUARTERLY DATA
(UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
NET INCREASE (DECREASE) IN
NET REALIZED AND
UNREALIZED GAINS NET INVESTMENT ASSETS
NET INVESTMENT INCOME (LOSSES) ON
INVESTMENTS RESULTING FROM OPERATIONS
PER PER PER
TOTAL COMMON COMMON COMMON
QUARTERLY PERIOD INCOME AMOUNT SHARE AMOUNT SHARE AMOUNT SHARE
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995 to March 31,
1995.......................... $ 3,300,526 $ 2,905,171 $ 0.28 $ 12,336,610 $ 1.18 $ 15,241,781 $ 1.46
April 1, 1995 to
June 30, 1995................. 3,352,125 2,948,761 0.28 913,610 0.09 3,862,371 0.37
July 1, 1995 to September 30,
1995.......................... 3,316,493 2,916,864 0.28 4,085,499 0.40 7,002,363 0.68
October 1, 1995 to December 31,
1995.......................... 3,319,567 2,922,388 0.28 6,327,515 0.60 9,249,903 0.88
January 1, 1996 to March 31,
1996.......................... 3,271,884 2,859,667 0.27 (5,160,129) (0.49) (2,300,462) (0.22)
April 1, 1996 to
June 30, 1996................. 3,312,779 2,902,540 0.28 (2,141,712) (0.21) 760,828 0.07
July 1, 1996 to September 30,
1996.......................... 3,271,716 2,848,554 0.28 1,895,697 0.18 4,744,251 0.46
October 1, 1996 to December 31,
1996.......................... 3,313,699 2,889,868 0.28 3,793,329 0.36 6,683,197 0.64
<CAPTION>
DIVIDENDS AND DISTRIBUTIONS
PREFERRED SHARES*
COMMON SHARES
PER PER SHARE PRICE OF PERIOD
COMMON COMMON COMMON STOCK END NET
QUARTERLY PERIOD AMOUNT SHARE AMOUNT SHARE HIGH LOW ASSET VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995 to March 31,
1995.......................... $ 2,224,420 $ 0.21 $ 755,620 $ 0.07 $ 14.000 $ 12.125 $ 14.84
April 1, 1995 to
June 30, 1995................. 2,224,528 0.22 754,250 0.07 14.500 13.750 14.92
July 1, 1995 to September 30,
1995.......................... 2,224,495 0.21 689,804 0.07 14.375 13.500 15.32
October 1, 1995 to December 31,
1995.......................... 2,224,494 0.21 704,774 0.07 14.750 13.625 15.92
January 1, 1996 to March 31,
1996.......................... 2,009,847 0.19 628,015 0.06 14.375 13.750 15.45
April 1, 1996 to
June 30, 1996................. 2,009,845 0.19 666,863 0.06 14.000 13.375 15.27
July 1, 1996 to September 30,
1996.......................... 2,009,844 0.20 607,645 0.06 14.375 13.500 15.47
October 1, 1996 to December 31,
1996.......................... 2,009,841 0.19 625,978 0.06 14.875 13.875 15.86
</TABLE>
* For the year ended December 31, 1996, the average annualized rate paid to
preferred shareholders was 3.24%.
12
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Shareholders and
Board of Directors of
The BlackRock California Insured Municipal 2008 Term Trust Inc.:
We have audited the accompanying statement of assets and liabilities of The
BlackRock California Insured Municipal 2008 Term Trust Inc., including the
portfolio of investments, as of December 31, 1996 and the related statement of
operations for the year then ended, the statement of changes in net investment
assets for each of the two years in the period then ended and the financial
highlights for each of the four years in the period then ended and for the
period September 28, 1992 (commencement of investment operations) to December
31, 1992. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion of these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock
California Insured Municipal 2008 Term Trust Inc. as of December 31, 1996, the
results of its operations, the changes in its net investment assets and the
financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.
[LOGO]
Deloitte & Touche LLP
New York, New York
February 3, 1997
13
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of
the Trust's fiscal year end as to the federally exempt interest dividends
received by you during such fiscal year. Accordingly, we are advising you that
during the year ended December 31, 1996 the Trust paid a total of $0.766837 in
dividends per common share that were federally tax-exempt interest dividends.
Additionally, the following summarizes the special taxable distributions
declared by the Trust during the fiscal year:
<TABLE>
<CAPTION>
TAXABLE
ORDINARY LONG-TERM
RECORD PAYABLE INCOME CAPITAL GAINS
DATE DATE PER SHARE PER SHARE
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
Common Stock.................................................................... 12/16/96 12/31/96 $0.001300 $ 0.004363
Preferred Stock Series W-7...................................................... 11/27/96 11/29/96 $1.320000 $ 4.430000
Preferred Stock Series W-28..................................................... 12/18/96 12/19/96 $1.370000 $ 4.610000
</TABLE>
For purposes of preparing your annual federal income tax return, however,
you should report the amounts as reflected on the appropriate Form 1099-DIV or
substitute 1099 DIV.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
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 about 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
approximately $43 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 traded on the New York or American
Stock Exchanges, several open-end funds and separate accounts for more than 100
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., one of the
nation's largest banking organizations.
WHAT CAN THE TRUST INVEST IN?
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, 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 portfolio of
California municipal obligations 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 total 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.
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
15
<PAGE>
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 Trust through the Trust's transfer agent, State Street
Bank and Trust Company. 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 the issuance of 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 and THE NEW YORK TIMES on Saturday 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Taxable Trusts
- -------------------------------------------------------------------------------------------------------
STOCK MATURITY
SYMBOL DATE
--------- ---------
PERPETUAL TRUSTS
<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
Tax-Exempt Trusts
- -------------------------------------------------------------------------------------------------------
<CAPTION>
STOCK MATURITY
SYMBOL DATE
--------- ---------
<S> <C> <C>
PERPETUAL TRUSTS
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
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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
approximately $43 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 traded on the New York or American
Stock Exchanges, several open-end funds and over 100 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 YOU FINANCIAL ADVISOR.
19
<PAGE>
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein
OFFICERS
Ralph L. Schlosstein, PRESIDENT
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Kevin Klingert, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Karen H. Sabath, SECRETARY
INVESTMENT ADVISER
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(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 LLP
919 Third Avenue
New York, NY 10022
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 Princeton Administrators, L.P.
P.O Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
09247G 10 8
09247G 20 7
09247G 30 8
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THE
CALIFORNIA INSURED MUNICIPAL 2008 TERM TRUST INC.
--------------------------
ANNUAL REPORT
DECEMBER 31, 1996
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