- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
November 30, 1997
Dear Trust Shareholder:
U.S. fixed income investors have been rewarded with solid total returns
over the past twelve months, as moderate economic growth and low inflation drove
Treasury yields below year-end 1996 levels by October 31, 1997.
The economy has shown some signs of slowing, which BlackRock expects may
persist as early indicators suggest that holiday spending may be tepid. We do
not see immediate signs of inflationary pressure nor do we anticipate an
imminent change in monetary policy by the Federal Reserve. Our long-term outlook
for the bond market remains optimistic, based on the fundamentally favorable
backdrop of slower economic growth, low inflation and declining Treasury
borrowing.
This report contains detailed market and portfolio strategy commentary by
your Trust's managers in addition to the Trust's audited financial statements
and a detailed portfolio listing. We thank you for your continued investment in
the Trust and wish you a successful new year.
Sincerely,
/s/Laurence D. Fink /s/Ralph L. Schlosstein
- ------------------- -----------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
November 30, 1997
Dear Shareholder:
We are pleased to present the annual report for The BlackRock California
Investment Quality Municipal Trust Inc. ("the Trust") for the fiscal year ended
October 31, 1997. We would like to take this opportunity to review the Trust's
stock price and net asset value (NAV) performance, summarize market developments
and discuss recent portfolio management activity.
The Trust is a non-diversified, actively managed closed-end bond fund
whose shares are traded on the American Stock Exchange under the symbol "RAA".
The Trust's investment objective is to provide high current income that is
exempt from regular federal and California income taxes consistent with the
preservation of capital. The Trust seeks to achieve this objective by investing
in investment grade (rated "AAA" to "BBB" by a major rating agency or of
equivalent quality) municipal debt securities issued by local municipalities
throughout California.
The table below summarizes the changes in the Trust's stock price and net
asset value over the year:
<TABLE>
<CAPTION>
--------------------------------------------------------
10/31/97 10/31/96 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STOCK PRICE $15.00 $13.50 11.11% $15.00 $13.50
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $14.77 $14.20 4.01% $14.81 $13.78
- --------------------------------------------------------------------------------
</TABLE>
THE FIXED INCOME MARKETS
The first half of the Trust's fiscal year was characterized by increased
concern over potential inflationary pressures. Bond prices fell and yields rose
between mid-December 1996 and mid-April 1997, as economic data indicated a very
strong economy. In an effort to subdue this growth and pre-emptively fight
inflation, the Federal Reserve raised the Federal funds rate by 25 basis points
(1/4%) to 5.50% at their March 25 FOMC policy meeting. During the second
quarter, however, signs of more moderate economic growth began to appear. Lower
factory orders, decreased consumer spending and higher inventories, in addition
to continued benign inflationary forces, soothed investor fears over inflation.
Accordingly, the Federal Reserve left interest rates unchanged at their May 20,
July 2 and September 30 policy meetings. U.S. Treasury yields reflected investor
expectations of Federal Reserve policy activity. The yield of the 10-year note
rose from a period low of 6.04% in late November 1996 to 6.98% in mid-April 1997
in response to Federal Reserve Chairman Alan Greenspan's warning of excessive
equity market euphoria and in anticipation of a Federal funds rate increase. As
economic data softened, the yield of the 10-year fell over 100 basis points from
6.98% to close at 5.83% on October 31, 1997.
The municipal bond market, represented by the LEHMAN MUNICIPAL BOND
INDEX, posted a total return of 8.50% for the 12 month period ended October 31,
1997, underperforming the domestic taxable investment grade market (measured by
the LEHMAN AGGREGATE INDEX), which returned 8.89%. Despite the rally in the
Treasury market, demand for municipals was relatively strong, particularly
during the summer, when nearly $60 billion worth of municipal issues matured and
were reinvested back into the market. However, the decline in Treasury yields
resulted in a significant increase in new municipal supply during September, as
municipal issuers refunded higher interest bearing securities and brought lower
yielding issues to market. During October, municipals experienced their largest
underperformance versus Treasuries during 1997, as they were unable to keep pace
with the global demand for U.S. Treasuries.
