UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08573
Name of Fund: BlackRock MuniHoldings California Insured Fund, Inc. (MUC)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive Officer,
BlackRock MuniHoldings California Insured Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton,
NJ 08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 06/30/2008
Date of reporting period: 07/01/2007 - 12/31/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock MuniHoldings BLACKROCK
California Insured Fund, Inc. (MUC)
SEMI-ANNUAL REPORT
DECEMBER 31, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
--------------------------------------------------------------------------------
A Letter to Shareholders .................................................. 3
Semi-Annual Report:
Fund Summary .............................................................. 4
The Benefits and Risks of Leveraging ...................................... 5
Swap Agreements ........................................................... 5
Financial Statements:
Schedule of Investments ................................................. 6
Statement of Assets and Liabilities ..................................... 11
Statement of Operations ................................................. 11
Statements of Changes in Net Assets ..................................... 12
Financial Highlights ...................................................... 13
Notes to Financial Statements ............................................. 14
Officers and Directors .................................................... 17
Additional Information .................................................... 18
2 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
A Letter to Shareholders
Dear Shareholder
Financial markets endured heightened volatility during 2007, culminating in
mixed results for some of the major benchmark indexes:
Total Returns as of December 31, 2007 6-month 12-month
==========================================================================================================
U.S. equities (S&P 500 Index) -1.37% + 5.49%
----------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) -7.53 - 1.57
----------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +0.39 +11.17
----------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +5.93 + 6.97
----------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +3.22 + 3.36
----------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -0.67 + 2.27
----------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
Subprime mortgage woes dominated headlines for much of 2007, spawning a
widespread liquidity and credit crisis with ramifications across global markets.
The Federal Reserve Board (the "Fed") stepped in to inject liquidity into the
markets and bolster investor confidence, cutting the federal funds rate by 0.50%
in September, 0.25% in October and 0.25% in December, which brought the target
short-term interest rate to 4.25%. In taking action, the central bankers, who
had long deemed themselves inflation fighters, were seeking to stem the fallout
from the credit crunch and forestall a wider economic unraveling.
Amid the volatility, equity markets displayed surprising resilience. Market
fundamentals generally held firm, dividend payouts and share buybacks continued,
and valuations remained attractive. To some extent, the credit turmoil dampened
corporate merger-and-acquisition (M&A) activity, a key source of strength for
equity markets, but 2007 remained a record year for global M&A nonetheless. As
the returns indicate, the most recent six months were more trying, reflecting
the slowing U.S. economy, a troubled housing market and a more difficult
corporate earnings backdrop. Overall, large cap stocks outperformed small caps
as investors grew increasingly risk averse. International markets fared better
than their U.S. counterparts, benefiting from generally stronger economies.
In fixed income markets, mixed economic signals and subprime fallout resulted in
a flight to quality. Investors shunned bonds associated with the housing and
credit markets in favor of higher-quality Treasury issues. The yield on 10-year
Treasury issues, which touched 5.30% in June (its highest level in five years),
fell to 4.04% by year-end, while prices correspondingly rose. The tax-exempt
bond market waffled amid the economic uncertainty and concerns around the credit
worthiness of bond insurers, but set a new-issuance record in 2007. A drop in
municipal bond prices created buying opportunities, and the heightened supply
was generally well absorbed.
As you navigate the uncertainties inherent in the financial markets, we
encourage you to start the year by reviewing your investment goals with your
financial professional and making portfolio changes, as needed. For more
reflection on 2007 and our 10 predictions for 2008, please ask your financial
professional for a copy of "What's Ahead in 2008: An Investment Perspective," or
view it online at 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 new year and beyond.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary as of December 31, 2007
Investment Objective
BlackRock MuniHoldings California Insured Fund, Inc. (MUC) seeks to provide
shareholders with current income exempt from federal and California income
taxes. The Fund seeks to achieve this objective by investing primarily in a
portfolio of long-term, investment-grade municipal obligations, the interest on
which, in the opinion of bond counsel to the issuer, is exempt from federal and
California income taxes.
Fund Information
Symbol on New York Stock Exchange ................................ MUC
Initial Offering Date ............................................ February 27, 1998
Yield on Closing Market Price as of December 31, 2007 ($12.79)* .. 5.21%
Tax Equivalent Yield** ........................................... 8.02%
Current Monthly Distribution per Common Stock*** ................. $.0555
Current Annualized Distribution per Common Stock*** .............. $ .666
Leverage as of December 31, 2007**** ............................. 40%
-------------------------------------------------------------------------------------
* Yield on closing market price is calculated by dividing the current
annualized distribution per share by the closing market price.
Past performance does not guarantee future results.
** Tax equivalent yield assumes the maximum federal tax rate of 35%.
*** The distribution is not constant and is subject to change.
**** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to Auction Market Preferred Stock that
may be outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
12/31/07 6/30/07 Change High Low
--------------------------------------------------------------------------------
Market Price ............ $12.79 $13.92 (8.12%) $13.97 $12.26
Net Asset Value ......... $14.54 $14.48 0.41% $14.77 $14.06
--------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 12/31/07 6/30/07
--------------------------------------------------------------------------------
City, County & State .................................. 25% 22%
Education ............................................. 20 13
Tax Revenue ........................................... 15 19
Water & Sewer ......................................... 13 12
Power ................................................. 9 6
Lease Revenue ......................................... 7 18
Transportation ........................................ 6 6
Hospital .............................................. 3 3
Housing ............................................... 2 1
--------------------------------------------------------------------------------
Credit Quality Allocations*
Credit Rating 12/31/07 6/30/07
--------------------------------------------------------------------------------
AAA/Aaa ............................................... 97% 97%
A/A ................................................... 3 3
--------------------------------------------------------------------------------
* Using the higher of Standard & Poor's or Moody's Investors Service
ratings.
4 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
The Benefits and Risks of Leveraging
BlackRock MuniHoldings California Insured Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To leverage,
the Fund issues Auction Market Preferred Stock, which pays dividends at
prevailing short-term interest rates, and invests the proceeds in long-term
municipal bonds. The interest earned on these investments, net of dividends to
Auction Market Preferred Stock, is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected in the per
share net asset value of the Fund's Common Stock. However, in order to benefit
Common Stock shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Auction
Market Preferred Stock based on the lower short-term interest rates. At the same
time, the fund's total portfolio of $150 million earns the income based on
long-term interest rates.
In this case, the dividends paid to Auction Market Preferred Stock shareholders
are significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the beneficiaries
of the incremental yield. However, if short-term interest rates rise, narrowing
the differential between short-term and long-term interest rates, the
incremental yield pickup on the Common Stock will be reduced or eliminated
completely. At the same time, the market value of the fund's Common Stock (that
is, its price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common Stock's net
asset value will reflect the full decline in the price of the portfolio's
investments, since the value of the fund's Auction Market Preferred Stock does
not fluctuate. In addition to the decline in net asset value, the market value
of the fund's Common Stock may also decline.
As of December 31, 2007, the Fund's leverage amount, due to Auction Market
Preferred Stock, was 40% of total net assets, before the deduction of Auction
Market Preferred Stock.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. (See Note 1 of the Notes to Financial Statements for
details of municipal bonds transferred to tender option bond trusts.)
