UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08573
Name of Fund: BlackRock MuniHoldings California Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock MuniHoldings California Insured Fund, Inc., 800
Scudders Mill Road, Plainsboro, NJ 08536. Mailing address: P.O. Box 9011,
Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (800) 882-0052
Date of fiscal year end: 06/30/07
Date of reporting period: 07/01/06 - 06/30/07
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock MuniHoldings BLACKROCK
California Insured Fund, Inc.
ANNUAL REPORT | JUNE 30, 2007
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniHoldings California Insured Fund, Inc.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
2 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
A Letter to Shareholders
Dear Shareholder
At the mid-point of 2007, investor sentiment appeared quite buoyant,
notwithstanding some undertones of caution. For equity markets, positive
momentum as the year began was interrupted by a notable but transitory set-back
at the end of February. Markets resumed their ascent through May, but entered a
trading range in June as investors began to question the sustainability of the
rally. For the most part, equities found support in robust
merger-and-acquisition activity, healthy global economies, tame inflation,
relatively low interest rates, still-positive earnings growth and attractive
valuations. These tailwinds prevailed over such headwinds as a weakening U.S.
economy, slowing housing market, credit-related lending problems, escalating
geopolitical concerns and high energy prices, leading the Standard & Poor's
(S&P) 500 Index to a new record high in May.
Meanwhile, turmoil in the subprime mortgage market and generally mixed economic
signals weighed on bonds. In June, bond prices dropped precipitously as
long-term yields rose to their highest levels in five years. The 10-year
Treasury yield, which began 2007 at 4.68%, reached nearly 5.30% in mid-June
before retracing to 5.03% by month's end. Notably, this year has brought some
re-steepening of the yield curve, which had been flat to inverted throughout
2006. Still, at the end of June, yields along the curve remained below the
federal funds rate of 5.25%, the level at which the Federal Reserve Board (the
Fed) has left it since first pausing in August 2006. While first-quarter gross
domestic product growth of 0.7% represented the slowest rate of expansion since
2002, the Fed reiterated that inflation, not a slowing economy, remains its
primary concern. Many observers interpreted the Fed's reaction to mean that the
economy has hit its low and is bound for renewed strength, thereby reducing the
likelihood of an interest rate cut in the near future.
Against this backdrop, the major equity market indexes posted strong returns for
the annual and semi-annual periods ended June 30, 2007, while fixed income
assets were more mixed:
Total Returns as of June 30, 2007 6-month 12-month
===============================================================================================================
U.S. equities (S&P 500 Index) + 6.96% +20.59%
---------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 6.45 +16.43
---------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +10.74 +27.00
---------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) + 0.98 + 6.12
---------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.14 + 4.69
---------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) + 2.96 +11.22
---------------------------------------------------------------------------------------------------------------
We expect market volatility to linger throughout the second half of 2007. As you
navigate the uncertainties, we encourage you to review your investment goals
with your financial professional and to make portfolio changes, as needed. For
more market insight, we invite you to view "What's Ahead in 2007: The
Second-Quarter Update" and "Are You Prepared for Volatility?" at
www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
Fund President and Director
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 3
The Benefits and Risks of Leveraging
BlackRock MuniHoldings California Insured Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To leverage,
the Fund issues Preferred Stock, which pays dividends at prevailing short-term
interest rates, and invests the proceeds in long-term municipal bonds. The
interest earned on these investments, net of dividends to Preferred Stock, is
paid to Common Stock shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share net asset value of the
Fund's Common Stock. However, in order to benefit Common Stock shareholders, the
yield curve must be positively sloped; that is, short-term interest rates must
be lower than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Stock shareholders. If either of
these conditions change, then the risks of leveraging will begin to outweigh the
benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As of June 30, 2007, the Fund's leverage amount, due to Auction Market Preferred
Stock, was 39.71% of total net assets, before the deduction of Preferred Stock.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. (See Note 1(c) to Financial Statements for details
of municipal bonds held in trust.)
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom the
Fund has entered into the swap will default on its obligation to pay the Fund
and the risk that the Fund will not be able to meet its obligations to pay the
other party to the agreement.
4 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Fund Summary as of June 30, 2007 (Unaudited)
Fund Information
Symbol on New York Stock Exchange .......................... MUC
Initial Offering Date ...................................... February 27, 1998
Yield on Closing Market Price as of 6/30/07 ($13.92)* ...... 5.00%
Current Monthly Distribution per Common Stock** ............ $ .058
Current Annualized Distribution per Common Stock** ......... $ .696
Leverage as of 6/30/07*** .................................. 39.71%
--------------------------------------------------------------------------------
* Yield on closing market price is calculated by dividing the current
annualized distribution per share by the closing market price. Past
performance does not guarantee future results.
** The distribution is not constant and is subject to change.
*** As a percentage of managed assets.
The table below summarizes the changes in the Fund's market price and net asset
value:
------------------------------------------------------------------------------------------------------
6/30/07 6/30/06 Change High Low
------------------------------------------------------------------------------------------------------
Market Price ........................... $13.92 $13.94 (0.14%) $15.39 $13.54
Net Asset Value ........................ $14.48 $14.44 0.28% $15.20 $14.34
------------------------------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 6/30/07 6/30/06
--------------------------------------------------------------------------------
City, County & State ...................................... 27% 22%
Tax Revenue ............................................... 16 19
Education ................................................. 14 13
Lease Revenue ............................................. 12 18
Power ..................................................... 10 6
Water & Sewer ............................................. 10 12
Transportation ............................................ 7 6
Hospital .................................................. 3 3
Housing ................................................... 1 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 6/30/07 12/31/06
--------------------------------------------------------------------------------
AAA/Aaa ................................................... 97% 95%
AA/Aa ..................................................... 3 1
A/A ....................................................... -- 4
--------------------------------------------------------------------------------
* Using the highest of S&P's and Moody's.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more stable level of dividend distributions, the
Fund may at times pay out less than the entire amount of net investment income
earned in any particular month and may at times in any particular month pay out
such accumulated but undistributed income in addition to net investment income
earned in that month. As a result, the dividends paid by the Fund for any
particular month may be more or less than the amount of net investment income
earned by the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the Statement of
Net Assets, which comprises part of the financial information included in this
report.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 5
Schedule of Investments as of June 30, 2007 (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California -- 146.2%
--------------------------------------------------------------------------------
$1,000 ABAG Finance Authority for Nonprofit Corporations,
California, COP (Children's Hospital Medical Center),
6% due 12/01/2029 (a) $ 1,054
--------------------------------------------------------------------------------
3,345 ABC California Unified School District, GO, Series A,
5.625% due 8/01/2020 (e)(j) 3,417
--------------------------------------------------------------------------------
4,000 Acalanes, California, Unified High School District, GO,
5.80% due 8/01/2007 (e)(i) 4,047
--------------------------------------------------------------------------------
10,000 Alameda, California, Unified School District, Capital
Appreciation, GO (Election of 2004), Series B, 5.02%
due 8/01/2035 (e)(f) 2,553
--------------------------------------------------------------------------------
7,360 Alhambra, California, Unified School District, GO
(Election of 2004), Series A, 5% due 8/01/2029 (c) 7,622
--------------------------------------------------------------------------------
2,825 Banning, California, Unified School District, GO
(Election of 2006), Series A, 5% due 8/01/2027 (c) 2,950
--------------------------------------------------------------------------------
3,885 Berkeley, California, GO, Series C, 5.375%
due 9/01/2007 (c)(i) 3,973
--------------------------------------------------------------------------------
6,520 Berkeley, California, Unified School District, GO,
Series I, 5.75% due 8/01/2008 (e)(i) 6,734
--------------------------------------------------------------------------------
2,925 Cajon Valley, California, Union School District, GO,
Series B, 5.50% due 8/01/2027 (b) 3,097
--------------------------------------------------------------------------------
2,180 California Community College Financing Authority,
Lease Revenue Bonds (Grossmont-Palomar-Shasta),
Series A, 5.625% due 4/01/2026 (b) 2,306
--------------------------------------------------------------------------------
