UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-04264
Name of Fund: BlackRock California Insured Municipal Bond Fund of BlackRock
California Municipal Series Trust
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 California Insured Municipal Bond Fund of BlackRock
California Municipal Series Trust, 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/07
Date of reporting period: 09/01/06 - 02/28/07
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock California Insured BLACKROCK
Municipal Bond Fund
OF BLACKROCK CALIFORNIA
MUNICIPAL SERIES TRUST
SEMI-ANNUAL REPORT
FEBRUARY 28, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock California Insured Municipal Bond Fund
Portfolio Information as of February 28, 2007
Percent of
Distribution by Market Sector Total Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds...................................................... 62.8%
General Obligation Bonds................................................. 29.1
Prerefunded Bonds........................................................ 5.8
Mutual Funds............................................................. 0.2
Other*................................................................... 2.1
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
Quality Ratings by Percent of
S&P/Moody's Total Investments
- --------------------------------------------------------------------------------
AAA/Aaa.................................................................. 92.6%
AA/Aa.................................................................... 0.5
A/A...................................................................... 0.6
NR (Not Rated)........................................................... 4.0
Other*................................................................... 2.3
- --------------------------------------------------------------------------------
* Includes portfolio holdings in mutual funds and short-term investments.
2 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
A Letter to Shareholders
Dear Shareholder
The new year began on a positive note for most financial markets, continuing the
momentum from the fourth quarter of 2006. At the end of February, however,
global equity markets registered their first significant decline since last
summer. The market jitters were triggered by a significant setback in the
Chinese market and were exacerbated by several concerns, notably a weakening
economy, some disappointing corporate earnings announcements, geopolitical
concerns related to Iran's nuclear program and increasing delinquencies in the
subprime mortgage market. Despite the recent spate of volatility, underlying
stock market fundamentals appear quite sound, supported by a generally good
global economic backdrop, tame inflation, relatively low interest rates and
attractive valuations.
Not unlike the equity market, the bond market also has seen volatility recently
as observers have attempted to interpret mixed economic signals. A bond market
rally late last year reversed early in 2007 as the economic data strengthened.
Prices improved (and yields fell) again in February as equities struggled.
Notably, the Treasury curve remained inverted for much of 2006 and into 2007.
The 30-year Treasury yield stood at 4.68% on February 28, 2007, while the
one-month Treasury offered the highest yield on the curve at 5.24%.
For its part, the Federal Reserve Board (the Fed) has left the target short-term
interest rate on hold at 5.25% since first pausing on August 8, 2006. Although
the central bankers continue to express concern about potential inflationary
pressures, they also have made reference to signs of economic weakness in their
public statements. Most observers expect the Fed to keep interest rates on hold
for now, but acknowledge that the combination of a mild economic slowdown and
moderating inflation could prompt an interest rate cut later in 2007.
Notwithstanding the volatility along the way, most major market indexes managed
to post positive returns for the annual and semi-annual reporting periods ended
February 28, 2007:
Total Returns as of February 28, 2007 6-month 12-month
==============================================================================================================
U.S. equities (Standard & Poor's 500 Index) + 8.93% +11.97%
- --------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +10.76 + 9.87
- --------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +12.17 +21.07
- --------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 3.66 + 5.54
- --------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 2.89 + 4.96
- --------------------------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 8.62 +12.36
- --------------------------------------------------------------------------------------------------------------
If the recent market movements are any guide, 2007 could be a year of enhanced
market volatility. As you navigate the uncertainties of the financial markets,
we encourage you to review your investment goals with your financial
professional and to make portfolio changes, as needed. We thank you for trusting
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.
Trust President and Trustee
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 3
A Discussion With Your Fund's Portfolio Manager
The Fund continued to emphasize a high degree of credit quality while
seeking to maintain an above-average income accrual for shareholders.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields moved slightly lower during the six-month period, as their
prices correspondingly increased. The municipal bond market's strong technical
position allowed long-term tax-exempt bond yields to decline more than taxable
yields.
Bond prices began to improve early in the period as economic growth softened and
the Federal Reserve Board (the Fed) opted to refrain from raising its target
interest rate after 17 consecutive increases since mid-2004. Bond prices found
additional support from moderating oil prices and, by the end of November,
30-year U.S. Treasury bond yields had declined 32 basis points (.32%) to 4.56%.
In December 2006 and January 2007, however, economic releases were generally
stronger than expected. The more positive economic environment, coupled with
year-end profit-taking, helped push bond yields higher. By the end of January,
long-term U.S. Treasury bond yields had risen to 4.93% before falling again in
February as softer economic news, particularly relating to employment and
housing, allowed bond prices to rally once again.
At the end of February 2007, 30-year U.S. Treasury bond yields stood at 4.68%, a
decline of 20 basis points over the past six months. Ten-year U.S. Treasury note
yields declined 18 basis points during the period to 4.56%. Longer-maturity
tax-exempt issues outperformed comparable U.S. Treasury issues as investor
demand outstripped a resurgent new-issue calendar. As reported by Municipal
Market Data, yields on AAA-rated municipal issues maturing in 30 years declined
28 basis points to 3.97%, while yields on 10-year, AAA-rated issues declined
eight basis points to 3.67%.
Investor demand for municipal product remained strong throughout the six-month
period. According to the Investment Company Institute, long-term municipal bond
funds had net new cash flows of over $15 billion in 2006, a 200% increase
compared to flows in 2005. This positive trend continued into 2007, with net
cash flows in January exceeding $2.8 billion. Weekly fund flows, as reported by
AMG Data, also have supported tax-exempt bond prices. Weekly average cash flows
into long-term tax-exempt funds averaged more than $420 million over the past
six months and more than $487 million in February. These flows represent a
considerable improvement from weekly levels of $230 million - $250 million in
the middle of 2006.
New issuance in the municipal market has surged in recent months as
municipalities have rushed to take advantage of low market yields and solid
investor demand. During the six-month period, more than $206 billion in new
long-term tax-exempt bonds was issued, an increase of 19.5% versus the same
period a year ago. During the last three months, more than $115 billion in new
long-term municipal bonds was underwritten, an increase of over 50% compared to
the same period a year earlier. The recent increase in issuance has made the
municipal market's outperformance even more impressive. In the past three
months, we saw more than 10 underwritings that were greater than $750 million in
size. Investor demand has been so strong that these issues were well
oversubscribed and saw their initial offering yields reduced by as much as 10
basis points.
Looking ahead, the tax-exempt bond market's technical position is likely to
remain supportive, leading to continued outperformance relative to taxable
issues. We believe recent stock market volatility and a benign inflationary
environment should foster continued retail demand for municipal product in the
coming months.
Describe conditions in the State of California.
The State of California ended the period with credit ratings of A1, A+ and A+
from Moody's, Standard & Poor's and Fitch, respectively. The state's steadily
improving economy, combined with the more settled political environment, has
resulted in annual rating upgrades over the past three years. The expanding
economy has helped to significantly stabilize the state's fiscal position.
California's fiscal year 2007 budget totals $101 billion and was balanced with
spending cuts. The budget includes allocations to repay debt, establish a
General Fund reserve account and fully fund K-12 education programs. The state
comptroller reports that through January 2007, California revenue increased more
than 4% year-over-year, which is slightly less than projected. In November 2006,
California voters approved $43 billion in infrastructure bonds. Key credit
issues continue to be K-12 education, MediCal and pension liabilities funding.
California's economic rebound continues to ease the state's
4 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
fiscal pressures and operating deficit, although economic growth did begin to
slow in late 2006 amid declines in the housing and light vehicle manufacturing
sectors.
California ranks ninth in debt per capita and 11th in debt as a percent of
personal income, according to Moody's. The state's January 2007 unemployment
rate was 4.8%, versus the national rate of 4.6%.
How did the Fund perform during the period?
For the six-month period ended February 28, 2007, BlackRock California Insured
Municipal Bond Fund's Institutional, Investor A, Investor A1, Investor B,
Investor C and Investor C1 Shares had total returns of +2.76%, +2.64%, +2.71%,
+2.51%, +2.26% and +2.46%, respectively. (Fund results shown do not reflect
sales charges and would be lower if sales charges were included. Complete
performance information can be found on pages 6 - 8 of this report to
shareholders.) For the same period, the broad-market Lehman Brothers Municipal
Bond Index returned +2.89%, and the Fund's comparable Lipper category of
California Insured Municipal Debt Funds had an average return of +2.63%. (Funds
in this Lipper category invest primarily in securities exempt from taxation in
California and insured as to timely payment.)
Fund performance during the six-month period benefited from our continued focus
on generating a high current yield for our shareholders. This was achieved
primarily by enhancing the portfolio's coupon structure at a time when municipal
yields are at historic lows in absolute terms. We also sought to enhance Fund
returns through selective trading opportunities, swapping bonds out of the
portfolio as compelling opportunities presented themselves in the new-issue
market. In doing so, we continued to favor high-quality bonds over lower-rated
issues, given tight credit spreads in the market.
What changes were made to the portfolio during the period?
The Fund's structure and investment strategy were largely unchanged during the
semi-annual period. We continued to focus on enhancing the level of income
provided to shareholders by maintaining a coupon structure that was well above
the industry average. The average coupon of bonds in the portfolio at period-end
was 5.40%, compared to the average for long-term California insured municipals
of 4.50%. While emphasizing income generation, we also sought to limit price
volatility by maintaining a slightly shorter duration than our Lipper peers.
New issuance in the California municipal market increased approximately 6.5%
compared to the same six months a year ago. This presented us with some
opportunities to make selective trades and swap into more attractive bonds in an
effort to improve the Fund's coupon and call structures.
We continued to underweight our exposure to lower-rated, uninsured securities as
credit spreads remained at historically tight levels. In our view, there was
not ample yield pick-up to compensate for the risk of investing in these
lower-rated bonds.
How would you characterize the Fund's position at the close of the period?
The Fund ended the period fully invested, reflecting our efforts to enhance
income for shareholders, and with a neutral duration posture. We maintained the
Fund's high degree of credit quality, with 94% of net assets invested in
AAA-rated tax-exempt issues with bond insurance. Given the low absolute level of
investment rates in the municipal market, tight credit spreads and a relatively
flat yield curve, we expect to maintain this conservative approach. As such, we
intend to focus on maintaining the Fund's superior income accrual while also
limiting net asset value volatility.