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom the
Fund has entered into the swap will default on its obligation to pay the Fund
and the risk that the Fund will not be able to meet its obligations to pay the
other party to the agreement.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 5
Schedule of Investments as of December 31, 2007 (Unaudited) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
California -- 147.7%
-------------------------------------------------------------------------------
$ 1,000 ABAG Finance Authority for Nonprofit Corporations,
California, COP (Children's Hospital Medical Center),
6% due 12/01/2009 (a)(h) $ 1,065
-------------------------------------------------------------------------------
3,345 ABC California Unified School District, GO, Series A,
5.625% due 8/01/2020 (c)(e) 3,418
-------------------------------------------------------------------------------
10,000 Alameda, California, Unified School District, Capital
Appreciation, GO (Election of 2004), Series B,
5.02% due 8/01/2035 (e)(i) 2,582
-------------------------------------------------------------------------------
7,360 Alhambra, California, Unified School District, GO
(Election of 2004), Series A, 5% due 8/01/2029 (d) 7,647
-------------------------------------------------------------------------------
3,100 Anaheim, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Merged Redevelopment
Project Area), Series A, 5% due 2/01/2031 (e) 3,171
-------------------------------------------------------------------------------
2,825 Banning, California, Unified School District, GO
(Election of 2006), Series A, 5% due 8/01/2027 (d) 2,970
-------------------------------------------------------------------------------
Berkeley, California, Unified School District, GO,
Series I (e)(h):
2,000 5.75% due 8/01/2008 2,052
4,520 5.875% due 8/01/2008 4,641
-------------------------------------------------------------------------------
8,350 Bonita, California, Unified School District, GO
(Election of 2004), Series B, 5% due 8/01/2029 (d) 8,711
-------------------------------------------------------------------------------
3,640 Burbank-Glendale-Pasadena Airport Authority,
California, Airport Revenue Refunding Bonds, AMT,
Series B, 5.25% due 7/01/2018 (a) 3,862
-------------------------------------------------------------------------------
2,925 Cajon Valley, California, Union School District, GO,
Series B, 5.50% due 8/01/2027 (g) 3,098
-------------------------------------------------------------------------------
2,180 California Community College Financing Authority,
Lease Revenue Bonds (Grossmont-Palomar-Shasta),
Series A, 5.625% due 4/01/2026 (g) 2,306
-------------------------------------------------------------------------------
California HFA, Home Mortgage Revenue Bonds,
VRDN (a)(m):
300 AMT, Series R, 3.50% due 8/01/2023 300
11,770 Series F, 3.50% due 2/01/2033 11,770
-------------------------------------------------------------------------------
California HFA, S/F Mortgage Revenue Bonds, AMT,
Class I (g):
195 Series A-1, 6% due 8/01/2020 197
1,160 Series C-2, 5.625% due 8/01/2020 (b) 1,175
-------------------------------------------------------------------------------
California Health Facilities Financing Authority
Revenue Bonds (Kaiser Permanente), Series A:
9,250 5.50% due 6/01/2022 (c)(e) 9,510
1,500 5% due 4/01/2037 1,453
-------------------------------------------------------------------------------
1,900 California Infrastructure and Economic Development
Bank Revenue Bonds (Los Angeles County
Department of Public Social Services), 5.75%
due 9/01/2023 (a) 2,080
-------------------------------------------------------------------------------
California State, GO:
2,000 5.50% due 6/01/2025 (d) 2,079
15 5.25% due 4/01/2027 15
-------------------------------------------------------------------------------
California State, GO, Refunding:
6,000 5.25% due 2/01/2026 (g) 6,359
5,000 5% due 6/01/2037 5,033
-------------------------------------------------------------------------------
2,625 California State Public Works Board, Lease Revenue
Refunding Bonds (Various Community College
Project), Series B, 5.625% due 3/01/2019 (a) 2,635
-------------------------------------------------------------------------------
10,000 California State University, Systemwide Revenue
Bonds, Series A, 5% due 11/01/2032 (d) 10,244
-------------------------------------------------------------------------------
California State University, Systemwide Revenue
Refunding Bonds:
5,000 Series A, 5% due 11/01/2029 (e) 5,167
16,215 Series C, 5% due 11/01/2028 (g) 16,885
-------------------------------------------------------------------------------
7,050 California State, Various Purpose, GO, 5.50%
due 11/01/2033 7,483
-------------------------------------------------------------------------------
14,000 California State, Veterans, GO, Refunding, AMT,
Series BZ, 5.35% due 12/01/2021 (g) 14,036
-------------------------------------------------------------------------------
4,915 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 5,199
-------------------------------------------------------------------------------
California Statewide Communities Development
Authority Revenue Bonds:
3,600 (Kaiser Permanente), Series B, 5%
due 3/01/2041 3,448
1,090 (Los Angeles Orthopedic Hospital Foundation),
5.50% due 6/01/2019 (a) 1,103
-------------------------------------------------------------------------------
California Statewide Communities Development
Authority, Revenue Refunding Bonds:
5,000 (Kaiser Hospital Asset Management, Inc.),
Series C, 5.25% due 8/01/2031 5,034
2,650 (Kaiser Permanente), Series A, 5%
due 4/01/2031 2,596
-------------------------------------------------------------------------------
4,500 Campbell, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Central Campbell
Redevelopment Project), Series A, 5%
due 10/01/2032 (a) 4,593
-------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of BlackRock MuniHoldings California Insured Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated
the names of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
IDR Industrial Development Revenue Bonds
M/F Multi-Family
ROLS Reset Option Long Securities
S/F Single-Family
VRDN Variable Rate Demand Notes
6 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
California (continued)
-------------------------------------------------------------------------------
$ 8,705 Castaic Lake, California, Water Agency Revenue
Bonds, COP (Water System Improvement Project),
5.50% due 8/01/2009 (a)(h) $ 9,122
-------------------------------------------------------------------------------
9,905 Chaffey Community College District, California, GO
(Election of 2002), Series B, 5% due 6/01/2030 (g) 10,303
-------------------------------------------------------------------------------
3,330 Chula Vista, California, IDR (San Diego Gas and
Electric Company), AMT, Series D, 5%
due 12/01/2027 (a) 3,374
-------------------------------------------------------------------------------
2,750 Chula Vista, California, Public Financing Authority,
Revenue Refunding Bonds, Series A, 5%
due 9/01/2029 (g) 2,799
-------------------------------------------------------------------------------
2,400 Coachella Valley, California, Unified School District,
GO (Election of 2005), Series A, 5%
due 8/01/2027 (d) 2,501
-------------------------------------------------------------------------------
2,500 Colton, California, Joint Unified School District, GO,
Series A, 5.375% due 8/01/2026 (d) 2,685
-------------------------------------------------------------------------------
7,800 Contra Costa, California, Community College District,
GO (Election of 2002), 5% due 8/01/2028 (g) 8,096
-------------------------------------------------------------------------------
6,600 Contra Costa County, California, Public Financing
Authority, Tax Allocation Revenue Refunding Bonds
(Contra Costa Centre Project Areas), Series A,
5% due 8/01/2037 (g) 6,751
-------------------------------------------------------------------------------
5,910 Corona, California, Department of Water and Power,
COP, 5% due 9/01/2029 (g) 6,034
-------------------------------------------------------------------------------
4,250 Coronado, California, Community Development
Agency, Tax Allocation Bonds (Coronado Community
Development Project), 5% due 9/01/2030 (a) 4,342
-------------------------------------------------------------------------------
5,000 Corona-Norco, California, Unified School District, GO
(Election of 2006), Series A, 5% due 8/01/2031 (e) 5,244
-------------------------------------------------------------------------------
2,395 Covina-Valley, California, Unified School District, GO,
Refunding, Series A, 5.50% due 8/01/2026 (e) 2,578
-------------------------------------------------------------------------------