2
<PAGE>
California's economy is recovering across all industries, as increases in
manufacturing, tourism, high technology, biotechnology and small start-up
businesses have contributed to the state's improving health. Additionally, the
construction industry is booming, as building is occurring in both the
commercial and residential sectors. A growing population has resulted in
increased revenues, stabilizing the State's financial position to such a degree
that California maintains a balanced budget. Further, California leads the U.S.
in job growth, creating over 1 million jobs over the last four years. All of
these positive factors resulted in Fitch raising the State's credit rating to
AA- in September 1997.
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 at about 35% of total net assets
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. Over the past twelve months, the Federal Reserve
tightened monetary policy by raising short term rates 25 basis points to 5.50%
in March. Typically, short term municipal rates (which determine the Trust's
borrowing costs) are approximately 65% of Treasury rates. Accordingly, the
Trust's cost of leverage modestly increased as a result of the Fed's action.
The main portfolio management theme in the Trust over the past year has
been to take advantage of narrowing credit spreads between higher and lower
rated bonds. To this end, the Trust has sold lower rated credits (BBB- and
A-rated issues) in favor of higher rated credits (AA and AAA). Historically,
lower rated bonds yield significantly more than higher rated bonds to compensate
the investor for taking on a higher probability of default. Over the past year,
this yield advantage has narrowed to levels that we believe do not pay investors
enough to purchase lower credits. The Trust's current strategy emphasizes high
credit quality non-callable and callable premiums in the 7- to 15-year maturity
range. Prevailing municipal market conditions do not reward investors for
extending beyond this maturity range.
The following charts compare the Trust's current and October 31, 1996
asset composition and credit quality allocations:
SECTOR BREAKDOWN
SECTOR OCTOBER 31, 1997 OCTOBER 31, 1996
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University 20% 10%
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Transportation 20% 23%
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Lease 11% 10%
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Housing 10% 10%
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Power 10% 19%
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City, County & State 5% 9%
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Water & Sewer 5% 14%
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Sales Tax 5% --
- --------------------------------------------------------------------------------
Student Loans 5% --
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Industrial 5% --
- --------------------------------------------------------------------------------
Miscellaneous Revenue 4% 5%
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3
<PAGE>
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STANDARD & POOR'S/MOODY'S/FITCH'S
CREDIT RATING OCTOBER 31, 1997 OCTOBER 31, 1996
- --------------------------------------------------------------------------------
AAA/Aaa 52% 42%
- --------------------------------------------------------------------------------
AA/Aa 21% 20%
- --------------------------------------------------------------------------------
A/A 22% 25%
- --------------------------------------------------------------------------------
BBB/Baa 5% 13%
- --------------------------------------------------------------------------------
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock
California Investment Quality Municipal Trust Inc. Please feel free to call our
marketing center at (800) 227-7BFM (7236) if you have any specific questions
which were not addressed in this report.
Sincerely yours,
/s/Robert Kapito /s/Kevin Klingert
- ----------------------------------- ---------------------------------------
Robert Kapito Kevin Klingert
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
- --------------------------------------------------------------------------------
Symbol on American Stock Exchange: RAA
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Initial Offering Date: May 28, 1993
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Closing Stock Price as of 10/31/97: $15.00
- --------------------------------------------------------------------------------
Net Asset Value as of 10/31/97: $14.77
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 10/31/97 ($15.00)1: 5.85%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.073125
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.8775
- --------------------------------------------------------------------------------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2The distribution is not constant and is subject to change.