California Educational Facilities Authority, Revenue
Refunding Bonds (Occidental College) (b)(i):
5,815 5.625% due 10/01/2007 5,958
5,000 5.70% due 10/01/2007 5,124
--------------------------------------------------------------------------------
3,500 California HFA, Home Mortgage Revenue Bonds,
VRDN, AMT, Series N, 3.80% due 8/01/2021 (e)(h) 3,500
--------------------------------------------------------------------------------
3,200 California HFA, Home Mortgage Revenue Bonds,
VRDN, Series F, 3.90% due 2/01/2033 (a)(h) 3,200
--------------------------------------------------------------------------------
California HFA, S/F Mortgage Revenue Bonds, AMT,
Class II (b):
205 Series A-1, 6% due 8/01/2020 208
1,160 Series C-2, 5.625% due 8/01/2020 (d) 1,176
--------------------------------------------------------------------------------
9,250 California Health Facilities Financing Authority Revenue
Bonds (Kaiser Permanente), Series A, 5.50%
due 6/01/2022 (e)(j) 9,563
--------------------------------------------------------------------------------
California Health Facilities Financing Authority,
Revenue Refunding Bonds (Catholic Healthcare West),
Series A (i):
510 5.75% due 7/01/2007 (a) 510
1,840 6% due 7/01/2007 (b) 1,859
--------------------------------------------------------------------------------
1,900 California Infrastructure and Economic Development
Bank Revenue Bonds (Los Angeles County Department
of Public Social Services), 5.75% due 9/01/2023 (a) 2,074
--------------------------------------------------------------------------------
California State, GO:
2,000 5.50% due 6/01/2025 (c) 2,079
15 5.25% due 4/01/2027 16
--------------------------------------------------------------------------------
California State, GO, Refunding:
1,075 5.75% due 12/01/2009 (i) 1,135
6,000 5.25% due 2/01/2026 (b) 6,271
--------------------------------------------------------------------------------
20,000 California State Public Works Board, Lease Revenue
Bonds (Various University of California Projects),
Series C, 5.125% due 9/01/2007 (a)(i) 20,445
--------------------------------------------------------------------------------
2,625 California State Public Works Board, Lease Revenue
Refunding Bonds (Various Community College Projects),
Series B, 5.625% due 3/01/2019 (a) 2,655
--------------------------------------------------------------------------------
10,000 California State University, Systemwide Revenue Bonds,
Series A, 5% due 11/01/2032 (c) 10,261
--------------------------------------------------------------------------------
5,000 California State University, Systemwide Revenue
Refunding Bonds, Series A, 5% due 11/01/2029 (e) 5,145
--------------------------------------------------------------------------------
7,050 California State, Various Purpose, GO, 5.50%
due 11/01/2033 7,519
--------------------------------------------------------------------------------
14,000 California State, Veterans, GO, Refunding, AMT,
Series BZ, 5.35% due 12/01/2021 (b) 14,035
--------------------------------------------------------------------------------
4,915 California Statewide Communities Development
Authority, Health Facility Revenue Bonds
(Memorial Health Services), Series A,
6% due 10/01/2023 5,267
--------------------------------------------------------------------------------
1,090 California Statewide Communities Development
Authority Revenue Bonds (Los Angeles Orthopedic
Hospital Foundation), 5.50% due 6/01/2019 (a) 1,102
--------------------------------------------------------------------------------
California Statewide Communities Development
Authority, Revenue Refunding Bonds:
5,000 (Kaiser Hospital Asset Management, Inc.),
Series C, 5.25% due 8/01/2031 5,156
2,650 (Kaiser Permanente), Series A,
5% due 4/01/2031 (f) 2,678
--------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of BlackRock MuniHoldings California Insured Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated
the names of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
M/F Multi-Family
ROLS Reset Option Long Securities
S/F Single-Family
VRDN Variable Rate Demand Notes
6 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California (continued)
--------------------------------------------------------------------------------
$ 4,500 Campbell, California, Redevelopment Agency,
Tax Allocation Refunding Bonds (Central Campbell
Redevelopment Project), Series A,
5% due 10/01/2032 (a) $ 4,611
--------------------------------------------------------------------------------
6,685 Castaic Lake, California, Water Agency Revenue Bonds,
COP, Series C, 5% due 8/01/2030 (b) 6,867
--------------------------------------------------------------------------------
8,705 Castaic Lake, California, Water Agency Revenue Bonds,
COP (Water System Improvement Project),
5.50% due 8/01/2009 (a)(i) 9,089
--------------------------------------------------------------------------------
9,905 Chaffey Community College District, California,
GO (Election of 2002), Series B, 5% due 6/01/2030 (b) 10,245
--------------------------------------------------------------------------------
2,750 Chula Vista, California, Public Financing Authority,
Revenue Refunding Bonds, Series A,
5% due 9/01/2029 (b) 2,820
--------------------------------------------------------------------------------
2,400 Coachella Valley, California, Unified School District,
GO (Election of 2005), Series A, 5% due 8/01/2027 (c) 2,489
--------------------------------------------------------------------------------
2,500 Colton, California, Joint Unified School District,
GO, Series A, 5.375% due 8/01/2026 (c) 2,663
--------------------------------------------------------------------------------
7,800 Contra Costa, California, Community College District,
GO (Election of 2002), 5% due 8/01/2028 (b) 8,053
--------------------------------------------------------------------------------
2,000 Contra Costa County, California, COP, Refunding
(Merrithew Memorial Hospital Project), 5.50%
due 11/01/2022 (b) 2,049
--------------------------------------------------------------------------------
5,910 Corona, California, Department of Water and Power,
COP, 5% due 9/01/2029 (b) 6,073
--------------------------------------------------------------------------------
5,000 Corona-Norco, California, Unified School District, GO
(Election of 2006), Series A, 5% due 8/01/2031 (e) 5,205
--------------------------------------------------------------------------------
4,250 Coronado, California, Community Development Agency,
Tax Allocation Bonds (Coronado Community
Development Project), 5% due 9/01/2030 (a) 4,359
--------------------------------------------------------------------------------
2,395 Covina-Valley, California, Unified School District, GO,
Refunding, Series A, 5.50% due 8/01/2026 (e) 2,555
--------------------------------------------------------------------------------
3,750 Culver City, California, Redevelopment Finance
Authority, Tax Allocation Revenue Refunding Bonds,
Series A, 5.60% due 11/01/2025 (e) 3,950
--------------------------------------------------------------------------------
1,870 Davis, California, Joint Unified School District,
Community Facilities District, Special Tax Refunding
Bonds, Number 1, 5.50% due 8/15/2007 (b)(i) 1,874
--------------------------------------------------------------------------------
6,015 East Bay, California, Municipal Utility District,
Wastewater System Revenue Refunding Bonds,
Sub-Series A, 5% due 6/01/2037 (a) 6,244
--------------------------------------------------------------------------------
20,900 East Bay, California, Municipal Utility District, Water
System Revenue Refunding Bonds, Series A, 5%
due 6/01/2037 (c) 21,694
--------------------------------------------------------------------------------
11,000 East Side Union High School District, California, Santa
Clara County, Capital Appreciation, GO (Election of
2002), Series E, 5.125% due 8/01/2028 (e)(k)(f) 3,827
--------------------------------------------------------------------------------
1,000 Escondido, California, COP, Refunding, Series A,
5.75% due 9/01/2024 (c) 1,059
--------------------------------------------------------------------------------
5,000 Foothill-De Anza, California, Community College District,
GO, Refunding, 5% due 8/01/2030 (c) 5,124
--------------------------------------------------------------------------------
4,455 Fresno, California, Airport Revenue Bonds, AMT,
Series B, 5.50% due 7/01/2020 (e) 4,628
--------------------------------------------------------------------------------
5,200 Fullerton, California, Joint Union High School District,
GO (Election of 2002), Series B, 5% due 8/01/2029 (c) 5,385
--------------------------------------------------------------------------------
4,040 Garden Grove, California, COP (Financing Project),
Series A, 5.50% due 3/01/2026 (a) 4,288
--------------------------------------------------------------------------------
5,200 Glendale, California, Unified School District, GO,
Series B, 5.125% due 9/01/2023 (e) 5,310
--------------------------------------------------------------------------------
2,155 Hartnell, California, Community College District, GO
(Election of 2002), Series B, 5% due 6/01/2031 (e) 2,235
--------------------------------------------------------------------------------
4,565 Hemet, California, Unified School District, GO,
Series A, 5.375% due 8/01/2026 (b) 4,806
--------------------------------------------------------------------------------
1,700 Inglewood, California, Unified School District, GO,
Series A, 5.60% due 10/01/2009 (c)(i) 1,784
--------------------------------------------------------------------------------
2,300 Irvine, California, Unified School District, Special Tax
(Community Facilities District Number 86-1), 5.375%
due 11/01/2020 (a) 2,389
--------------------------------------------------------------------------------
4,665 Irvine, California, Unified School District, Special Tax
Refunding Bonds (Community Facilities District
Number 86-1), 5.80% due 11/01/2020 (a) 4,788
--------------------------------------------------------------------------------
2,500 La Quinta, California, Financing Authority, Local Agency
Revenue Bonds, Series A, 5.25% due 9/01/2024 (a) 2,651
--------------------------------------------------------------------------------
2 La Quinta, California, Financing Authority, Local Agency
Tax Allocation and Revenue Refunding Bonds, ROLS,
Series II-R-412X, 6.422% due 9/01/2034 (a)(g) 3
--------------------------------------------------------------------------------
1,210 Little Lake, California, City School District, GO, Series B,
5.25% due 7/01/2022 (e) 1,274
--------------------------------------------------------------------------------
1,485 Lompoc, California, Unified School District, GO (Election
of 2002), Series C, 5% due 6/01/2032 (e) 1,545
--------------------------------------------------------------------------------