Walter C. O'Connor, CFA
Vice President and Portfolio Manager
March 8, 2007
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 5
Performance Data
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B, Class C and Class I
Shares were redesignated Investor A1, Investor B, Investor C1, and Institutional
Shares, respectively. Also effective October 2, 2006, the Fund's Investor A
Shares and Investor C Shares commenced operations. As previously communicated to
shareholders, new sales charge schedules came into effect at the same time for
certain of these classes.
The Fund has multiple classes of shares:
o Institutional Shares are not subject to any front-end sales charge.
Institutional Shares bear no ongoing distribution or service fees and are
available only to eligible investors.
o Investor A Shares incur a maximum initial sales charge (front-end load) of
4.25% and a service fee of 0.25% per year (but no distribution fee). Prior
to October 2, 2006, Investor A Share performance results were those of
Institutional Shares (which have no distribution or service fees) restated
to reflect Investor A Share fees.
o Investor A1 Shares incur a maximum initial sales charge (front-end load)
of 4% and a service fee of 0.10% per year (but no distribution fee).
o Investor B Shares are subject to a maximum contingent deferred sales
charge of 4%, declining to 0% after six years. In addition, Investor B
Shares are subject to a distribution fee of 0.25% per year and a service
fee of 0.25% per year. These shares automatically convert to Investor A1
Shares after approximately ten years. (There is no initial sales charge
for automatic share conversions.)
o Investor C Shares are subject to a distribution fee of 0.75% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase. Prior to October 2, 2006, Investor C Share performance
results were those of Institutional Shares (which have no distribution or
service fees) restated to reflect Investor C Share fees.
o Investor C1 Shares are subject to a distribution fee of 0.35% per year and
a service fee of 0.25% per year. In addition, Investor C1 Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
Performance information reflects past performance and does not guarantee future
results. Current performance may be lower or higher than the performance data
quoted. Refer to www.blackrock.com to obtain performance data current to the
most recent month-end. Performance results do not reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Figures shown in each of the following tables assume reinvestment of all
dividends and capital gain distributions, if any, at net asset value on the
payable date. Investment return and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Dividends paid to each class of shares will vary because of the different levels
of service, distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to share holders. The
Fund's Manager reimbursed a portion of its fee. Without such reimbursement, the
Fund's total returns may have been lower.
Recent Performance Results
6-Month 12-Month 10-Year Standardized
As of February 28, 2007 Total Return Total Return Total Return 30-Day Yield
==============================================================================================================
Institutional Shares* +2.76% +4.33% +66.03% 3.81%
- --------------------------------------------------------------------------------------------------------------
Investor A Shares* +2.64 +4.07 +61.94 3.40
- --------------------------------------------------------------------------------------------------------------
Investor A1 Shares* +2.71 +4.22 +64.38 3.56
- --------------------------------------------------------------------------------------------------------------
Investor B Shares* +2.51 +3.89 +58.00 3.31
- --------------------------------------------------------------------------------------------------------------
Investor C Shares* +2.26 +3.29 +50.28 2.79
- --------------------------------------------------------------------------------------------------------------
Investor C1 Shares* +2.46 +3.70 +56.29 3.21
- --------------------------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index** +2.89 +4.96 +74.90 --
- --------------------------------------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown
would be lower if a sales charge was included. Cumulative total investment
returns are based on changes in net asset values for the periods shown,
and assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date.
** This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
6 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Performance Data (continued)
BlackRock California Insured Municipal Bond Fund --Edgar
BlackRock California Insured Municipal Bond Fund's Institutional, Investor A and
Investor A1 Shares--Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Fund's Institutional,
Investor A and Investor A1 Shares compared to growth of an investment in the
Lehman Brothers Municipal Bond Index. Values are from February 1997 to February
2007:
Lehman Brothers
Institutional Investor A Investor A1 Municipal Bond
Shares*+ Shares*+ Shares*+ Index++
2/97 $10,000 $ 9,575 $ 9,600 $10,000
2/98 $10,890 $10,401 $10,444 $10,914
2/99 $11,520 $10,976 $11,047 $11,585
2/00 $10,961 $10,417 $10,492 $11,344
2/01 $12,405 $11,761 $11,862 $12,744
2/02 $13,253 $12,533 $12,670 $13,615
2/03 $14,220 $13,414 $13,570 $14,659
2/04 $15,001 $14,115 $14,301 $15,582
2/05 $15,377 $14,433 $14,644 $16,043
2/06 $15,914 $14,900 $15,141 $16,664
2/07 $16,603 $15,506 $15,781 $17,490
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
+ The Fund invests primarily in long-term investment grade obligations
issued by or on behalf of the State of California, its political
subdivisions, agencies and instrumentalities and obligations of other
qualifying issuers.
++ This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
Past performance is not indicative of future results.
Average Annual Total Return
Return
================================================================================
Institutional Shares
================================================================================
One Year Ended 2/28/07 +4.33%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +4.61
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +5.20
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge*
================================================================================
Investor A Shares
================================================================================
One Year Ended 2/28/07 +4.07% -0.36%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +4.35 +3.45
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +4.94 +4.48
- --------------------------------------------------------------------------------
Return Without Return With
Sales Charge Sales Charge**
================================================================================
Investor A1 Shares
================================================================================
One Year Ended 2/28/07 +4.22% +0.05%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +4.49 +3.64
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +5.10 +4.67
- --------------------------------------------------------------------------------
* Assuming maximum sales charge of 4.25%.
** Assuming maximum sales charge of 4%.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 7
Performance Data (concluded)
California Insured Municipal Bond Fund
BlackRock California Insured Municipal Bond Fund --Edgar
BlackRock California Insured Municipal Bond Fund's Investor B, Investor C and
Investor C1 Shares--Total Return Based on a $10,000 Investment
A line graph depicting the growth of an investment in the Investor B, Investor C
and Investor C1 Shares compared to growth of an investment in the Lehman
Brothers Municipal Bond Index. Values are from February 1997 to February 2007:
Lehman Brothers
Investor B Investor C Investor C1 Municipal Bond
Shares*+ Shares*+ Shares*+ Index++
2/97 $10,000 $10,000 $10,000 $10,000
2/98 $10,835 $10,782 $10,824 $10,914
2/99 $11,415 $11,294 $11,392 $11,585
2/00 $10,797 $10,638 $10,764 $11,344
2/01 $12,158 $11,921 $12,109 $12,744
2/02 $12,934 $12,609 $12,869 $13,615
2/03 $13,797 $13,396 $13,714 $14,659
2/04 $14,493 $13,990 $14,379 $15,582
2/05 $14,769 $14,199 $14,651 $16,043
2/06 $15,208 $14,549 $15,072 $16,664
2/07 $15,800 $15,028 $15,629 $17,490
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
+ The Fund invests primarily in long-term investment grade obligations
issued by or on behalf of the State of California, its political
subdivisions, agencies and instrumentalities and obligations of other
qualifying issuers.
++ This unmanaged Index consists of long-term revenue bonds, prerefunded
bonds, general obligation bonds and insured bonds.
Past performance is not indicative of future results.
Average Annual Total Return
Return Return
Without CDSC With CDSC+++
================================================================================
Investor B Shares+
================================================================================
One Year Ended 2/28/07 +3.89% -0.11%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +4.08 +3.74
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +4.68 +4.68
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C Shares++
================================================================================
One Year Ended 2/28/07 +3.29% +2.29%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +3.57 +3.57
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +4.16 +4.16
- --------------------------------------------------------------------------------
Return Return
Without CDSC With CDSC+++
================================================================================
Investor C1 Shares++
================================================================================
One Year Ended 2/28/07 +3.70% +2.70%
- --------------------------------------------------------------------------------
Five Years Ended 2/28/07 +3.96 +3.96
- --------------------------------------------------------------------------------
Ten Years Ended 2/28/07 +4.57 +4.57
- --------------------------------------------------------------------------------
+ Maximum contingent deferred sales charge is 4% and is reduced to 0% after
six years.
++ Maximum contingent deferred sales charge is 1% and is reduced to 0% after
one year.
+++ Assuming payment of applicable contingent deferred sales charge.
8 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12b-1 fees, and other Fund expenses. The following example (which is based on a
hypothetical investment of $1,000 invested on September 1, 2006 and held through
February 28, 2007) is intended to assist shareholders both in calculating
expenses based on an investment in the Fund and in comparing these expenses with
similar costs of investing in other mutual funds.
The Actual table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The Hypothetical table below provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders' ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees or exchange fees. Therefore, the Hypothetical table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Including Interest Expense and Fees
Expenses Paid
Ending During the
Beginning Account Value Period++ Ended
Account Value+ February 28, 2007 February 28, 2007*
====================================================================================================================
Actual
====================================================================================================================
Institutional $1,000 $1,027.60 $4.68
- --------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,026.40 $4.29
- --------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,027.10 $5.18
- --------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,025.10 $7.18
- --------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,022.60 $6.40
- --------------------------------------------------------------------------------------------------------------------
Investor C1 $1,000 $1,024.60 $7.73
====================================================================================================================
Hypothetical (5% annual return before expenses)**
====================================================================================================================
Institutional $1,000 $1,020.19 $4.66
- --------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,015.65 $4.27
- --------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,019.69 $5.16
- --------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,017.71 $7.15
- --------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,012.53 $6.37
- --------------------------------------------------------------------------------------------------------------------
Investor C1 $1,000 $1,017.16 $7.70
- --------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.93% for Institutional, 1.18% for Investor A, 1.03%
for Investor A1, 1.43% for Investor B, 1.94% for Investor C and 1.54% for
Investor C1), multiplied by the average account value over the period,
multiplied by 181/365 for Institutional, Investor A1, Investor B and
Investor C1 Shares and 150/365 for Investor A and Investor C Shares (to
reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year for Institutional,
Investor A1, Investor B and Investor C1 Shares and the actual days since
inception for Investor A and Investor C Shares divided by 365.
+ September 1, 2006 for Institutional, Investor A1, Investor B and Investor
C1 Shares and October 2, 2006 (commencement of operations) for Investor A
and Investor C Shares.