3,750 Culver City, California, Redevelopment Finance
Authority, Tax Allocation Revenue Refunding Bonds,
Series A, 5.60% due 11/01/2025 (e) 3,942
-------------------------------------------------------------------------------
East Bay, California, Municipal Utility District,
Wastewater System Revenue Refunding Bonds,
Sub-Series A (a):
6,545 5% due 6/01/2033 6,835
6,015 5% due 6/01/2037 6,272
-------------------------------------------------------------------------------
11,000 East Side Union High School District, California,
Santa Clara County, Capital Appreciation, GO
(Election of 2002), Series E, 5.125%
due 8/01/2028 (i)(l) 3,778
-------------------------------------------------------------------------------
465 Escondido, California, COP, Refunding, Series A,
5.75% due 9/01/2024 (d) 494
-------------------------------------------------------------------------------
3,745 Folsom, California, Public Financing Authority,
Special Tax Revenue Refunding Bonds, Series A,
5% due 9/01/2028 (a) 3,837
-------------------------------------------------------------------------------
5,000 Foothill-De Anza, California, Community College
District, GO, Refunding, 5% due 8/01/2030 (d) 5,137
-------------------------------------------------------------------------------
4,455 Fresno, California, Airport Revenue Bonds, AMT,
Series B, 5.50% due 7/01/2020 (e) 4,609
-------------------------------------------------------------------------------
5,200 Fullerton, California, Joint Union High School
District, GO (Election of 2002), Series B, 5%
due 8/01/2029 (d) 5,403
-------------------------------------------------------------------------------
4,040 Garden Grove, California, COP (Financing Project),
Series A, 5.50% due 3/01/2026 (a) 4,316
-------------------------------------------------------------------------------
5,200 Glendale, California, Unified School District, GO,
Series B, 5.125% due 9/01/2023 (e) 5,301
-------------------------------------------------------------------------------
2,155 Hartnell, California, Community College District, GO
(Election of 2002), Series B, 5% due 6/01/2031 (e) 2,250
-------------------------------------------------------------------------------
4,565 Hemet, California, Unified School District, GO,
Series A, 5.375% due 8/01/2026 (g) 4,819
-------------------------------------------------------------------------------
6,365 Hollister, California, Joint Powers Finance Authority,
Wastewater Revenue Refunding Bonds (Refining
and Improvement Project), Series 1, 5%
due 6/01/2037 (e) 6,595
-------------------------------------------------------------------------------
1,700 Inglewood, California, Unified School District, GO,
Series A, 5.60% due 10/01/2009 (d)(h) 1,792
-------------------------------------------------------------------------------
2,300 Irvine, California, Unified School District,
Special Tax (Community Facilities District
Number 86-1), 5.375% due 11/01/2020 (a) 2,382
-------------------------------------------------------------------------------
4,665 Irvine, California, Unified School District, Special
Tax Refunding Bonds (Community Facilities District
Number 86-1), 5.80% due 11/01/2020 (a) 4,767
-------------------------------------------------------------------------------
2,500 La Quinta, California, Financing Authority, Local
Agency Revenue Bonds, Series A, 5.25%
due 9/01/2024 (a) 2,672
-------------------------------------------------------------------------------
3 La Quinta, California, Financing Authority, Local
Agency Tax Allocation and Revenue Refunding
Bonds, ROLS, Series II-R-412X, 6.682%
due 9/01/2034 (a)(k) 3
-------------------------------------------------------------------------------
1,210 Little Lake, California, City School District, GO,
Series B, 5.25% due 7/01/2022 (e) 1,293
-------------------------------------------------------------------------------
1,485 Lompoc, California, Unified School District, GO
(Election of 2002), Series C, 5% due 6/01/2032 (e) 1,556
-------------------------------------------------------------------------------
4,000 Long Beach, California, Bond Finance Authority,
Lease Revenue Bonds (Rainbow Harbor Refinancing
Project), Series A, 5.25% due 5/01/2009 (a)(h) 4,157
-------------------------------------------------------------------------------
9,000 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue
Refunding Bonds, Proposition A, First Tier
Senior-Series A, 5% due 7/01/2035 (a) 9,324
-------------------------------------------------------------------------------
12,000 Los Angeles, California, Community College
District, GO (Election of 2003), Series E, 5%
due 8/01/2031 (e) 12,545
-------------------------------------------------------------------------------
10,000 Los Angeles, California, Community Redevelopment
Agency, Community Redevelopment Financing
Authority Revenue Bonds (Bunker Hill Project),
Series A, 5% due 12/01/2027 (e) 10,270
-------------------------------------------------------------------------------
2,000 Los Angeles, California, Department of Water and
Power, Waterworks Revenue Bonds, Sub-Series A-2,
5% due 7/01/2035 (a) 2,080
-------------------------------------------------------------------------------
160 Los Angeles, California, M/F Housing Revenue
Refunding Bonds, Senior Series G, 5.65%
due 1/01/2014 (e) 161
-------------------------------------------------------------------------------
5,000 Los Angeles, California, Unified School District, GO
(Election of 2004), Series H, 5% due 7/01/2032 5,249
-------------------------------------------------------------------------------
9,650 Los Angeles, California, Unified School District, GO,
Refunding, Series A-1, 5% due 7/01/2021 10,250
-------------------------------------------------------------------------------
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
California (continued)
-------------------------------------------------------------------------------
$10,000 Los Angeles, California, Unified School District, GO,
Series E, 5% due 7/01/2030 (a) $10,412
-------------------------------------------------------------------------------
20,000 Los Angeles, California, Wastewater System
Revenue Refunding Bonds, Series A, 4.75%
due 6/01/2035 (g) 20,148
-------------------------------------------------------------------------------
5,000 Los Angeles, California, Water and Power Revenue
Bonds (Power System), Sub-Series A-1, 5%
due 7/01/2031 (e) 5,203
-------------------------------------------------------------------------------
2,735 Los Gatos, California, Unified School District, GO
(Election 2001), Series B, 5% due 8/01/2030 (e) 2,810
-------------------------------------------------------------------------------
1,890 Los Rios, California, Community College District, GO
(Election of 2002), Series B, 5% due 8/01/2027 (g) 1,952
-------------------------------------------------------------------------------
2,000 Madera, California, Public Financing Authority, Water
and Wastewater Revenue Refunding Bonds, 5%
due 3/01/2036 (g) 2,076
-------------------------------------------------------------------------------
6,365 Merced, California, Community College District, GO
(School Facilities District Number 1), 5%
due 8/01/2031 (g) 6,649
-------------------------------------------------------------------------------
5,000 Merced, California, Irrigation District, Electrical
System Revenue Refunding Bonds, 5.25%
due 9/01/2036 (l) 5,172
-------------------------------------------------------------------------------
Metropolitan Water District of Southern California,
Waterworks Revenue Bonds:
3,550 Series A, 5% due 7/01/2035 (e) 3,696
9,000 Series B-1, 5% due 10/01/2033 (d) 9,290
-------------------------------------------------------------------------------
5,000 Modesto, California, Schools Infrastructure Financing
Agency, Special Tax Bonds, 5% due 9/01/2029 (a) 5,079
-------------------------------------------------------------------------------
1,685 Monrovia, California, Financing Authority, Lease
Revenue Bonds (Library Project), 5%
due 12/01/2037 (a) 1,754
-------------------------------------------------------------------------------
4,150 Moorpark, California, Redevelopment Agency, Tax
Allocation Bonds (Moorpark Redevelopment
Project), 5.125% due 10/01/2031 (a) 4,258
-------------------------------------------------------------------------------
2,315 Morgan Hill, California, Unified School District, GO,
5.75% due 8/01/2010 (d)(h) 2,489
-------------------------------------------------------------------------------
9,100 Napa, California, Water Revenue Bonds, 5%
due 5/01/2035 (a) 9,492
-------------------------------------------------------------------------------
3,275 Northern California Power Agency, Public Power
Revenue Refunding Bonds (Hydroelectric Project
Number 1), Series A, 5.125% due 7/01/2023 (g) 3,330