4,000 Long Beach, California, Bond Finance Authority, Lease
Revenue Bonds (Rainbow Harbor Refinancing Project),
Series A, 5.25% due 5/01/2009 (a)(i) 4,146
--------------------------------------------------------------------------------
11,110 Long Beach, California, Harbor Revenue Refunding
Bonds, AMT, Series B, 5.20% due 5/15/2027 (b) 11,493
--------------------------------------------------------------------------------
10,000 Los Angeles, California, Community Redevelopment
Agency, Community Redevelopment Financing Authority
Revenue Bonds (Bunker Hill Project), Series A, 5%
due 12/01/2027 (e) 10,268
--------------------------------------------------------------------------------
160 Los Angeles, California, M/F Housing Revenue Refunding
Bonds, Senior Series G, 5.65% due 1/01/2014 (e) 161
--------------------------------------------------------------------------------
Los Angeles, California, Unified School District, GO,
Refunding, Series B (c):
5,000 5% due 7/01/2023 5,236
5,400 4.75% due 7/01/2026 5,471
--------------------------------------------------------------------------------
10,000 Los Angeles, California, Unified School District, GO,
Series E, 5% due 7/01/2030 (a) 10,347
--------------------------------------------------------------------------------
5,000 Los Angeles, California, Wastewater System Revenue
Refunding Bonds, Series A, 4.75% due 6/01/2035 (b) 5,026
--------------------------------------------------------------------------------
5,000 Los Angeles, California, Water and Power Revenue
Bonds (Power System), Sub-Series A-1, 5%
due 7/01/2031 (e) 5,170
--------------------------------------------------------------------------------
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California (continued)
--------------------------------------------------------------------------------
Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue
Refunding Bonds:
$ 9,000 Proposition A, First Tier Senior Series A, 5%
due 7/01/2035 (a) $ 9,306
3,750 Proposition C, Second Tier Senior Series A, 5.25%
due 7/01/2010 (c)(i) 3,934
--------------------------------------------------------------------------------
2,735 Los Gatos, California, Unified School District, GO
(Election 2001), Series B, 5% due 8/01/2030 (e) 2,807
--------------------------------------------------------------------------------
1,890 Los Rios, California, Community College District, GO
(Election of 2002), Series B, 5% due 8/01/2027 (b) 1,949
--------------------------------------------------------------------------------
2,000 Madera, California, Public Financing Authority, Water
and Wastewater Revenue Refunding Bonds, 5%
due 3/01/2036 (b) 2,064
--------------------------------------------------------------------------------
6,365 Merced, California, Community College District, GO
(School Facilities District Number 1), 5%
due 8/01/2031 (b) 6,605
--------------------------------------------------------------------------------
5,000 Merced, California, Irrigation District, Electrical System
Revenue Refunding Bonds, 5.25% due 9/01/2036 (k) 5,243
--------------------------------------------------------------------------------
Metropolitan Water District of Southern California,
Waterworks Revenue Bonds:
3,550 Series A, 5% due 7/01/2035 (e) 3,666
9,000 Series B-1, 5% due 10/01/2033 (c) 9,223
--------------------------------------------------------------------------------
5,000 Modesto, California, Schools Infrastructure Financing
Agency, Special Tax Bonds, 5% due 9/01/2029 (a) 5,124
--------------------------------------------------------------------------------
2,000 Montebello, California, Community Redevelopment
Agency, Housing Tax Allocation Bonds, Series A, 5.45%
due 9/01/2007 (e)(i) 2,046
--------------------------------------------------------------------------------
4,150 Moorpark, California, Redevelopment Agency, Tax
Allocation Bonds (Moorpark Redevelopment Project),
5.125% due 10/01/2031 (a) 4,293
--------------------------------------------------------------------------------
2,315 Morgan Hill, California, Unified School District, GO,
5.75% due 8/01/2010 (c)(i) 2,465
--------------------------------------------------------------------------------
3,275 Northern California Power Agency, Public Power
Revenue Refunding Bonds (Hydroelectric Project
Number 1), Series A, 5.125% due 7/01/2023 (b) 3,338
--------------------------------------------------------------------------------
9,995 Oakland, California, Alameda County Unified School
District, GO, Refunding, Series C, 5.50%
due 8/01/2019 (c) 10,009
--------------------------------------------------------------------------------
Oakland, California, Alameda County Unified School
District, GO, Series F (b):
3,705 5.625% due 8/01/2020 3,883
5,245 5.625% due 8/01/2021 5,496
6,000 5.50% due 8/01/2024 6,255
--------------------------------------------------------------------------------
5,000 Ohlone, California, Community College District, GO,
Series B, 5% due 8/01/2030 (e) 5,175
--------------------------------------------------------------------------------
10,000 Oxnard, California, Financing Authority, Wastewater
Revenue Bonds (Redwood Trunk Sewer and Headworks
Projects), Series A, 5.25% due 6/01/2034 (c) 10,512
--------------------------------------------------------------------------------
10,000 Oxnard, California, Financing Authority, Water Revenue
Bonds, 5% due 6/01/2031 (b) 10,349
--------------------------------------------------------------------------------
6,475 Palm Desert, California, Financing Authority, Tax
Allocation Revenue Bonds (Project Area Number 2), 5%
due 8/01/2033 (b) 6,630
--------------------------------------------------------------------------------
1,000 Palm Springs, California, COP, Refunding (Multiple
Capital Facilities Project), 5.75% due 4/01/2017 (a) 1,025
--------------------------------------------------------------------------------
1,600 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center Project),
Series A, 5.50% due 11/01/2035 (b) 1,730
--------------------------------------------------------------------------------
9,100 Pleasanton, California, Unified School District, GO,
Series E, 5.50% due 8/01/2008 (c)(i) 9,369
--------------------------------------------------------------------------------
5,000 Port of Oakland, California, Port Revenue Refunding
Bonds, Series I, 5.40% due 11/01/2017 (b) 5,126
--------------------------------------------------------------------------------
Port of Oakland, California, Revenue Bonds, AMT,
Series K (c):
3,500 5.75% due 11/01/2014 3,652
17,120 5.75% due 11/01/2029 17,836
--------------------------------------------------------------------------------
9,070 Poway, California, Unified School District, Public
Financing Authority, Special Tax Revenue Bonds, 5%
due 9/15/2031 (a) 9,340
--------------------------------------------------------------------------------
10,090 RNR School Financing Authority, California, Special Tax
Bonds (Community Facilities District Number 92-1),
Series A, 5% due 9/01/2036 (a) 10,343
--------------------------------------------------------------------------------
5,085 Rancho Cordova, California, COP (City Hall Facility
Acquisition Project), 5% due 2/01/2015 (i)(k) 5,401
--------------------------------------------------------------------------------
2,205 Richmond, California, Joint Powers Financing Authority,
Tax Allocation Revenue Bonds, Series A, 5.50%
due 9/01/2018 (b) 2,317
--------------------------------------------------------------------------------
10,735 Riverside, California, Unified School District, GO
(Election of 2001), Series B, 5% due 8/01/2030 (b) 11,148
--------------------------------------------------------------------------------
Rohnert Park, California, Community Development
Commission, Tax Allocation Revenue Bonds (Rohnert
Park Redevelopment Project), Series R (c):
5,245 5% due 8/01/2030 5,395
10,000 5% due 8/01/2037 10,255
--------------------------------------------------------------------------------
2,125 Sacramento, California, Area Flood Control Agency,
Special Assessment Refunding Bonds (Consolidated
Capital Assessment District), Series A, 5%
due 10/01/2032 (c) 2,207
--------------------------------------------------------------------------------
8,775 Sacramento, California, City Financing Authority,
Revenue Refunding Bonds, 5% due 12/01/2029 (c) 9,098
--------------------------------------------------------------------------------
10,825 Sacramento, California, Municipal Utility District,
Electric Revenue Refunding Bonds, Series L, 5.125%
due 7/01/2022 (b) 11,034
--------------------------------------------------------------------------------
2,500 Sacramento, California, Municipal Utility District
Financing Authority, Revenue Bonds (Consumers
Project), 5.125% due 7/01/2029 (b) 2,628
--------------------------------------------------------------------------------
4,115 Saddleback Valley, California, Unified School District,
GO, 5% due 8/01/2029 (e) 4,246
--------------------------------------------------------------------------------
5,440 San Bernardino, California, Joint Powers Financing
Authority, Lease Revenue Bonds (Department of
Transportation Lease), Series A, 5.50%
due 12/01/2020 (b) 5,478
--------------------------------------------------------------------------------
8 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California (continued)
--------------------------------------------------------------------------------
$ 1,480 San Bernardino County, California, COP, Refunding
(Medical Center Financing Project), 5.50%
due 8/01/2019 (b) $ 1,482
--------------------------------------------------------------------------------
12,555 San Diego, California, Community College District, GO
(Election of 2002), 5% due 5/01/2030 (e) 12,982
--------------------------------------------------------------------------------
5,055 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series A, 5.25%
due 5/15/2027 (c) 5,110
--------------------------------------------------------------------------------
1,500 San Diego County, California, COP (Edgemoor Project
and Regional System), Refunding, 5% due 2/01/2029 (a) 1,539
--------------------------------------------------------------------------------
4,000 San Diego County, California, Water Authority, Water
Revenue Bonds, COP, Series A, 5% due 5/01/2031 (e) 4,099
--------------------------------------------------------------------------------
6,795 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Bonds, 5.50% due 7/01/2009 (c)(i) 7,091
--------------------------------------------------------------------------------
13,100 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, Series A, 5%
due 7/01/2030 (b) 13,554
--------------------------------------------------------------------------------
6,430 San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds, AMT,
Second Series, Issue 24A, 5.50% due 5/01/2024 (e) 6,691
--------------------------------------------------------------------------------