++ The period represents the six months ended for Institutional, Investor A1,
Investor B and Investor C1 Shares and from October 2, 2006 (commencement
of operations) to February 28, 2007 for Investor A and Investor C Shares.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 9
Disclosure of Expenses (concluded)
Excluding Interest Expense and Fees
Expenses Paid
Ending During the
Beginning Account Value Period++ Ended
Account Value+ February 28, 2007 February 28, 2007*
====================================================================================================================
Actual
====================================================================================================================
Institutional $1,000 $1,027.60 $3.42
- --------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,026.40 $3.25
- --------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,027.10 $3.92
- --------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,025.10 $5.92
- --------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,022.60 $5.36
- --------------------------------------------------------------------------------------------------------------------
Investor C1 $1,000 $1,024.60 $6.48
====================================================================================================================
Hypothetical (5% annual return before expenses)**
====================================================================================================================
Institutional $1,000 $1,021.43 $3.41
- --------------------------------------------------------------------------------------------------------------------
Investor A $1,000 $1,016.68 $3.23
- --------------------------------------------------------------------------------------------------------------------
Investor A1 $1,000 $1,020.93 $3.91
- --------------------------------------------------------------------------------------------------------------------
Investor B $1,000 $1,018.95 $5.91
- --------------------------------------------------------------------------------------------------------------------
Investor C $1,000 $1,013.55 $5.34
- --------------------------------------------------------------------------------------------------------------------
Investor C1 $1,000 $1,018.40 $6.46
- --------------------------------------------------------------------------------------------------------------------
* For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (.68% for Institutional, .93% for Investor A, .78% for
Investor A1, 1.18% for Investor B, 1.69% for Investor C and 1.29% for
Investor C1), multiplied by the average account value over the period,
multiplied by 181/365 for Institutional, Investor A1, Investor B and
Investor C1 Shares and 150/365 for Investor A and Investor C Shares (to
reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year for Institutional,
Investor A1, Investor B and Investor C1 Shares and the actual days since
inception for Investor A and Investor C Shares divided by 365.
+ September 1, 2006 for Institutional, Investor A1, Investor B and Investor
C1 Shares and October 2, 2006 (commencement of operations) for Investor A
and Investor C Shares.
++ The period represents the six months ended for Institutional, Investor A1,
Investor B and Investor C1 Shares and from October 2, 2006 (commencement
of operations) to February 28, 2007 for Investor A and Investor C Shares.
10 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Schedule of Investments as of February 28, 2007 (Unaudited) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California -- 89.9%
- --------------------------------------------------------------------------------
$ 2,625 ABAG Finance Authority for Nonprofit Corporations,
California, COP (Children's Hospital Medical Center),
6% due 12/01/2029 (a) $ 2,798
- --------------------------------------------------------------------------------
3,750 Alameda, California, Public Financing Authority, Local
Agency Special Tax Revenue Bonds (Community Facility
Number 1), Series A, 7% due 8/01/2019 3,831
- --------------------------------------------------------------------------------
3,600 Alameda Corridor Transportation Authority, California,
Revenue Bonds, Senior Lien, Series A, 5.25%
due 10/01/2021 (g) 3,769
- --------------------------------------------------------------------------------
4,000 Anaheim, California, Public Financing Authority, Tax
Allocation Revenue Refunding Bonds, RITES, 9.17%
due 12/28/2018 (f)(g)(k) 4,325
- --------------------------------------------------------------------------------
2,000 Bakersfield, California, COP, Refunding (Convention
Center Expansion Project), 5.875% due 4/01/2007 (g)(h) 2,024
- --------------------------------------------------------------------------------
5,000 Banning, California, Utility Authority, Water Enterprise
Revenue Refunding Bonds (Improvement Projects),
5.25% due 11/01/2035 (d) 5,518
- --------------------------------------------------------------------------------
2,935 Bay Area Government Association, California, Tax
Allocation Revenue Bonds (California Redevelopment
Agency Pool), Series A, 5.125% due 9/01/2025 (l) 3,169
- --------------------------------------------------------------------------------
770 Bay Area Government Association, California, Tax
Allocation Revenue Refunding Bonds (California
Redevelopment Agency Pool), Series A, 6%
due 12/15/2024 (e) 775
- --------------------------------------------------------------------------------
2,665 Cajon Valley, California, Unified Elementary School
District, GO (Election of 2000), Series E, 5%
due 8/01/2031 (e) 2,872
- --------------------------------------------------------------------------------
320 California Educational Facilities Authority Revenue Bonds
(University of the Pacific), 5.875% due 11/01/2020 (g) 344
- --------------------------------------------------------------------------------
California Health Facilities Financing Authority
Revenue Bonds:
5,000 DRIVERS, Series 181, 7.065%
due 6/01/2022 (e)(k) 5,418
3,000 (Kaiser Permanente), RIB, Series 26, 7.06%
due 6/01/2022 (e)(k) 3,250
2,080 (Sutter Health), Series A, 6.25% due 8/15/2035 2,270
- --------------------------------------------------------------------------------
2,355 California Health Facilities Financing Authority, Revenue
Refunding Bonds (Catholic Healthcare West), Series A,
6% due 7/01/2017 (g) 2,406
- --------------------------------------------------------------------------------
California State Public Works Board, Lease Revenue
Bonds, Series A:
1,000 (Office of Emergency Services), 5%
due 3/01/2032 (d) 1,077
3,000 (Various Community College Projects), 5.625%
due 3/01/2016 (a) 3,035
- --------------------------------------------------------------------------------
5,000 California State, Various Purpose, GO, Refunding, 4.75%
due 3/01/2035 (g) 5,212
- --------------------------------------------------------------------------------
2,475 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 2,754
- --------------------------------------------------------------------------------
1,720 Capistrano, California, Unified School District,
Community Facility District, Special Tax Bonds (Number
05-1 Rancho Madrina), 5.15% due 9/01/2029 1,764
- --------------------------------------------------------------------------------
5,000 Chabot-Las Positas, California, Community College
District, GO (Election of 2004), Series B, 5%
due 8/01/2031 (a) 5,389
- --------------------------------------------------------------------------------
4,800 Contra Costa County, California, Public Financing
Authority, Lease Revenue Bonds, Series A, 4.50%
due 6/01/2027 (g) 4,895
- --------------------------------------------------------------------------------
5,585 Contra Costa County, California, Public Financing
Authority, Lease Revenue Refunding Bonds (Various
Capital Facilities), Series A, 5.35% due 8/01/2024 (g) 5,752
- --------------------------------------------------------------------------------
Corona, California, COP, Refunding
(Corona Community) (h):
2,065 8% due 3/01/2010 2,324
2,230 8% due 3/01/2011 2,594
2,410 8% due 3/01/2012 2,888
2,605 8% due 3/01/2013 3,216
2,810 8% due 3/01/2014 3,557
- --------------------------------------------------------------------------------
4,000 Corona, California, Department of Water and Power,
COP, 5% due 9/01/2035 (g) 4,262
- --------------------------------------------------------------------------------
1,250 Cucamonga, California, County Water District, COP,
Refunding, 5.50% due 9/01/2024 (d) 1,348
- --------------------------------------------------------------------------------
4,805 Duarte, California, Unified School District, Capital
Appreciation, GO (Election of 1998), Series E, 4.96%
due 11/01/2030 (e)(i) 1,711
- --------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of BlackRock California Insured Municipal Bond Fund of
BlackRock California Municipal Series Trust'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
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
ROLS Reset Option Long Securities
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 11
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California (continued)
- --------------------------------------------------------------------------------
East Side Union High School District, California, Santa
Clara County, GO (Election of 2002), Series F (e):
$ 1,625 5% due 8/01/2024 $ 1,760
1,850 5% due 8/01/2025 2,002
- --------------------------------------------------------------------------------
1,000 Elk Grove, California, East Franklin Community
Number 1 Special Tax, Series A, 6% due 8/01/2007 (h) 1,048
- --------------------------------------------------------------------------------
3,000 Etiwanda School District, California, Community
Facilities District Number 8, Special Tax, 6.25%
due 9/01/2032 3,131
- --------------------------------------------------------------------------------
Eureka, California, Unified School District, GO
(Election of 2002) (g)(i):
2,545 5.18% due 8/01/2029 949
2,685 4.52% due 8/01/2031 914
2,760 5.26% due 8/01/2032 895
2,835 4.54% due 8/01/2033 877
2,990 5.27% due 8/01/2035 844
- --------------------------------------------------------------------------------
3,620 Fremont, California, GO (Election of 2002), Series B,
5% due 8/01/2029 (d) 3,848
- --------------------------------------------------------------------------------
2,000 Glendale, California, Unified School District, GO,
Series F, 5% due 9/01/2028 (g) 2,112
- --------------------------------------------------------------------------------
2,000 Hawthorne, California, School District, GO, Series A,
5.50% due 11/01/2008 (d)(h) 2,102
- --------------------------------------------------------------------------------
5,080 Irvine, California, Unified School District, Special Tax
Refunding Bonds (Community Facilities District
Number 86-1), 5.50% due 11/01/2017 (a) 5,241
- --------------------------------------------------------------------------------
4,445 Long Beach, California, Harbor Revenue Refunding
Bonds, AMT, Series B, 5.20% due 5/15/2027 (g) 4,739
- --------------------------------------------------------------------------------
4,000 Los Angeles, California, COP (Sonnenblick Del Rio West
Los Angeles), 6.20% due 11/01/2031 (a) 4,360
- --------------------------------------------------------------------------------
6,000 Los Angeles, California, Department of Airports, Airport
Revenue Refunding Bonds (Ontario International
Airport), AMT, Series A, 5% due 5/15/2026 (g) 6,359
- --------------------------------------------------------------------------------
4,310 Los Angeles, California, Harbor Department Revenue
Refunding Bonds, 7.60% due 10/01/2018 (c)(g) 5,137
- --------------------------------------------------------------------------------
10,000 Los Angeles, California, Municipal Improvement
Corporation, Lease Revenue Bonds (Police Headquarters
Facility and Public Works Building), Series A, 5%
due 1/01/2025 (d) 10,815
- --------------------------------------------------------------------------------
4,000 Los Angeles, California, Wastewater System Revenue
Refunding Bonds, Series A, 5% due 6/01/2032 (g) 4,278
- --------------------------------------------------------------------------------
Los Angeles, California, Water and Power Revenue
Refunding Bonds (Power System):
5,400 Series A-A-1, 5.25% due 7/01/2020 (e) 5,721
4,000 Series A-A-2, 5.375% due 7/01/2021 (g) 4,271
- --------------------------------------------------------------------------------
4,000 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue Refunding
Bonds, Proposition A, First Tier Senior Series A, 5%
due 7/01/2035 (a) 4,281
- --------------------------------------------------------------------------------
Los Angeles County, California, Sanitation Districts
Financing Authority, Revenue Refunding Bonds (Capital
Projects -- District Number 14), Sub-Series B (d):
5,000 5% due 10/01/2029 5,360
2,500 5% due 10/01/2030 2,680
- --------------------------------------------------------------------------------
4,275 Los Gatos, California, Unified School District, GO
(Election of 2001), Series C, 5% due 8/01/2030 (d) 4,578
- --------------------------------------------------------------------------------
2,000 Los Rios, California, Community College District, GO