4
<PAGE>
<TABLE>
<CAPTION>
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPTION CALL
RATING* AMOUNT PROVISIONS VALUE
(UNAUDITED) (000) DESCRIPTION (UNAUDITED) (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS--146.6%
California Educational Facilities Auth. Rev.,
AAA $1,000 Santa Clara Univ., 5.00%, 9/01/15, MBIA ........................... 9/06 at 102 $ 979,030
AAA 1,000 Student Loan Program, Series A, 6.00%, 3/01/16, MBIA .............. 3/07 at 102 1,038,670
A1 1,000 California St. G.O., 5.75%, 3/01/19 .................................. 3/05 at 101 1,033,660
California St. Hsg. Fin. Agcy. Rev., Home Mtge.,
Aa2 970 Ser. B-1, 6.45%, 2/01/11 .......................................... 8/04 at 102 1,023,146
Aa2 1,000 Ser. G, 7.20%, 8/01/14 ............................................ 8/04 at 102 1,092,260
California St. Pub. Wks. Brd. Lease Rev.,
Aaa 1,000 Dept. of Corrections, Ser. A, 6.875%, 11/01/04 .................... No Opt. Call 1,165,560
A 1,000 St. Univ. Proj., Ser. A, 6.10%, 10/01/06 .......................... 10/04 at 102 1,098,690
AAA 1,000 St. Univ. Proj., Ser. A, 6.40%, 12/01/02, AMBAC ................... No Opt. Call 1,115,720
Baa 1,385 Foothill / Eastern Trans. Agcy., Ser. A, Zero Coupon, 1/01/04 ........ No Opt. Call 1,016,535
AAA 1,000 Los Angeles County, Special Tax, Ser. A, 5.50%, 9/01/14, FSA ......... 9/07 at 102 1,022,250
Aa 1,150 Los Angeles Harbor Dept. Rev., Ser. B, 6.00%, 8/01/13 ................ 8/06 at 101 1,211,456
AAA 1,000 Los Angeles Met. Trans. Auth., Sales Tax Rev., 6.00%, 7/01/26, MBIA .. 7/06 at 101 1,058,830
Aa 1,000 Los Angeles Pub. Wks. Fin. Auth. Rev., Regl. Park & Open Space
Dist. A, 6.00%, 10/01/15 .......................................... 10/04 at 102 1,054,410
BBB- 1,000 Sacramento Pwr. Auth., Rev., Cogeneration Proj. 6.50%, 7/01/09 ....... 7/06 at 102 1,082,680
AAA 1,000 San Diego Ind. Dev. Rev., Ser. A, 5.90%, 6/01/18, AMBAC .............. 6/03 at 102 1,047,150
San Francisco City & Cnty.,
AAA 1,000 Arpt. Comn. Rev., Intl. Arpt., Ser. 6, 6.125%, 5/01/09, AMBAC ..... 5/04 at 102 1,080,740
AAA 1,000 Sewer Rev., Ser. A, 5.95%, 10/01/25, FGIC ......................... 10/03 at 102 1,042,190
AAA 1,000 Southern California Pub. Pwr. Auth. Transmission. Proj. Rev.,
5.50%, 7/01/20, MBIA .............................................. 7/02 at 100 1,003,960
Univ. of California Rev.,
AAA 1,000 Ser. D, 6.10%, 9/01/10, MBIA ...................................... 9/02 at 102 1,072,190
A 1,135 Ser. B, 6.30%, 9/01/13 ............................................ 9/03 at 102 1,202,396
AAA 370 West Basin Municipal Water Dist. Rev., COP,
1992 Proj. Ser. A, 5.50%, 8/01/22, AMBAC .......................... 8/07 at 101 373,652
-----------
Total Long-Term Investments (cost $20,176,679) ....................... 21,815,175
-----------
SHORT-TERM INVESTMENTS**--0.7%
A1 100 Orange County Sanitation Dists., COP,
3.80%, 11/03/97, FRDD,
(cost $100,000) ................................................... 100,000
-----------
TOTAL INVESTMENTS--147.3% (COST $20,276,679) ......................... 21,915,175
Other assets in excess of liabilities--3.1% .......................... 458,299
Liquidation value of preferred stock--(50.4)% ........................ (7,500,000)
-----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS--100% ................... $14,873,474
===========
</TABLE>
- -----------
* Rating: using the higher of Standard & Poor's, Moody's or Fitch's rating.
** For purposes of amortization.
+ Option call provisions: date (month/year) and prices of the earliest
optional call on redemption. There may be other call provisions at varying
prices at later dates.
This bond is prerefunded. See Glossary for definitions.
- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
COP -- 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.