-------------------------------------------------------------------------------
Oakland, California, Alameda County Unified School
District, GO, Series F (g)(h):
6,000 5.50% due 8/01/2010 6,359
8,950 5.625% due 8/01/2010 9,513
-------------------------------------------------------------------------------
9,355 Oakland, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Coliseum Area
Redevelopment Project), Series B, 5%
due 9/01/2036 (a) 9,552
-------------------------------------------------------------------------------
5,000 Ohlone, California, Community College District, GO,
Series B, 5% due 8/01/2030 (e) 5,208
-------------------------------------------------------------------------------
10,000 Oxnard, California, Financing Authority, Wastewater
Revenue Bonds (Redwood Trunk Sewer and
Headworks Projects), Series A, 5.25%
due 6/01/2034 (d) 10,491
-------------------------------------------------------------------------------
10,000 Oxnard, California, Financing Authority, Water
Revenue Bonds, 5% due 6/01/2031 (g) 10,411
-------------------------------------------------------------------------------
6,475 Palm Desert, California, Financing Authority, Tax
Allocation Revenue Bonds (Project Area Number 2),
5% due 8/01/2033 (g) 6,606
-------------------------------------------------------------------------------
1,600 Palm Springs, California, Financing Authority, Lease
Revenue Refunding Bonds (Convention Center
Project), Series A, 5.50% due 11/01/2035 (g) 1,727
-------------------------------------------------------------------------------
9,300 Palomar Pomerado Health Care District, California,
GO (Election of 2004), Series A, 5.125%
due 8/01/2037 (g) 9,704
-------------------------------------------------------------------------------
6,980 Peralta, California, Community College District, GO
(Election of 2007), Series B, 5% due 8/01/2032 (d) 7,318
-------------------------------------------------------------------------------
9,100 Pleasanton, California, Unified School District, GO,
Series E, 5.50% due 8/01/2008 (d)(h) 9,324
-------------------------------------------------------------------------------
Port of Oakland, California, Revenue Bonds, AMT,
Series K (d):
3,500 5.75% due 11/01/2014 3,655
19,815 5.75% due 11/01/2029 20,454
-------------------------------------------------------------------------------
3,000 Poway, California, Redevelopment Agency, Tax
Allocation Refunding Bonds, 5% due 6/15/2033 (g) 3,073
-------------------------------------------------------------------------------
9,070 Poway, California, Unified School District, Public
Financing Authority, Special Tax Revenue Bonds,
5% due 9/15/2031 (a) 9,401
-------------------------------------------------------------------------------
2,500 Rancho Cucamonga, California, Redevelopment
Agency, Tax Allocation Refunding Bonds (Rancho
Redevelopment Project), Series A, 5%
due 9/01/2034 (g) 2,556
-------------------------------------------------------------------------------
4,630 Redwoods, California, Community College District,
GO (Election of 2004), 5% due 8/01/2031 (g) 4,795
-------------------------------------------------------------------------------
2,205 Richmond, California, Joint Powers Financing
Authority, Tax Allocation Revenue Bonds, Series A,
5.50% due 9/01/2018 (g) 2,333
-------------------------------------------------------------------------------
10,735 Riverside, California, Unified School District, GO
(Election of 2001), Series B, 5% due 8/01/2030 (g) 11,222
-------------------------------------------------------------------------------
2,125 Sacramento, California, Area Flood Control Agency,
Special Assessment Refunding Bonds (Consolidated
Capital Assessment District), Series A, 5%
due 10/01/2032 (d) 2,222
-------------------------------------------------------------------------------
8,775 Sacramento, California, City Financing Authority,
Revenue Refunding Bonds, 5% due 12/01/2029 (d) 8,976
-------------------------------------------------------------------------------
10,825 Sacramento, California, Municipal Utility District,
Electric Revenue Refunding Bonds, Series L,
5.125% due 7/01/2022 (g) 11,046
-------------------------------------------------------------------------------
2,500 Sacramento, California, Municipal Utility District
Financing Authority, Revenue Bonds (Consumers
Project), 5.125% due 7/01/2029 (g) 2,629
-------------------------------------------------------------------------------
4,115 Saddleback Valley, California, Unified School District,
GO, 5% due 8/01/2029 (e) 4,267
-------------------------------------------------------------------------------
3,490 Salinas, California, Union High School District, GO
(Election of 2002), Series B, 5% due 6/01/2026 (g) 3,671
-------------------------------------------------------------------------------
1,480 San Bernardino County, California, COP, Refunding
(Medical Center Financing Project), 5.50%
due 8/01/2019 (g) 1,483
-------------------------------------------------------------------------------
8 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
California (continued)
-------------------------------------------------------------------------------
$ 5,440 San Bernardino, California, Joint Powers Financing
Authority, Lease Revenue Bonds (Department
of Transportation Lease), Series A, 5.50%
due 12/01/2020 (g) $ 5,449
-------------------------------------------------------------------------------
1,500 San Diego County, California, COP (Edgemoor
Project and Regional System), Refunding,
5% due 2/01/2029 (a) 1,530
-------------------------------------------------------------------------------
4,000 San Diego County, California, Water Authority,
Water Revenue Bonds, COP, Series A, 5%
due 5/01/2031 (e) 4,091
-------------------------------------------------------------------------------
12,555 San Diego, California, Community College District,
GO (Election of 2002), 5% due 5/01/2030 (e) 13,062
-------------------------------------------------------------------------------
5,055 San Diego, California, Public Facilities Financing
Authority, Sewer Revenue Bonds, Series A,
5.25% due 5/15/2027 (d) 5,111
-------------------------------------------------------------------------------
6,795 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds, 5.50%
due 7/01/2009 (d)(h) 7,110
-------------------------------------------------------------------------------
23,100 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Refunding Bonds,
Series A, 5% due 7/01/2030 (g) 23,977
-------------------------------------------------------------------------------
6,430 San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds,
AMT, Second Series, Issue 24A, 5.50%
due 5/01/2024 (e) 6,652
-------------------------------------------------------------------------------
4,195 San Francisco, California, Community College
District, GO (Election of 2001), Series C, 5%
due 6/15/2031 (e) 4,383
-------------------------------------------------------------------------------
5,530 San Joaquin County, California, COP, Refunding
(County Administration Building), 5%
due 11/15/2030 (g) 5,668
-------------------------------------------------------------------------------
5,000 San Jose, California, Airport Revenue Refunding
Bonds, AMT, Series A, 5% due 3/01/2037 (a) 4,939
-------------------------------------------------------------------------------
2,118 San Jose, California, Financing Authority, Lease
Revenue Refunding Bonds, DRIVERS, Series 1280Z,
6.202% due 12/01/2010 (a)(k) 2,209
-------------------------------------------------------------------------------
San Jose-Evergreen, California, Community College
District, Capital Appreciation, GO (Election of 2004),
Refunding, Series A (g)(i):
10,410 5.17% due 9/01/2024 4,496
7,250 5.34% due 9/01/2029 2,344
-------------------------------------------------------------------------------
7,785 San Juan, California, Unified School District, GO,
5.625% due 8/01/2010 (d)(h) 8,348
-------------------------------------------------------------------------------
4,250 San Juan, California, Unified School District, GO
(Election of 2002), 5% due 8/01/2028 (g) 4,371
-------------------------------------------------------------------------------
5,650 San Mateo County, California, Transit District,
Sales Tax Revenue Refunding Bonds, Series A,
5% due 6/01/2029 (g) 5,880
-------------------------------------------------------------------------------
5,000 San Ramon, California, Public Financing Authority,
Tax Allocation Revenue Bonds, Series A,
5% due 2/01/2038 (a) 5,100
-------------------------------------------------------------------------------
7,345 Sanger, California, Unified School District, GO
(Election of 2006), 5% due 8/01/2027 (e) 7,778
-------------------------------------------------------------------------------
9,750 Santa Clara County, California, Financing Authority,