4,195 San Francisco, California, Community College District,
GO (Election of 2001), Series C, 5% due 6/15/2031 (e) 4,351
--------------------------------------------------------------------------------
5,530 San Joaquin County, California, COP, Refunding (County
Administration Building), 5% due 11/15/2030 (b) 5,692
--------------------------------------------------------------------------------
2,118 San Jose, California, Financing Authority, Lease
Revenue Refunding Bonds, DRIVERS, VRDN,
Series 1280Z, 5.97% due 12/01/2010 (a)(g) 2,197
--------------------------------------------------------------------------------
San Jose-Evergreen, California, Community College
District, Capital Appreciation, GO (Election of 2004),
Refunding, Series A (b)(f):
10,410 5.17% due 9/01/2024 4,431
7,250 5.340% due 9/01/2029 2,310
--------------------------------------------------------------------------------
7,785 San Juan, California, Unified School District, GO, 5.625%
due 8/01/2010 (c)(i) 8,260
--------------------------------------------------------------------------------
4,250 San Juan, California, Unified School District, GO
(Election of 2002), 5% due 8/01/2028 (b) 4,367
--------------------------------------------------------------------------------
5,650 San Mateo County, California, Transit District, Sales
Tax Revenue Refunding Bonds, Series A, 5%
due 6/01/2029 (b) 5,848
--------------------------------------------------------------------------------
7,345 Sanger, California, Unified School District, GO (Election
of 2006), 5% due 8/01/2027 (e) 7,695
--------------------------------------------------------------------------------
14,000 Santa Clara, California, Redevelopment Agency, Tax
Allocation Bonds (Bayshore North Project),
Series A, 5.50% due 6/01/2023 (a) 14,517
--------------------------------------------------------------------------------
6,050 Santa Clara, California, Subordinated Electric Revenue
Bonds, Series A, 5% due 7/01/2028 (b) 6,217
--------------------------------------------------------------------------------
9,750 Santa Clara County, California, Financing Authority,
Lease Revenue Refunding Bonds, Series A, 5%
due 11/15/2022 (a) 9,944
--------------------------------------------------------------------------------
9,000 Santa Fe Springs, California, Community Development,
Commission Tax Allocation Refunding Bonds
(Consolidated Redevelopment Project), Series A, 5%
due 9/01/2007 (b)(i) 9,198
--------------------------------------------------------------------------------
5,110 Santa Monica, California, Redevelopment Agency, Tax
Allocation Bonds (Earthquake Recovery Redevelopment
Project), 6% due 7/01/2009 (a)(i) 5,382
--------------------------------------------------------------------------------
2,855 Santa Rosa, California, High School District, GO
(Election of 2002), 5% due 8/01/2028 (b) 2,934
--------------------------------------------------------------------------------
10,910 Southern California Public Power Authority, Power
Project Revenue Bonds (Magnolia Power Project),
Series A-1, 5% due 7/01/2013 (a)(i) 11,535
--------------------------------------------------------------------------------
3,200 Stockton, California, Public Financing Authority, Water
Revenue Bonds (Water System Capital Improvement
Projects), Series A, 5% due 10/01/2031 (b) 3,311
--------------------------------------------------------------------------------
1,500 Stockton, California, Redevelopment Agency, Revenue
Bonds (Stockton Events Center -- Arena Project), 5%
due 9/01/2028 (c) 1,535
--------------------------------------------------------------------------------
4,400 Tamalpais, California, Union High School District, GO
(Election of 2006), 5% due 8/01/2028 (b) 4,576
--------------------------------------------------------------------------------
13,025 Tracy, California, Area Public Facilities Financing Agency,
Special Tax Refunding Bonds (Community Facilities
District Number 87-1), Series H, 5.875%
due 10/01/2019 (b) 13,770
--------------------------------------------------------------------------------
6,655 Turlock, California, Public Finance Authority, Sewer
Revenue Bonds, Series A, 5% due 9/15/2033 (c) 6,819
--------------------------------------------------------------------------------
7,475 University of California, COP, Series A, 5.25%
due 11/01/2007 (a)(i) 7,587
--------------------------------------------------------------------------------
10,500 University of California, General Revenue Refunding
Bonds, Series A, 5% due 5/15/2027 (a) 10,821
--------------------------------------------------------------------------------
1,410 University of California Revenue Bonds, Series K,
5.25% due 9/01/2008 (c)(i) 1,449
--------------------------------------------------------------------------------
16,000 University of California, Revenue Refunding Bonds
(Multiple Purpose Projects), Series E, 5.125%
due 9/01/2007 (b)(i) 16,192
--------------------------------------------------------------------------------
Vista, California, Unified School District, GO:
10,000 Series A, 5.25% due 8/01/2025 (e) 10,448
2,550 Series B, 5% due 8/01/2028 (c) 2,620
--------------------------------------------------------------------------------
6,075 Washington, California, Unified School District (Yolo
County), Capital Appreciation, GO (Election of 2004),
Series A, 4.98% due 8/01/2029 (c)(e)(f) 2,108
--------------------------------------------------------------------------------
5,825 West Contra Costa, California, Unified School District,
Capital Appreciation, GO (Election of 2002), Series C,
5.78% due 8/01/2029 (c)(e)(f) 2,021
--------------------------------------------------------------------------------
West Contra Costa, California, Unified School
District, GO (e):
6,690 (Election of 2002), Series B, 5% due 8/01/2032 6,842
2,595 (Election of 2005), Series A, 5% due 8/01/2026 2,693
--------------------------------------------------------------------------------
3,145 Yorba Linda, California, Redevelopment Agency,
Redevelopment Project Tax Allocation Revenue Bonds
(Subordinate Lien), Series B, 5% due 9/01/2032 (a) 3,222
--------------------------------------------------------------------------------
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 9
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Puerto Rico -- 4.5%
-------------------------------------------------------------------------------
Puerto Rico Electric Power Authority, Power
Revenue Bonds (i):
$11,215 Series HH, 5.30% due 7/01/2010 (e) $ 11,766
6,130 Series NN, 5.125% due 7/01/2013 6,515
-------------------------------------------------------------------------------
8,120 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series UU, 5% due 7/01/2024 (e) 8,538
-------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $871,050) -- 150.7% 892,202
===============================================================================
===============================================================================
Municipal Bonds Held in Trust (n)
===============================================================================
California -- 25.5%
-------------------------------------------------------------------------------
12,000 Contra Costa County, California, COP, Refunding
(Merrithew Memorial Hospital Project), 5.375%
due 11/01/2017 (b) 12,296
-------------------------------------------------------------------------------
7,165 La Quinta, California, Financing Authority,
Local Agency Revenue Bonds, Series A, 5.125%
due 9/01/2034 (a) 7,438
-------------------------------------------------------------------------------
15,490 Peralta, California, Community College District, GO
(Election of 2000), Series D, 5% due 8/01/2035 (e) 15,999
-------------------------------------------------------------------------------
25,350 Port of Oakland, California, Revenue Refunding Bonds,
AMT, Series L, 5.375% due 11/01/2027 (c) 26,452
-------------------------------------------------------------------------------
34,260 Sacramento, California, Municipal Utility District
Financing Authority, Revenue Bonds (Consumers
Project), 5.125% due 7/01/2029 (b) 36,012
-------------------------------------------------------------------------------
10,000 San Diego County, California, Water Authority, Water
Revenue Refunding Bonds, COP, Series A, 5%
due 5/01/2032 (b) 10,258
-------------------------------------------------------------------------------
13,500 San Francisco, California, City and County Public
Utilities Commission, Water Revenue Refunding Bonds,
Series A, 5% due 11/01/2032 (b) 13,893
-------------------------------------------------------------------------------
10,564 San Jose, California, Financing Authority, Lease Revenue
Refunding Bonds (Civic Center Project), Series B,
5% due 6/01/2032 (a) 10,760
-------------------------------------------------------------------------------
17,400 University of California, Limited Project Revenue Bonds,
Series B, 5% due 5/15/2033 (e) 17,909
-------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $152,699) -- 25.5% 151,017
===============================================================================
===============================================================================
Shares
Held Short-Term Securities Value
===============================================================================
15 CMA California Municipal Money Fund, 3.18% (l)(m) $ 15
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $15) -- 0.0% 15
===============================================================================
Total Investments (Cost -- $1,023,764*) -- 176.2% 1,043,234
Other Assets Less Liabilities -- 2.1% 12,612
Liability for Trust Certificates,
Including Interest Expense Payable -- (12.4%) (73,597)
Preferred Stock, at Redemption Value -- (65.9%) (390,196)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 592,053
==========
* The cost and unrealized appreciation (depreciation) of investments as of
June 30, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $ 950,629
=========
Gross unrealized appreciation .............................. $ 24,167
Gross unrealized depreciation .............................. (4,427)
---------
Net unrealized appreciation ................................ $ 19,740
=========
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) FHA Insured.
(e) FSA Insured.
(f) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(g) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(h) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(i) Prerefunded.
(j) Escrowed to maturity.
(k) XL Capital Insured.
(l) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA California Municipal Money Fund (2,432) $171
--------------------------------------------------------------------------
(m) Represents the current yield as of June 30, 2007.
(n) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1(c)
to Financial Statements for details of municipal bonds held in trust.
See Notes to Financial Statements.