5
<PAGE>
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THE BLACKROCK CALIFORNIA INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $20,276,679) (Note 1) ........... $21,915,175
Cash ........................................................ 184,810
Interest receivable ......................................... 310,140
Deferred organization expenses and other assets ............. 491
-----------
22,410,616
-----------
LIABILITIES
Advisory fee payable (Note 2) ............................... 6,642
Dividends payable-common stock .............................. 3,144
Administration fee payable (Note 2) ......................... 1,898
Dividends payable-preferred stock ........................... 1,315
Other accrued expenses ...................................... 24,143
-----------
37,142
-----------
NET INVESTMENT ASSETS ....................................... $22,373,474
===========
Net investment assets were comprised of:
Common stock:
Par value (Note 4) .................................... $ 10,071
Paid-in capital in excess of par ...................... 13,897,103
Preferred stock (Note 4) ................................. 7,500,000
-----------
21,407,174
Undistributed net investment income ...................... 146,509
Accumulated net realized loss ............................ (818,705)
Net unrealized appreciation .............................. 1,638,496
-----------
Net investment assets, October 31, 1997 .................. $22,373,474
===========
Net assets applicable to common shareholders ................ $14,873,474
===========
Net asset value per share:
($14,873,474 / 1,007,093 shares of common
stock issued and outstanding) ............................ $14.77
======
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INVESTMENT
QUALITY MUNICIPAL TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest and discount earned ................................ $1,272,163
----------
Expenses
Investment advisory ...................................... 77,035
Administration ........................................... 22,010
Auction agent ............................................ 18,800
Reports to shareholders .................................. 17,000
Directors ................................................ 12,000
Transfer agent ........................................... 7,000
Audit .................................................... 7,000
Legal .................................................... 6,500
Custodian ................................................ 3,000
Miscellaneous ............................................ 20,869
----------
Total expenses ........................................... 191,214
----------
Net investment income ....................................... 1,080,949
----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 3)
Net realized gain on investments ............................ 1,100
Net change in unrealized appreciation
on investments ........................................... 618,624
----------
Net gain on investments ..................................... 619,724
----------
NET INCREASE IN NET INVESTMENT
ASSETS RESULTING FROM OPERATIONS ............................ $1,700,673
See Notes to Financial Statements.
6
<PAGE>
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET INVESTMENT ASSETS 1997 1996
----- -----
Operations:
Net investment income ........................................................ $ 1,080,949 $1,089,014
Net realized gain on investments ............................................. 1,100 32,195
Net change in unrealized appreciation on investments ......................... 618,624 298,978
---------- ----------
Net increase in net investment assets resulting from operations 1,700,673 1,420,187
Dividends and distributions:
To common shareholders from net investment income ............................ (876,796) (796,360)
To preferred shareholders from net investment income ......................... (245,735) (254,442)
To common shareholders in excess of net realized gains on investments ........ (564) (14,099)
To preferred shareholders in excess of net realized gains on investments ..... (186) (4,883)
---------- ----------
Total dividends and distributions ............................................ (1,123,281) (1,069,784)
---------- ----------
Total increase ............................................................ 577,392 350,403
NET INVESTMENT ASSETS
Beginning of year ............................................................... 21,796,082 21,445,679
---------- ----------
End of year ..................................................................... $22,373,474 $21,796,082
========== ==========
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED OCTOBER 31, JUNE 4, 1993*
----------------------------------------------------------- THROUGH
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE 1997 1996 1995 1994 OCTOBER 31, 1993
----- ---- ---- ---- ----------------
Net asset value, beginning of period ................ $ 14.20 $ 13.85 $ 11.74 $ 14.73 $ 14.10
-------- -------- -------- -------- --------
Net investment income ............................ 1.07 1.08 1.05 1.04 .31
Net realized and unrealized gain (loss)
on investments ................................ .61 .33 2.12 (3.01) .83
-------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ............................ 1.68 1.41 3.17 (1.97) 1.14