Lease Revenue Refunding Bonds, Series A, 5%
due 11/15/2022 (a) 9,954
-------------------------------------------------------------------------------
14,000 Santa Clara, California, Redevelopment Agency,
Tax Allocation Bonds (Bayshore North Project),
Series A, 5.50% due 6/01/2023 (a) 14,491
-------------------------------------------------------------------------------
6,050 Santa Clara, California, Subordinated Electric
Revenue Bonds, Series A, 5% due 7/01/2028 (g) 6,207
-------------------------------------------------------------------------------
5,110 Santa Monica, California, Redevelopment Agency,
Tax Allocation Bonds (Earthquake Recovery
Redevelopment Project), 6% due 7/01/2009 (a)(h) 5,384
-------------------------------------------------------------------------------
5,000 Santa Monica-Malibu Unified School District,
California, GO (Election of 2006), Series A,
5% due 8/01/2032 (d) 5,226
-------------------------------------------------------------------------------
2,855 Santa Rosa, California, High School District, GO
(Election of 2002), 5% due 8/01/2028 (g) 2,937
-------------------------------------------------------------------------------
1,550 Sierra, California, Joint Community College District,
GO (School Facility Improvement District Number 2 --
Western Nevada), Series A, 5% due 8/01/2028 (d) 1,605
-------------------------------------------------------------------------------
3,200 Stockton, California, Public Financing Authority,
Water Revenue Bonds (Water System Capital
Improvement Projects), Series A, 5%
due 10/01/2031 (g) 3,323
-------------------------------------------------------------------------------
4,400 Tamalpais, California, Union High School District,
GO (Election of 2006), 5% due 8/01/2028 (g) 4,609
-------------------------------------------------------------------------------
13,025 Tracy, California, Area Public Facilities Financing
Agency, Special Tax Refunding Bonds (Community
Facilities District Number 87-1), Series H,
5.875% due 10/01/2019 (g) 13,977
-------------------------------------------------------------------------------
6,655 Turlock, California, Public Finance Authority, Sewer
Revenue Bonds, Series A, 5% due 9/15/2033 (d) 6,810
-------------------------------------------------------------------------------
10,500 University of California, General Revenue Refunding
Bonds, Series A, 5% due 5/15/2027 (a) 10,816
-------------------------------------------------------------------------------
1,410 University of California Revenue Bonds, Series K,
5.25% due 9/01/2008 (d)(h) 1,445
-------------------------------------------------------------------------------
6,750 Vista, California, COP (Community Projects),
5% due 5/01/2037 (g) 6,865
-------------------------------------------------------------------------------
10,000 Vista, California, Unified School District, GO,
Series A, 5.25% due 8/01/2025 (e) 10,566
-------------------------------------------------------------------------------
2,550 Vista, California, Unified School District, GO,
Series B, 5% due 8/01/2028 (d) 2,623
-------------------------------------------------------------------------------
6,075 Washington, California, Unified School District (Yolo
County), Capital Appreciation, GO (Election of 2004),
Series A, 4.98% due 8/01/2029 (d)(i) 2,019
-------------------------------------------------------------------------------
5,825 West Contra Costa, California, Unified School District,
Capital Appreciation, GO (Election of 2002), Series C,
5.78% due 8/01/2029 (d)(i) 1,936
-------------------------------------------------------------------------------
West Contra Costa, California, Unified School
District, GO (e):
6,690 (Election of 2002), Series B, 5% due 8/01/2032 6,862
2,595 (Election of 2005), Series A, 5% due 8/01/2026 2,705
-------------------------------------------------------------------------------
3,145 Yorba Linda, California, Redevelopment Agency,
Redevelopment Project Tax Allocation Revenue Bonds
(Subordinate Lien), Series B, 5% due 9/01/2032 (a) 3,210
-------------------------------------------------------------------------------
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 9
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================
Puerto Rico -- 3.4%
-------------------------------------------------------------------------------
$11,215 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series HH, 5.30% due 7/01/2010 (e)(h) $ 11,916
-------------------------------------------------------------------------------
8,120 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series UU, 5% due 7/01/2024 (e) 8,547
Total Municipal Bonds
(Cost -- $878,295) -- 151.1% 898,172
===============================================================================
===============================================================================
Municipal Bonds Transferred to
Tender Option Bond Trusts (n)
===============================================================================
California -- 23.2%
-------------------------------------------------------------------------------
7,165 La Quinta, California, Financing Authority, Local
Agency Revenue Bonds, Series A, 5.125%
due 9/01/2034 (a) 7,342
-------------------------------------------------------------------------------
15,490 Peralta, California, Community College District, GO
(Election of 2000), Series D, 5% due 8/01/2035 (e) 16,093
-------------------------------------------------------------------------------
25,350 Port of Oakland, California, Revenue Refunding
Bonds, AMT, Series L, 5.375%, due 11/01/2027 (d) 25,924
-------------------------------------------------------------------------------
34,260 Sacramento, California, Municipal Utility District
Financing Authority, Revenue Bonds (Consumers
Project), 5.125% due 7/01/2029 (g) 36,031
-------------------------------------------------------------------------------
10,000 San Diego County, California, Water Authority, Water
Revenue Refunding Bonds, COP, Series A, 5%,
due 5/01/2032 (g) 10,212
-------------------------------------------------------------------------------
13,500 San Francisco, California, City and County Public
Utilities Commission, Water Revenue Refunding
Bonds, Series A,5% due 11/01/2032 (g) 13,790
-------------------------------------------------------------------------------
10,564 San Jose, California, Financing Authority, Lease
Revenue Refunding Bonds (Civic Center Project),
Series B, 5% due 6/01/2032 (a) 10,793
-------------------------------------------------------------------------------
17,400 University of California, Limited Project Revenue
Bonds, Series B, 5% due 5/15/2033 (e) 18,003
-------------------------------------------------------------------------------
Total Municipal Bonds Transferred to
Tender Option Bond Trusts
(Cost -- $140,167) -- 23.2% 138,188
===============================================================================
===============================================================================
Shares
Held Short-Term Securities
-------------------------------------------------------------------------------
447 CMA California Municipal Money Fund, 2.88% (f)(j) 447
-------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $447) -- 0.1% 447
===============================================================================
Total Investments (Cost -- $1,018,909*) -- 174.4% 1,036,807
Liability for Trust Certificates,
Including Interest Expense Payable -- (11.4%) (67,527)
Other Assets Less Liabilities -- 2.6% 15,380
Preferred Stock, at Redemption Value -- (65.6%) (390,223)
----------
Net Assets Applicable to Common Stock -- 100.0% $ 594,437
==========
* The cost and unrealized appreciation (depreciation) of investments as of
December 31, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost .............................................. $ 952,142
=========
Gross unrealized appreciation ............................... $ 20,592
Gross unrealized depreciation ............................... (2,791)
---------
Net unrealized appreciation ................................. $ 17,801
=========
(a) AMBAC Insured.
(b) FHA Insured.
(c) Escrowed to maturity.
(d) FGIC Insured.
(e) FSA Insured.
(f) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA California Municipal Money Fund 432 $33
--------------------------------------------------------------------------
(g) MBIA Insured.
(h) Prerefunded.
(i) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(j) Represents the current yield as of December 31, 2007.
(k) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically and inversely based upon prevailing market rates.
(l) XL Capital Insured.
(m) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(n) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1 of
the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
See Notes to Financial Statements.