10 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Statement of Net Assets
As of June 30, 2007
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $1,023,749,062) $1,043,219,417
Investments in affiliated securities, at value (identified cost -- $14,601) ......... 14,601
Cash ................................................................................ 27,863
Interest ........................................................................ $ 14,979,361
Securities sold ................................................................. 5,928,532 20,907,893
-------------
Prepaid expenses .................................................................... 3,582
--------------
Total assets ........................................................................ 1,064,173,356
--------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Trust certificates .................................................................. 72,864,500
Payables:
Securities purchased ............................................................ 5,225,989
Dividends to Common Stock shareholders .......................................... 2,370,719
Interest expense ................................................................ 732,598
Investment adviser .............................................................. 424,326
Other affiliates ................................................................ 4,539 8,758,171
-------------
Accrued expenses .................................................................... 301,014
--------------
Total liabilities ................................................................... 81,923,685
--------------
===================================================================================================================================
Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.10 per share (1,920 Class
A Shares, 3,880 Class B Shares, 3,200 Class C Shares, 2,960 Class D Shares and
3,640 Class E Shares of AMPS* authorized, issued and outstanding at $25,000
per share liquidation preference) ................................................. 390,196,175
--------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ............................................... $ 592,053,496
=============
===================================================================================================================================
Analysis of Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share (40,874,458 shares issued and outstanding) ... $ 4,087,446
Paid-in capital in excess of par .................................................... 603,025,455
Undistributed investment income -- net .............................................. $ 2,399,315
Accumulated realized capital losses -- net .......................................... (36,929,075)
Unrealized appreciation -- net ...................................................... 19,470,355
-------------
Total accumulated losses -- net ..................................................... (15,059,405)
--------------
Total -- Equivalent to $14.48 net asset value per share of Common Stock
(market price -- $13.92) .......................................................... $ 592,053,496
--------------
* Auction Market Preferred Stock.
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 11
Statement of Operations
For the Year Ended June 30, 2007
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
Interest ............................................................................ $ 50,686,389
Dividends from affiliates ........................................................... 170,922
-------------
Total income ........................................................................ 50,857,311
-------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................................ $ 5,465,998
Interest expense and fees ........................................................... 2,882,247
Commission fees ..................................................................... 989,606
Accounting services ................................................................. 273,855
Professional fees ................................................................... 88,462
Transfer agent fees ................................................................. 88,335
Printing and shareholder reports .................................................... 66,185
Custodian fees ...................................................................... 47,101
Directors' fees and expenses ........................................................ 37,355
Pricing fees ........................................................................ 28,802
Listing fees ........................................................................ 14,260
Other ............................................................................... 65,661
-------------
Total expenses before waiver and reimbursement ...................................... 10,047,867
Waiver and reimbursement of expenses ................................................ (367,651)
-------------
Total expenses after waiver and reimbursement ....................................... 9,680,216
-------------
Investment income -- net ............................................................ 41,177,095
-------------
===================================================================================================================================
Realized & Unrealized Gain (Loss) -- Net
-----------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments -- net .............................................................. 4,464,028
Financial futures contracts -- net .............................................. 67,742 4,531,770
-------------
Change in unrealized appreciation on investments -- net ............................. (1,281,142)
-------------
Total realized and unrealized gain -- net ........................................... 3,250,628
-------------
===================================================================================================================================
Dividends to Preferred Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................ (12,734,644)
-------------
Net Increase in Net Assets Resulting from Operations ................................ $ 31,693,079
=============
See Notes to Financial Statements.
12 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Statements of Changes in Net Assets
For the Year Ended
June 30,
------------------------------
Increase (Decrease) in Net Assets: 2007 2006
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................ $ 41,177,095 $ 42,866,890
Realized gain -- net ................................................................ 4,531,770 9,033,357
Change in unrealized appreciation -- net ............................................ (1,281,142) (43,515,955)
Dividends to Preferred Stock shareholders ........................................... (12,734,644) (10,285,335)
------------------------------
Net increase (decrease) in net assets resulting from operations ..................... 31,693,079 (1,901,043)
------------------------------
===================================================================================================================================
Dividends to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ............................................................ (29,867,063) (37,217,450)
------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholder ..... (29,867,063) (37,217,450)
------------------------------
===================================================================================================================================
Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets derived from stock transactions .......................... 823,540 2,413,582
------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock .................. 2,649,556 (36,704,911)
Beginning of year ................................................................... 589,403,940 626,108,851
------------------------------
End of year* ........................................................................ $ 592,053,496 $ 589,403,940
==============================
* Undistributed investment income -- net ........................................ $ 1,546,251 $ 4,109,174
==============================
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 13
Financial Highlights
The following per share data and ratios For the Year Ended June 30,
have been derived from information ----------------------------------------------------------------
provided in the financial statements. 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ................. $ 14.44 $ 15.40 $ 14.73 $ 15.53 $ 14.82
----------------------------------------------------------------
Investment income -- net* .......................... 1.01 1.05 1.07 1.05 1.09
Realized and unrealized gain (loss) -- net ......... .07 (.85) .69 (.84) .63
Dividends and distributions to Preferred
Stock shareholders:
Investment income -- net ....................... (.31) (.25) (.14) (.08) (.10)
Realized gain -- net ........................... -- -- -- -- --
----------------------------------------------------------------
Total from investment operations ................... .77 (.05) 1.62 .13 1.62
----------------------------------------------------------------
Less dividends and distributions to Common
Stock shareholders:
Investment income -- net ....................... (.73) (.91) (.95) (.93) (.91)
Realized gain -- net ........................... -- -- -- -- --
----------------------------------------------------------------
Total dividends and distributions to Common
Stock shareholders ............................... (.73) (.91) (.95) (.93) (.91)
----------------------------------------------------------------
Net asset value, end of year ....................... $ 14.48 $ 14.44 $ 15.40 $ 14.73 $ 15.53
================================================================
Market price per share, end of year ................ $ 13.92 $ 13.94 $ 14.97 $ 13.36 $ 14.85
================================================================
===================================================================================================================================
Total Investment Return***
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ................. 5.46% (.29%) 11.56% 1.28% 11.60%
================================================================
Based on market price per share .................... 5.02% (.98%) 19.56% (3.93%) 11.45%
================================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and
reimbursement and interest expense and
fees** ........................................... 1.12% 1.10% 1.11% 1.10% 1.11%
================================================================
Total expenses, net of waiver and
reimbursement** .................................. 1.60% 1.35% 1.16% 1.17% 1.24%
================================================================
Total expenses** ................................... 1.66% 1.41% 1.22% 1.24% 1.31%
================================================================
Total investment income -- net ..................... 6.81% 7.01% 6.99% 6.87% 7.09%
================================================================
Amount of dividends to Preferred Stock
shareholders ..................................... 2.11% 1.68% .93% .53% .65%
================================================================
Investment income -- net, to Common Stock
shareholders ..................................... 4.70% 5.33% 6.06% 6.34% 6.44%
================================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders .......... 3.27% 2.62% 1.48% .85% 1.03%
================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of year (in thousands) ....................... $592,053 $589,404 $626,109 $598,908 $631,571
================================================================
Preferred Stock outstanding,
end of year (in thousands) ....................... $390,000 $390,000 $390,000 $390,000 $390,000
================================================================
Portfolio turnover ................................. 35% 34% 47% 35% 25%
================================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 .......................... $ 2,518 $ 2,511 $ 2,605 $ 2,536 $ 2,619
================================================================
===================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
-----------------------------------------------------------------------------------------------------------------------------------
Series A -- Investment income -- net ............... $ 806 $ 641 $ 347 $ 195 $ 253
================================================================
Series B -- Investment income -- net ............... $ 828 $ 671 $ 391 $ 216 $ 269
================================================================
Series C -- Investment income -- net ............... $ 815 $ 662 $ 373 $ 218 $ 248
================================================================
Series D -- Investment income -- net ............... $ 806 $ 653 $ 351 $ 210 $ 255
================================================================
Series E -- Investment income -- net ............... $ 819 $ 659 $ 369 $ 213 $ 262
================================================================
* Based on average shares outstanding.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effect of sales
charges.
See Notes to Financial Statements.
14 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, MuniHoldings California Insured Fund, Inc. was renamed
BlackRock MuniHoldings California Insured Fund, Inc. (the "Fund"). The Fund is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end management investment company. The Fund's financial
statements are prepared in conformity with U.S. generally accepted accounting
principles, which may require the use of management accruals and estimates.
Actual results may differ from these estimates. The Fund determines and makes
available for publication the net asset value of its Common Stock on a daily
basis. The Fund's Common Stock shares are listed on the New York Stock Exchange
under the symbol MUC. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values as obtained by a pricing service.
Pricing services use valuation matrixes that incorporate both dealer-supplied
valuations and valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general direction
of the Board of Directors. Such valuations and procedures are reviewed
periodically by the Board of Directors of the Fund. Financial futures contracts
and options thereon, which are traded on exchanges, are valued at their closing
prices as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded options. Options
traded in the OTC market are valued at the last asked price (options written) or
the last bid price (options purchased). Swap agreements are valued by quoted
fair values received daily by the Fund's pricing service. Investments in
open-end investment companies are valued at their net asset value each business
day. Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits, and maintains, as
collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
o Options -- The Fund may write covered call options and purchase put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked-to-market to reflect
the current market value of the option written. When a security is
purchased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent
of the premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make net periodic payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
o Swaps -- The Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 15
Notes to Financial Statements (continued)
pre-determined credit event. The net periodic payments may be based on a
fixed or variable interest rate; the change in market value of a specified
security, basket of securities or index; or the return generated by a
security. These periodic payments received or made by the Fund are
recorded in the accompanying Statement of Operations as realized gains or
losses, respectively. Gains or losses are also realized upon termination
of the swap agreements. Swaps are marked-to-market daily and changes in
value are recorded as unrealized appreciation (depreciation). Risks
include changes in the returns of the underlying instruments, failure of
the counterparties to perform under the contracts' terms and the possible
lack of liquidity with respect to the swap agreements.
