UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04264
Name of Fund: BlackRock California Insured Municipal Bond Fund of
BlackRock California Municipal Series Trust
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, 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: (800) 441-7762
Date of fiscal year end: 05/31/2008
Date of reporting period: 06/01/2007 - 05/31/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
- ----------------------------------------------
BlackRock California Insured BLACKROCK
Municipal Bond Fund
OF BLACKROCK CALIFORNIA
MUNICIPAL SERIES TRUST
ANNUAL REPORT | MAY 31, 2008
- ----------------------------------------------
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
================================================================================
Table of Contents
- --------------------------------------------------------------------------------
Page
- --------------------------------------------------------------------------------
A Letter to Shareholders ................................................ 3
Annual Report:
Fund Summary ............................................................ 4
About Fund Performance .................................................. 6
Disclosure of Expenses .................................................. 7
Financial Statements:
Schedule of Investments .............................................. 8
Statement of Assets and Liabilities .................................. 12
Statements of Operations ............................................. 14
Statements of Changes in Net Assets .................................. 15
Financial Highlights .................................................... 16
Notes to Financial Statements ........................................... 20
Report of Independent Registered Public Accounting Firm ................. 26
Important Tax Information (Unaudited) ................................... 26
Officers and Trustees ................................................... 27
Additional Information .................................................. 31
Mutual Fund Family ...................................................... 34
2 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
A Letter to Shareholders
Dear Shareholder
For much of the reporting period, investors grappled with the repercussions of
the credit crisis that surfaced last summer, and with the effects of a weakening
economy and surging energy and food prices. These factors were offset by the
positive impact from robust export activity, strength in the non-financial
corporate sector and monetary and fiscal stimuli.
Amid the market turbulence, the Federal Reserve Board (the "Fed") initiated a
series of moves to restore liquidity and bolster financial market stability.
Since September 2007, the central bank slashed the target federal funds rate 325
basis points (3.25%), bringing the rate to 2.0% as of period-end. Also of
significance were its other policy decisions, which included extending use of
the discount window to broker-dealers and investment banks and backstopping the
rescue of ill-fated Bear Stearns. Notably, on April 30, the Fed dropped previous
references to downside growth risks and added more emphasis on inflationary
pressures, indicating the central bankers have likely concluded the current
cycle of monetary easing.
Nevertheless, the Fed's response to the financial crisis helped to ease credit
turmoil and investor anxiety. Since hitting a low point on March 17, following
the collapse of Bear Stearns, stocks appreciated 10% (through May 30). Most
international markets, which had outperformed U.S. stocks for some time, saw a
reversal in that trend, as the troubled credit situation and downward pressures
on growth fanned recession fears.
In fixed income markets, Treasury securities rallied (yields fell as prices
correspondingly rose), as a broad "flight-to-quality" theme persisted. The yield
on 10-year Treasury issues, which touched 5.30% in June 2007 (its highest level
in five years), fell to a low of 3.34% in March 2008 before rising to 4.06% by
May 31 as investors grew more risk tolerant and shifted out of Treasury issues
in favor of stocks and other high-quality fixed income sectors. Tax-exempt
issues under-performed throughout most of the reporting period, pressured by
problems among municipal bond insurers and the freeze in the market for auction
rate securities. However, the final two months saw a firmer tone in the
municipal market, as investors took advantage of unusually high yields.
On the whole, results for the major benchmark indexes generally reflected
heightened investor risk aversion:
Total Returns as of May 31, 2008 6-month 12-month
- -------------------------------------------------------------------------------------------------------------------
U.S. equities (S&P 500 Index) (4.47%) (6.70%)
- -------------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (1.87) (10.53)
- -------------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (5.21) (2.53)
- -------------------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Index) 1.49 6.89
- -------------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) 1.44 3.87
- -------------------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) 1.81 (1.08)
- -------------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
As you navigate today's volatile markets, we encourage you to review your
investment goals with your financial professional and to make portfolio changes,
as needed. For more up-to-date commentary on the economy and financial markets,
we invite you to visit www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
THIS PAGE NOT PART OF YOUR FUND REPORT
3
================================================================================
Fund Summary
- --------------------------------------------------------------------------------
Portfolio Management Commentary
- --------------------------------------------------------------------------------
How did the Fund perform?
o The Fund recently changed its fiscal year end to May 31. The Fund
generated positive returns amid a challenging investment backdrop, but
under-performed the broad-market Lehman Brothers Municipal Bond Index and
the Lipper Single-State Insured Municipal Debt Funds category average for
the twelve-month period ended May 31, 2008. Notably, the Fund's Lipper
category recently changed and now includes funds investing in insured
municipal bonds issued by multiple states, not only California. As a
result, Fund returns will vary from that of the broader Lipper peer group.
What factors influenced performance?
o U.S. Treasury yields generally moved lower (while prices correspondingly
rose) during the year in response to weaker domestic economic growth and
declining equity valuations. The Federal Reserve Board cut short-term
interest rates seven times from 5.25% to 2.0%. The municipal market
underperformed U.S. Treasury issues, as credit downgrades of the mono-line
insurers and disruption of the auction rate securities market weighed
heavily on the sector. Long-term municipal bond yields were acutely
affected. New issuance for the period was relatively strong, despite a 12%
decline in the past six months. More recently, the pace has increased,
alongside improved investor demand.
o The Fund's inherently high exposure to insured paper was the primary
detractor from performance, as credit downgrades of the monoline insurers
pressured these securities during the reporting period.
o On the positive side, the Fund's relatively higher yield benefited
performance. We seek to enhance the Fund's yield by purchasing securities
with above-average coupon rates.
o Generally speaking, we maintained a relatively short-to-neutral duration,
as we seek to boost the Fund's total return through income flow rather
than interest rate positioning. This strategy enhanced relative results,
as did the Fund's high degree of credit quality and underweight in
lower-quality issues, an advantage as credit spreads widened.
Describe recent portfolio activity.
o During the period, we sought to limit the Fund's exposure to those mono-
line insurers most likely to experience downgrades, selling positions in
bonds enhanced by these insurers and reinvesting the proceeds into
less-affected insured bonds. Additionally, we reduced the Fund's exposure
to inverse floating rate product.
o While we generally refrain from making strategic moves based on duration
calls (that is, interest rate direction), we did take advantage of market
dislocations in February to purchase some longer-maturity bonds at
attractive prices.
Describe Fund positioning at period-end.
o The Fund ended the period with a short-to-neutral duration. We will look
to take advantage of the newly steep yield curve and extend the Fund's
duration closer to neutral if yields on insured California municipal
securities rise to near 5%. We maintained a modest cash reserve position
(approximately 3% of total assets), affording us ample liquidity to take
advantage of opportunities should interest rates rise.
o The Fund also ended the period underweight in lower-rated bonds. With the
guidance of our Municipal Investment Strategy Group, we are in a position
to increase exposure to these securities, in an effort to further enhance
the Fund's current yield.
The views expressed reflect the opinions of BlackRock as of the date of this
report and are subject to change based on changes in market, economic or
other conditions. These views are not intended to be a forecast of future
events and are no guarantee of future results.
- --------------------------------------------------------------------------------
Portfolio Information
- --------------------------------------------------------------------------------
Percent of
Distribution by Market Sector Long-Term Investments
- --------------------------------------------------------------------------------
Other Revenue Bonds ..................................................... 66%
General Obligation Bonds ................................................ 28
Prerefunded Bonds(1) .................................................... 6
- --------------------------------------------------------------------------------
(1) Backed by an escrow fund.
Quality Ratings by Percent of
S&P/Moody's(1) Long-Term Investments
- --------------------------------------------------------------------------------
AAA/Aaa ................................................................. 82%
AA/Aa ................................................................... 7
A/A ..................................................................... 9
Not Rated ............................................................... 2
- --------------------------------------------------------------------------------
(1) Using the higher of Standard & Poor's or Moody's Investors Service ratings.
4 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
- --------------------------------------------------------------------------------
Total Return Based on a $10,000 Investment
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund's Institutional
and Investor A Shares compared to growth of an investment in the Lehman Brothers
Municipal Bond Index. Values are from May 1998 to May 2008:
Lehman Brothers
Institutional Investor A Municipal Bond
Shares(1,2) Shares(1,2) Index(3)
5/98 $10,000 $ 9,575 $10,000
5/99 $10,402 $ 9,935 $10,467
5/00 $10,075 $ 9,599 $10,377
5/01 $11,269 $10,710 $11,637
5/02 $12,050 $11,424 $12,394
5/03 $13,252 $12,532 $13,679
5/04 $13,159 $12,413 $13,674
5/05 $14,146 $13,311 $14,763
5/06 $14,423 $13,538 $15,042
5/07 $15,022 $14,053 $15,771
5/08 $15,396 $14,368 $16,381
(1) Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
(2) 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.
(3) This unmanaged Index consists of revenue bonds, prerefunded bonds, general
obligation bonds and insured bonds.
- --------------------------------------------------------------------------------
Performance Summary for the Period Ended May 31, 2008
- --------------------------------------------------------------------------------
Average Annual Total Returns(1)
----------------------------------------------------------------
1 Year 5 Years 10 Years
------------------- ------------------- -------------------
Standardized 6-Month w/o sales w/sales w/o sales w/sales w/o sales w/sales
30-Day Yields Total Returns charge charge charge charge charge charge
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ................... 3.88% 0.85% 2.49% -- 3.04% -- 4.41% --
Investor A ...................... 3.41 0.72 2.24 (2.11%) 2.77 1.88% 4.14 3.69%
Investor A1 ..................... 3.65 0.81 2.41 (1.69) 2.95 2.11 4.31 3.88
Investor B ...................... 3.41 0.61 2.07 (1.86) 2.55 2.21 3.89 3.89
Investor C ...................... 2.89 0.36 1.49 0.50 2.03 2.03 3.38 3.38
Investor C1 ..................... 3.31 0.56 1.90 0.91 2.43 2.43 3.78 3.78
Lehman Brothers Municipal
Bond Index ................... -- 1.44 3.87 -- 3.67 -- 5.06 --
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Assuming maximum sales charges. See "About Fund Performance" on page 6 for
a detailed description of share classes, including any related sales
charges and fees.
Past performance is not indicative of future results.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 5
================================================================================
About Fund Performance
o Institutional Shares are not subject to any 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 are 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 10 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 are 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/funds 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 the
performance tables on page 5 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 shareholders. The Fund's Advisor agreed to reimburse a portion
of its fee. Without such reimbursement, the Fund's performance would have
been lower.
6 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
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 expense example below (which is based on
a hypothetical investment of $1,000 invested on December 1, 2007 and held
through May 31, 2008) 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 tables provide 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 corresponding to their share class under the
heading entitled "Expenses Paid During the Period."