(Election of 2002), Series B, 5% due 8/01/2027 (g) 2,126
- --------------------------------------------------------------------------------
2,220 Madera, California, Unified School District, GO (Election
2002), 5% due 8/01/2028 (e) 2,332
- --------------------------------------------------------------------------------
5,500 Murrieta Valley, California, Unified School District,
Public Financing Authority, Special Tax Revenue Bonds,
Series A, 5.125% due 9/01/2026 (b) 5,981
- --------------------------------------------------------------------------------
3,565 Oakland, California, Sewer Revenue Bonds, Series A,
5% due 6/15/2028 (e) 3,788
- --------------------------------------------------------------------------------
3,000 Orange County, California, Community Facilities District,
Special Tax Bonds (Number 04-1 Ladera Ranch),
Series A, 5.15% due 8/15/2029 3,078
- --------------------------------------------------------------------------------
2,000 Orange County, California, Sanitation District, COP,
5.25% due 2/01/2028 (d) 2,146
- --------------------------------------------------------------------------------
1,025 Palm Desert, California, Financing Authority, Tax
Allocation Revenue Refunding Bonds (Project Area
Number 1), 5.45% due 4/01/2007 (g)(h) 1,047
- --------------------------------------------------------------------------------
1,500 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center Project),
Series A, 5.50% due 11/01/2029 (g) 1,680
- --------------------------------------------------------------------------------
5,485 Peralta, California, Community College District, GO
(Election of 2000), Series C, 5% due 8/01/2029 (g) 5,830
- --------------------------------------------------------------------------------
4,845 Placerville, California, Public Financing Authority,
Revenue Refunding Bonds (Wastewater System
Refunding and Improvement Project), 5%
due 9/01/2034 (l) 5,187
- --------------------------------------------------------------------------------
1,000 Port of Oakland, California, Port Revenue Refunding
Bonds, Series I, 5.60% due 11/01/2019 (g) 1,032
- --------------------------------------------------------------------------------
5,778 Port of Oakland, California, RITR, AMT, Class R, Series 5,
7.573% due 11/01/2012 (d)(k) 6,427
- --------------------------------------------------------------------------------
4,295 Riverside, California, Unified School District, GO
(Election of 2001), Series B, 5% due 8/01/2030 (g) 4,629
- --------------------------------------------------------------------------------
1,750 Riverside County, California, Asset Leasing Corporation,
Leasehold Revenue Refunding Bonds (Riverside County
Hospital Project), Series B, 5.70% due 6/01/2016 (g) 1,936
- --------------------------------------------------------------------------------
285 Sacramento, California, City Financing Authority, Capital
Improvement Revenue Bonds (Redevelopment Projects),
5.75% due 12/01/2022 (a) 305
- --------------------------------------------------------------------------------
8,000 Sacramento, California, Municipal Utility District,
Electric Revenue Refunding Bonds, Series L, 5.125%
due 7/01/2022 (g) 8,192
- --------------------------------------------------------------------------------
3,400 Sacramento, California, Unified School District, GO
(Election of 2002), 5% due 7/01/2027 (g) 3,644
- --------------------------------------------------------------------------------
12 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
California (concluded)
- --------------------------------------------------------------------------------
$ 1,820 Saddleback Valley, California, Unified School District,
GO, 5% due 8/01/2029 (e) $ 1,936
- --------------------------------------------------------------------------------
3,500 Saddleback Valley, California, Unified School District,
Public Financing Authority, Special Tax Revenue
Refunding Bonds, Series A, 5.65% due 9/01/2017 (e) 3,535
- --------------------------------------------------------------------------------
2,000 San Bernardino, California, Joint Powers Financing
Authority, Lease Revenue Bonds (Department of
Transportation Lease), Series A, 5.50% due 12/01/2020 (g) 2,023
- --------------------------------------------------------------------------------
4,000 San Bernardino County, California, COP, Refunding
(Medical Center Financing Project), 5.50%
due 8/01/2019 (g) 4,006
- --------------------------------------------------------------------------------
2,000 San Diego, California, Certificates of Undivided Interest,
Revenue Bonds, ROLS, Series 11-R-551X, 6.884%
due 8/01/2024 (d)(k) 2,115
- --------------------------------------------------------------------------------
10,000 San Diego, California, Certificates of Undivided Interest,
Water Utility Fund, Net System Revenue Bonds, 5%
due 8/01/2021 (d) 10,274
- --------------------------------------------------------------------------------
San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds (d):
4,450 Series A, 5.25% due 5/15/2027 4,507
6,175 Series B, 5.25% due 5/15/2027 6,254
- --------------------------------------------------------------------------------
San Diego County, California, Water Authority, Water
Revenue Bonds, COP, Series A (e):
7,350 5% due 5/01/2030 7,826
4,000 5% due 5/01/2031 4,259
- --------------------------------------------------------------------------------
San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds:
980 5.125% due 7/01/2011 (a)(h) 1,042
345 5.125% due 7/01/2036 (a) 361
6,270 Series A, 5% due 7/01/2030 (g) 6,720
- --------------------------------------------------------------------------------
1,250 San Francisco, California, City and County Airport
Commission, International Airport, Special Facilities
Lease Revenue Bonds (SFO Fuel Company LLC), AMT,
Series A, 6.10% due 1/01/2020 (e) 1,298
- --------------------------------------------------------------------------------
5,790 San Joaquin Hills, California, Transportation Corridor
Agency, Toll Road Revenue Refunding Bonds, Series A,
5.375% due 1/15/2029 (g) 5,913
- --------------------------------------------------------------------------------
1,420 San Jose-Evergreen, California, Community College
District, GO, Series B, 5.50% due 9/01/2021 (d) 1,503
- --------------------------------------------------------------------------------
San Juan, California, Unified School District, GO:
3,740 5.625% due 8/01/2017 (d) 4,004
3,000 5.70% due 8/01/2019 (e) 3,196
4,345 5.625% due 8/01/2020 (d) 4,657
3,500 (Election of 2002), 5% due 8/01/2028 (g) 3,694
- --------------------------------------------------------------------------------
2,240 San Mateo County, California, Joint Powers Authority,
Lease Revenue Refunding Bonds (Capital Projects),
Series A, 5.125% due 7/15/2028 (e) 2,297
- --------------------------------------------------------------------------------
1,650 Santa Margarita, California, Water District, Special Tax
Refunding Bonds (Community Facilities District
Number 99), Series 1, 6.20% due 9/01/2020 1,761
- --------------------------------------------------------------------------------
4,000 Santa Monica, California, Redevelopment Agency, Tax
Allocation Bonds (Earthquake Recovery Redevelopment
Project), 6% due 7/01/2009 (a)(h) 4,259
- --------------------------------------------------------------------------------
Santa Rosa, California, High School District, GO:
1,000 5.70% due 5/01/2021 (e) 1,033
1,000 (Election of 2002), 5% due 8/01/2028 (g) 1,056
- --------------------------------------------------------------------------------
6,700 Sonoma County, California, Junior College District,
GO (Election 2002), Refunding, Series B, 5%
due 8/01/2028 (e) 7,175
- --------------------------------------------------------------------------------
4,865 South Tahoe, California, Joint Powers Financing
Authority, Lease Revenue Refunding Bonds, 5.125%
due 10/01/2025 (g) 5,322
- --------------------------------------------------------------------------------
1,400 Stockton, California, Public Financing Authority, Water
Revenue Bonds (Water System Capital Improvement
Projects), Series A, 5% due 10/01/2031 (g) 1,501
- --------------------------------------------------------------------------------
4,600 Tamalpais, California, Union High School District, GO
(Election of 2006), 5% due 8/01/2029 (g) 4,958
- --------------------------------------------------------------------------------
Temecula Valley, California, Unified School District,
Community Facilities District Number 02-1, Special
Tax Bonds:
1,255 5.125% due 9/01/2030 1,282
1,905 5.125% due 9/01/2035 1,942
- --------------------------------------------------------------------------------
1,650 Turlock, California, Public Finance Authority, Sewer
Revenue Bonds, Series A, 5% due 9/15/2026 (d) 1,743
- --------------------------------------------------------------------------------
5,500 University of California, Hospital Revenue Refunding
Bonds (UCLA Medical Center), Series B, 5.50%
due 5/15/2021 (a) 6,092
- --------------------------------------------------------------------------------
4,215 Vista, California, Unified School District, GO, Series A,
5.25% due 8/01/2025 (e) 4,489
- --------------------------------------------------------------------------------
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 13
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
================================================================================
Puerto Rico -- 1.7%
- --------------------------------------------------------------------------------
$ 6,610 Puerto Rico Commonwealth, Public Improvement, GO,
Refunding, 5.70% due 7/01/2020 (g) $ 7,028
- --------------------------------------------------------------------------------
Total Municipal Bonds
(Cost -- $355,450) -- 91.6% 373,270
- --------------------------------------------------------------------------------
================================================================================
Municipal Bonds Held in Trust (m)
================================================================================
California -- 14.1%
- --------------------------------------------------------------------------------
14,000 California Health Facilities Financing Authority
Revenue Bonds (Kaiser Permanente), Series A,
5.50% due 6/01/2022 (e) 14,584
- --------------------------------------------------------------------------------
6,000 La Quinta, California, Financing Authority, Local
Agency Revenue Bonds, Series A, 5.125%
due 9/01/2034 (a) 6,442
- --------------------------------------------------------------------------------
8,000 Los Angeles, California, Unified School District, GO,
Series A, 5% due 1/01/2028 (g) 8,653
- --------------------------------------------------------------------------------
2,540 Palm Desert, California, Financing Authority,
Tax Allocation Revenue Refunding Bonds
(Project Area Number 2), Series A, 5.125%
due 8/01/2036 (a) 2,754
- --------------------------------------------------------------------------------
5,035 Port of Oakland, California, Revenue Bonds, AMT,
Series K, 5.875% due 11/01/2017 (d) 5,318
- --------------------------------------------------------------------------------
12,710 Port of Oakland, California, Revenue Refunding Bonds,
AMT, Series L, 5.375% due 11/01/2027 (d) 13,542
- --------------------------------------------------------------------------------
6,000 San Diego, California, Certificates of Undivided
Interest Revenue Bonds (Water Utility Fund),
5.20% due 8/01/2024 (d) 6,173
- --------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost -- $55,995) -- 14.1% 57,466
- --------------------------------------------------------------------------------
================================================================================
Shares
Held Mutual Funds
================================================================================
69 BlackRock California Insured Municipal
2008 Term Trust, Inc. (f) 1,067
- --------------------------------------------------------------------------------
Total Mutual Funds
(Cost -- $1,156) -- 0.3% 1,067
- --------------------------------------------------------------------------------
================================================================================
Short-Term Securities
================================================================================
9,228 CMA California Municipal Money Fund, 3.03% (f)(j) 9,228
- --------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $9,228) -- 2.3% 9,228
- --------------------------------------------------------------------------------
Total Investments (Cost -- $421,829*) -- 108.3% 441,031
Liabilities in Excess of Other Assets -- (1.6%) (6,337)
Liability for Trust Certificates, Including
Interest Expense Payable -- (6.7%) (27,351)
--------
Net Assets -- 100.0% $407,343
========
* The cost and unrealized appreciation (depreciation) of investments as of
February 28, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost............................................. $394,607
========
Gross unrealized appreciation.............................. $ 19,383
Gross unrealized depreciation.............................. (102)
--------
Net unrealized appreciation................................ $ 19,281
========
(a) AMBAC Insured.
