UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES |
Investment Company Act file number 811-02857 and 811-21434 Name of Fund: BlackRock Total Return Fund of BlackRock Bond Fund, Inc. Master Total Return Portfolio of Master Bond LLC Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809 Name and address of agent for service: Donald C. Burke, Chief Executive Officer, BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC, 800 Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011 Registrant’s telephone number, including area code: (800) 441-7762 Date of fiscal year end: 09/30/2008 Date of reporting period: 10/01/2007 – 09/30/2008 Item 1 – Report to Stockholders |
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS BlackRock Total Return Fund OF BLACKROCK BOND FUND, INC. ANNUAL REPORT | SEPTEMBER 30, 2008 |
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE |
Table of Contents | ||
Table of Contents | Page | |
A Letter to Shareholders | 3 | |
Annual Report: | ||
Fund Summary | 4 | |
About Fund Performance | 6 | |
Disclosure of Expenses | 7 | |
Fund Financial Statements: | ||
Statement of Assets and Liabilities | 8 | |
Statement of Operations | 9 | |
Statements of Changes in Net Assets | 10 | |
Fund Financial Highlights | 11 | |
Fund Notes to Financial Statements | 20 | |
Fund Report of Independent Registered Public Accounting Firm | 28 | |
Important Tax Information (Unaudited) | 28 | |
Master Portfolio Information | 29 | |
Master Financial Statements: | ||
Schedule of Investments | 30 | |
Statement of Assets and Liabilities | 42 | |
Statement of Operations | 43 | |
Statements of Changes in Net Assets | 44 | |
Master Financial Highlights | 44 | |
Master Notes to Financial Statements | 45 | |
Master Report of Independent Registered Public Accounting Firm | 50 | |
Disclosure of Investment Advisory Agreement and Subadvisory Agreement | 51 | |
Officers and Directors | 54 | |
Additional Information | 57 | |
Mutual Fund Family | 59 |
2 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
A Letter to Shareholders
Dear Shareholder
It has been a tumultuous period for investors, marked by almost daily headlines related to the housing market turmoil, volatile energy prices, and the escalating credit crisis. The news took an extraordinarily heavy tone in September as the credit crisis boiled over and triggered unprecedented failures and consolidation in the financial sector, stoking fears of a market and economic collapse and prompting the largest government rescue plan since the Great Depression.
Through it all, the Federal Reserve Board (the “Fed”) has taken decisive action to restore liquidity and bolster financial market stability. Key moves included slashing the target federal funds rate 275 basis points (2.75%) between October 2007 and April 2008 and providing massive cash injections and lending programs. As the credit crisis took an extreme turn for the worse, the Fed, in concert with five other global central banks, cut interest rates by 50 basis points in early October in a rare move intended to stave off worldwide economic damage from the intensifying financial market turmoil. The U.S. economy managed to grow at a slow-but-positive pace through the second quarter of the year, though recent events almost certainly portend a global economic recession.
Against this backdrop, U.S. stocks experienced intense volatility and generally posted losses for the current reporting period, with small-cap stocks faring noticeably better than their larger counterparts. Non-U.S. markets followed the U.S. on the way down and, notably, decelerated at a faster pace than domestic equities — a stark reversal of recent years’ trends, when international stocks generally outpaced U.S. stocks.
Treasury securities also traded in a volatile fashion, but rallied overall (yields fell and prices correspondingly rose) amid an ongoing flight to quality. The yield on 10-year Treasury issues, which fell to 3.34% in March, climbed to the 4.20% range in mid-June as investors temporarily shifted out of Treasury issues in favor of riskier assets (such as stocks and other high-quality fixed income sectors), then declined again to 3.85% by period-end as the financial market contagion widened. Tax-exempt issues underperformed overall, as problems among municipal bond insurers and the collapse in the market for auction rate securities pressured the group throughout the course of the past year. At the same time, the above mentioned economic headwinds and malfunctioning credit markets led to considerable weakness in the high yield sector.
Facing unprecedented volatility and macro pressures, the major benchmark indexes generally recorded losses over the six- and 12-month reporting periods:
Total Returns as of September 30, 2008 | 6-month | 12-month | ||
U.S. equities (S&P 500 Index) | (10.87)% | (21.98)% | ||
Small cap U.S. equities (Russell 2000 Index) | (0.54) | (14.48) | ||
International equities (MSCI Europe, Australasia, Far East Index) | (22.35) | (30.50) | ||
Fixed income (Barclays Capital U.S. Aggregate Index)* | (1.50) | 3.65 | ||
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)* | (2.59) | (1.87) | ||
High yield bonds (Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index)* | (6.77) | (10.51) | ||
* | Formerly a Lehman Brothers index. |
Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index. | |
Through periods of market turbulence, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For our most current views on the economy and financial markets, we invite you to visit www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with your investments, and we look forward to continuing to serve you in the months and years ahead.