10 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Statement of Assets and Liabilities of Operations
As of December 31, 2007 (Unaudited)
===============================================================================
Assets
-------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost -- $1,018,461,642) .......................... $1,036,359,745
Investments in affiliated securities, at value
(identified cost -- $447,461) ................................ 447,461
Receivables:
Interest ..................................................... 15,038,943
Securities sold .............................................. 3,344,307
Prepaid expenses ............................................... 3,582
--------------
Total assets ................................................... 1,055,194,038
--------------
===============================================================================
Liabilities
-------------------------------------------------------------------------------
Trust certificates** ........................................... 66,864,500
Bank overdraft ................................................. 2,166,982
Payables:
Interest expense ............................................. 662,675
Investment advisor ........................................... 438,705
Dividends to Common Stock shareholders ....................... 280,043
Other affiliates ............................................. 8,569
Accrued expenses ............................................... 113,068
------------
Total liabilities .............................................. 70,534,542
------------
===============================================================================
Preferred Stock
-------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.10 per share
(1,920 Class A Shares, 3,880 Class B Shares, 3,200 Class C
Shares, 2,960 Class D Shares and 3,640 Class E Shares of AMPS*
authorized, issued and outstanding at $25,000 per share
liquidation preference) ...................................... 390,222,621
------------
===============================================================================
Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------
Net assets applicable to Common Stock .......................... $594,436,875
============
===============================================================================
Analysis of Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------
Common Stock, par value $.10 per share (40,874,458 shares
issued and outstanding) ...................................... $ 4,087,446
Paid-in capital in excess of par
Undistributed investment income -- net ......................... 1,730,019
Accumulated realized capital losses -- net ..................... (32,304,148)
Unrealized appreciation -- net ................................. 17,898,103
------------
Total -- Equivalent to $14.54 net asset value per share of
Common Stock (market price -- $12.79) ........................ $594,436,875
============
* Auction Market Preferred Stock.
** Represents short-term floating rate certificates issued by tender option
bond trusts.
See Notes to Financial Statements.
Statement of Operations
For the Six Months Ended December 31, 2007 (Unaudited)
===============================================================================
Investment Income
-------------------------------------------------------------------------------
Interest ....................................................... $ 24,698,752
Dividends from affiliates ...................................... 33,081
------------
Total income ................................................... 24,731,833
------------
===============================================================================
Expenses
-------------------------------------------------------------------------------
Investment advisory fees ....................................... 2,716,507
Interest expense and fees ...................................... 1,357,156
Commission fees ................................................ 496,621
Accounting services ............................................ 135,387
Professional fees .............................................. 38,607
Transfer agent fees ............................................ 36,798
Custodian fees ................................................. 24,423
Printing and shareholder reports ............................... 23,427
Directors' fees and expenses ................................... 17,465
Pricing fees ................................................... 14,979
Listing fees ................................................... 7,159
Other .......................................................... 42,408
------------
Total expenses before waiver and reimbursement ................. 4,910,937
Waiver and reimbursement of expenses ........................... (200,832)
------------
Total expenses after waiver and reimbursement .................. 4,710,105
------------
Investment income -- net ....................................... 20,021,728
------------
===============================================================================
Realized & Unrealized Gain (Loss) -- Net
-------------------------------------------------------------------------------
Realized gain on investments -- net ............................ 5,080,835
Change in unrealized appreciation on investments -- net ........ (1,572,252)
------------
Total realized and unrealized gain -- net ...................... 3,508,583
------------
===============================================================================
Dividends & Distributions to Preferred Stock Shareholders
-------------------------------------------------------------------------------
Investment income -- net ....................................... (6,875,457)
Realized gain -- net ........................................... (153,272)
------------
Total dividends and distributions to Preferred Stock
shareholders ................................................. (7,028,729)
------------
Net Increase in Net Assets Resulting from Operations ........... $ 16,501,582
============
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 11
Statements of Changes in Net Assets
For the Six
Months Ended For the
December 31, Year Ended
2007 June 30,
Increase (Decrease) in Net Assets: (Unaudited) 2007
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ......................................................................... $ 20,021,728 $ 41,177,095
Realized gain -- net ............................................................................. 5,080,835 4,531,770
Change in unrealized appreciation -- net ......................................................... (1,572,252) (1,281,142)
Dividends and distributions to Preferred Stock shareholders ...................................... (7,028,729) (12,734,644)
------------------------------
Net increase in net assets resulting from operations ............................................. 16,501,582 31,693,079
------------------------------
===================================================================================================================================
Dividends & Distributions to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income -- net ......................................................................... (13,815,567) (29,867,063)
Realized gain -- net ............................................................................. (302,636) --
------------------------------
Net decrease in net assets resulting from dividends and distributions to
Common Stock shareholders ...................................................................... (14,118,203) (29,867,063)
------------------------------
===================================================================================================================================
Common Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment of dividends ................. -- 823,540
------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets applicable to Common Stock .......................................... 2,383,379 2,649,556
Beginning of period .............................................................................. 592,053,496 589,403,940
------------------------------
End of period* ................................................................................... $ 594,436,875 $ 592,053,496
==============================
* Undistributed investment income -- net ..................................................... $ 1,730,019 $ 2,399,315
==============================
See Notes to Financial Statements.
12 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Financial Highlights
For the Six
Months Ended
December 31, For the Year Ended June 30,
The following per share data and ratios have been derived 2007 --------------------------------------------------------
from information provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..................... $ 14.48 $ 14.44 $ 15.40 $ 14.73 $ 15.53 $ 14.82
---------------------------------------------------------------------
Investment income -- net++ ............................... .51 1.01 1.05 1.07 1.05 1.09
Realized and unrealized gain (loss) -- net ............... .07 .07 (.85) .69 (.84) .63
Dividends and distributions to Preferred Stock
shareholders:
Investment income -- net ............................. (.17) (.31) (.25) (.14) (.08) (.10)
Realized gain -- net ................................. --+ -- -- -- -- --
---------------------------------------------------------------------
Total from investment operations ......................... .41 .77 (.05) 1.62 .13 1.62
---------------------------------------------------------------------
Less dividends and distributions to Common Stock
shareholders:
Investment income -- net ............................. (.34) (.73) (.91) (.95) (.93) (.91)
Realized gain -- net ................................. (.01) -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions to Common Stock
shareholders ........................................... (.35) (.73) (.91) (.95) (.93) (.91)
---------------------------------------------------------------------
Net asset value, end of period ........................... $ 14.54 $ 14.48 $ 14.44 $ 15.40 $ 14.73 $ 15.53
=====================================================================
Market price per share, end of period .................... $ 12.79 $ 13.92 $ 13.94 $ 14.97 $ 13.36 $ 14.85
=====================================================================
===================================================================================================================================
Total Investment Return***
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....................... 3.06%@ 5.46% (.29%) 11.56% 1.28% 11.60%
=====================================================================
Based on market price per share .......................... (5.70%)@ 5.02% (.98%) 19.56% (3.93%) 11.45%
=====================================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and reimbursement
and excluding interest expense and fees**@@ ............ 1.12%* 1.12% 1.10% 1.11% 1.10% 1.11%
=====================================================================
Total expenses, net of waiver and reimbursement** ........ 1.58%* 1.60% 1.35% 1.16% 1.17% 1.24%
=====================================================================
Total expenses** ......................................... 1.64%* 1.66% 1.41% 1.22% 1.24% 1.31%
=====================================================================
Total investment income -- net ........................... 6.70%* 6.81% 7.01% 6.99% 6.87% 7.09%
=====================================================================
Amount of dividends to Preferred Stock shareholders ...... 2.30%* 2.11% 1.68% .93% .53% .65%
=====================================================================
Investment income -- net, to Common Stock shareholders ... 4.40%* 4.70% 5.33% 6.06% 6.34% 6.44%
=====================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of
period (in thousands) .................................. $594,437 $592,053 $589,404 $626,109 $598,908 $631,571
=====================================================================
Preferred Stock outstanding, end of period
(in thousands) ......................................... $390,000 $390,000 $390,000 $390,000 $390,000 $390,000
=====================================================================
Portfolio turnover ....................................... 24% 35% 34% 47% 35% 25%
=====================================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ................................ $ 2,524 $ 2,518 $ 2,511 $ 2,605 $ 2,536 $ 2,619
=====================================================================
* Annualized.