(b) Assured Guaranty Insured.
(c) Escrowed to maturity.
(d) FGIC Insured.
(e) FSA Insured.
(f) 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:
--------------------------------------------------------------------------
Interest/
Purchase Sales Realized Dividend
Affiliate Cost Cost Gain Income
--------------------------------------------------------------------------
Anaheim, California, Public
Financing Authority, Tax
Allocation Revenue
Refunding Bonds, RITES,
9.17% due 12/28/2018 -- -- -- $183
BlackRock California Insured
Municipal 2008 Term
Trust, Inc. -- -- -- $ 26
CMA California Municipal
Money Fund $73,086 $70,109 -- $ 88
--------------------------------------------------------------------------
(g) MBIA Insured.
(h) Prerefunded.
(i) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(j) Represents the current yield as of February 28, 2007.
(k) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(l) XL Capital Insured.
(m) 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 Notes to Financial Statements.
14 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Statement of Assets and Liabilities
As of February 28, 2007 (Unaudited)
====================================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost -- $407,329,325)................... $426,410,281
Investments in affiliated securities, at value (identified cost -- $14,499,438)...................... 14,620,327
Cash................................................................................................. 76,199
Receivables:
Interest (including $16,079 from affiliates)..................................................... $ 5,433,780
Beneficial interest sold......................................................................... 674,449
Dividends........................................................................................ 4,410 6,112,639
------------
Prepaid expenses and other assets.................................................................... 22,340
------------
Total assets......................................................................................... 447,241,786
------------
====================================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Trust certificates................................................................................... 27,142,500
Payables:
Securities purchased............................................................................. 10,722,994
Beneficial interest redeemed..................................................................... 820,770
Dividends to shareholders........................................................................ 687,808
Interest expense................................................................................. 208,673
Investment adviser............................................................................... 168,765
Distributor...................................................................................... 64,367
Other affiliates................................................................................. 40,829 12,714,206
------------
Accrued expenses..................................................................................... 41,642
------------
Total liabilities.................................................................................... 39,898,348
------------
====================================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets........................................................................................... $407,343,438
============
====================================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Shares of beneficial interest, $.10 par value, unlimited number of shares authorized... $ 370,113
Investor A Shares of beneficial interest, $.10 par value, unlimited number of shares authorized...... 42,274
Investor A1 Shares of beneficial interest, $.10 par value, unlimited number of shares authorized..... 2,202,607
Investor B Shares of beneficial interest, $.10 par value, unlimited number of shares authorized...... 507,255
Investor C Shares of beneficial interest, $.10 par value, unlimited number of shares authorized...... 17,680
Investor C1 Shares of beneficial interest, $.10 par value, unlimited number of shares authorized..... 373,498
Paid-in capital in excess of par..................................................................... 384,461,933
Undistributed investment income -- net............................................................... $ 791,316
Accumulated realized capital losses -- net........................................................... (625,083)
Unrealized appreciation -- net....................................................................... 19,201,845
------------
Total accumulated earnings -- net.................................................................... 19,368,078
------------
Net Assets........................................................................................... $407,343,438
============
====================================================================================================================================
Net Asset Value
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional -- Based on net assets of $42,906,445 and 3,701,132 shares of beneficial
interest outstanding............................................................................... $ 11.59
Investor A -- Based on net assets of $4,898,127 and 422,736 shares of beneficial ============
interest outstanding............................................................................... $ 11.59
Investor A1 -- Based on net assets of $255,346,141 and 22,026,074 shares of beneficial ============
interest outstanding............................................................................... $ 11.59
Investor B -- Based on net assets of $58,839,459 and 5,072,552 shares of beneficial ============
interest outstanding............................................................................... $ 11.60
Investor C -- Based on net assets of $2,049,667 and 176,801 shares of beneficial ============
interest outstanding............................................................................... $ 11.59
Investor C1 -- Based on net assets of $43,303,599 and 3,734,983 shares of beneficial ============
interest outstanding............................................................................... $ 11.59
============
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 15
Statement of Operations
For the Six Months Ended February 28, 2007 (Unaudited)
====================================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Interest (including $183,783 from affiliates)........................................................ $ 10,392,674
Dividends from affiliates............................................................................ 113,973
------------
Total income ........................................................................................ 10,506,647
------------
====================================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees............................................................................. $ 1,119,424
Interest expense and fees............................................................................ 500,691
Service and distribution fees -- Investor B.......................................................... 157,377
Service and distribution fees -- Investor C1......................................................... 133,022
Service fees -- Investor A1.......................................................................... 127,573
Accounting services.................................................................................. 75,711
Transfer agent fees -- Investor A1................................................................... 41,757
Registration fees.................................................................................... 28,587
Printing and shareholder reports..................................................................... 26,412
Professional fees.................................................................................... 25,911
Custodian fees....................................................................................... 15,812
Transfer agent fees -- Investor B.................................................................... 12,030
Trustees' fees and expenses.......................................................................... 10,484
Transfer agent fees -- Investor C1................................................................... 8,201
Pricing fees......................................................................................... 7,913
Transfer agent fees -- Institutional................................................................. 6,841
Service and distribution fees -- Investor C.......................................................... 4,538
Service fees -- Investor A........................................................................... 2,206
Transfer agent fees -- Investor A.................................................................... 295
Transfer agent fees -- Investor C.................................................................... 152
Other................................................................................................ 17,346
------------
Total expenses before reimbursement.................................................................. 2,322,283
Reimbursement of expenses............................................................................ (12,138)
------------
Total expenses after reimbursement................................................................... 2,310,145
------------
Investment income -- net............................................................................. 8,196,502
------------
====================================================================================================================================
Realized & Unrealized Gain -- Net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments -- net............................................................................... 984,465
Financial futures contracts -- net............................................................... 101,058 1,085,523
------------
Change in unrealized appreciation on investments -- net.............................................. 1,588,506
------------
Total realized and unrealized gain -- net............................................................ 2,674,029
------------
Net Increase in Net Assets Resulting from Operations................................................. $ 10,870,531
============
See Notes to Financial Statements.
16 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Statements of Changes in Net Assets
(As Restated for the Year Ended 2006. See Note 7)
For the Six
Months Ended For the
February 28, Year Ended
2007 August 31,
Increase (Decrease) in Net Assets: (Unaudited) 2006
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ........................................................................... $ 8,196,502 $ 17,991,461
Realized gain -- net ............................................................................... 1,085,523 4,983,714
Change in unrealized appreciation -- net............................................................ 1,588,506 (11,799,018)
---------------------------
Net increase in net assets resulting from operations................................................ 10,870,531 11,176,157
---------------------------
===================================================================================================================================
Dividends & Distributions to Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net:
Institutional.................................................................................... (883,110) (1,703,239)
Investor A....................................................................................... (34,900) --
Investor A1...................................................................................... (5,262,870) (11,284,726)
Investor B....................................................................................... (1,171,737) (3,276,574)
Investor C....................................................................................... (14,540) --
Investor C1...................................................................................... (802,818) (1,720,848)
Realized gain -- net:
Institutional.................................................................................... (13,753) --
Investor A....................................................................................... (694) --
Investor A1...................................................................................... (84,095) --
Investor B....................................................................................... (20,293) --
Investor C....................................................................................... (381) --
Investor C1...................................................................................... (14,460) --
---------------------------
Net decrease in net assets resulting from dividends and distributions to shareholders .............. (8,303,651) (17,985,387)
---------------------------
===================================================================================================================================
Beneficial Interest Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from beneficial interest transactions............................ (10,889,991) (20,461,128)
---------------------------
===================================================================================================================================
Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets........................................................................ (8,323,111) (27,270,358)
Beginning of period................................................................................. 415,666,549 442,936,907
---------------------------
End of period*...................................................................................... $407,343,438 $415,666,549
===========================
* Undistributed investment income -- net......................................................... $ 791,316 $ 764,789
===========================
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 17
Financial Highlights
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 7)
Institutional
-----------------------------------------------------------------------------------
For the Six
Months Ended
The following per share data and ratios have February 28, For the Year Ended August 31,
been derived from information provided in the 2007 ------------------------------------------------------------------
financial statements. (Unaudited) 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....... $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.81 $ 11.77
---------------------------------------------------------------------------------
Investment income -- net** ................. .24 .51 .54 .56 .57 .58
Realized and unrealized gain (loss) -- net . .07 (.18) (.02) .17 (.27) .04
---------------------------------------------------------------------------------
Total from investment operations ........... .31 .33 .52 .73 .30 .62
---------------------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............... (.24) (.51) (.54) (.55) (.57) (.58)
Realized gain -- net ................... --++ -- -- -- -- --
---------------------------------------------------------------------------------
Total dividends and distributions .......... (.24) (.51) (.54) (.55) (.57) (.58)
---------------------------------------------------------------------------------
Net asset value, end of period ............. $ 11.59 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.81
=================================================================================
===================================================================================================================================
Total Investment Return
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......... 2.76%+ 2.93% 4.50% 6.48% 2.54% 5.48%
=================================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding
interest expense and fees ................ .68%* .68% .68% .68% .68% .71%
=================================================================================
Expenses, net of reimbursement ............. .93%* .91% .78% .73% .79% .88%
=================================================================================
Expenses ................................... .93%* .92% .79% .73% .79% .90%
=================================================================================
Investment income -- net ................... 4.24%* 4.45% 4.60% 4.76% 4.84% 5.03%
=================================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ... $ 42,906 $ 42,053 $ 36,105 $ 36,132 $ 39,841 $ 42,873
=================================================================================
Portfolio turnover ......................... 25% 30% 27% 22% 26% 30%
=================================================================================
* Annualized.