The tables also provide 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 tables 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 tables are 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
- --------------------------------------------------------------------------------
Actual Hypothetical(2)
----------------------------------------------------- ------------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
December 1, 2007 May 31, 2008 During the Period(1) December 1, 2007 May 31, 2008 During the Period(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional ...... $1,000 $1,008.50 $4.19 $1,000 $1,020.72 $4.22
Investor A ......... $1,000 $1,007.20 $5.44 $1,000 $1,019.48 $5.47
Investor A1 ........ $1,000 $1,008.10 $4.54 $1,000 $1,020.37 $4.57
Investor B ......... $1,000 $1,006.10 $6.58 $1,000 $1,018.34 $6.62
Investor C ......... $1,000 $1,003.60 $8.97 $1,000 $1,015.95 $9.02
Investor C1 ........ $1,000 $1,005.60 $7.03 $1,000 $1,017.89 $7.07
- ------------------------------------------------------------------------------------------------------------------------------------
(1) For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (0.84% for Institutional, 1.09% for Investor A, 0.91%
for Investor A1, 1.32% for Investor B, 1.80% for Investor C and 1.41% for
Investor C1), multiplied by the average account value over the period,
multiplied by 182/366 (to reflect the one-half year period shown).
(2) Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 366.
- --------------------------------------------------------------------------------
Excluding Interest Expense and Fees
- --------------------------------------------------------------------------------
Actual Hypothetical(2)
----------------------------------------------------- ------------------------------------------------------
Beginning Ending Beginning Ending
Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid
December 1, 2007 May 31, 2008 During the Period(1) December 1, 2007 May 31, 2008 During the Period(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional(3) ... $1,000 $1,008.50 $3.70 $1,000 $1,021.22 $3.72
Investor A(3) ...... $1,000 $1,007.20 $4.99 $1,000 $1,019.93 $5.02
Investor A1(3) ..... $1,000 $1,008.10 $4.09 $1,000 $1,020.82 $4.12
Investor B(3) ...... $1,000 $1,006.10 $6.09 $1,000 $1,018.83 $6.12
Investor C(3) ...... $1,000 $1,003.60 $8.52 $1,000 $1,016.40 $8.57
Investor C1(3) ..... $1,000 $1,005.60 $6.53 $1,000 $1,018.39 $6.55
- ------------------------------------------------------------------------------------------------------------------------------------
(1) For each class of the Fund, expenses are equal to the annualized expense
ratio for the class (0.74% for Institutional, 1.00% for Investor A, 0.82%
for Investor A1, 1.22% for Investor B, 1.71% for Investor C and 1.31% for
Investor C1), multiplied by the average account value over the period,
multiplied by 182/366 (to reflect the one-half year period shown).
(2) Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 366.
(3) Expenses are net of waiver, excluding interest expense and fees.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 7
================================================================================
Schedule of Investments May 31, 2008
(Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
California -- 90.6%
- --------------------------------------------------------------------------------
ABAG Finance Authority for Nonprofit Corporations,
California, COP (Children's Hospital Medical Center),
6%, 12/01/09 (a)(b) $ 2,625 $ 2,799,878
- --------------------------------------------------------------------------------
Alameda, California, Public Financing Authority,
Local Agency Special Tax Revenue Bonds (Community
Facility Number 1), Series A, 7%, 8/01/19 3,750 3,760,913
- --------------------------------------------------------------------------------
Auburn, California, Union School District, COP,
Refunding (Refinancing Project), 5%, 6/01/33 (c) 4,000 4,013,071
- --------------------------------------------------------------------------------
Bakersfield, California, Wastewater Revenue Bonds,
Series A, 5%, 9/15/32 (d) 10,000 10,337,200
- --------------------------------------------------------------------------------
Bay Area Government Association, California,
Tax Allocation Revenue Refunding Bonds (California
Redevelopment Agency Pool), Series A, 6%,
12/15/24 (d) 770 780,226
- --------------------------------------------------------------------------------
Butte-Glenn Community College District, California,
GO (Election of 2002), Series B, 4.85%,
8/01/29 (e)(f) 2,355 776,232
- --------------------------------------------------------------------------------
Cajon Valley, California, Unified Elementary School
District, GO (Election of 2000), Series E, 5%,
8/01/31 (d) 2,665 2,747,722
- --------------------------------------------------------------------------------
California Health Facilities Financing Authority
Revenue Bonds, Series A:
(Kaiser Permanente), 5.50%,
6/01/22 (d)(g) 20,000 20,432,200
(Sutter Health), Series A, 6.25%, 8/15/35 2,080 2,199,600
- --------------------------------------------------------------------------------
California State University, Systemwide Revenue
Bonds, Series A, 5%, 11/01/39 (d)(h) 1,494 1,539,985
- --------------------------------------------------------------------------------
California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6%, 10/01/23 (d) 2,475 2,600,557
- --------------------------------------------------------------------------------
California Statewide Communities Development
Authority Revenue Bonds:
(Adventist), Series B, 5%, 3/01/37 2,650 2,645,787
(Sutter Health), Series D, 5.05%, 8/15/38 (c) 2,500 2,529,650
- --------------------------------------------------------------------------------
Chabot-Las Positas, California, Community College
District, GO (Election of 2004), Series B, 5%,
8/01/31 (a) 5,000 5,124,350
- --------------------------------------------------------------------------------
Contra Costa County, California, Public Financing
Authority, Lease Revenue Refunding Bonds (Various
Capital Facilities), Series A, 5.35%, 8/01/24 (e) 5,585 5,655,874
- --------------------------------------------------------------------------------
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
California (continued)
- --------------------------------------------------------------------------------
Corona, California, COP, Refunding
(Corona Community) (b):
8%, 3/01/10 $ 2,065 $ 2,267,349
8%, 3/01/11 2,230 2,549,314
8%, 3/01/12 2,410 2,842,667
8%, 3/01/13 2,605 3,171,822
8%, 3/01/14 2,810 3,520,593
- --------------------------------------------------------------------------------
Duarte, California, Unified School District, Capital
Appreciation, GO (Election of 1998), Series E,
4.96%, 11/01/30 (d)(f) 4,805 1,509,779
- --------------------------------------------------------------------------------
Eureka, California, Unified School District, GO
(Election of 2002) (e)(f):
5.18%, 8/01/29 2,545 839,214
5.26%, 8/01/32 2,760 766,783
5.27%, 8/01/35 2,990 701,514
- --------------------------------------------------------------------------------
Glendale, California, Unified School District, GO,
Series F, 5%, 9/01/28 (e) 2,000 2,048,060
- --------------------------------------------------------------------------------
Glendale, California, Water Revenue Bonds,
5%, 2/01/32 (d) 6,825 7,062,647
- --------------------------------------------------------------------------------
Hollister, California, Joint Powers Finance Authority,
Wastewater Revenue Refunding Bonds (Refining and
Improvement Project), Series 1, 5%, 6/01/37 (d) 5,000 5,122,550
- --------------------------------------------------------------------------------
Huntington Beach, California, Union High School
District, GO (Election of 2004) (i):
5.02%, 8/01/33 (f) 5,000 1,239,750
5%, 8/01/35 3,000 3,001,980
- --------------------------------------------------------------------------------
La Quinta, California, Financing Authority, Local
Agency Revenue Bonds, Series A, 5.125%,
9/01/34 (a) 6,000 6,053,820
- --------------------------------------------------------------------------------
Long Beach, California, Harbor Revenue Refunding
Bonds, AMT, Series B, 5.20%, 5/15/27 (e) 3,445 3,448,411
- --------------------------------------------------------------------------------
Los Angeles, California, COP (Sonnenblick Del Rio
West Los Angeles), 6.20%, 11/01/31 (a) 4,000 4,236,240
- --------------------------------------------------------------------------------
Los Angeles, California, Harbor Department Revenue
Refunding Bonds, 7.60%, 10/01/18 (e)(g) 4,080 4,805,710
- --------------------------------------------------------------------------------
Los Angeles, California, Wastewater System Revenue
Refunding Bonds, Series A, 5%, 6/01/32 (e) 4,000 4,087,640
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Abbreviations
- --------------------------------------------------------------------------------
To simplify the listings of portfolio holdings in the Schedule of
Investments, the names of many of the securities have been abbreviated
according to the list on the right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
RITES Residual Interest Tax-Exempt Securities
S/F Single-Family
See Notes to Financial Statements.