-------- -------- -------- -------- --------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders ........................... (.87) (.80) (.79) (.79) (.20)
Preferred shareholders ........................ (.24) (.25) (.27) (.18) (.04)
Distributions from capital gains to:
Common shareholders ........................... -- -- -- (.03) --
Preferred shareholders ........................ -- -- -- (.01) --
Distributions in excess of net realized gains
on investments to:
Common shareholders ........................... *** (.01) -- -- --
Preferred shareholders ........................ *** *** -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ................ (1.11) (1.06) (1.06) (1.01) (.24)
-------- -------- -------- -------- --------
Capital charge with respect to issuance of
common and preferred stock ........................ -- -- -- (.01) (.27)
-------- -------- -------- -------- --------
Net asset value, end of period** .................... $ 14.77 $ 14.20 $ 13.85 $ 11.74 $ 14.73#
======== ======== ======== ======== ========
Per share market value, end of period** ............. $ 15.00 $ 13.50 $ 12.625 $ 10.625 $ 14.00
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN : ........................... 17.98% 13.80% 26.86% (18.85)% .68%
RATIOS TO AVERAGE NET ASSETS OF
COMMON SHAREHOLDERS:
Expenses ............................................ 1.32% 1.42% 1.52% 1.25% 1.07%+++
Net investment income before preferred
stock dividends ................................... 7.48% 7.78% 8.24% 7.81% 5.31%+++
Preferred stock dividends ........................... 1.70% 1.82% 2.09% 1.36% 0.73%+++
Net investment income available to
common shareholders ............................... 5.78% 5.96% 6.15% 6.45% 4.58%+++
SUPPLEMENTAL DATA:
Average net assets of common shareholders
(in thousands) ..................................... $ 14,445 $ 13,996 $ 12,892 $ 13,362 $ 14,504
Portfolio turnover rate ............................. 28% 72% 149% 184% 13%
Net assets of common shareholders,
end of period (in thousands) ...................... $ 14,873 $ 14,296 $ 13,946 $ 11,826 $ 14,836
Asset coverage per share of preferred stock,
end of period## .................................... $ 74,583 $ 72,654 $ 71,485 $128,837 $148,910
Preferred stock outstanding (in thousands) .......... $ 7,500 $ 7,500 $ 7,500 $ 7,500 $7,500
</TABLE>
- -------------------
* Commencement of investment operations.
** Net asset value and market value are published in THE WALL STREET JOURNAL
each Monday.
*** Actual amount paid for the year ended October 31, 1997 to common
shareholders was $0.00056 per share and to preferred shareholders was
$0.00018 per common share. Actual amount paid to preferred shareholders
for the year ended October 31, 1996 was $0.0048 per common share.
# Net asset value immediately after the closing of the first public offering
was $14.01.
## A stock split occurred on July 24, 1995 (Note 4).
+ Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market price on the last day of each period reported. Dividends and
distributions are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment
plan. This calculation does not reflect brokerage commissions. Total
investment returns for periods of less than one year are not annualized.
++ Ratios are calculated on the basis of income, expenses and preferred stock
dividends applicable to both the common and preferred shares relative to
the average net assets of common shareholders.
+++ Annualized.
The information above represents the audited operating performance data
for a share of common stock outstanding, total investment return, ratio 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 the Trust's
common stock.
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK CALIFORNIA INVESTMENT
QUALITY MUNICIPAL TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
The BlackRock California Investment Quality Municipal Trust Inc. (the "Trust")
was organized in Maryland on April 12, 1993 as a non-diversified closed-end
management investment company. The Trust had no transactions until May 27, 1993
when it sold 7,093 shares of common stock for $100,012 to BlackRock Financial
Management, Inc., (the "Adviser"). Investment operations commenced on June 4,
1993.
The Trust's investment objective is to provide high current income exempt
from regular federal and California state income taxes consistent with the
preservation of capital. 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 and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes original issue discounts or amortizes
premium on securities purchased using the interest method.
FEDERAL INCOME TAXES: For federal income tax purposes, the Trust is treated as a
separate taxpaying entity. It is the intent of the Trust to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its 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
realized short-term capital gains and other sources, if necessary. Net long-term
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 $16,000 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: The Trust accounts and reports 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
effect of applying this statement for the year ended October 31, 1997 was to
increase accumulated net realized loss and increase undistributed net investment
income by $3,468. 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.