** Based on average shares outstanding.
+ Aggregate total investment return.
++ Amount is less than $(.01) per share.
See Notes to Financial Statements.
18 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Financial Highlights (continued)
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 7)
Investor A Investor A1
-------------- -----------------------------------------------------------------------
For the
Period Oct. 2, For the Six
2006+ to Months Ended
The following per share data and ratios February 28, February 28, For the Year Ended August 31,
have been derived from information 2007 2007 --------------------------------------------------------
provided in the financial statements. (Unaudited) (Unaudited) 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ....... $ 11.55 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82 $ 11.77
-------- ---------------------------------------------------------------------
Investment income -- net** ................. .14 .24 .50 .53 .55 .56 .57
Realized and unrealized gain (loss) -- net . .09 .07 (.18) (.03) .17 (.28) .05
-------- ---------------------------------------------------------------------
Total from investment operations ........... .23 .31 .32 .50 .72 .28 .62
-------- ---------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net ............... (.19) (.24) (.50) (.52) (.54) (.56) (.57)
Realized gain -- net ................... --@@ --@@ -- -- -- -- --
-------- ---------------------------------------------------------------------
Total dividends and distributions .......... (.19) (.24) (.50) (.52) (.54) (.56) (.57)
-------- ---------------------------------------------------------------------
Net asset value, end of period ............. $ 11.59 $ 11.59 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82
======== =====================================================================
===================================================================================================================================
Total Investment Return***
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ......... 2.02%@ 2.71%@ 2.83% 4.40% 6.37% 2.35% 5.46%
======== =====================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding
interest expense and fees ................ .93%* .78%* .78% .78% .78% .78% .81%
======== =====================================================================
Expenses, net of reimbursement ............. 1.18%* 1.03%* 1.01% .88% .83% .89% .98%
======== =====================================================================
Expenses ................................... 1.19%* 1.04%* 1.02% .89% .83% .89% 1.00%
======== =====================================================================
Investment income -- net ................... 4.00%* 4.16%* 4.35% 4.50% 4.66% 4.74% 4.93%
======== =====================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ... $ 4,898 $255,346 $258,492 $264,482 $258,411 $247,184 $236,181
======== =====================================================================
Portfolio turnover ......................... 25% 25% 30% 27% 22% 26% 30%
======== =====================================================================
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
@ Aggregate total investment return.
@@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 19
Financial Highlights (continued)
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 7)
Investor B
---------------------------------------------------------------------------
For the Six
Months Ended
The following per share data and ratios February 28, For the Year Ended August 31,
have been derived from information 2007 --------------------------------------------------------------
provided in the financial statements. (Unaudited) 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period................ $ 11.53 $ 11.70 $ 11.72 $ 11.54 $ 11.82 $ 11.77
---------------------------------------------------------------------------
Investment income -- net**.......................... .21 .46 .48 .50 .51 .52
Realized and unrealized gain (loss) -- net.......... .07 (.17) (.02) .18 (.28) .05
---------------------------------------------------------------------------
Total from investment operations.................... .28 .29 .46 .68 .23 .57
---------------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net........................ (.21) (.46) (.48) (.50) (.51) (.52)
Realized gain -- net............................ --++ -- -- -- -- --
---------------------------------------------------------------------------
Total dividends and distributions................... (.21) (.46) (.48) (.50) (.51) (.52)
---------------------------------------------------------------------------
Net asset value, end of period...................... $ 11.60 $ 11.53 $ 11.70 $ 11.72 $ 11.54 $ 11.82
===========================================================================
===================================================================================================================================
Total Investment Return***
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share.................. 2.51%+ 2.50% 3.98% 5.94% 1.93% 5.04%
===========================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding
interest expense and fees........................ 1.18%* 1.18% 1.19% 1.18% 1.19% 1.22%
===========================================================================
Expenses, net of reimbursement...................... 1.43%* 1.42% 1.29% 1.24% 1.29% 1.38%
===========================================================================
Expenses............................................ 1.44%* 1.42% 1.29% 1.24% 1.30% 1.41%
===========================================================================
Investment income -- net............................ 3.73%* 3.95% 4.10% 4.25% 4.34% 4.52%
===========================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)............ $ 58,839 $ 69,647 $ 96,650 $118,304 $151,276 $194,733
===========================================================================
Portfolio turnover.................................. 25% 30% 27% 22% 26% 30%
===========================================================================
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales charges.
+ Aggregate total investment return.
++ Amount is less than $(.01) per share.
See Notes to Financial Statements.
20 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Financial Highlights (concluded)
(As Restated for the Years Ended 2006, 2005, 2004, 2003 and 2002. See Note 7)
Investor C
-------------- Investor C1
For the -------------------------------------------------------------------
Period Oct. 2, For the Six
2006+ to Months Ended
The following per share data and ratios February 28, February 28, For the Year Ended August 31,
have been derived from information 2007 2007 -------------------------------------------------------
provided in the financial statements. (Unaudited) (Unaudited) 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period........... $ 11.55 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82 $ 11.77
------- -------------------------------------------------------------------
Investment income -- net**..................... .13 .21 .44 .47 .49 .50 .51
Realized and unrealized gain (loss) -- net..... .06 .07 (.18) (.02) .17 (.28) .05
------- -------------------------------------------------------------------
Total from investment operations............... .19 .28 .26 .45 .66 .22 .56
------- -------------------------------------------------------------------
Less dividends and distributions:
Investment income -- net................... (.15) (.21) (.44) (.47) (.48) (.50) (.51)
Realized gain -- net....................... --@@ --@@ -- -- -- -- --
------- -------------------------------------------------------------------
Total dividends and distributions.............. (.15) (.21) (.44) (.47) (.48) (.50) (.51)
------- -------------------------------------------------------------------
Net asset value, end of period ................ $ 11.59 $ 11.59 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82
======= ===================================================================
===================================================================================================================================
Total Investment Return***
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share............. 1.71%@ 2.46%@ 2.31% 3.88% 5.84% 1.83% 4.94%
======= ===================================================================
===================================================================================================================================
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and excluding
interest expense and fees.................... 1.69%* 1.29%* 1.28% 1.29% 1.28% 1.29% 1.32%
======= ===================================================================
Expenses, net of reimbursement................. 1.94%* 1.54%* 1.52% 1.39% 1.34% 1.39% 1.48%
======= ===================================================================
Expenses....................................... 1.94%* 1.54%* 1.52% 1.39% 1.34% 1.40% 1.51%
======= ===================================================================
Investment income -- net....................... 3.24%* 3.65%* 3.85% 4.00% 4.15% 4.24% 4.42%
======= ===================================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)....... $ 2,050 $43,304 $45,474 $45,700 $46,900 $50,197 $36,983
======= ===================================================================
Portfolio turnover............................. 25% 25% 30% 27% 22% 26% 30%
======= ===================================================================
* Annualized.
** Based on average shares outstanding.
*** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
@ Aggregate total investment return.
@@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 21
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock California Insured Municipal Bond Fund (the "Fund") is part of
BlackRock California Municipal Series Trust (the "Trust"). The Fund is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-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. These unaudited financial
statements reflect all adjustments, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim period. All
such adjustments are of a normal, recurring nature. The Fund offers multiple
classes of shares. Effective October 2, 2006, Class I, Class A, Class B and
Class C Shares were redesignated Institutional, Investor A1, Investor B and
Investor C1 Shares, respectively. Newly created Investor A and Investor C Shares
commenced operations on October 2, 2006. Institutional Shares are sold only to
certain eligible investors. Investor A and Investor A1 Shares are sold with a
front-end sales charge. Shares of Investor B, Investor C and Investor C1 may be
subject to a contingent deferred sales charge. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that Investor A, Investor A1, Investor B, Investor C and
Investor C1 Shares bear certain expenses related to the shareholder servicing of
such shares, and Investor B, Investor C and Investor C1 Shares also bear certain
expenses related to the distribution of such shares. Each class has exclusive
voting rights with respect to matters relating to its shareholder servicing and
distribution expenditures (except that Investor B shareholders may vote on
certain changes to the Investor A1 distribution plan). Income, expenses (other
than expenses attributable to a specific class) and realized and unrealized
gains and losses on investments are allocated daily to each class based on its
relative net assets. 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 Trustees. Such valuations and procedures are reviewed
periodically by the Board of Trustees 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. In the
case of options traded in the OTC market, valuation is the last asked price
(options written) or the last bid price (options purchased). Swap agreements are
valued based upon quoted fair valuations received daily by the Fund's pricing
service. Short-term investments with a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market value, under which method
the investment is valued at cost and any premium or discount is amortized on a
straight line basis to maturity. 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
Trustees 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 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 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 periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed,
22 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Notes to Financial Statements (continued)
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 predetermined 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 a 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 transfers of the municipal
securities to a TOB do 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 schedules of
investments and the proceeds from the transactions 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 a 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 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 February 28, 2007, the aggregate value of the underlying municipal
securities transferred to TOBs was $57,466,481, the related liability for trust
certificates was $27,142,500 and the range of interest rates on the liability
for trust certificates was 3.35% to 3.93%.