8 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
California (continued)
- --------------------------------------------------------------------------------
Los Angeles, California, Water and Power Revenue
Refunding Bonds (Power System):
Series A-A-1, 5.25%, 7/01/20 (d) $ 5,400 $ 5,670,756
Series A-A-2, 5.375%, 7/01/21 (e) 4,000 4,205,480
- --------------------------------------------------------------------------------
Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue Refunding
Bonds, Proposition A, First Tier Senior-Series A,
5%, 7/01/35 (a) 4,000 4,081,120
- --------------------------------------------------------------------------------
Los Angeles County, California, Sanitation Districts
Financing Authority, Revenue Refunding Bonds
(Capital Projects -- District Number 14), Sub-Series B,
5%, 10/01/29 (i) 5,000 4,967,250
- --------------------------------------------------------------------------------
Los Gatos, California, Unified School District, GO
(Election of 2001), Series C, 5%, 8/01/30 (i) 4,275 4,372,898
- --------------------------------------------------------------------------------
Los Rios, California, Community College District, GO
(Election of 2002), Series B, 5%, 8/01/27 (e) 2,000 2,041,340
- --------------------------------------------------------------------------------
Madera, California, Unified School District, GO
(Election 2002), 5%, 8/01/28 (d) 2,220 2,261,625
- --------------------------------------------------------------------------------
Montebello, California, Unified School District, GO
(Election of 1998), 5.02%, 8/01/28 (f)(i) 2,355 782,190
- --------------------------------------------------------------------------------
Murrieta Valley, California, Unified School District,
Public Financing Authority, Special Tax Revenue
Bonds, Series A, 5.125%, 9/01/26 (c) 5,500 5,742,110
- --------------------------------------------------------------------------------
Oakland, California, Sewer Revenue Bonds, Series A,
5%, 6/15/28 (d) 3,565 3,667,815
- --------------------------------------------------------------------------------
Orange County, California, Community Facilities
District, Special Tax Bonds (Number 04-1 Ladera
Ranch), Series A, 5.15%, 8/15/29 2,000 1,858,460
- --------------------------------------------------------------------------------
Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center Project),
Series A, 5.50%, 11/01/29 (e) 1,500 1,575,135
- --------------------------------------------------------------------------------
Palomar Pomerado Health Care District, California, GO
(Election of 2004), Series A, 5.125%, 8/01/37 (e) 1,850 1,909,996
- --------------------------------------------------------------------------------
Peralta, California, Community College District, GO:
(Election of 2000), Series C, 5%, 8/01/29 (e) 5,485 5,619,108
(Election of 2007), Series B, 5%, 8/01/37 (d) 2,000 2,059,180
- --------------------------------------------------------------------------------
Port of Oakland, California, Revenue Bonds, AMT,
Series K (i):
5.75%, 11/01/12 4,500 4,614,615
5.75%, 11/01/13 4,900 5,013,043
5.75%, 11/01/16 3,100 3,149,166
5.875%, 11/01/17 2,290 2,324,991
- --------------------------------------------------------------------------------
Port of Oakland, California, Revenue Refunding Bonds,
AMT, Series L, 5.375%, 11/01/27 (e)(i) 12,710 12,796,174
- --------------------------------------------------------------------------------
Rio, California, Elementary School District, GO,
Refunding, 5%, 8/01/29 (a) 2,415 2,497,424
- --------------------------------------------------------------------------------
Riverside County, California, Asset Leasing
Corporation, Leasehold Revenue Refunding Bonds
(Riverside County Hospital Project), Series B,
5.70%, 6/01/16 (e) 1,750 1,910,615
- --------------------------------------------------------------------------------
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
California (continued)
- --------------------------------------------------------------------------------
Riverside, California, Unified School District, GO
(Election of 2001), Series B, 5%, 8/01/30 (e) $ 4,295 $ 4,378,366
- --------------------------------------------------------------------------------
Sacramento, California, Municipal Utility District,
Electric Revenue Refunding Bonds, Series L,
5.125%, 7/01/22 (e) 8,000 8,059,680
- --------------------------------------------------------------------------------
Sacramento, California, Municipal Utility District
Financing Authority Revenue Bonds (Consumers
Project), 5%, 7/01/21 (e) 2,000 2,040,560
- --------------------------------------------------------------------------------
Sacramento, California, Unified School District, GO
(Election of 2002) (e):
5%, 7/01/27 3,400 3,514,546
5%, 7/01/30 9,230 9,473,211
- --------------------------------------------------------------------------------
Sacramento County, California, Airport System
Revenue Bonds, Senior Series A, 5%, 7/01/32 (d) 5,675 5,805,695
- --------------------------------------------------------------------------------
Sacramento County, California, Sanitation District
Financing Authority, Revenue Bonds (Sacramento
Regional County Sanitation District), 5%,
12/01/36 (i) 7,600 7,735,356
- --------------------------------------------------------------------------------
Saddleback Valley, California, Unified School District,
GO, 5%, 8/01/29 (d) 1,820 1,869,431
- --------------------------------------------------------------------------------
Saddleback Valley, California, Unified School District,
Public Financing Authority, Special Tax Revenue
Refunding Bonds, Series A, 5.65%, 9/01/17 (d) 3,500 3,509,205
- --------------------------------------------------------------------------------
San Bernardino, California, Joint Powers Financing
Authority, Lease Revenue Bonds (Department of
Transportation Lease), Series A, 5.50%, 12/01/20 (e) 2,000 2,003,760
- --------------------------------------------------------------------------------
San Bernardino County, California, COP, Refunding
(Medical Center Financing Project), 5.50%,
8/01/19 (e) 4,000 4,007,400
- --------------------------------------------------------------------------------
San Diego, California, Certificates of Undivided
Interest, Water Utility Fund, Net System Revenue
Bonds, 5%, 8/01/21 (i) 10,000 10,125,600
- --------------------------------------------------------------------------------
San Diego County, California, Water Authority, Water
Revenue Bonds, COP, Series A (d):
5%, 5/01/27 5,000 5,132,100
5%, 5/01/31 4,000 4,070,040
- --------------------------------------------------------------------------------
San Diego County, California, Water Authority, Water
Revenue Refunding Bonds, COP, Series A, 5%,
5/01/33 (d) 4,250 4,377,203
- --------------------------------------------------------------------------------
San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Refunding Bonds,
5.125%, 7/01/36 (a) 345 349,447
- --------------------------------------------------------------------------------
San Francisco, California, City and County Airport
Commission, International Airport, Special Facilities
Lease Revenue Bonds (SFO Fuel Company LLC), AMT,
Series A, 6.10%, 1/01/20 (d) 1,250 1,277,088
- --------------------------------------------------------------------------------
San Jose-Evergreen, California, Community College
District, GO (Election of 2004), Series B, 5.50%,
9/01/31 (d)(f) 5,000 1,478,200
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 9
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
California (concluded)
- --------------------------------------------------------------------------------
San Juan, California, Unified School District, GO
(Election of 2002), 5%, 8/01/28 (e) $ 3,500 $ 3,557,085
- --------------------------------------------------------------------------------
San Mateo County, California, Community College
District, GO (Election of 2005), Series B, 0%,
9/01/23 (e)(f) 6,720 3,132,125
- --------------------------------------------------------------------------------
San Mateo County, California, Joint Powers Authority,
Lease Revenue Refunding Bonds (Capital Projects),
Series A, 5.125%, 7/15/28 (d) 2,240 2,265,558
- --------------------------------------------------------------------------------
San Ysidro, California, School District, Capital
Appreciation, GO (Election of 1997), Series E,
5.24%, 8/01/31 (d)(f) 10,125 3,047,423
- --------------------------------------------------------------------------------
Santa Margarita, California, Water District, Special
Tax Refunding Bonds (Community Facilities District
Number 99), Series 1:
6.20%, 9/01/09 (b) 420 449,505
6.20%, 9/01/20 1,230 1,258,573
- --------------------------------------------------------------------------------
Santa Monica, California, Redevelopment Agency,
Tax Allocation Bonds (Earthquake Recovery
Redevelopment Project), 6%, 7/01/09 (a)(b) 4,000 4,214,560
- --------------------------------------------------------------------------------
Santa Rosa, California, High School District, GO
(Election of 2002), 5%, 8/01/28 (e) 1,000 1,012,190
- --------------------------------------------------------------------------------
Selma, California, Unified School District, GO
(Election of 2006), 5.125%, 8/01/26 (d) 2,550 2,697,977
- --------------------------------------------------------------------------------
Sonoma County, California, Junior College District,
GO (Election 2002), Refunding, Series B, 5%,
8/01/28 (d) 6,700 6,923,646
- --------------------------------------------------------------------------------
South Tahoe, California, Joint Powers Financing
Authority, Lease Revenue Refunding Bonds,
5.125%, 10/01/25 (e) 4,865 5,043,302
- --------------------------------------------------------------------------------
Southern California HFA, S/F Mortgage Revenue
Bonds, AMT, Series A, 5.80%, 12/01/49 (j)(k) 2,995 3,004,165
- --------------------------------------------------------------------------------
Stockton, California, Public Financing Authority,
Water Revenue Bonds (Water System Capital Improvement
Projects), Series A, 5%, 10/01/31 (e) 1,400 1,415,330
- --------------------------------------------------------------------------------
Tamalpais, California, Union High School District, GO
(Election of 2006), 5%, 8/01/29 (e) 4,600 4,749,132
- --------------------------------------------------------------------------------
Turlock, California, Public Finance Authority, Sewer
Revenue Bonds, Series A, 5%, 9/15/26 (i) 1,650 1,681,350
- --------------------------------------------------------------------------------
Par
Municipal Bonds (000) Value
- --------------------------------------------------------------------------------
Puerto Rico -- 1.8%
- --------------------------------------------------------------------------------
Puerto Rico Commonwealth, Public Improvement,
GO, Refunding, 5.70%, 7/01/20 (e) $ 6,610 $ 6,793,956
- --------------------------------------------------------------------------------
Total Municipal Bonds (Cost -- $334,686,160) -- 92.4% 340,792,344
================================================================================
================================================================================
Municipal Bonds Transferred to
Tender Option Bond Trusts (l)
================================================================================
Alameda County, California, Joint Powers Authority,
Lease Revenue Refunding Bonds, 5.0%,
12/01/34 (d) 1,200 1,234,008
- --------------------------------------------------------------------------------
Vista, California, Unified School District Revenue
Bonds, Series A, 5.25%, 8/01/25 (d) 4,200 4,396,266
- --------------------------------------------------------------------------------
San Diego County, California, Water Authority Revenue
Refunding Bonds, COP, 5.0%, 5/01/30 (d) 7,350 7,491,708
- --------------------------------------------------------------------------------
San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Refunding Bonds, Series A,
5%, 7/01/30 (e) 5,270 5,402,435
- --------------------------------------------------------------------------------
Total Municipal Bonds Transferred to Tender Option
Bond Trusts (Cost -- $17,883,066) -- 5.0% 18,524,417
================================================================================
================================================================================
Mutual Funds Shares
================================================================================
BlackRock California Insured Municipal 2008 Term
Trust, Inc. (m) 68,500 1,037,090
- --------------------------------------------------------------------------------
Total Mutual Funds (Cost -- $1,155,837) -- 0.3% 1,037,090
================================================================================
================================================================================
Short-Term Securities
================================================================================
CMA California Municipal Money Fund,
1.24% (m)(n) 9,292,676 9,292,676
- --------------------------------------------------------------------------------
Total Short-Term Securities (Cost -- $9,292,676)
- -- 2.5% 9,292,676
================================================================================
Total Investments (Cost -- $363,017,739*) -- 100.2% 369,646,527
Other Assets Less Liabilities -- 2.8% 10,308,011
Liability for Trust Certificates, Including
Interest Expense and Fees Payable -- (3.0%) (11,150,878)
-------------
Net Assets -- 100.0% $368,803,660
=============
See Notes to Financial Statements.
10 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Schedule of Investments (concluded)
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 352,044,085
==============
Gross unrealized appreciation .......................... $ 9,572,967
Gross unrealized depreciation .......................... (3,105,525)
--------------
Net unrealized appreciation ............................ $ 6,467,442
==============
(a) AMBAC Insured.
(b) U.S. government securities, held in escrow, are used to pay interest on
this security as well as to retire the bond in full at the date indicated,
typically at a premium to par.
(c) Assured Guaranty Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Represents a zero-coupon bond. Rate shown reflects the effective yield at
the time of purchase.
(g) Security is collateralized by municipal or U.S. Treasury obligations.
(h) When-issued security.
(i) FGIC Insured.
(j) FHLMC Collateralized.
(k) FNMA/GNMA Collateralized.
(l) Securities represent bonds transferred to a tender option bond trust, in
exchange for which the Fund acquired the residual interest certificates.
These securities serve as collateral in a financing transaction. See Note
1 of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(m) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Interest/
Purchase Sale Realized Dividend
Affiliate Cost Cost Gain Income
--------------------------------------------------------------------------
Anaheim, California, Public
Financing Authority,
Tax Allocation Revenue
Refunding Bonds, RITES,
8.87%, 12/28/2018 -- $4,107,079 $39,521 $123,668
BlackRock California
Insured Municipal
2008 Term Trust, Inc. -- -- -- $ 32,366
CMA California Municipal
Money Fund $5,984,218 -- -- $114,959
--------------------------------------------------------------------------
(n) Represents the current yield as of report date.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 11
================================================================================
Statement of Assets and Liabilities
May 31, 2008
- --------------------------------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------------------------------
Investments at value -- unaffiliated (cost -- $352,569,226) ............................ $ 359,316,761
Investments at value -- affiliated (cost -- $10,448,513) ............................... 10,329,766
Investments sold receivable ............................................................ 6,200,472
Interest receivable .................................................................... 5,169,390
Capital shares sold receivable ......................................................... 474,838
Prepaid expenses ....................................................................... 21,413
Dividends from affiliates receivable ................................................... 3,596
Other assets ........................................................................... 49,665
-------------
Total assets ........................................................................... 381,565,901
-------------
- --------------------------------------------------------------------------------------------------------
Accrued Liabilities
- --------------------------------------------------------------------------------------------------------
Bank overdraft ......................................................................... 2,254
Income dividends payable ............................................................... 1,047,465
Investment advisory fees payable ....................................................... 173,424
Capital shares redeemed payable ........................................................ 159,272
Other accrued expenses payable ......................................................... 140,125
Distribution fees payable .............................................................. 67,451
Other affiliates payable ............................................................... 18,174
Interest expense and fees payable ...................................................... 15,878
Officer's and Trustees' fees payable ................................................... 3,198
-------------
Total accrued liabilities .............................................................. 1,627,241
-------------
- --------------------------------------------------------------------------------------------------------
Other Liabilities
- --------------------------------------------------------------------------------------------------------
Trust certificates(1) .................................................................. 11,135,000
-------------
Total Liabilities ...................................................................... 12,762,241
-------------
- --------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------
Net assets ............................................................................. $ 368,803,660
=============
- --------------------------------------------------------------------------------------------------------
Net Assets Consist of
- --------------------------------------------------------------------------------------------------------
Institutional Shares, $0.10 par value .................................................. $ 399,071
Investor A Shares, $0.10 par value ..................................................... 181,082
Investor A1 Shares, $0.10 par value .................................................... 1,964,770
Investor B Shares, $0.10 par value ..................................................... 334,353
Investor C Shares, $0.10 par value ..................................................... 83,993
Investor C1 Shares, $0.10 par value .................................................... 323,282
Paid-in capital in excess of par ....................................................... 359,091,615
Undistributed net investment income .................................................... 378,557
Accumulated net realized loss .......................................................... (581,851)
Net unrealized appreciation/depreciation ............................................... 6,628,788
-------------
Net assets ............................................................................. $ 368,803,660
=============
(1) Represents short-term floating rate certificates issued by tender option
bond trusts.