(c) Municipal bonds held in trust -- The Fund invests in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which the Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. The Fund's transfer of the municipal
securities to a TOB does not qualify for sale treatment under Statement of
Financial Accounting Standards No. 140 "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," therefore the municipal
securities deposited into a TOB are presented in the Fund's schedule of
investments and the proceeds from the transaction are reported as a liability
for trust certificates of the Fund. Similarly, proceeds from residual
certificates issued to affiliates, if any, from the transaction are included in
the liability for trust certificates. Interest income from the underlying
security is recorded by the Fund on an accrual basis. Interest expense incurred
on the secured borrowing and other expenses related to remarketing,
administration and trustee services to a TOB are reported as expenses of the
Fund. The floating rate certificates have interest rates that generally reset
weekly and their holders have the option to tender certificates to the TOB for
redemption at par at each reset date. The residual interests held by the Fund
include the right of the Fund (1) to cause the holders of a proportional share
of the floating rate certificates to tender their certificates at par, and (2)
to transfer a corresponding share of the municipal securities from the TOB to
the Fund. At June 30, 2007, the aggregate value of the underlying municipal
securities transferred to TOBs was $151,017,121, the related liability for trust
certificates was $72,864,500 and the range of interest rates on the liability
for trust certificates was 3.74% to 3.78%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investment in TOB Residuals likely will adversely affect the Fund's investment
income -- net and distributions to shareholders. Fluctuations in the market
value of municipal securities deposited into the TOB may adversely affect the
Fund's net asset value per share.
While the Fund's investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Fund to borrow money for purposes of making
investments. The Fund's management believes that the Fund's restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(f) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) Reclassification -- U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the current
year, $285,247 has been reclassified between undistributed net investment income
and accumulated net realized capital losses as a result of a permanent
difference attributable to amortization methods on fixed income securities. This
reclassification has no effect on net assets or net asset values per share.
16 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Notes to Financial Statements (continued)
(h) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109."
FIN 48 prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including mutual funds, before being measured
and recognized in the financial statements. Adoption of FIN 48 is required for
the last net asset value calculation in the first required financial statement
reporting period for fiscal years beginning after December 15, 2006. The impact
on the Fund's financial statements, if any, is currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business, Merrill Lynch
Investment Managers, L.P. ("MLIM") and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc. has
approximately a 34% economic and voting interest. The new company operates under
the BlackRock name and is governed by a board of directors with a majority of
independent members.
On August 15, 2006, shareholders of the Fund approved a new Investment Advisory
Agreement with BlackRock Advisors, Inc. BlackRock Advisors, Inc. was reorganized
into a limited liability company and renamed BlackRock Advisors, LLC (the
"Manager"). The new Investment Advisory Agreement between the Fund and the
Manager became effective on September 29, 2006. Prior to September 29, 2006, FAM
was the manager. The general partner of FAM is an indirect, wholly owned
subsidiary of Merrill Lynch, which is the limited partner.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .55% of the Fund's average daily net
assets, including proceeds from the issuance of Preferred Stock. The Manager
(and previously FAM) has agreed to waive its management fee on the proceeds of
Preferred Stock that exceeds 35% of the Fund's total net assets. For the period
July 1, 2006 to September 29, 2006, FAM earned fees of $1,358,540, of which
$91,218 was waived and for the period September 30, 2006 to June 30, 2007, the
Manager earned fees of $4,107,458, of which $253,699 was waived. In addition,
the Manager (and previously FAM) has agreed to reimburse its advisory fee by the
amount of advisory fees the Fund pays to the Manager (and previously FAM)
indirectly through its investment in CMA California Municipal Money Fund. For
the period July 1, 2006 to September 29, 2006, FAM reimbursed the Fund in the
amount of $9,748 and for the period September 30, 2006 to June 30, 2007, the
Manager reimbursed the Fund in the amount of $12,986.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC ("BIM"), an affiliate of the Manager, under
which the Manager pays BIM for services it provides a monthly fee that is a
percentage of the management fee paid by the Fund to the Manager.
For the year ended June 30, 2007, the Fund reimbursed FAM and the Manager $5,033
and $14,880, respectively, for certain accounting services.
Prior to September 29, 2006, certain officers and/or directors of the Fund were
officers and/or directors of FAM, MLIM, and/or Merrill Lynch.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 17
Notes to Financial Statements (concluded)
Commencing September 29, 2006, certain officers and/or directors of the Fund are
officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended June 30, 2007 were $384,956,598 and $365,459,983, respectively.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of stock, including Preferred
Stock, par value $.10 per share, all of which were initially classified as
Common Stock. The Board of Directors is authorized, however, to reclassify any
unissued shares of stock without approval of holders of Common Stock.
Common Stock
Shares issued and outstanding during the years ended June 30, 2007 and June 30,
2006 increased by 54,952 and 162,205, respectively, as a result of dividend
reinvestment.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Fund, with a
par value of $.10 per share and a liquidation preference of $25,000 per share
that entitle their holders to receive cash dividends at an annual rate that may
vary for the successive dividend periods. The yields in effect at June 30, 2007
were: Series A, 3.70%; Series B, 3.50%; Series C, 3.75%; Series D, 3.68%; and
Series E, 3.80%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended June 30, 2007, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of the Manager, earned $253,066 as commissions.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.058000 per share on August 1, 2007 to shareholders of record on July
16, 2007.
The tax character of distributions paid during the fiscal years ended June 30,
2007 and June 30, 2006 was as follows:
--------------------------------------------------------------------------------
6/30/2007 6/30/2006
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $42,601,707 $47,502,785
--------------------------
Total distributions .............................. $42,601,707 $47,502,785
==========================
As of June 30, 2007, the components of accumulated losses on a tax basis were as
follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net ...................... $ 1,549,517
Undistributed ordinary income -- net ........................ 161,143
------------
Total undistributed earnings -- net ......................... 1,710,660
Capital loss carryforward ................................... (31,882,311)*
Unrealized gains -- net ..................................... 15,112,246**
------------
Total accumulated losses -- net ............................. $(15,059,405)
============
* On June 30, 2007, the Fund had a net capital loss carryforward of
$31,882,311, of which $3,988,050 expires in 2008, $24,786,894 expires in
2009 and $3,107,367 expires in 2012. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on straddles, the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities and the difference between the book
and tax treatment of residual interests in tender option bond trusts.
18 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock MuniHoldings California
Insured Fund, Inc.:
We have audited the accompanying statement of net assets, including the schedule
of investments, of BlackRock MuniHoldings California Insured Fund, Inc.
(formerly MuniHoldings California Insured Fund, Inc.) as of June 30, 2007, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund'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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of June 30, 2007 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock MuniHoldings California Insured Fund, Inc. as of June 30, 2007, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and its financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
August 21, 2007
Fund Certification (Unaudited)
In May 2007, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Forms N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Important Tax Information (Unaudited)
All of the net investment income distributions paid by BlackRock MuniHoldings
California Insured Fund, Inc. during the taxable year ended June 30, 2007
qualify as tax-exempt interest dividends for federal income tax purposes.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 19
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York (the
"Plan Agent"). Under the Plan, whenever the Fund declares a dividend,
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund. The Plan Agent will acquire the shares for the participant's
account either (i) through receipt of additional unissued but authorized shares
of the Fund ("newly issued shares") or (ii) by purchase of outstanding shares of
Common Stock on the open market on the New York Stock Exchange or elsewhere. If,
on the dividend payment date, the Fund's net asset value per share is equal to
or less than the market price per share plus estimated brokerage commissions (a
condition often referred to as a "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares. If the Fund's net asset value per
share is greater than the market price per share (a condition often referred to
as a "market discount"), the Plan Agent will invest the dividend amount by
purchasing on the open market additional shares. If the Plan Agent is unable to
invest the full dividend amount in open market purchases, or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will invest any uninvested portion in newly issued shares. The shares acquired
are credited to each shareholder's account. The amount credited is determined by
dividing the dollar amount of the dividend by either (i) when the shares are
newly issued, the net asset value per share on the date the shares are issued or
(ii) when shares are purchased in the open market, the average purchase price
per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Fund's shares are trading at a
market premium, the Fund issues shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
20 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Officers and Directors
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 121 Funds None
Doll, Jr.* Princeton, NJ President present Global Chief Investment Officer for Equities, 161 Portfolios
08543-9011 and Chairman of the BlackRock Retail Operating
Age: 52 Director Committee, and member of the BlackRock Executive
Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and
President of Princeton Administrators, L.P.
("Princeton Administrators") from 2001 to 2006;
Chief Investment Officer of OppenheimerFunds, Inc.
in 1999 and Executive Vice President thereof from
1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which
BlackRock Advisors, LLC and its affiliates act as investment adviser. Mr. Doll is an "interested person," as
defined in the Investment Company Act, of the Fund based on his positions with BlackRock, Inc. and its affiliates.
Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
As Fund President, Mr. Doll serves at the pleasure of the Board of Directors.
====================================================================================================================================
Independent Directors*
------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director 1997 to Director, The China Business Group, Inc. since 37 Funds None
Bodurtha** Princeton, NJ present 1996 and Executive Vice President thereof from 57 Portfolios
08543-9095 1996 to 2003; Chairman of the Board, Berkshire
Age: 63 Holding Corporation since 1980; Partner, Squire,
Sanders & Dempsey from 1980 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9095 Director 2005 to Professor, Harvard University since 1992; 37 Funds None
Froot Princeton, NJ present Professor, Massachusetts Institute of Technology 57 Portfolios
08543-9095 from 1986 to 1992.
Age: 49
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 21
Officers and Directors (continued)
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (continued)
------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director 2002 to Member of the Committee of Investment of 37 Funds Kimco
Grills** Princeton, NJ present Employee Benefit Assets of the Association of 57 Portfolios Realty
08543-9095 Financial Professionals ("CIEBA") since 1986; Corporation
Age: 72 Member of CIEBA's Executive Committee since
1988 and its Chairman from 1991 to 1992;
Assistant Treasurer of International Business
Machines Corporation ("IBM") and Chief
Investment Officer of IBM Retirement Funds from
1986 to 1993; Member of the Investment Advisory
Committee of the State of New York Common
Retirement Fund from 1989 to 2006; Member of
the Investment Advisory Committee of the Howard
Hughes Medical Institute from 1997 to 2000;
Director, Duke University Management Company
from 1992 to 2004, Vice Chairman thereof from
1998 to 2004, and Director Emeritus thereof since
2004; Director, LaSalle Street Fund from 1995 to
2001; Director, Kimco Realty Corporation since
1997; Member of the Investment Advisory
Committee of the Virginia Retirement System since
1998, Vice Chairman thereof from 2002 to 2005,
and Chairman thereof since 2005; Director,
Montpelier Foundation since 1998, its Vice
Chairman from 2000 to 2006, and Chairman,
thereof, since 2006; Member of the Investment
Committee of the Woodberry Forest School since
2000; Member of the Investment Committee of
the National Trust for Historic Preservation
since 2000.
------------------------------------------------------------------------------------------------------------------------------------
Herbert P.O. Box 9095 Director 1997 to Professor Emeritus, New York University since 37 Funds None
I. London Princeton, NJ present 2005; John M. Olin Professor of Humanities, New 57 Portfolios
08543-9095 York University from 1993 to 2005; and Professor
Age: 68 thereof from 1980 to 2005; President, Hudson
Institute since 1997 and Trustee thereof since
1980; Dean, Gallatin Division of New York
University from 1976 to 1993; Distinguished
Fellow, Herman Kahn Chair, Hudson Institute from
1984 to 1985; Chairman of the Board of Directors
of Vigilant Research, Inc. since 2006; Member of
the Board of Directors for Grantham University
since 2006; Director of AIMS since 2006; Director
of Reflex Security since 2006; Director of
InnoCentive, Inc. since 2006; Director of Cerego,
LLC since 2005; Director, Damon Corp. from 1991 to
1995; Overseer, Center for Naval Analyses from
1983 to 1993.
22 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007
Officers and Directors (concluded)
Number of
Funds and
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director 1999 to Shareholder, Modrall, Sperling, Roehl, Harris & 37 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 57 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of
Age: 64 the Board of Governors thereof from 1994 to 1997;
Shareholder, Poole, Kelly & Ramo, Attorneys at
Law, P.C. from 1977 to 1993; Director of ECMC
Group (service provider to students, schools and
lenders) since 2001; Director, United New Mexico
Bank (now Wells Fargo) from 1983 to 1988;
Director, First National Bank of New Mexico (now
Wells Fargo) from 1975 to 1976; Vice President,
American Law Institute since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director 2002 to Principal of STI Management (investment adviser) 37 Funds None
Salomon, Princeton, NJ present from 1994 to 2005; Chairman and CEO of Salomon 57 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to
Age: 70 1995; Chairman of Salomon Brothers Equity Mutual
Funds from 1992 to 1995; regular columnist with
Forbes Magazine from 1992 to 2002; Director of
Stock Research and U.S. Equity Strategist at
Salomon Brothers Inc. from 1975 to 1991; Trustee,
Commonfund from 1980 to 2001.
------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Co-Chairman of the Board of Directors and the Audit Committee.
------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1997 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill Lynch
Burke Princeton, NJ President present Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM") in 2006;
08543-9011 and and First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof from
Age: 47 Treasurer 1999 to 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
present
------------------------------------------------------------------------------------------------------------------------------------
Karen P.O. Box 9011 Fund Chief 2007 to Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
Clark Princeton, NJ Compliance present BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to 2007;
08543-9011 Officer Principal and Senior Compliance Officer, State Street Global Advisors, from 2001 to
Age: 42 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998 to 2001; and
Branch Chief, Division of Investment Management and Office of Compliance
Inspections and Examinations, U.S. Securities and Exchange Commission, from 1993
to 1998.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from 2002
Pellegrino Princeton, NJ present to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
08543-9011 from 1997 to 1999; Secretary of MLIM, FAM, FAM Distributors, Inc. and Princeton
Age: 47 Services from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
Common Stock:
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. JUNE 30, 2007 23
BlackRock MuniHoldings California Insured Fund, Inc. seeks to provide
shareholders with current income exempt from federal and California income
taxes. The Fund seeks to achieve this objective by investing primarily in a
portfolio of long-term investment grade municipal obligations the interest on
which, in the opinion of bond counsel to the issuer, is exempt from federal and
California income taxes.
This report, including the financial information herein, is transmitted to
shareholders of BlackRock MuniHoldings California Insured Fund, Inc. for their
information. It is not a prospectus. Past performance results shown in this
report should not be considered a representation of future performance. The Fund
has leveraged its Common Stock and intends to remain leveraged by issuing
Preferred Stock to provide the Common Stock shareholders with a potentially
higher rate of return. Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net asset value and market
price of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the yield to Common
Stock shareholders. Statements and other information herein are as dated and are
subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniHoldings California Insured Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
# HOLDCA-6/07
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of
the end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available without
charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee and
(ii) each audit committee financial expert is independent: (1) Joe
Grills and (2) Robert S. Salomon, Jr.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ended June 30, 2007 - $57,350
Fiscal Year Ended June 30, 2006 - $32,500
(b) Audit-Related Fees - Fiscal Year Ended June 30, 2007 - $3,500
Fiscal Year Ended June 30, 2006 - $3,500
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ended June 30, 2007 - $6,100
Fiscal Year Ended June 30, 2006 - $6,000
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ended June 30, 2007 - $0
Fiscal Year Ended June 30, 2006 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be deemed
pre-approved provided that any individual project does not exceed
$5,000 attributable to the registrant or $50,000 for all of the
registrants the Committee oversees. Any proposed services exceeding
the pre-approved cost levels will require specific pre-approval by
the Committee, as will any other services not subject to general
pre-approval (e.g., unanticipated but permissible services). The
Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ended June 30, 2007 - $2,970,500
Fiscal Year Ended June 30, 2006 - $2,819,300
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,735,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha
Kenneth A. Froot
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Proxy Voting Policies and
Procedures Applicable to the Fund
Each Fund's Board of Directors has delegated to the Manager
authority to vote all proxies relating to the Fund's portfolio
securities. The Manager has adopted policies and procedures (the
"Proxy Voting Procedures") with respect to the voting of proxies
related to the portfolio securities held in the account of one or
more of its clients, including a Fund. Pursuant to these Proxy
Voting Procedures, the Manager's primary objective when voting
proxies is to make proxy voting decisions solely in the best
interests of each Fund and its shareholders, and to act in a manner
that the Manager believes is most likely to enhance the economic
value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Manager considers the
interests of its clients, including each Fund, and not the interests
of the Manager, when voting proxies and that real (or perceived)
material conflicts that may arise between the Manager's interest and
those of the Manager's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee,
which is a subcommittee of the Manager's Equity Investment Policy
Oversight Committee ("EIPOC"), is comprised of a senior member of
the Manager's equity management group who is also a member of EIPOC,
one or more other senior investment professionals appointed by
EIPOC, portfolio managers and investment analysts appointed by EIPOC
and any other personnel EIPOC deems appropriate. The Committee will
also include two non-voting representatives from the Manager's Legal
Department appointed by the Manager's General Counsel. The
Committee's membership shall be limited to full-time employees of
the Manager. No person with any investment banking, trading, retail
brokerage or research responsibilities for the Manager's affiliates
may serve as a member of the Committee or participate in its
decision making (except to the extent such person is asked by the
Committee to present information to the Committee on the same basis
as other interested knowledgeable parties not affiliated with the
Manager might be asked to do so). The Committee determines how to
vote the proxies of all clients, including a Fund, that have
delegated proxy voting authority to the Manager and seeks to ensure
that all votes are consistent with the best interests of those
clients and are free from unwarranted and inappropriate influences.