NOTE 2. AGREEMENTS
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, 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 Prudential Investments Fund
Management LLC ("PIFM"), an indirect, wholly-owned subsidiary of The Prudential
Insurance Company of America.
9
<PAGE>
The investment 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 PIFM 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. PIFM pays occupancy and certain clerical
and accounting costs of the Trust. The Trust bears all other costs and expenses.
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 1997 aggregated $5,927,577 and $6,341,643,
respectively.
The federal income tax basis of the Trust's investments at October 31, 1997
was substantially the same as the basis for financial reporting purposes and,
accordingly, net and gross unrealized appreciation was $1,638,496.
For federal income tax purposes, the Trust had a capital loss carryforward
at October 31, 1997 of approximately $817,000 which will expire in 2002. Such
carryforward is after utilization of approximately $1,100 to offset the Trust's
net taxable gains recognized in the year ended October 31, 1997. Accordingly, no
capital gain distribution is expected to be paid to shareholders until net gains
have been realized in excess of such amount.
NOTE 4. CAPITAL
There are 200 million shares of $.01 par value common stock authorized. Of the
1,007,093 shares outstanding at October 31, 1997, the Adviser owned 7,093
shares. As of October 31, 1997 there were 300 shares of Preferred Stock Series
W7 outstanding.
Offering costs ($104,994) incurred in connection with the 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 July 29, 1993 the Trust
reclassified 150 shares of common stock and issued a series of Auction Market
Preferred Stock ("Preferred Stock") Series W7. The Preferred Stock had a
liquidation value of $50,000 per share plus any accumulated but unpaid
dividends. On May 16, 1995 shareholders approved a proposal to split each share
of 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.
Underwriting discounts ($112,500) and offering costs ($75,344) 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. Dividend rates ranged from 3.00% to 3.87%
during the year ended October 31, 1997.
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
shares 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.
NOTE 5. DIVIDENDS
Subsequent to October 31, 1997, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.073125 per common share payable
November 28, 1997 to shareholders of record on November 14, 1997.
For the period November 1, 1997 to November 30, 1997, dividends declared on
Preferred Stock totalled $18,985 in aggregate for the outstanding Preferred
Stock.
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
REPORT OF INDEPENDENT AUDITORS
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The Shareholders and Board of Directors of
The BlackRock California Investment Quality Municipal Trust Inc.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The BlackRock California Investment
Quality Municipal Trust Inc. as of October 31, 1997 and the related statements
of operations for the year then ended and 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 June 4,
1993 (commencement of investment operations) to October 31, 1993. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1997, 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 Investment Quality Municipal Trust Inc. at October 31,
1997, and the results of its operations, the changes in its net investment
assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche
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Deloitte & Touche LLP
New York, New York
December 12, 1997
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
TAX INFORMATION
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We are required by the Internal Revenue Code to advise you within 60 days
of the Trust's fiscal year end (October 31, 1997) as to the federal tax status
of dividends you received during such fiscal year.The dividend paid December 27,
1996 to common shareholders of record on December 13, 1996 included $0.00056 per
share of taxable ordinary income. The dividend paid December 11, 1996 to
preferred shareholders of record on December 10, 1996 included $0.62 per share
of taxable ordinary income. All other dividends paid to both common and
preferred shareholders consisted of federal tax-exempt interest.
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DIVIDEND INVESTMENT PLAN
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Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders will automatically have all distributions of dividends and capital
gains reinvested by State Street Bank and Trust Company (the "Plan Agent") in
Trust shares pursuant to the Plan unless an election is made to receive such
amounts in cash. The Plan Agent will effect purchases of shares under the Plan
in the open market. Shareholders who elect not to 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 Transfer Agent, 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 American
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with 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 shares.
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, state or local income taxes 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 by the Plan
Agent upon at least 90 days' written notice to all shareholders of the Trust.
The Plan may be terminated by the Plan Agent or the Trust upon at least 30 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 addresses
are on the front of this report.
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives
or policies that have not been approved by the shareholders, or to its charter
or by-laws, or 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.
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
INVESTMENT SUMMARY
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THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock California Investment Quality Municipal Trust's investment
objective is to provide high current income exempt from regular Federal and
California income tax consistent with the preservation of capital.