See Notes to Financial Statements.
12 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (concluded)
May 31, 2008
- --------------------------------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------------------------------
Institutional -- based on net assets of $44,781,772 and 3,990,707 shares outstanding ... $ 11.22
=============
Investor A -- based on net assets of $20,305,964 and 1,810,817 shares outstanding ...... $ 11.21
=============
Investor A1 -- based on net assets of $220,470,237 and 19,647,704 shares outstanding ... $ 11.22
=============
Investor B -- based on net assets of $37,540,267 and 3,343,531 shares outstanding ...... $ 11.23
=============
Investor C -- based on net assets of $9,425,336 and 839,931 shares outstanding ......... $ 11.22
=============
Investor C1 -- based on net assets of $36,280,084 and 3,232,819 shares outstanding ..... $ 11.22
=============
(1) Represents short-term floating rate certificates issued by tender option
bond trusts.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 13
================================================================================
Statements of Operations
Period
Sept. 1, 2007 Year Ended
to May 31, August 31,
Increase (Decrease) in Net Assets: 2008 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------------
Interest (including $123,668 from affiliates) ...................................................... $ 14,230,138 $ 20,327,328
Dividends from affiliates .......................................................................... 147,325 215,223
-----------------------------
Total income ....................................................................................... 14,377,463 20,542,551
-----------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Investment advisory ................................................................................ 1,551,208 2,243,180
Service -- Investor A .............................................................................. 29,663 14,028
Service -- Investor A1 ............................................................................. 170,331 253,675
Service and distribution -- Investor B ............................................................. 157,262 293,572
Service and distribution -- Investor C ............................................................. 58,140 26,231
Service and distribution -- Investor C1 ............................................................ 168,339 260,024
Accounting services ................................................................................ 122,672 167,715
Transfer agent -- Institutional .................................................................... 20,005 20,102
Transfer agent -- Investor A ....................................................................... 7,090 2,400
Transfer agent -- Investor A1 ...................................................................... 62,737 84,841
Transfer agent -- Investor B ....................................................................... 17,007 24,643
Transfer agent -- Investor C ....................................................................... 2,172 1,300
Transfer agent -- Investor C1 ...................................................................... 10,806 15,225
Registration ....................................................................................... 62,250 54,166
Printing ........................................................................................... 59,763 72,099
Professional ....................................................................................... 50,292 79,885
Custodian .......................................................................................... 29,533 31,361
Officer and Trustees ............................................................................... 21,087 21,859
Miscellaneous ...................................................................................... 40,162 54,869
-----------------------------
Total expenses excluding interest expense and fees ................................................. 2,640,519 3,721,175
Interest expense and fees(1) ....................................................................... 361,741 896,912
-----------------------------
Total expenses ..................................................................................... 3,002,260 4,618,087
Less fees waived by advisor ........................................................................ (15,953) (22,433)
-----------------------------
Total expenses after waiver ........................................................................ 2,986,307 4,595,654
-----------------------------
Net investment income .............................................................................. 11,391,156 15,946,897
-----------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments (including $39,521 from affiliates) ................................................. 1,426,442 (409,378)
Financial futures contracts ..................................................................... -- 111,671
-----------------------------
1,426,442 (297,707)
Net change in unrealized appreciation/depreciation on investments .................................. (2,731,083) (8,253,468)
-----------------------------
Total realized and unrealized loss ................................................................. (1,304,641) (8,551,175)
-----------------------------
Net Increase in Net Assets Resulting from Operations ............................................... $ 10,086,515 $ 7,395,722
=============================
(1) Related to tender option bond trusts.
See Notes to Financial Statements.
14 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Statements of Changes in Net Assets
Period
Sept. 1, 2007 Year Ended August 31,
to May 31, -----------------------------
Increase (Decrease) in Net Assets: 2008 2007 2006
- ------------------------------------------------------------------------------------------------------------------------------------
Operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income ................................................................ $ 11,391,156 $ 15,946,897 $ 17,991,461
Net realized gain (loss) ............................................................. 1,426,442 (297,707) 4,983,714
Net change in unrealized appreciation/depreciation ................................... (2,731,083) (8,253,468) (11,799,018)
--------------------------------------------
Net increase in net assets resulting from operations ................................. 10,086,515 7,395,722 11,176,157
--------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders From
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income:
Institutional ..................................................................... (1,422,079) (1,846,625) (1,703,239)
Investor A ........................................................................ (469,076) (223,449) --
Investor A1 ....................................................................... (7,034,288) (10,505,085) (11,284,726)
Investor B ........................................................................ (1,169,691) (2,190,747) (3,276,574)
Investor C ........................................................................ (185,828) (84,571) --
Investor C1 ....................................................................... (1,017,011) (1,575,835) (1,720,848)
Net realized gain:
Institutional ..................................................................... -- (13,753) --
Investor A ........................................................................ -- (694) --
Investor A1 ....................................................................... -- (84,096) --
Investor B ........................................................................ -- (20,293) --
Investor C ........................................................................ -- (381) --
Investor C1 ....................................................................... -- (14,460) --
--------------------------------------------
Decrease in net assets resulting from dividends and distributions to shareholders .... (11,297,973) (16,559,989) (17,985,387)
--------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from beneficial interest transactions ............. (20,688,174) (15,798,990) (20,461,128)
--------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ......................................................... (21,899,632) (24,963,257) (27,270,358)
Beginning of period .................................................................. 390,703,292 415,666,549 442,936,907
============================================
End of period ........................................................................ $ 368,803,660 $ 390,703,292 $ 415,666,549
============================================
End of period undistributed net investment income .................................... $ 378,557 $ 285,374 $ 764,789
============================================
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 15
================================================================================
Financial Highlights
Institutional Investor A
----------------------------------------------------------- --------------------------
Period Period Period
Sept. 1, Sept. 1, October 2,
2007 to Year Ended August 31, 2007 to 2006(1) to
May 31, ---------------------------------------------- May 31, Aug. 31,
2008 2007 2006 2005 2004 2003 2008 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..... $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.81 $ 11.25 $ 11.55
----------------------------------------------------------- -------------------------
Net investment income(2) ................. 0.36 0.48 0.51 0.54 0.56 0.57 0.33 0.37
Net realized and unrealized gain (loss) .. (0.05) (0.25) (0.18) (0.02) 0.17 (0.27) (0.04) (0.25)
----------------------------------------------------------- -------------------------
Net increase from investment operations .. 0.31 0.23 0.33 0.52 0.73 0.30 0.29 0.12
----------------------------------------------------------- -------------------------
Dividends and distributions from:
Net investment income ................. (0.35) (0.49) (0.51) (0.54) (0.55) (0.57) (0.33) (0.42)
Net realized gain ..................... -- --(3) -- -- -- -- -- --(3)
----------------------------------------------------------- -------------------------
Total dividends and distributions ........ (0.35) (0.49) (0.51) (0.54) (0.55) (0.57) (0.33) (0.42)
----------------------------------------------------------- -------------------------
Net asset value, end of period ........... $ 11.22 $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.21 $ 11.25
=========================================================== =========================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return(4)
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ................. 2.84%(5) 1.99% 2.93% 4.50% 6.48% 2.54% 2.65%(5) 1.05%(5)
=========================================================== =========================
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver and
excluding interest expense and
fees(6) ............................... 0.74%(7) 0.71% 0.68% 0.68% 0.68% 0.68% 0.99%(7) 0.96%(7)
=========================================================== =========================
Total expenses after waiver .............. 0.87%(7) 0.93% 0.91% 0.78% 0.73% 0.79% 1.12%(7) 1.18%(7)
=========================================================== =========================
Total expenses ........................... 0.87%(7) 0.93% 0.92% 0.79% 0.73% 0.79% 1.13%(7) 1.19%(7)
=========================================================== =========================
Net investment income .................... 4.22%(7) 4.11% 4.45% 4.60% 4.76% 4.84% 3.95%(7) 3.89%(7)
=========================================================== =========================
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) .......... $ 44,782 $46,481 $42,053 $36,105 $36,132 $39,841 $ 20,306 $ 12,452
=========================================================== =========================
Portfolio turnover ....................... 31% 43% 30% 27% 22% 26% 31% 43%
=========================================================== =========================
(1) Commencement of operations.
(2) Based on average shares outstanding.
(3) Amount is less than $(0.01) per share.
(4) Total investment returns exclude the effects of any sales charges.
(5) Aggregate total investment return.
(6) Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(7) Annualized.
See Notes to Financial Statements.
16 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Financial Highlights (continued)
Investor A1
---------------------------------------------------------------------
Period
Sept. 1,
2007 to Year Ended August 31,
May 31, -------------------------------------------------------
2008 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ...................... $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82
---------------------------------------------------------------------
Net investment income(1) .................................. 0.35 0.47 0.50 0.53 0.55 0.56
Net realized and unrealized gain (loss) ................... (0.05) (0.25) (0.18) (0.03) 0.17 (0.28)
---------------------------------------------------------------------
Net increase from investment operations ................... 0.30 0.22 0.32 0.50 0.72 0.28
---------------------------------------------------------------------
Dividends and distributions from:
Net investment income .................................. (0.34) (0.48) (0.50) (0.52) (0.54) (0.56)
Net realized gain ...................................... -- --(2) -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ......................... (0.34) (0.48) (0.50) (0.52) (0.54) (0.56)
---------------------------------------------------------------------
Net asset value, end of period ............................ $ 11.22 $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value .................................. 2.78%(4) 1.90% 2.83% 4.40% 6.37% 2.35%
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver and excluding interest
expense and fees(5) .................................... 0.82%(6) 0.80% 0.78% 0.78% 0.78% 0.78%
=====================================================================
Total expenses after waiver ............................... 0.94%(6) 1.02% 1.01% 0.88% 0.83% 0.89%
=====================================================================
Total expenses ............................................ 0.95%(6) 1.02% 1.02% 0.89% 0.83% 0.89%
=====================================================================
Net investment income ..................................... 4.14%(6) 4.02% 4.35% 4.50% 4.66% 4.74%
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) ........................... $220,470 $239,346 $258,492 $264,482 $258,411 $247,184
=====================================================================
Portfolio turnover ........................................ 31% 43% 30% 27% 22% 26%
=====================================================================
(1) Based on average shares outstanding.