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
investments 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) 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.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 23
Notes to Financial Statements (continued)
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, FASB issued "Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), which 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.
(f) Prepaid registration fees -- Prepaid registration fees are charged to
expense as the related shares are issued.
(g) Expenses -- Certain expenses have been allocated to the individual funds in
the Trust on a pro rata basis based upon the respective aggregate net asset
value of each fund included in the Trust.
(h) Dividends and distributions -- Dividends from net investment income are
declared daily and paid monthly. Distributions of capital gains are recorded on
the ex-dividend dates.
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. ("), 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.
The Investment Advisory Agreement between the Fund and BlackRock Advisors, LLC
(the "Manager"), an indirect, wholly owned subsidiary of BlackRock, Inc., became
effective on September 29, 2006. Prior to September 29, 2006, FAM was the Fund's
Manager. The general partner of FAM is Princeton Services, Inc. ("PSI"), an
indirect, wholly owned subsidiary of Merrill Lynch, which is the limited
partner. The Fund has also entered into separate Distribution Agreements and
Distribution Plans with FAM Distributors, Inc. ("FAMD") and BlackRock
Distributors, Inc. ("BDI") (collectively, the "Distributor"). FAMD is a wholly
owned subsidiary of Merrill Lynch Group, Inc. and BDI is an affiliate of
BlackRock, Inc.
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 operation of the Fund. For such services, the Fund
pays a monthly fee based upon the average daily value of the Fund's net assets
at the following annual rates: .55% of the Fund's average daily net assets not
exceeding $500 million; .525% of average daily net assets in excess of $500
million but not exceeding $1 billion; and .50% of average daily net assets in
excess of $1 billion.
In addition, the Manager (and previously FAM) has agreed to reimburse its
advisory fee by the amount of advisory fees the Fund pays to 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
$2,196 and for the period September 30, 2006 to February 28, 2007 and the
Manager reimbursed the Fund in the amount of $9,942.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Investment Management, LLC, an affiliate of the Manager, under which
the Manager pays the Sub-Adviser, for services it provides, a monthly fee that
is a percentage of the management fee paid by the Fund to the Manager.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing service and distribution fees. The fees are accrued daily and paid
24 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Notes to Financial Statements (continued)
monthly at annual rates based upon the average daily net assets of the shares as
follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A...................................... .25% --
Investor A1..................................... .10% --
Investor B...................................... .25% .25%
Investor C...................................... .25% .75%
Investor C1..................................... .25% .35%
- --------------------------------------------------------------------------------
Pursuant to sub-agreements with each Distributor, broker-dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, provides shareholder servicing and distribution
services to the Fund. The ongoing service fee compensates the Distributor and
each broker-dealer (including MLPF&S) for providing shareholder services to
Investor A, Investor A1, Investor B, Investor C and Investor C1 shareholders.
The ongoing distribution fee compensates the Distributor and MLPF&S for
providing shareholder servicing and distribution-related services to Investor B,
Investor C and Investor C1 shareholders.
For the six months ended February 28, 2007, FAMD, the Fund's sole Distributor
until September 29, 2006, earned underwriting discounts and direct commissions
and MLPF&S earned dealer concessions on sales of the Fund's Investor A and
Investor A1 Shares as follows:
- --------------------------------------------------------------------------------
FAMD MLPF&S
- --------------------------------------------------------------------------------
Investor A..................................... $ 2,803 $25,831
Investor A1.................................... $ 963 $ 8,357
- --------------------------------------------------------------------------------
For the six months ended February 28, 2007, MLPF&S received contingent deferred
sales charges of $9,769, $128 and $177 relating to transactions in Investor B,
Investor C and Investor C1 Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges relating to
transactions subject to front-end sales charge waivers in Investor A1 Shares of
$10,251.
For the six months ended February 28, 2007, the Fund reimbursed FAM and the
Manager $669 and $3,344, respectively, for certain accounting services.
Effective September 29, 2006, PFPC Inc., an indirect, wholly owned subsidiary of
PNC and an affiliate of the Manager, became the Fund's transfer agent. Prior to
September 29, 2006, the Fund's transfer agent was Financial Data Services, Inc.
("FDS"), a wholly owned subsidiary of Merrill Lynch.
Prior to September 29, 2006, certain officers and/or trustees of the Fund were
officers and/or directors of FAM, PSI, FDS, FAMD, Merrill Lynch, MLIM, and/or
MLIM, LLC.
Commencing September 29, 2006, certain officers and/or trustees 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 six
months ended February 28, 2007 were $107,064,044 and $100,529,104, respectively.
4. Beneficial Interest Transactions:
Net decrease in net assets derived from beneficial interest transactions was
$10,889,991 and $20,461,128 for the six months ended February 28, 2007 and the
year ended August 31, 2006, respectively.
Transactions in shares of beneficial interest for each class were as follows:
- -------------------------------------------------------------------------------
Institutional Shares for the
Six Months Ended Dollar
February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 393,164 $ 4,540,611
Shares issued to shareholders in
reinvestment of dividends
and distributions......................... 41,431 479,407
------------------------------
Total issued................................ 434,595 5,020,018
Shares redeemed............................. (383,730) (4,428,739)
------------------------------
Net increase................................ 50,865 $ 591,279
==============================
- -------------------------------------------------------------------------------
Institutional Shares for the Year Dollar
Ended August 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 990,715 $11,381,126
Shares issued to shareholders in
reinvestment of dividends................. 75,044 863,077
------------------------------
Total issued................................ 1,065,759 12,244,203
Shares redeemed............................. (501,223) (5,766,334)
------------------------------
Net increase................................ 564,536 $ 6,477,869
==============================
- -------------------------------------------------------------------------------
Investor A Shares for the
Period October 2, 2006+ to Dollar
February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 428,387 $4,944,529
Shares issued to shareholders in
reinvestment of dividends
and distributions........................... 1,792 20,734
------------------------------
Total issued................................ 430,179 4,965,263
Shares redeemed............................. (7,443) (86,069)
------------------------------
Net increase................................ 422,736 $4,879,194
==============================
+ Commencement of operations.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 25
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
Investor A1 Shares for the
Six Months Ended Dollar
February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 581,306 $ 6,702,972
Automatic conversion of shares.............. 51,220 589,539
Shares issued to shareholders in
reinvestment of dividends
and distributions......................... 217,833 2,521,061
------------------------------
Total issued................................ 850,359 9,813,572
Shares redeemed............................. (1,261,458) (14,577,289)
------------------------------
Net decrease................................ (411,099) $ (4,763,717)
==============================
- -------------------------------------------------------------------------------
Investor A1 Shares for the Year Dollar
Ended August 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 1,479,802 $ 17,017,821
Automatic conversion of shares.............. 1,057,574 12,158,609
Shares issued to shareholders in
reinvestment of dividends
and distributions......................... 456,697 5,254,757
------------------------------
Total issued................................ 2,994,073 34,431,187
Shares redeemed............................. (3,160,727) (36,358,719)
------------------------------
Net decrease................................ (166,654) $ (1,927,532)
==============================
- -------------------------------------------------------------------------------
Investor B Shares for the
Six Months Ended Dollar
February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 22,833 $ 264,233
Shares issued to shareholders in
reinvestment of dividends
and distributions......................... 41,718 483,114
------------------------------
Total issued................................ 64,551 747,347
------------------------------
Shares redeemed............................. (982,727) (11,348,434)
Automatic conversion of shares.............. (51,220) (589,539)
------------------------------
Total redemptions........................... (1,033,947) (11,937,973)
------------------------------
Net decrease................................ (969,396) $(11,190,626)
==============================
- -------------------------------------------------------------------------------
Investor B Shares for the Year Dollar
Ended August 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 101,383 $ 1,190,423
Shares issued to shareholders in
reinvestment of dividends................. 110,858 1,276,508
------------------------------
Total issued................................ 212,241 2,466,931
------------------------------
Shares redeemed............................. (1,371,215) (15,780,754)
Automatic conversion of shares.............. (1,057,090) (12,158,609)
------------------------------
Total redemptions........................... (2,428,305) (27,939,363)
------------------------------
Net decrease................................ (2,216,064) $(25,472,432)
==============================
- -------------------------------------------------------------------------------
Investor C Shares for the
Period October 2, 2006+ Dollar
to February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 178,804 $2,066,083
Shares issued to shareholders in
reinvestment of dividends................. 844 9,761
------------------------------
Total issued................................ 179,648 2,075,844
Shares redeemed............................. (2,847) (32,977)
------------------------------
Net increase................................ 176,801 $2,042,867
==============================
+ Commencement of operations.
- -------------------------------------------------------------------------------
Investor C1 Shares for the
Six Months Ended Dollar
February 28, 2007 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 51,790 $ 597,170
Shares issued to shareholders in
reinvestment of dividends
and distributions......................... 38,020 440,046
------------------------------
Total issued................................ 89,810 1,037,216
Shares redeemed............................. (301,633) (3,486,204)
------------------------------
Net decrease................................ (211,823) $(2,448,988)
==============================
- -------------------------------------------------------------------------------
Investor C1 Shares for the Year Dollar
Ended August 31, 2006 Shares Amount
- -------------------------------------------------------------------------------
Shares sold................................. 831,944 $ 9,553,375
Shares issued to shareholders in
reinvestment of dividends................. 75,587 870,003
------------------------------
Total issued................................ 907,531 10,423,378
Shares redeemed............................. (866,124) (9,962,411)
------------------------------
Net increase................................ 41,407 $ 460,967
==============================
5. Short-Term Borrowings:
The Trust, on behalf of the Fund, along with certain other funds managed by the
Manager and its affiliates, is a party to a $500,000,000 credit agreement with a
group of lenders. The Fund may borrow under the credit agreement to fund
shareholder redemptions and for other lawful purposes other than for leverage.