The Committee establishes general proxy voting policies for the
Manager and is responsible for determining how those policies are
applied to specific proxy votes, in light of each issuer's unique
structure, management, strategic options and, in certain
circumstances, probable economic and other anticipated consequences
of alternate actions. In so doing, the Committee may determine to
vote a particular proxy in a manner contrary to its generally stated
policies. In addition, the Committee will be responsible for
ensuring that all reporting and recordkeeping requirements related
to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may elect
not to adopt a specific voting policy applicable to that issue. The
Manager believes that certain proxy voting issues require investment
analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may
elect to adopt a common position for the Manager on certain proxy
votes that are akin to investment decisions, or determine to permit
the portfolio manager to make individual decisions on how best to
maximize economic value for a Fund (similar to normal buy/sell
investment decisions made by such portfolio managers). While it is
expected that the Manager will generally seek to vote proxies over
which the Manager exercises voting authority in a uniform manner for
all the Manager's clients, the Committee, in conjunction with a
Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Manager in voting proxies, the Committee has retained
Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan
sponsors, custodians, consultants, and other institutional
investors. The services provided to the Manager by ISS include
in-depth research, voting recommendations (although the Manager is
not obligated to follow such recommendations), vote execution, and
recordkeeping. ISS will also assist the Fund in fulfilling its
reporting and recordkeeping obligations under the Investment Company
Act.
The Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager generally
will not seek to vote proxies related to portfolio securities that
are on loan, although it may do so under certain circumstances. In
addition, the Manager will vote proxies related to securities of
foreign issuers only on a best efforts basis and may elect not to
vote at all in certain countries where the Committee determines that
the costs associated with voting generally outweigh the benefits.
The Committee may at any time override these general policies if it
determines that such action is in the best interests of a Fund.
From time to time, the Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the
Manager's adherence to those procedures are designed to address such
conflicts of interest. The Committee intends to strictly adhere to
the Proxy Voting Procedures in all proxy matters, including matters
involving Affiliates and Clients. If, however, an issue representing
a non-routine matter that is material to an Affiliate or a widely
known Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Manager's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the Committee may pass the voting power to a
subcommittee, appointed by EIPOC (with advice from the Secretary of
the Committee), consisting solely of Committee members selected by
EIPOC. EIPOC shall appoint to the subcommittee, where appropriate,
only persons whose job responsibilities do not include contact with
the Client and whose job evaluations would not be affected by the
Manager's relationship with the Client (or failure to retain such
relationship). The subcommittee shall determine whether and how to
vote all proxies on behalf of the Manager's clients or, if the proxy
matter is, in their judgment, akin to an investment decision, to
defer to the applicable portfolio managers, provided that, if the
subcommittee determines to alter the Manager's normal voting
guidelines or, on matters where the Manager's policy is
case-by-case, does not follow the voting recommendation of any proxy
voting service or other independent fiduciary that may be retained
to provide research or advice to the Manager on that matter, no
proxies relating to the Client may be voted unless the Secretary, or
in the Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Manager's fiduciary duties.
In addition to the general principles outlined above, the Manager
has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Manager may elect to
vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at
any time upon the request of a Committee member and may be amended
or deleted upon the vote of a majority of Committee members present
at a Committee meeting at which there is a quorum.
The Manager has adopted specific voting guidelines with respect to
the following proxy issues:
o Proposals related to the composition of the board of directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's board of directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is,
therefore, best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's number of other directorships, history of representing
shareholder interests as a director of other companies or other
factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that corporate
auditors have a responsibility to represent the interests of
shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
o Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of an
issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
o Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
o Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's board of directors (rather than its
shareholders) is best positioned to set fund policy and oversee
management. However, the Committee opposes granting boards of
directors authority over certain matters, such as changes to a
fund's investment objective, which the Investment Company Act
envisions will be approved directly by shareholders.
o Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Information about how a Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended June 30 is available without charge (1) at www.blackrock.com
and (2) on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of June 30, 2007.
(a)(1) BlackRock Apex Municipal Fund, Inc. is managed by a team of
investment professionals comprised of Theodore R. Jaeckel, Jr., CFA,
Managing Director at BlackRock, and Walter O'Connor, Managing
Director at BlackRock. Each is a member of BlackRock's municipal
tax-exempt management group. Mr. Jaeckel and Mr. O'Connor are
responsible for setting the Fund's overall investment strategy and
overseeing the management of the Fund. Mr. O'Connor is the Fund's
lead portfolio manager and is responsible for the day-to-day
management of the Fund's portfolio and the selection of its
investments. Mr. Jaeckel has been a member of the Fund's management
team since 2006 and Mr. O'Connor has been the Fund's portfolio
manager since 1997.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
(a)(2) As of June 30, 2007:
------------------------------------------------------------------------------------------------------------------------------------
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
------------------------------------------------------------------------------------------------------------------------------------
Other Other
Registered Other Pooled Registered Other Pooled
(i) Name of Investment Investment Other Investment Investment Other
Portfolio Manager Companies Vehicles Accounts Companies Vehicles Accounts
------------------------------------------------------------------------------------------------------------------------------------
Theodore R.
Jaeckel, Jr. 80 0 1 0 0 1
------------------------------------------------------------------------------------------------------------------------------------
$27,998,012,168 $0 $34,091,152 $0 $0 $34,091,152
------------------------------------------------------------------------------------------------------------------------------------
Walter O'Connor 80 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------------
$27,998,012,168 $0 $0 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made to the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
and employees of any of them has any substantial economic interest
or possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this connection,
it should be noted that certain portfolio managers currently manage
certain accounts that are subject to performance fees. In addition,
certain portfolio managers assist in managing certain hedge funds
and may be entitled to receive a portion of any incentive fees
earned on such funds and a portion of such incentive fees may be
voluntarily or involuntarily deferred. Additional portfolio managers
may in the future manage other such accounts or funds and may be
entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of June 30, 2007:
Portfolio Manager Compensation
The elements of total compensation for portfolio managers on
BlackRock's municipal team include a fixed base salary, annual
performance-based cash and stock compensation (cash and stock bonus)
and other benefits. BlackRock has balanced these components of pay
to provide these portfolio managers with a powerful incentive to
achieve consistently superior investment performance. By design,
compensation levels for these portfolio managers fluctuate--both up
and down--with the relative investment performance of the portfolios
that they manage.
Base compensation. Like that of many asset management firms, base
salaries represent a relatively small portion of a portfolio
manager's total compensation. This approach serves to enhance the
motivational value of the performance-based (and therefore variable)
compensation elements of the compensation program.
Performance-Based Compensation. BlackRock believes that the best
interests of investors are served by recruiting and retaining
exceptional asset management talent and managing their compensation
within a consistent and disciplined framework that emphasizes pay
for performance in the context of an intensely competitive market
for talent. To that end, BlackRock and its affiliates portfolio
manager incentive compensation is based on a formulaic compensation
program. BlackRock's formulaic portfolio manager compensation
program includes: investment performance relative to a subset of
closed-end, insured, California municipal debt funds over 1-, 3- and
5-year performance periods and a measure of operational efficiency.
Portfolio managers are compensated based on the pre-tax performance
of the products they manage. If a portfolio manager's tenure is less
than 5 years, performance periods will reflect time in position.
Portfolio managers are compensated based on products they manage. A
discretionary element of portfolio manager compensation may include
consideration of: financial results, expense control, profit
margins, strategic planning and implementation, quality of client
service, market share, corporate reputation, capital allocation,
compliance and risk control, leadership, workforce diversity,
supervision, technology and innovation. All factors are considered
collectively by BlackRock management.
Cash Bonus
Performance-based compensation is distributed to portfolio
managers in a combination of cash and stock. Typically, the cash
bonus, when combined with base salary, represents more than 60% of
total compensation for portfolio managers.
Stock Bonus
A portion of the dollar value of the total annual
performance-based bonus is paid in restricted shares of BlackRock
stock. Paying a portion of annual bonuses in stock puts compensation
earned by a portfolio manager for a given year "at risk" based on
the company's ability to sustain and improve its performance over
future periods. The ultimate value of stock bonuses is dependent on
future BlackRock stock price performance. As such, the stock bonus
aligns each portfolio manager's financial interests with those of
the BlackRock shareholders and encourages a balance between
short-term goals and long-term strategic objectives. Management
strongly believes that providing a significant portion of
competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that
portfolio managers participate as shareholders in both the "downside
risk" and "upside opportunity" of the company's performance.
Portfolio managers therefore have a direct incentive to protect
BlackRock's reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance
and financial management objectives during a performance year are
eligible to participate in a deferred cash program. Awards under
this program are in the form of deferred cash that may be
benchmarked to a menu of BlackRock mutual funds (including their own
fund) during a five-year vesting period. The deferred cash program
aligns the interests of participating portfolio managers with the
investment results of BlackRock products and promotes continuity of
successful portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in
broad-based plans offered generally to employees of BlackRock and
its affiliates, including broad-based retirement, 401(k), health,
and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of June 30, 2007,
neither Mr. Jaeckel nor Mr. O'Connor beneficially owned
any stock issued by the Fund.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniHoldings California Insured Fund, Inc.
By: /s/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniHoldings California Insured Fund, Inc.
Date: August 20, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniHoldings California Insured Fund, Inc.
Date: August 20, 2007
By: /s/ Donald C. Burke
--------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock MuniHoldings California Insured Fund, Inc.
Date: August 20, 2007