(2) Amount is less than $(0.01) per share.
(3) Total investment returns exclude the effects of sales charges.
(4) Aggregate total investment return.
(5) Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(6) Annualized.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 17
================================================================================
Financial Highlights (continued)
Investor B
---------------------------------------------------------------------
Period
Sept. 1,
2007 to Year Ended August 31,
May 31, -------------------------------------------------------
2008 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ...................... $ 11.26 $ 11.53 $ 11.70 $ 11.72 $ 11.54 $ 11.82
---------------------------------------------------------------------
Net investment income(1) .................................. 0.31 0.42 0.46 0.48 0.50 0.51
Net realized and unrealized gain (loss) ................... (0.03) (0.26) (0.17) (0.02) 0.18 (0.28)
---------------------------------------------------------------------
Net increase from investment operations ................... 0.28 0.16 0.29 0.46 0.68 0.23
---------------------------------------------------------------------
Dividends and distributions from:
Net investment income .................................. (0.31) (0.43) (0.46) (0.48) (0.50) (0.51)
Net realized gain ...................................... -- --(2) -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions ......................... (0.31) (0.43) (0.46) (0.48) (0.50) (0.51)
---------------------------------------------------------------------
Net asset value, end of period ............................ $ 11.23 $ 11.26 $ 11.53 $ 11.70 $ 11.72 $ 11.54
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value .................................. 2.55%(4) 1.39% 2.50% 3.98% 5.94% 1.93%
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver and excluding interest
expense and fees(5) .................................... 1.23%(6) 1.21% 1.18% 1.19% 1.18% 1.19%
=====================================================================
Total expenses after waiver ............................... 1.36%(6) 1.43% 1.42% 1.29% 1.24% 1.29%
=====================================================================
Total expenses ............................................ 1.36%(6) 1.43% 1.42% 1.29% 1.24% 1.30%
=====================================================================
Net investment income ..................................... 3.73%(6) 3.61% 3.95% 4.10% 4.25% 4.34%
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) ........................... $ 37,540 $ 47,753 $ 69,647 $ 96,650 $118,304 $151,276
=====================================================================
Portfolio turnover ........................................ 31% 43% 30% 27% 22% 26%
=====================================================================
(1) Based on average shares outstanding.
(2) Amount is less than $(0.01) per share.
(3) Total investment returns exclude the effects of sales charges.
(4) Aggregate total investment return.
(5) Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(6) Annualized.
See Notes to Financial Statements.
18 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Financial Highlights (concluded)
Investor C Investor C1
---------------------------- --------------------------------------------------------------
Period Period Period
Sept. 1, October 2, Sept. 1,
2007 to 2006(1) to 2007 to Year Ended August 31,
May 31, Aug. 31, May 31, ------------------------------------------------
2008 2007 2008 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period ........................... $ 11.26 $ 11.55 $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54 $ 11.82
---------------------------- --------------------------------------------------------------
Net investment income(2) ............ 0.27 0.30 0.31 0.41 0.44 0.47 0.49 0.50
Net realized and unrealized gain
(loss) ........................... (0.04) (0.25) (0.05) (0.25) (0.18) (0.02) 0.17 (0.28)
---------------------------- --------------------------------------------------------------
Net increase from investment
operations ....................... 0.23 0.05 0.26 0.16 0.26 0.45 0.66 0.22
---------------------------- --------------------------------------------------------------
Dividends and distributions from:
Net investment income ............ (0.27) (0.34) (0.30) (0.42) (0.44) (0.47) (0.48) (0.50)
Net realized gain ................ -- --(3) -- --(3) -- -- -- --
---------------------------- --------------------------------------------------------------
Total dividends and distributions ... (0.27) (0.34) (0.30) (0.42) (0.44) (0.47) (0.48) (0.50)
---------------------------- --------------------------------------------------------------
Net asset value, end of period ...... $ 11.22 $ 11.26 $ 11.22 $ 11.26 $ 11.52 $ 11.70 $ 11.72 $ 11.54
============================ ==============================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return(4)
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ............ 2.08%(5) 0.44%(5) 2.39%(5) 1.39% 2.31% 3.88% 5.84% 1.83%
============================ ==============================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses after waiver and
excluding interest expense and
fees(6) .......................... 1.72%(7) 1.72%(7) 1.31%(7) 1.30% 1.28% 1.29% 1.28% 1.29%
============================ ==============================================================
Total expenses after waiver ......... 1.85%(7) 1.94%(7) 1.44%(7) 1.52% 1.52% 1.39% 1.34% 1.39%
============================ ==============================================================
Total expenses ...................... 1.86%(7) 1.95%(7) 1.45%(7) 1.52% 1.52% 1.39% 1.34% 1.40%
============================ ==============================================================
Net investment income ............... 3.22%(7) 3.13%(7) 3.64%(7) 3.52% 3.85% 4.00% 4.15% 4.24%
============================ ==============================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000) ..... $ 9,425 $ 5,448 $ 36,280 $39,223 $ 45,474 $45,700 $46,900 $50,197
============================ ==============================================================
Portfolio turnover .................. 31% 43% 31% 43% 30% 27% 22% 26%
============================ ==============================================================
(1) Commencement of operations.
(2) Based on average shares outstanding.
(3) Amount is less than $(0.01) per share.
(4) Total investment returns exclude the effects of sales charges.
(5) Aggregate total investment return.
(6) Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
(7) Annualized.
See Notes to Financial Statements.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 19
================================================================================
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock California Insured Municipal Bond Fund (the "Fund") of BlackRock
California Municipal Series Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
open-end management investment company. The Fund's financial statements are
prepared in conformity with accounting principles generally accepted in the
United States of America, which may require the use of management accruals and
estimates. Actual results may differ from these estimates. The Fund recently
changed its fiscal year end to May 31. The Fund offers multiple classes of
shares. Institutional Shares are sold only to certain eligible investors.
Investor A and Investor A1 Shares are generally 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 material changes
to the Investor A1 distribution plan).
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of Investments: Municipal investments (including commitments to
purchase such investments on a "when-issued" basis) are valued on the basis of
prices provided by dealers or pricing services selected under the supervision of
the Trust's Board of Trustees (the "Board"). In determining the value of a
particular investment, pricing services may use certain information with respect
to transactions in such investments, quotations from bond dealers, pricing
matrixes, market transactions in comparable investments and various
relationships between investments. Financial futures contracts traded on
exchanges are valued at their last sale price. Investments in open-end
investment companies are valued at net asset value each business day. Short-term
securities are valued at amortized cost.
In the event that application of these methods of valuation results in a price
for an investment which is deemed not to be representative of the market value
of such investment, the investment will be valued by a method approved by the
Board as reflecting fair value ("Fair Value Assets"). When determining the price
for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to
determine the price that the Fund might reasonably expect to receive from the
current sale of that asset in an arm's-length transaction. Fair value
determinations shall be based upon all available factors that the investment
advisor and/or the sub-advisor deems relevant. The pricing of all Fair Value
Assets is subsequently reported to the Board or a committee thereof.
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 if the value of the contract decreases due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract.
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts. 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 margin variation and are
recognized 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.
Forward Commitments and When-Issued Delayed Delivery Securities: The Fund may
purchase securities on a when-issued basis and may purchase or sell securities
on a forward commitment basis. Settlement of such transactions normally occurs
within a month or more after the purchase or sale commitment is made. The Fund
may purchase securities under such conditions only with the intention of
actually acquiring them, but may enter into a separate agreement to sell the
securities before the settlement date. Since the value of securities purchased
may fluctuate prior to settlement, the Fund may be required to pay more at
settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement. Upon making a
commitment to purchase a security on a when-issued basis, the Fund will hold
liquid assets worth at least the equivalent of the amount due.
Municipal Bonds Transferred to Tender Option Bond Trusts: The Fund leverages its
assets through the use of tender option bond trusts ("TOBs"). A TOB is
established by a third party sponsor forming a special purpose entity, into
which one or more funds, or an agent on behalf of the funds, transfers municipal
securities. Other funds managed by the investment advisor may also contribute
municipal securities to a TOB into which the Fund has contributed 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 ("TOB Residuals"), which are generally issued to the participating
funds that made the transfer. The TOB residuals held by the Fund include the
right of the Fund (1) to cause the holders of a proportional share of the
floating rate certificates to tender their certificates at par, and (2) to
transfer, within seven days, a corresponding share of the municipal securities
from the TOB to the Fund. The cash received by the TOB from the sale of the
short-term floating rate certificates,
20 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Notes to Financial Statements (continued)
less transaction expenses, is paid to the Fund, which typically invests the cash
in additional municipal securities. The Fund's transfer of the municipal
securities to a TOB is accounted for as a secured borrowing, therefore the
municipal securities deposited into a TOB are presented in the Fund's Schedule
of Investments and the proceeds from the transaction are reported as a liability
of the Fund.
Interest income from the underlying security is recorded by the Fund on an
accrual basis. Interest expense incurred on the secured borrowing and other
expenses related to remarketing, administration and trustee services to a TOB
are reported as expenses of the Fund. The floating rate certificates have
interest rates that generally reset weekly and their holders have the option to
tender certificates to the TOB for redemption at par at each reset date. As of
May 31, 2008, the aggregate value of the underlying municipal securities
transferred to TOBs was $18,524,417, the related liability for trust
certificates was $11,135,000, and the range of interest rates was 1.620% -
2.313%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investment in TOBs likely will adversely affect the Fund's net investment income
and dividends 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.
Zero-Coupon Bonds: The Fund may invest in zero-coupon bonds, which are normally
issued at a significant discount from face value and do not provide for periodic
interest payments. Zero-coupon bonds may experience greater volatility in market
value than similar maturity debt obligations which provide for regular interest
payments.
Segregation: In cases in which the 1940 Act and the interpretive positions of
the Securities and Exchange Commission ("SEC") require that the Fund segregate
assets in connection with certain investments (e.g., when-issued securities),
the Fund will, consistent with certain interpretive letters issued by the SEC,
designate on its books and records cash or other liquid debt securities having a
market value at least equal to the amount that would otherwise be required to be
physically segregated.
Investment Transactions and Investment Income: Investment transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual method. The Fund amortizes all
premiums and discounts on debt securities. Income and realized and unrealized
gains and losses on investments are allocated daily to each class based on its
relative net assets.
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.
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.
Effective February 29, 2008, the Fund implemented Financial Accounting Standards
Board ("FASB") Interpretation No. 48,"Accounting for Uncertainty in Income Taxes
- -- an interpretation of FASB Statement No. 109" ("FIN 48"). 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 investment companies, before being measured and
recognized in the financial statements. The investment advisor has evaluated the
application of FIN 48 to the Fund and has determined that the adoption of FIN 48
does not have a material impact on the Fund's financial statements. The Fund
files U.S. federal and various state and local tax returns. No income tax
returns are currently under examination. The statute of limitations on the
Fund's U.S. federal tax returns remains open for the years ended August 31, 2005
through August 31, 2007. The statutes of limitations on the Fund's state and
local tax returns may remain open for an additional year depending upon the
jurisdiction.