** Does not reflect the effect of dividends to Preferred Stock shareholders.
*** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effect of sales
charges.
+ Amount is less than ($.01) per share.
++ Based on average shares outstanding.
@ Aggregate total investment return.
@@ Interest expense and fees relate to tender option bond trusts. See Note 1
of Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
See Notes to Financial Statements.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 13
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock MuniHoldings California Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
non-diversified, closed-end management investment company. The Fund's financial
statements are prepared in conformity with accounting principles generally
accepted in the United States, which may require the use of management accruals
and estimates. Actual results may differ from these estimates. These unaudited
financial statements reflect all adjustments, which are, in the opinion of
management, necessary to present a fair statement of the results for the interim
period. All such adjustments are of a normal, recurring nature. The Fund
determines and makes available for publication the net asset value of its Common
Stock on a daily basis. The Fund's Common Stock shares are listed on the New
York Stock Exchange under the symbol MUC.
The following is a summary of significant accounting policies followed by the
Fund.
Investment Valuations: 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
Fund's Board of Directors ("Directors" or a "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,
market transactions in comparable investments and various relationships between
investments. Short-term securities may be valued at amortized cost. Investments
in open-end companies are valued at net asset value per share. 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, under the direction of or in accordance with 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
sub-advisor shall seek to determine the price that the Fund might reasonably
expect to receive from the current sale of that asset in an arms-length
transaction. Fair value determinations shall be based upon all available factors
that the advisor and/or sub-advisor deems relevant. The pricing of all Fair
Value Assets shall be 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 due to changes in the value of the contract due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract.
Municipal bonds transferred to tender option bond trusts: The Fund invests in
leveraged residual certificates ("TOB Residuals") issued by tender option bond
trusts ("TOBs"). A TOB is established by a third party sponsor forming a special
purpose entity, into which the Fund, or an agent on behalf of the Fund,
transfers municipal securities. A TOB typically issues two classes of beneficial
interests: short-term floating rate certificates, which are sold to third party
investors, and residual certificates, which are generally issued to the Fund
which made the transfer or to affiliates of the Fund. The Fund's transfer of the
municipal securities to a TOB does not qualify for sale treatment under
Statement of Financial Accounting Standards No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," therefore
the municipal securities deposited into a TOB are presented in the Fund's
schedule of investments and the proceeds from the transaction are reported as a
liability for trust certificates of the Fund. Similarly, proceeds from residual
certificates issued to affiliates, if any, from the transaction are included in
the liability for trust certificates. Interest income from the underlying
security is recorded by the Fund on an accrual basis. Interest expense incurred
on the secured borrowing and other expenses related to remarketing,
administration and trustee services to a TOB are reported as expenses of the
Fund. The floating rate certificates have interest rates that generally reset
weekly and their holders have the option to tender certificates to the TOB for
redemption at par at each reset date. The residual interests held by the Fund
include the right of the Fund (1) to cause the holders of a proportional share
of the floating rate certificates to tender their certificates at par, and (2)
to transfer a corresponding share of the municipal securities from the TOB to
the Fund. At December 31, 2007, the aggregate value of the underlying municipal
securities transferred to TOBs was $138,188,011, the related liability for trust
certificates was $66,864,500 and the range of interest rates on the liability
for trust certificates was 3.601% to 3.664%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investment in TOB Residuals likely will adversely affect the Fund's investment
income -- net and distributions to shareholders. Fluctuations in the market
value of municipal securities deposited into the TOB may adversely affect the
Fund's net asset value per share.
While the Fund's investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Fund to borrow money for purposes of making
investments. The Fund's management believes that the Fund's restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
14 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Notes to Financial Statements (continued)
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 June 29, 2007, 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. Management 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 June 30, 2004
through June 30, 2007. The statute of limitations on the Fund's state and local
tax returns may remain open for an additional year depending upon the
jurisdiction.
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. Interest income is recognized on the accrual basis. The
Fund amortizes all premiums and discounts on debt securities.
Dividends and distributions: Dividends to common shareholders from net
investment income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Dividends and distributions to Preferred
Stock shareholders are accrued and determined as described in Note 4.
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. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the "Advisor"), an indirect, wholly owned subsidiary of
BlackRock, Inc. Merrill Lynch & Co., Inc. and The PNC Financial Services Group,
Inc. are principal owners of BlackRock, Inc.
The Advisor is responsible for the management of the Fund's portfolios and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .55% of the Fund's average daily net
assets, including proceeds from the issuance of Preferred Stock. The Advisor has
agreed to waive its management fee on the proceeds of Preferred Stock that
exceeds 35% of the Fund's total net assets. For the six months ended December
31, 2007, the Advisor earned fees of $2,716,507, of which $196,283 was waived.
In addition, the Advisor has agreed to reimburse its management fee by the
amount of management fees the Fund pays to the Advisor indirectly through its
investment in CMA California Municipal Money Fund. For the six months ended
December 31, 2007, the Advisor reimbursed the Fund in the amount of $204,549.
In addition, the Advisor has entered into a 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 management fee paid by the Fund to the Advisor.
For the six months ended December 31, 2007, the Fund reimbursed the Advisor
$17,279 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended December 31, 2007 were $248,394,347 and $263,092,366, respectively.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of stock, including Preferred
Stock, par value $.10 per share, all of which were initially classified as
Common Stock. The Board of Directors is authorized, however, to reclassify any
unissued shares of stock without approval of holders of Common Stock.
Common Stock
Shares issued and outstanding during the six months ended December
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 15
Notes to Financial Statements (concluded)
31, 2007 remained constant and during the year ended June 30, 2007 increased by
54,952 as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Fund, with a
par value of $.10 per share and a liquidation preference of $25,000 per share
that entitle their holders to receive cash dividends at an annual rate that may
vary for the successive dividend periods. The yields in effect at December 31,
2007 were: Series A, 3.00%; Series B, 4.30%; Series C, 4.20%; Series D, 4.20%;
and Series E, 4.30%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the six months ended December 31, 2007, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, a wholly owned subsidiary of Merrill Lynch, earned
$137,945 as commissions.
Dividends on seven-day Preferred Stock are cumulative at a rate which is reset
every seven days based on the results of an auction. If the Preferred Stock is
unable to be remarketed on the remarketing date as part of the auction process,
the Fund would be required to pay the maximum applicable rate on the Preferred
Stock to holders of such stock for successive dividend periods until such time
as the stock is successfully remarketed. The maximum applicable rate on
Preferred Stock is 110% of the higher of (i) 90% of the quotient of (a) the
Taxable Equivalent of the Short-Term Municipal Bond Rate divided by (b) 1.00
minus the greater of the maximum marginal individual or corporate income tax
rate or (ii) the interest equivalent of the 30-day commercial paper rate. During
the six months ended December 31, 2007, the Preferred Stock of the Fund was
successfully remarketed at each remarketing date. The dividend ranges and
average on the Preferred Stock for the Fund for the six months ended December
31, 2007 were as follows:
--------------------------------------------------------------------------------
Low High Average
--------------------------------------------------------------------------------
Series A ......................................... 2.85% 4.20% 3.40%
Series B ......................................... 3.20% 4.35% 3.49%
Series C ......................................... 2.95% 4.40% 3.50%
Series D ......................................... 2.90% 4.25% 3.52%
Series E ......................................... 3.00% 4.30% 3.54%
--------------------------------------------------------------------------------
The Fund may not declare dividends or make other distributions on Common Stock
or purchase any such stock if, at the time of the declaration, distribution or
purchase, asset coverage with respect to the outstanding Preferred Stock would
be less than 200%.