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 $50
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 either the New York or American Stock
Exchanges, several open-end funds and over 125 separate accounts for various
clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group which is a division of PNC Bank, N.A., one of the nations
largest banking organizations.
WHAT CAN THE TRUST INVEST IN?
Under normal conditions, the Trust expects to continue to manage its assets so
that at least 80% of its investments are rated at least investment grade ("BBB"
by Standard & Poor's and "Baa" by Moody's Investor Services) and up to 20% of
its assets may instead be deemed to be of equivalent credit quality by the
Adviser. The Trust intends to invest substantially all of the assets in a
portfolio of investment grade California Municipal Obligations, which include
debt obligations issued by or on behalf of California, its political
subdivisions, agencies and instrumentalities and by other qualifying issuers
that pay interest which, in the opinion of the bond counsel of the issuer, is
exempt from regular Federal and California income tax. California Municipal
Obligations are issued to obtain funds for various public functions, including
the construction of public facilities, the refinancing of outstanding
obligations, the obtaining of funds for general operating expenses and for loans
to other public institutions and facilities.
WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will manage the assets of the Trust in accordance with the Trust's
investment objective and policies to seek to achieve its objective by investing
in investment grade California Municipal Obligations. The Adviser actively
manages the assets in relation to market conditions and interest rate changes.
Depending on yield and portfolio allocation considerations, the Adviser may
choose to invest a portion of the Trust's assets in securities which pay
interest that is subject to AMT (alternative minimum tax). The Trust intends to
emphasize investments in California Municipal Obligations with long-term
maturities and expects to maintain an average portfolio maturity of 15-20 years,
but the average maturity may be shortened or lengthened from time to time
depending on market conditions.
Under current market conditions the use of leverage increases the income earned
by the Trust. The Trust employs leverage primarily through the issuance of
preferred stock. Preferred stockholders will receive dividends based on
short-term rates in exchange for allowing the Trust to borrow additional assets.
These assets will be invested in longer-term assets which typically offer higher
interest rates and the difference between the cost of the dividends paid to
preferred stockholders and the interest earned on the longer-term securities
will provide higher income levels for common stockholders in most interest rate
environments. The Trust issued preferred stock to leverage the portfolio at
approximately 35% of total assets. See "Leverage Considerations in the Trust"
below.
HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD? DOES THE TRUST PAY DIVIDENDS
REGULARLY?
The Trust's shares are traded on the American 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, 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.
13
<PAGE>
LEVERAGE CONSIDERATIONS IN THE TRUST
Leverage increases the duration (or price sensitivity of the net assets
with respect to changes in interest rates) of the Trust, which can improve the
performance of the fund in a declining rate environment, but can cause net
assets to decline faster in a rapidly rising interest rate environment. The
Trust may reduce, or unwind, the amount of leverage employed should BlackRock
consider that reduction to be in the best interests of the Trust. BlackRock's
portfolio managers continuously monitor and regularly review the Trust's use of
leverage and maintain the ability to unwind the leverage if that course is
chosen.
SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO THE TRUST
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.
INVESTMENT OBJECTIVE. Although the objective of the Trust is to provide high
current income exempt from regular Federal and California income tax consistent
with the preservation of capital, there can be no assurance that this objective
will be achieved.
DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends may
be higher or lower than the dividend the Trust is currently paying.
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 American Stock Exchange (AMEX symbol: RAA) 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.
INVESTMENT GRADE MUNICIPAL OBLIGATIONS. 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.
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. These securities involve 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.
14
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THE BLACKROCK CALIFORNIA INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
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 the Trust.
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.
15
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BLACKROCK
DIRECTORS
Laurence D. Fink, CHAIRMAN
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Walter F. Mondale
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
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
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 INVESTMENT
QUALITY MUNICIPAL TRUST INC.
c/o Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
09247U-10-7
[LOGO] Printed on recycled paper 09247U-20-6
================================================================================
THE BLACKROCK
CALIFORNIA
INVESTMENT QUALITY
MUNICIPAL TRUST INC.
================================================================================
ANNUAL REPORT
OCTOBER 31, 1997
[GRAPHIC]