Recent Accounting Pronouncements: 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. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. 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. The impact on the Fund's financial statement disclosures, if any,
is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued and is effective for fiscal years
beginning after November 15, 2008. FAS 161 is intended to improve financial
reporting for derivative instruments by requiring enhanced disclosure that
enables investors to understand how
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 21
================================================================================
Notes to Financial Statements (continued)
and why an entity uses derivatives, how derivatives are accounted for, and how
derivative instruments affect an entity's results of operations and financial
position. The impact on the Fund's financial statement disclosures, if any, is
currently being assessed.
Bank Overdraft: The Fund recorded a bank overdraft, which resulted from
management estimates of available cash.
Other: Expenses directly related to the Fund or its classes are charged to that
Fund or class. Other operating expenses shared by several funds are pro-rated
among those funds on the basis of relative net assets or other appropriate
methods. Other expenses of the Fund are allocated daily to each class based on
its relative net assets.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Fund entered into an Investment Advisory Agreement with BlackRock Advisors,
LLC (the "Advisor"), an indirect, wholly owned subsidiary of BlackRock, Inc., to
provide investment advisory and administration services. Merrill Lynch & Co.,
Inc. ("Merrill Lynch") and The PNC Financial Services Group, Inc. ("PNC") are
principal owners of BlackRock, Inc.
The Advisor 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 the Advisor a monthly fee based upon the average daily value of the Fund's
net assets at the following annual rates: 0.55% of the Fund's average daily net
assets not exceeding $500 million; 0.525% of average daily net assets in excess
of $500 million but not exceeding $1 billion; and 0.50% of average daily net
assets in excess of $1 billion.
For the period September 1, 2007 to May 31, 2008, the Fund reimbursed the
Advisor $4,980 for certain accounting services, which is included in accounting
services in the Statements of Operations.
The Advisor has voluntarily agreed to waive its advisory fee by the amount of
advisory fees the Fund pays to the Advisor indirectly through its investment in
affiliated money market funds. For the period September 1, 2007 to May 31, 2008,
the Advisor waived $15,953, which is included in fees waived by advisor on the
Statements of Operations.
The Advisor has entered into a separate sub-advisory agreement with BlackRock
Investment Management, LLC ("BIM"), an affiliate of the Advisor, under which the
Advisor pays BIM for services it provides, a monthly fee that is a percentage of
the investment advisory fee paid by the Fund to the Advisor.
The Fund has also entered into separate Distribution Agreements and Distribution
Plans with FAM Distributors, Inc. ("FAMD") and BlackRock Distributors, Inc. and
its affiliates ("BDI") (collectively, the "Distributor"). FAMD is a wholly owned
subsidiary of Merrill Lynch Group, Inc., and BDI is an affiliate of BlackRock,
Inc.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the 1940 Act, the Fund pays the Distributor ongoing service and
distribution fees. The fees are accrued daily and paid monthly at annual rates
based upon the average daily net assets of the shares as follows:
- --------------------------------------------------------------------------------
Service Distribution
Fee Fee
- --------------------------------------------------------------------------------
Investor A .......................................... 0.25% --
Investor A1 ......................................... 0.10% --
Investor B .......................................... 0.25% 0.25%
Investor C .......................................... 0.25% 0.75%
Investor C1 ......................................... 0.25% 0.35%
- --------------------------------------------------------------------------------
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, and each Distributor provide shareholder servicing
and distribution services to the Fund. The ongoing service and/or distribution
fee compensates the Distributor and each broker-dealer for providing shareholder
servicing and/or distribution related services to Investor A, Investor A1,
Investor B, Investor C and Investor C1 shareholders.
For the period September 1, 2007 to May 31, 2008, the Distributor earned
underwriting discounts, direct commissions and dealer concessions on sales of
the Fund's Investor A Shares, which totaled $110,884. For the period September
1, 2007 to May 31, 2008, affiliates received contingent deferred sales charges
of $10,471 and $2,818 relating to transactions in Investor B and Investor C
Shares, respectively. These amounts include payments to Hilliard Lyons, which
was considered an affiliate for a portion of the period.
Pursuant to written agreements, certain affiliates provide the Fund with
sub-accounting, recordkeeping, sub-transfer agency and other administrative
services with respect to sub-accounts they service. For these services, these
affiliates receive an annual fee per shareholder account which will vary
depending on share class. For the period September 1, 2007 to May 31, 2008, the
Fund paid $76,122 in return for these services.
PNC Global Investment Servicing (U.S.) Inc., formerly PFPC Inc., an indirect,
wholly owned subsidiary of PNC and an affiliate of the Advisor, serves as
transfer agent and dividend disbursing agent. Each class of the Fund bears the
costs of transfer agent fees associated with such respective classes. Transfer
agency fees borne by each class of the Fund are comprised of those fees charged
for all shareholder communications including the mailing of shareholder reports,
dividend and distribution notices, and proxy materials for shareholders
meetings, as well as per account and per transaction fees related to servicing
and maintenance of shareholder accounts, including the issuing, redeeming and
transferring of shares of each class of the Fund, 12b-1 fee calculation, check
writing, anti-money laundering services, and customer identification services.
22 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Notes to Financial Statements (continued)
The Advisor maintains a call center, which is responsible for providing certain
shareholder services to the Fund, such as responding to shareholder inquiries
and processing transactions based upon instructions from shareholders with
respect to the subscription and redemption of Fund shares. During the period
September 1, 2007 to May 31, 2008, the following amounts have been accrued by
the Fund to reimburse the Advisor for costs incurred running the call center,
which are a component of the transfer agent fees in the accompanying Statements
of Operations.
- --------------------------------------------------------------------------------
Call Center Fees
- --------------------------------------------------------------------------------
Institutional .............................................. $ 400
Investor A ................................................. $ 251
Investor A1................................................. $ 4,341
Investor B ................................................. $ 765
Investor C ................................................. $ 116
Investor C1 ................................................ $ 520
- --------------------------------------------------------------------------------
Certain officers and/or trustees of the Trust are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
period September 1, 2007 to May 31, 2008 were $121,733,203 and $163,054,067,
respectively.
4. Beneficial Interest Transactions:
There are an unlimited number of shares authorized for all classes. Transactions
in shares of beneficial interest for each class were as follows:
Period September 1, 2007 Year Ended
to May 31, 2008 August 31, 2007
-------------------------- -------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ....................................... 1,019,604 $ 11,436,511 998,306 $ 11,419,664
Shares issued to shareholders in reinvestment of
dividends and distributions .................... 66,577 746,718 84,015 964,317
-------------------------- -------------------------
Total issued ...................................... 1,086,181 12,183,229 1,082,321 12,383,981
Shares redeemed ................................... (1,224,090) (13,749,338) (603,972) (6,934,638)
-------------------------- -------------------------
Net increase (decrease) ........................... (137,909) $ (1,566,109) 478,349 $ 5,449,343
========================== =========================
Year Ended
August 31, 2006
-------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Class I*
- ------------------------------------------------------------------------------------------------------------------------------------
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
=========================
* Effective October 2, 2006, Class I Shares were redesignated Institutional
Shares.
Period September 1, 2007 Period October 2, 2006+
to May 31, 2008 to August 31, 2007
-------------------------- -------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Investor A
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ....................................... 1,022,253 $ 11,533,525 1,216,192 $ 13,949,168
Shares issued to shareholders in reinvestment of
dividends and distributions .................... 25,706 287,800 12,356 140,773
-------------------------- -------------------------
Total issued ...................................... 1,047,959 11,821,325 1,228,548 14,089,941
Shares redeemed ................................... (343,870) (3,884,326) (121,820) (1,388,133)
-------------------------- -------------------------
Net increase ...................................... 704,089 $ 7,936,999 1,106,728 $ 12,701,808
========================== =========================
+ Commencement of operations.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 23
================================================================================
Notes to Financial Statements (continued)
Period September 1, 2007 Year Ended
to May 31, 2008 August 31, 2007
-------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Investor A1
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ....................................... 583,521 $ 6,581,626 1,086,250 $ 12,439,838
Shares issued to shareholders in reinvestment of
dividends and distributions and the automatic
conversion of shares ........................... 287,322 3,223,660 473,724 5,442,067
-------------------------- --------------------------
Total issued ...................................... 870,843 9,805,286 1,559,974 17,881,905
Shares redeemed ................................... (2,482,744) (27,961,285) (2,737,542) (31,403,844)
-------------------------- --------------------------
Net decrease ...................................... (1,611,901) $(18,155,999) (1,177,568) $(13,521,939)
========================== ==========================
Year Ended
August 31, 2006
--------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Class A*
- ------------------------------------------------------------------------------------------------------------------------------------
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 ............................................ 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)
==========================
* Effective October 2, 2006, Class A Shares were redesignated Investor A1
Shares.
Period September 1, 2007 Year Ended
to May 31, 2008 August 31, 2007
-------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Investor B
- ------------------------------------------------------------------------------------------------------------------------------------
Shares sold ....................................... 20,969 $ 236,900 46,014 $ 530,825
Shares issued to shareholders in reinvestment of
dividends and distributions .................... 42,229 474,231 76,329 877,612
-------------------------- --------------------------
Total issued ...................................... 63,198 711,131 122,343 1,408,437
Shares redeemed and the automatic conversion of
shares ......................................... (958,835) (10,815,680) (1,925,123) (22,087,142)
-------------------------- --------------------------
Net decrease ...................................... (895,637) $(10,104,549) (1,802,780) $(20,678,705)
========================== ==========================
Year Ended
August 31, 2006
--------------------------
Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Class B*
- ------------------------------------------------------------------------------------------------------------------------------------
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)
==========================
* Effective October 2, 2006, Class B Shares were redesignated Investor B
Shares.
24 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Notes to Financial Statements (continued)
Period September 1, 2007 Period October 2, 2006+
to May 31, 2008 to August 31, 2007
--------------------------- ---------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Investor C
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold ..................................................... 436,606 $ 4,939,226 502,743 $ 5,775,905
Shares issued to shareholders in reinvestment of dividends
and distributions ............................................ 10,339 115,788 4,391 50,075
--------------------------- ---------------------------
Total issued .................................................... 446,945 5,055,014 507,134 5,825,980
Shares redeemed ................................................. (90,900) (1,022,075) (23,248) (265,556)
--------------------------- ---------------------------
Net increase .................................................... 356,045 $ 4,032,939 483,886 $ 5,560,424
=========================== ===========================
+ Commencement of operations.
Period September 1, 2007 Year Ended
to May 31, 2008 August 31, 2007
--------------------------- --------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Investor C1
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold ..................................................... 110 $ 1,188 53,190 $ 613,301
Shares issued to shareholders in reinvestment of dividends
and distributions ............................................ 46,611 522,957 71,976 826,936
--------------------------- ---------------------------
Total issued .................................................... 46,721 524,145 125,166 1,440,237
Shares redeemed ................................................. (297,503) (3,355,600) (588,371) (6,750,158)
--------------------------- ---------------------------
Net decrease .................................................... (250,782) $ (2,831,455) (463,205) $ (5,309,921)
=========================== ===========================
Year Ended
August 31, 2006
---------------------------
Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Class C*
- ----------------------------------------------------------------------------------------------------------------------------------
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
===========================
* Effective October 2, 2006, Class C Shares were redesignated Investor C1
Shares.