The Fund may borrow up to the maximum amount allowable under the Fund's current
prospectus and statement of additional information, subject to various other
legal, regulatory or contractual limits. On November 22, 2006, the credit
agreement was renewed for one year under substantially the same terms. The Fund
pays a commitment fee of .06% per annum based on the Fund's pro rata share of
the unused portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each Fund's election, the federal
funds rate plus .35% or a base rate as defined in the credit agreement. The Fund
did not borrow under the credit agreement during the six months ended February
28, 2007.
6. Capital Loss Carryforward:
On August 31, 2006, the Fund had a net capital loss carry forward of $1,295,867,
all of which expires in 2009. This amount will be available to offset like
amounts of any future taxable gains.
26 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
Notes to Financial Statements (concluded)
7. Restatement Information:
During the six months ended February 28, 2007, the Fund determined that the
criteria for sale accounting in Statement of Financial Accounting Standards No.
140 had not been met for certain transfers of municipal bonds and that these
transfers should have been accounted for as secured borrowings rather than as
sales. Accordingly, the Fund has restated the Statement of Changes in Net Assets
for the year ended August 31, 2006 and the financial highlights for the years
ended August 31, 2006, 2005, 2004, 2003 and 2002. The effects of the restatement
were to record the transfers of the municipal bonds as secured borrowings, to
give effect to offsetting changes in realized gain -- net and in the change in
unrealized appreciation/depreciation -- net on the transferred municipal
securities and to give effect to interest on the bonds as interest income and
interest on the secured borrowings as interest expense.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended August 31, 2006
- --------------------------------------------------------------------------------
Previously
Reported Restated
- --------------------------------------------------------------------------------
Realized gain -- net................. $ 5,454,817 $ 4,983,714
Change in unrealized
appreciation -- net................ $(12,270,121) $(11,799,018)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For the Years Ended August 31, 2006, 2005, 2004, 2003 and 2002
- ------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------- --------------------- --------------------- --------------------- ---------------------
Previously Previously Previously Previously Previously
Institutional Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses,
net of
reimbursement.. .68% .91% .68% .78% .68% .73% .68% .79% .71% .88%
Expenses......... .68% .92% .68% .79% .68% .73% .68% .79% .74% .90%
Portfolio
turnover....... 37.90% 30% 30.78% 27% 24.69% 22% 29.70% 26% 37.35% 30%
- ------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------- --------------------- --------------------- --------------------- ---------------------
Previously Previously Previously Previously Previously
Investor A1 Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses,
net of
reimbursement.. .78% 1.01% .78% .88% .78% .83% .78% .89% .81% .98%
Expenses......... .78% 1.02% .78% .89% .78% .83% .78% .89% .84% 1.00%
Portfolio
turnover....... 37.90% 30% 30.78% 27% 24.69% 22% 29.70% 26% 37.35% 30%
- ------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------- --------------------- --------------------- --------------------- ---------------------
Previously Previously Previously Previously Previously
Investor B Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses,
net of
reimbursement.. 1.18% 1.42% 1.19% 1.29% 1.18% 1.24% 1.19% 1.29% 1.22% 1.38%
Expenses......... 1.19% 1.42% 1.19% 1.29% 1.18% 1.24% 1.19% 1.30% 1.25% 1.41%
Portfolio
turnover....... 37.90% 30% 30.78% 27% 24.69% 22% 29.70% 26% 37.35% 30%
- ------------------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------- --------------------- --------------------- --------------------- ---------------------
Previously Previously Previously Previously Previously
Investor C1 Reported Restated Reported Restated Reported Restated Reported Restated Reported Restated
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses,
net of
reimbursement.. 1.28% 1.52% 1.29% 1.39% 1.28% 1.34% 1.29% 1.39% 1.32% 1.48%
Expenses......... 1.29% 1.52% 1.29% 1.39% 1.28% 1.34% 1.29% 1.40% 1.35% 1.51%
Portfolio
turnover....... 37.90% 30% 30.78% 27% 24.69% 22% 29.70% 26% 37.35% 30%
- ------------------------------------------------------------------------------------------------------------------------------------
While the Statements of Assets and Liabilities for the Fund as of August 31,
2006, 2005, 2004, 2003 and 2002, not presented herein, have not been reissued to
give effect to the restatements, the principal effects of the restatements would
be to increase investments and liability for trust certificates by corresponding
amounts at each year, with no effect on previously reported net assets.
The Statements of Operations for the Fund for the years ended August 31, 2006,
2005, 2004, 2003 and 2002, not presented herein, have not been reissued to give
effect to the restatements. However, the principal effects of the restatements
would be to increase interest income and interest expense and fees by
corresponding amounts each year, and, where applicable, to revise realized gain
(loss) on investments -- net, and the change in unrealized
appreciation/depreciation on investments -- net, by corresponding and offsetting
amounts.
The Statements of Changes in Net Assets for the Fund for the years ended August
31, 2005, 2004, 2003 and 2002, not presented herein, have not been reissued to
give effect to the restatements, but the principal effects of the restatements,
where applicable, would be to revise previously reported realized gain (loss) on
investments -- net, and change in unrealized appreciation/depreciation -- net,
by corresponding and offsetting amounts.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 27
Officers and Trustees
Robert C. Doll, Jr., President and Trustee
James H. Bodurtha, Trustee
Kenneth A. Froot, Trustee
Joe Grills, Trustee
Herbert I. London, Trustee
Roberta Cooper Ramo, Trustee
Robert S. Salomon, Jr., Trustee
Donald C. Burke, Vice President and Treasurer
John M. Loffredo, Senior Vice President
Walter C. O'Connor, Vice President
Jeffrey Hiller, Fund Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
- --------------------------------------------------------------------------------
Effective April 13, 2007, Jeffrey Hiller resigned his position as Chief
Compliance Officer of the Fund. Also effective April 13, 2007, Karen Clark was
appointed Chief Compliance Officer of the Fund. Ms. Clark has been a Managing
Director of BlackRock, Inc. since 2007. She was a Director thereof from 2005 to
2007. Prior to that, Ms. Clark was a principal and senior compliance officer at
State Street Global Advisors from 2001 to 2005. Ms. Clark was a principal
consultant with PricewaterhouseCoopers, LLP from 1998 to 2001. From 1993 to
1998, Ms. Clark was Branch Chief, Division of Investment Management and Office
of Compliance Examinations, with the U.S. Securities and Exchange Commission.
- --------------------------------------------------------------------------------
28 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
BlackRock Funds
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 nonpublic 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 nonpublic 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 nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary to service Client accounts. These nonaffiliated 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 nonpublic
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 nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or 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.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at http://www.blackrock.com/edelivery
2) Select eDelivery under the More Information section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be house holded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined with
those for other members of your household, please contact the Fund at (800)
441-7762.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 29
BlackRock Funds (concluded)
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Trustees. A
description of the policies and procedures that BlackRock and its affiliates use
to determine how to vote proxies relating to portfolio securities is available
without charge, upon request, on our Web site at www.blackrock.com, by calling
(800) 441-7762, or on the Web site of the Securities and Exchange Commission
(the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were voted
(if any) by BlackRock during the most recent 12-month period ended June 30 is
available, upon request and without charge, on our Web site at
www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also be
obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us on
the Web at www.blackrock.com.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the BlackRock portfolios.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock portfolios, as
long as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
30 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007
A World-Class Mutual Fund Family
BlackRock now offers an expanded lineup of open-end mutual funds. Our range
includes more than 85 funds crossing all investment styles and managed by
experts in equity, fixed income and tax-exempt investing.
Equity Portfolios
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio+
BlackRock Balanced Capital Fund+
BlackRock Basic Value Fund
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund+
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio*
BlackRock Global Science & Technology Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Global Technology Fund
BlackRock Global Value Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Investment Trust
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Capital Appreciation Portfolio
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Portfolios
BlackRock Bond Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Real Investment Fund
BlackRock Short-Term Bond Fund
BlackRock Total Return Portfolio
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Portfolios
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Money Market Portfolios
BlackRock Money Market Portfolio
BlackRock Municipal Money Market Portfolio@
BlackRock NC Municipal MM Portfolio@
BlackRock NJ Municipal MM Portfolio@
BlackRock OH Municipal MM Portfolio@
BlackRock PA Municipal MM Portfolio@
BlackRock Summit Cash Reserves Fund*
BlackRock U.S. Treasury MM Portfolio
BlackRock VA Municipal MM Portfolio@
* See the prospectus for information on specific limitations on investments
in the fund.
+ Mixed asset fund.
@ Tax-exempt fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should consider
the investment objectives, risks, charges and expenses of the funds under
consideration carefully before investing. Each fund's prospectus contains this
and other information and is available at www.blackrock.com or by calling
800-882-0052 or from your financial advisor. The prospectus should be read
carefully before investing.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND FEBRUARY 28, 2007 31
This report is transmitted to shareholders only. It is not authorized for use as
an offer of sale or a solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past performance
results shown in this report should not be considered a representation of future
performance. Investment returns and principal value of shares will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are subject to change.
BlackRock California Insured Municipal Bond Fund
Of BlackRock California Municipal Series Trust
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#10329-2/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable
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 - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - As of September 29, 2006, with the conclusion of the combination of
Merrill Lynch's asset management business with BlackRock, the registrant
was migrated to BlackRock's trading and compliance monitoring systems,
and various personnel changes occurred. In conjunction with these
business improvements, there were no changes in the registrants internal
control over financial reporting (as defined in Rule 30a-3(d) under Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year of
the period covered by this report that has materially affected, or is
reasonably likely to affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
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 California Insured Municipal Bond Fund of BlackRock California
Municipal Series Trust
By: /s/ Robert C. Doll, Jr.
--------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock California Insured Municipal Bond Fund of BlackRock California
Municipal Series Trust
Date: April 23, 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 California Insured Municipal Bond Fund of BlackRock California
Municipal Series Trust
Date: April 23, 2007
By: /s/ Donald C. Burke
--------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock California Insured Municipal Bond Fund of BlackRock California
Municipal Series Trust
Date: April 23, 2007