The Preferred Stock is redeemable at the option of the Fund, in whole or in
part, on any dividend payment date at $50,000 per share plus any accumulated
unpaid dividends whether or not declared. The Preferred Stock is also subject to
mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Fund, as set forth in the
Fund's Declaration of Fund/Articles Supplementary, are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of common
shares (one vote per share) and will vote together with holders of common shares
as a single class. However, holders of Preferred Stock, voting as a separate
class, are also entitled to elect two Directors for the Fund. In addition, the
1940 Act requires that along with approval by shareholders that might otherwise
be required, the approval of the holders of a majority of any outstanding
preferred shares, voting separately as a class would be required to (a) adopt
any plan of reorganization that would adversely affect the Preferred Stock, (b)
change a Fund's subclassification as a closed-end investment company or change
its fundamental investment restrictions or (c) change is business so as to cease
to be an investment company.
5. Capital Loss Carryforward:
On June 30, 2007, the Fund had a net capital loss carryforward of $31,882,311,
of which $3,988,050 expires in 2008, $24,786,894 expires in 2009 and $3,107,367
expires in 2012. This amount will be available to offset like amounts of any
future taxable gains.
6. Concentration Risk:
The Fund concentrates its investments in securities issued by state agencies,
other governmental entities and U.S. Territories. The Fund is more susceptible
to adverse financial, social, environmental, economic, regulatory and political
factors that may affect these state agencies, other governmental entities and
U.S. Territories, which could seriously affect the ability of this state and its
municipal subdivisions to meet continuing obligations for principal and interest
payments and therefore could impact the value of the Fund's investments and net
asset value per share, than if the Fund was not concentrated in securities
issued by state agencies, other governmental entities and U.S. Territories.
Many municipalities insure repayment of their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that market value may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Schedule of Investments.
7. Subsequent Event:
During the period February 13, 2008 to February 22, 2008, the Preferred Stock of
the Fund was not successfully remarketed. As a result, the Preferred Stock
dividend rates were reset to the maximum applicable rate, which ranged from
3.32% to 3.41% for the Fund during the period. Unsuccessful remarketing during
the auction process is not an event of default or credit but rather a liquidity
event for the holders of Preferred Stock. The Fund paid a tax-exempt income
dividend to holders of Common Stock in the amount of $.055500 per share on
February 1, 2007 to shareholders of record on January 15, 2007.
16 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Officers and Directors
G. Nicholas Beckwith, III, Director
Richard E. Cavanagh, Director
Richard S. Davis, Director
Kent Dixon, Director
Frank J. Fabozzi, Director
Kathleen F. Feldstein, Director
James T. Flynn, Director
Henry Gabbay, Director
Jerrold B. Harris, Director
R. Glenn Hubbard, Director
W. Carl Kester, Director
Karen P. Robards, Director
Robert S. Salomon, Jr., Director
Roscoe S. Suddarth, Advisory Board Member*
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Howard Surloff, Secretary
Brian P. Kindelan, Chief Compliance Officer
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
* Roscoe S. Suddarth resigned from the Advisory Board of the Fund, effective
December 31, 2007.
Custodian
The Bank of New York Mellon
New York, NY 10286
Transfer Agent
Common and Auction Market Preferred Stock:
The Bank of New York Mellon
New York, NY 10286
Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 17
Additional Information
Proxy Results
During the six-month period ended December 31, 2007, the Common Stock and
Auction Market Preferred Stock (Series A-E) shareholders of BlackRock
MuniHoldings California Insured Fund, Inc. voted on the following proposal,
which was approved at an annual shareholders' meeting on August 16, 2007. This
proposal was part of the reorganization of the Fund's Board of Directors that
took effect on November 1, 2007. A description of the proposal and number of
shares voted are as follows:
-------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 37,945,396 1,065,775
Richard E. Cavanagh 37,950,186 1,060,985
Richard S. Davis 37,947,768 1,063,403
Kent Dixon 37,946,279 1,064,892
Kathleen F. Feldstein 37,941,487 1,069,684
James T. Flynn 37,945,040 1,066,131
Henry Gabbay 37,940,588 1,070,583
Jerrold B. Harris 37,935,600 1,075,571
R. Glenn Hubbard 37,939,157 1,072,014
Karen P. Robards 37,945,892 1,065,279
Robert S. Salomon, Jr. 37,954,344 1,056,827
-------------------------------------------------------------------------------------------------------
During the six-month period ended November 30, 2007, the Auction Market
Preferred Stock shareholders (Series A-E) of BlackRock MuniHoldings California
Insured Fund, Inc. voted on the following proposal, which was approved at an
annual shareholders' meeting on August 16, 2007. This proposal was part of the
reorganization of the Fund's Board of Directors that took effect on November 1,
2007. A description of the proposal and number of shares voted for each Director
are as follows:
-------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------
To elect the Fund's Directors: Frank J. Fabozzi and W. Carl Kester 10,261 2
-------------------------------------------------------------------------------------------------------
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Fund may at
times pay out less than the entire amount of net investment income earned in any
particular month and may at times in any particular month pay out such
accumulated but undistributed income in addition to net investment income earned
in that month. As a result, the dividends paid by the Fund for any particular
month may be more or less than the amount of net investment income earned by the
Fund during such month. The Fund's current accumulated but undistributed net
investment income, if any, is disclosed in the Statement of Assets and
Liabilities, which comprises part of the financial information included in this
report.
18 BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007
Additional Information (concluded)
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling (800) SEC-0330. The Fund's
Forms N-Q may also be obtained upon request and without charge by calling (800)
441-7762.
Electronic Delivery
Electronic copies of most financial reports are available on the Fund's website.
Shareholders can sign up for e-mail notifications of quarterly statements,
annual and semi-annual reports by enrolling in the Fund's electronic delivery
program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
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.
General Information
The Fund does not make available copies of its Statements of Additional
Information because the Fund's shares are not continuously offered, which means
that the Statement of Additional Information of the Fund has not been updated
after completion of the Fund's offering and the information contained in the
Fund's Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Fund's investment
objective or policies or to the Fund's character or by-laws that were not
approved by the shareholders or in the principal risk factors associated with
investment in the Fund. There have been no changes in the persons who are
primarily responsible for the day-to-day management of the Fund's portfolio.
BLACKROCK MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2007 19
This report, including the financial information herein, is transmitted to
shareholders of BlackRock MuniHoldings California Insured Fund, Inc. for their
information. It is not a prospectus. Past performance results shown in this
report should not be considered a representation of future performance. The Fund
has leveraged its Common Stock and intends to remain leveraged by issuing
Auction Market Preferred Stock to provide the Common Stock shareholders with a
potentially higher rate of return. Leverage creates risks for Common Stock
shareholders, including the likelihood of greater volatility of net asset value
and market price of shares of the Common Stock, and the risk that fluctuations
in the short-term dividend rates of the Auction Market Preferred Stock may
affect the yield to Common Stock shareholders. Statements and other information
herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's website
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available upon request and without charge (1) at
www.blackrock.com or by calling (800) 441-7762 and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov.
BlackRock MuniHoldings California Insured Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
# HOLDCA-12/07
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
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 recommended by shareholders when a vacancy
becomes available. Shareholders who wish to recommend a nominee
should send nominations which include biographical information and
set forth the qualifications of the proposed nominee to the
registrant's Secretary. There have been no material changes to these
procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities 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 - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniHoldings California Insured Fund, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer of
BlackRock MuniHoldings California Insured Fund, Inc.
Date: February 21, 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 MuniHoldings California Insured Fund, Inc.
Date: February 21, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock MuniHoldings California Insured Fund, Inc.
Date: February 21, 2008