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by the Advisor and its
affiliates, is 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 21, 2007, the credit agreement was renewed for
one year under substantially the same terms. The Fund pays a commitment fee of
0.06% per annum based on the Fund's pro rata share of the unused portion of the
credit agreement, which is included in miscellaneous expenses in the Statements
of Operations. Amounts borrowed under the credit agreement bear interest at a
rate equal to, at each fund's election, the federal funds rate plus 0.35% or a
base rate as defined in the credit agreement. The Fund did not borrow under the
credit agreement during the period September 1, 2007 and May 31, 2008.
6. Income Tax Information:
The tax character of distributions paid during the period September 1, 2007 to
May 31, 2008 and year ended August 31, 2007 was as follows:
- --------------------------------------------------------------------------------
5/31/2008 8/31/2007
- --------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ............................ $ 11,297,973 $ 16,426,312
Ordinary income .............................. -- 133,677
----------------------------
Total distributions ............................. $ 11,297,973 $ 16,559,989
----------------------------
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 25
================================================================================
Notes to Financial Statements (concluded)
As of May 31, 2008, the components of accumulated earnings on a tax basis were
as follows:
- --------------------------------------------------------------------------------
Undistributed tax-exempt net income ........................... $ 525,870
Undistributed long-term net capital gains ..................... --
-----------
Total undistributed net earnings .............................. 525,870
Capital loss carryforward ..................................... (467,038)*
Net unrealized gains .......................................... 6,366,662**
-----------
Total net accumulated earnings ................................ $ 6,425,494
===========
* On May 31, 2008, the Fund had a capital loss carryforward of $467,038, all
of which expires in 2009. This amount will be available to offset future
realized capital gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on straddles, the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities and the difference between the book
and tax treatment of residual interests in tender option bond trusts.
7. Concentration Risk:
The Fund's investments are concentrated in certain states, which may be affected
by adverse financial, social, environmental, economic, regulatory and political
factors.
Many municipalities insure repayment of their bonds, which reduces the risk of
loss due to issuer default. The market value of these bonds may fluctuate for
other reasons and there is no assurance that the insurer will meet its
obligation.
================================================================================
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of BlackRock California Municipal
Series Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BlackRock California Insured Municipal Bond Fund
of BlackRock California Municipal Series Trust (the "Trust") as of May 31, 2008,
and the related statements of operations for the period September 1, 2007 to May
31, 2008 and for the year ended August 31, 2007, the statements of changes in
net assets for the period September 1, 2007 to May 31, 2008 and for each of the
two years in the period ended August 31, 2007, and the financial highlights for
each of the respective periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of May 31, 2008, by correspondence with the custodian. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock California Insured Municipal Bond Fund of BlackRock Municipal Series
Trust as of May 31, 2008, the results of its operations for the period September
1, 2007 to May 31, 2008 and for the year ended August 31, 2007, the changes in
its net assets for the period September 1, 2007 to May 31, 2008 and for each of
the two years in the period ended August 31, 2007, and the financial highlights
for each of the respective periods presented, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 28, 2008
- --------------------------------------------------------------------------------
Important Tax Information (Unaudited)
- --------------------------------------------------------------------------------
All of the net investment income distributions paid by BlackRock California
Insured Municipal Bond Fund of BlackRock California Municipal Series Trust
during the taxable period ended May 31, 2008 qualify as tax-exempt interest
dividends for federal income tax purposes.
26 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Officers and Trustees
Number of
BlackRock-
Position(s) Length of Time Advised Funds
Name, Address Held with Served as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Trustee(2) During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Interested Trustees(1)
- ------------------------------------------------------------------------------------------------------------------------------------
James H. Bodurtha Trustee Since 1995 Director, The China Business Group, Inc. 37 Funds None
40 East 52nd Street (consulting firm) since 1996 and 104 Portfolios
New York, NY 10022 formerly Executive Vice President
1944 thereof from 1996 to 2003; Chairman of
the Board, Berkshire Holding Corporation
since 1980.
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce R. Bond Trustee Since 2007 Formerly Trustee and Member of the 37 Funds None
40 East 52nd Street Governance Committee, State Street 104 Portfolios
New York, NY 10022 Research Mutual Funds from 1997 to 2005;
1946 Formerly Board Member of Governance,
Audit and Finance Committee, Avaya Inc.
(computer equipment) from 2003 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Donald W. Burton Trustee Since 2007 Managing General Partner, The Burton 37 Funds Knology, Inc.
40 East 52nd Street Partnership, LP (an investment 104 Portfolios (telecommunications);
New York, NY 10022 partnership) since 1979; Managing Capital
1944 General Partner, The South Atlantic Southwest (financial)
Venture Funds since 1983; Member of the
Investment Advisory Council of the
Florida State Board of Administration
from 2001 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Honorable Trustee Since 2007 Partner and Head of International 37 Funds UPS Corporation
Stuart E. Eizenstat Practice, Covington and Burling (law 104 Portfolios (delivery service)
40 East 52nd Street firm) since 2001; International Advisory
New York, NY 10022 Board Member, The Coca Cola Company
1943 since 2002; Advisory Board Member BT
Americas (telecommunications) since
2004; Member of the Board of Directors,
Chicago Climate Exchange (environmental)
since 2006; Member of the International
Advisory Board GML (energy) since 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. Froot Trustee Since 2005 Professor, Harvard University since 37 Funds None
40 East 52nd Street 1992. 104 Portfolios
New York, NY 10022
1957
- ------------------------------------------------------------------------------------------------------------------------------------
Robert M. Hernandez Chairman of Since 2007 Formerly Director, Vice Chairman and 37 Funds ACE Limited (insurance
40 East 52nd Street the Board, Chief Financial Officer of USX 104 Portfolios company);
New York, NY 10022 Trustee and Corporation (energy and steel business) Eastman Chemical
1944 Member of from 1991 to 2001. Company (chemical);
the Audit RTI International
Committee Metals, Inc. (metals);
TYCO Electronics
(electronics)
- ------------------------------------------------------------------------------------------------------------------------------------
John F. O'Brien Trustee Since 2007 Trustee, Woods Hole Oceanographic 37 Funds Cabot Corporation
40 East 52nd Street Institute since 2003; Formerly Director, 104 Portfolios (chemicals); LKQ
New York, NY 10022 Allmerica Financial Corporation from Corporation (auto
1943 1995 to 2003; Formerly Director, ABIOMED parts manufacturing);
from 1989 to 2006; Formerly Director, TJX Companies,
Ameresco, Inc. (energy solutions Inc. (retailer)
company) from 2006 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 27
================================================================================
Officers and Trustees (continued)
Number of
BlackRock-
Position(s) Length of Time Advised Funds
Name, Address Held with Served as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Trustee(2) During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Interested Trustees(1) (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Roberta Cooper Ramo Trustee Since 2000 Shareholder, Modrall, Sperling, Roehl, 37 Funds None
40 East 52nd Street Harris & Sisk, P.A. (law firm) since 104 Portfolios
New York, NY 10022 1993; Chairman of the Board, Cooper's
1942 Inc. (retail) since 2000; Director of
ECMC Group (service provider to
students, schools and lenders) since
2001; President Elect, The American Law
Institute (non-profit), 2007; Formerly
President, American Bar Association from
1995 to 1996.
- ------------------------------------------------------------------------------------------------------------------------------------
Jean Margo Reid Trustee Since 2007 Self-employed consultant since 2001; 37 Funds None
40 East 52nd Street Director and Secretary, SCB, Inc. 104 Portfolios
New York, NY 10022 (holding company) since 1998; Director
1945 and Secretary, SCB Partners, Inc.
(holding company) since 2000; Formerly
Director, Covenant House (non-profit)
from 2001 to 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
David H. Walsh Trustee Since 2007 Director, National Museum of Wildlife 37 Funds None
40 East 52nd Street Art since 2007; Director, Ruckleshaus 104 Portfolios
New York, NY 10022 Institute and Haub School of Natural
1941 Resources at the University of Wyoming
since 2006; Director, The American
Museum of Fly Fishing since 1997;
Formerly Consultant with Putnam
Investments from 1993 to 2003; Formerly
Director, The National Audubon Society
from 1998 to 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Fred G. Weiss Chairman of Since 2007 Managing Director, FGW Associates 37 Funds Watson
40 East 52nd Street the Audit (consulting and investment company) 104 Portfolios Pharmaceutical Inc.
New York, NY 10022 Committee and since 1997; Director, Michael J. Fox
1941 Trustee Foundation for Parkinson's Research
since 2000; Formerly Director of BTG
International Plc (a global technology
commercialization company) from 2001 to
2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard R. West Trustee and Since 2007 Dean Emeritus, New York University's 37 Funds Bowne & Co., Inc.
40 East 52nd Street Member of Leonard N. Stern School of Business 104 Portfolios (financial printers);
New York, NY 10022 the Audit Administration since 1995. Vornado Realty Trust
1938 Committee (real estate company);
Alexander's
Inc. (real estate
company)
- --------------------------------------------------------------------------------
(1) Trustees serve until their resignation, removal or death, or until
December 31 of the year in which they turn 72.
(2) Following the combination of Merrill Lynch Investment Managers, L.P.
("MLIM") and BlackRock, Inc. ("BlackRock") in September 2006, the various
legacy MLIM and legacy BlackRock Fund boards were realigned and
consolidated into three new Fund boards in 2007. As a result, although the
chart shows certain trustees as joining the Fund's board in 2007, each
trustee first became a member of the board of trustees of other legacy
MLIM or legacy BlackRock Funds as follows: James H. Bodurtha since 1995;
Bruce R. Bond since 2005; Donald W. Burton since 2002; Stuart E. Eizenstat
since 2001; Kenneth A. Froot since 2005; Robert M. Hernandez since 1996;
John F. O'Brien since 2004; Roberta Cooper Ramo since 2000; Jean Margo
Reid since 2004; David H. Walsh since 2003; Fred G. Weiss since 1998; and
Richard R. West since 1978.
28 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Officers and Trustees (continued)
Number of
BlackRock-
Position(s) Length of Time Advised Funds
Name, Address Held with Served as a Principal Occupation(s) and Portfolios
and Year of Birth Fund Trustee During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustees(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard S. Davis Fund Since 2007 Managing Director, BlackRock, Inc. since 185 Funds None
40 East 52nd Street President and 2005; Formerly Chief Executive Officer, 295 Portfolios
New York, NY 10022 Trustee State Street Research & Management
1945 Company from 2000 to 2005; Formerly
Chairman of the Board of Trustees, State
Street Research Mutual Funds from 2000
to 2005; Formerly Chairman, SSR Realty
from 2000 to 2004.
- -----------------------------------------------------------------------------------------------------------------------------------
Laurence D. Fink Trustee Since 2007 Chairman and Chief Executive Officer of 37 Funds None
40 East 52nd Street BlackRock, Inc. since its formation in 104 Portfolios
New York, NY 10022 1998 and of BlackRock, Inc.'s
1952 predecessor entities since 1988 and
Chairman of the Executive and Management
Committees; Formerly Managing Director,
The First Boston Corporation, Member of
its Management Committee, Co-head of
its Taxable Fixed Income Division and
Head of its Mortgage and Real Estate
Products Group; Chairman of the Board of
several of BlackRock's alternative
investment vehicles; Director of several
of BlackRock's offshore funds; Member of
the Board of Trustees of New York
University, Chair of the Financial
Affairs Committee and a member of the
Executive Committee, the Ad Hoc
Committee on Board Governance, and the
Committee on Trustees; Co-Chairman of
the NYU Hospitals Center Board of
Trustees, Chairman of the Development/
Trustee Stewardship Committee and
Chairman of the Finance Committee;
Trustee, The Boys' Club of New York.
- ------------------------------------------------------------------------------------------------------------------------------------
Henry Gabbay Trustee Since 2007 Consultant, BlackRock, Inc. since 2007; 184 Funds None
40 East 52nd Street Formerly Managing Director, BlackRock, 294 Portfolios
New York, NY 10022 Inc. from 1989 to 2007; Formerly Chief
1947 Administrative Officer, BlackRock
Advisors, LLC from 1998 to 2007;
Formerly President of BlackRock Funds
and BlackRock Bond Allocation Target
Shares from 2005 to 2007 and Treasurer
of certain closed-end Funds in the
BlackRock fund complex from 1989 to
2006.
- --------------------------------------------------------------------------------
(1) Messrs. Davis, Fink and Gabbay are all "interested persons," as defined in
the Investment Company Act of 1940, of the Fund based on their positions
with BlackRock, Inc. and its affiliates. Trustees serve until their
resignation, removal or death, or until December 31 of the year in which
they turn 72.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 29
================================================================================
Officers and Trustees (concluded)
Position(s)
Name, Address Held with the Length of
and Year of Birth Fund Time Served Principal Occupation(s) During Past Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Officers(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Chief Executive Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director
40 East 52nd Street Officer of Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund Asset
New York, NY 10022 Management, L.P. ("FAM") in 2006; First Vice President thereof from 1997 to
1960 2005; Treasurer thereof from 1999 to 2006 and Vice President thereof from
1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Anne F. Ackerley Vice Since 2007 Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer of
40 East 52nd Street President BlackRock's U.S. Retail Group since 2006; Head of BlackRock's Mutual Fund
New York, NY 10022 Group from 2000 to 2006; Merrill Lynch & Co., Inc. from 1984 to 1986 and
1962 from 1988 to 2000, most recently as First Vice President and Operating
Officer of the Mergers and Acquisitions Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Neal J. Andrews Chief Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice
40 East 52nd Street Financial President and Line of Business Head of Fund Accounting and Administration
New York, NY 10022 Officer at PFPC Inc. from 1992 to 2006.
1966
- ------------------------------------------------------------------------------------------------------------------------------------
Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006;
40 East 52nd Street Formerly Assistant Treasurer of the MLIM/FAM-advised Funds from 2005 to
New York, NY 10022 2006; Director of MLIM Fund Services Group from 2001 to 2006.
1970
- ------------------------------------------------------------------------------------------------------------------------------------
Brian P. Kindelan Chief Since 2007 Chief Compliance Officer of the BlackRock-advised Funds since 2007;
40 East 52nd Street Compliance Anti-Money Laundering Officer of the BlackRock-advised Funds since 2007;
New York, NY 10022 Officer of Managing Director and Senior Counsel of BlackRock, Inc. since 2005;
1959 the Fund Director and Senior Counsel of BlackRock Advisors, Inc. from 2001 to 2004
and Vice President and Senior Counsel thereof from 1998 to 2000; Formerly
Senior Counsel of The PNC Bank Corp. from 1995 to 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at
40 East 52nd Street BlackRock, Inc. since 2006; Formerly General Counsel (U.S.) of Goldman
New York, NY 10022 Sachs Asset Management, L.P. from 1993 to 2006.
1965
- --------------------------------------------------------------------------------
(1) Officers of the Fund serve at the pleasure of the Board of Trustees.
- --------------------------------------------------------------------------------
Further information about the Fund's Officers and Directors is available in the
Fund's Statement of Additional Information, which can be obtained without charge
by calling (800) 441-7762.
- --------------------------------------------------------------------------------
Custodian
The Bank of New York Mellon
New York, NY 10286
Transfer Agent
PNC Global Investment
Servicing (U.S.) Inc.
Wilmington, DE 19809
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Willkie Farr & Gallagher LLP
New York, NY 10019
30 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Additional Information
- --------------------------------------------------------------------------------
BlackRock Privacy Principles
- --------------------------------------------------------------------------------
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our website.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
- --------------------------------------------------------------------------------
Availability of Additional Information
- --------------------------------------------------------------------------------
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's website 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 Advisors, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisors, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock website at http://www.blackrock.com/edelivery
2) Click on the applicable link and follow the steps to sign up
3) Log into your account
Householding
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 householded 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 MAY 31, 2008 31
================================================================================
Additional Information (continued)
- --------------------------------------------------------------------------------
Availability of Additional Information (concluded)
- --------------------------------------------------------------------------------
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's (the
"SEC") website at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how the Fund votes proxies relating to securities held in the
Fund's portfolio during the most recent 12-month period ended June 30 is
available upon request and without charge (1) at www.blackrock.com or by calling
(800) 441-7762 and (2) on the SEC's website at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on 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
and without charge by calling (800) 441-7762.
32 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
================================================================================
Additional Information (concluded)
- --------------------------------------------------------------------------------
Shareholder Privileges
- --------------------------------------------------------------------------------
Account Information
Call us at (800) 441-7762 from 8:00 AM to 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/funds.
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 funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock funds, 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.
BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008 33
================================================================================
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all
investment styles and managed by experts in equity, fixed income and tax-exempt
investing.
- --------------------------------------------------------------------------------
Equity Funds
- --------------------------------------------------------------------------------
BlackRock All-Cap Global Resources Portfolio
BlackRock Asset Allocation Portfolio+
BlackRock Aurora Portfolio
BlackRock Balanced Capital Fund+
BlackRock Basic Value Fund
BlackRock Capital Appreciation Portfolio
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Growth Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund+
BlackRock Global Dynamic Equity Fund
BlackRock Global Emerging Markets 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 Health Sciences Opportunities Portfolio*
BlackRock Healthcare Fund
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio
BlackRock International Value Fund
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
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 Technology Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
- --------------------------------------------------------------------------------
Fixed Income Funds
- --------------------------------------------------------------------------------
BlackRock Commodity Strategies Fund
BlackRock Emerging Market Debt Portfolio
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Income Portfolio
BlackRock Income Builder Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Long Duration Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Strategic Income Portfolio
BlackRock Total Return Fund
BlackRock Total Return Portfolio II
BlackRock World Income Fund
- --------------------------------------------------------------------------------
Municipal Bond Funds
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Target Risk & Target Date Funds
- --------------------------------------------------------------------------------
BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio
BlackRock Lifecycle Prepared Portfolios
Prepared Portfolio 2010
Prepared Portfolio 2015
Prepared Portfolio 2020
Prepared Portfolio 2025
Prepared Portfolio 2030
Prepared Portfolio 2035
Prepared Portfolio 2040
Prepared Portfolio 2045
Prepared Portfolio 2050
* See the prospectus for information on specific limitations on investments
in the fund.
+ Mixed asset 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.
34 BLACKROCK CALIFORNIA INSURED MUNICIPAL BOND FUND MAY 31, 2008
GO
[PAPERLESS LOGO]
It's Fast, Convenient, & Timely!
To sign up today, go to www.blackrock.com/edelivery.
This report 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
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#10329-5/08
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a
code of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. During the period covered by this
report, there have been no amendments to or waivers granted under the
code of ethics. A copy of the code of ethics is available without
charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Joe Grills (not reappointed to the Audit Committee, effective
November 1, 2007)
Robert M. Hernandez (term began, effective November 1, 2007)
Robert S. Salomon, Jr. (term ended, effective November 1, 2007)
Fred G. Weiss (term began, effective November 1, 2007)
Richard R. West (term began, effective November 1, 2007)
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation or
identification as an audit committee financial expert does not impose
on such person any duties, obligations, or liabilities greater than
the duties, obligations, and liabilities imposed on such person as a
member of the audit committee and board of directors in the absence
of such designation or identification.
Item 4 - Principal Accountant Fees and Services
- ------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees(3)
- ------------------------------------------------------------------------------------------------------------------------------
Current Previous Current Previous Current Previous Current Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Entity Name Year End Year End Year End Year End Year End Year End Year End Year End
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
BlackRock $28,000 $28,500 $0 $0 $6,100 $6,100 $1,049 $1,042
California Insured
Municipal Bond Fund
of BlackRock
California
Municipal Series
Trust
- ------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements not included in
Audit Fees.
2 The nature of the services include tax compliance, tax advice and
tax planning.
3 The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly to
the operations and the financial reporting of the registrant. Certain
of these non-audit services that the Committee believes are a)
consistent with the SEC's auditor independence rules and b) routine
and recurring services that will not impair the independence of the
independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). The term of any general pre-approval is 12
months from the date of the pre-approval, unless the Committee
provides for a different period. Tax or other non-audit services
provided to the registrant which have a direct impact on the
operation or financial reporting of the registrant will only be
deemed pre-approved provided that any individual project does not
exceed $10,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. For this purpose, multiple
projects will be aggregated to determine if they exceed the
previously mentioned cost levels.
Any proposed services exceeding the pre-approved cost levels
will require specific pre-approval by the Committee, as will any
other services not subject to general pre-approval (e.g.,
unanticipated but permissible services). The Committee is informed of
each service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting. At this meeting, an
analysis of such services is presented to the Committee for
ratification. The Committee may delegate to one or more of its
members the authority to approve the provision of and fees for any
specific engagement of permitted non-audit services, including
services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
---------------------------------------------------------------------
Entity Name Current Fiscal Previous Fiscal
Year End Year End
---------------------------------------------------------------------
---------------------------------------------------------------------
BlackRock California $294,649 $291,642
Insured Municipal Bond Fund
of BlackRock California
Municipal Series Trust
---------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to
the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $287,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Investments
(a) The registrant's Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual
period covered since the previous Form N-CSR filing.
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 - The
registrant's Nominating and Governance Committee will consider
nominees to the board of directors recommended by shareholders when a
vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations which include biographical
information and set forth the qualifications of the proposed nominee
to the registrant's Secretary. There have been no material changes to
these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BlackRock California Insured Municipal Bond Fund of BlackRock
California Municipal Series Trust
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer of
BlackRock California Insured Municipal Bond Fund of
BlackRock California Municipal Series Trust
Date: July 18, 2008
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/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock California Insured Municipal Bond Fund of
BlackRock California Municipal Series Trust
Date: July 18, 2008
By: /s/ Neal J. Andrews
-------------------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock California Insured Municipal Bond Fund of
BlackRock California Municipal Series Trust
Date: July 18, 2008