Sincerely,
Rob Kapito President, BlackRock Advisors, LLC |
THIS PAGE NOT PART OF YOUR FUND REPORT |
3 |
Fund Summary Portfolio Management Commentary How did the Fund perform? •For the year ended September 30, 2008, the Fund’s total return (through its investment in Master Total Return Portfolio) lagged that of the benchmark Barclays Capital U.S. Aggregate Index. What factors influenced performance? •The Portfolio’s overweight to high-quality spread sectors — including agency and non-agency mortgage-backed securities (MBS) (both fixed and adjustable-rate), commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) — was the primary detractor from comparative performance. Throughout the period, continued write- downs and forced de-leveraging at institutions and hedge funds pushed spreads on these sectors sharply wider, regardless of quality. An under- weight in U.S. Treasury securities further hampered returns, as uncertain- ties over the outlook for financial markets and the broader economy prompted a massive investor flight to quality, and these issues outper- formed. Additionally, an overweight to the financial subsector of the credit markets detracted from Fund performance, as the sector lagged duration-adjusted Treasury securities by 14.35% . •In contrast, the Portfolio’s underweight to agencies benefited relative results. Our bias for a steepening yield curve also paid off as the spread between two-year and 10-year Treasury securities increased by over 120 basis points (1.20%) . Additionally, security selection in CMBS and ABS proved advantageous, as did our decision to hold minimal exposure to “plus sectors,” including emerging market debt and high yield, which significantly underperformed over the period. |
Describe recent portfolio activity. •Over the 12 months, we modestly increased our exposure to agency debentures, but maintained an overall underweight given opportunities in other spread sectors. We also increased exposure to non-agency ARMs, as we believe these assets represent outstanding long-term value from a fundamental perspective relative to other spread sectors. While we retained an overweight to AAA-rated CMBS, we opportunistically decreased the Portfolio’s exposure to the sector on recent spread tight- ening. In light of global economic weakness and diminishing earnings potential, we also continued to reduce our allocation to corporate debt, though we maintained an overweight to the financial subsector. Describe the Portfolio’s positioning at period-end. •The Portfolio ended the period slightly long duration versus the bench- mark, with a bias toward a steeper yield curve. We have maintained our underweight to U.S. Treasury and agency debt in favor of high-quality spread assets, including MBS, CMBS and ABS. Within the ABS sector, we maintain an up-in-quality bias and are focused on short-dated, fixed- rate credit card and auto paper from top-tier prime issuers, as well as selective high-quality home equity bonds. We continue to hold an overall underweight to investment grade corporates; however, we maintain an overweight in the financials subsector, favoring higher-quality names of stronger financial firms, while avoiding exposure to regional banks. •At period-end, we held a small allocation to non-dollar debt issues (roughly 2% of total assets), namely a long position in European bonds. We also held a small allocation to the high yield sector (about 1%), focusing on higher-quality issues. |
The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results. 4 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Total Return Based on a $10,000 Investment |
1 Assuming maximum sales charge, if any, transaction costs and other operating expenses, including advisory fees. 2 The Fund invests primarily in long-term, fixed income securities that are rated in the four highest categories of the recognized rating agencies (Baa or better by Moody’s Investors Service, Inc. or BBB or better by Standard & Poor’s). 3 This unmanaged market-weighted Index is comprised of investment grade corporate bonds (rated BBB or better), mortgages and U.S. Treasury and government agency issues with at least one year to maturity. 4 Commencement of operations. |
Performance Summary for the Period Ended September 30, 2008 | ||||||||||||||||
Average Annual Total Returns6 | ||||||||||||||||
1 Year | 5 Years | Since Inception7 | ||||||||||||||
Standardized | 6-Month | w/o sales | w/sales | w/o sales | w/sales | w/o sales | w/sales | |||||||||
30-Day Yields | Total Returns | charge | charge | charge | charge | charge | charge | |||||||||
BlackRock | 5.71% | (7.80)% | (6.11)% | (6.11)% | 1.67% | 1.67% | 3.30% | 3.30% | ||||||||
Institutional | 5.55 | (7.88) | (6.26) | (6.26) | 1.49 | 1.49 | 3.13 | 3.13 | ||||||||
Service | 5.32 | (7.96) | (6.47) | (6.47) | 1.20 | 1.20 | 2.79 | 2.79 | ||||||||
Investor A | 4.98 | (8.03) | (6.56) | (10.29) | 1.21 | 0.39 | 2.84 | 2.23 | ||||||||
Investor A1 | 5.28 | (7.98) | (6.46) | (7.40) | 1.34 | 1.14 | 2.99 | 2.83 | ||||||||
Investor B | 4.48 | (8.33) | (7.18) | (10.74) | 0.65 | 0.31 | 2.28 | 2.28 | ||||||||
Investor B1 | 4.79 | (8.11) | (6.91) | (7.80) | 0.94 | 0.94 | 2.58 | 2.58 | ||||||||
Investor B2 | 5.29 | (7.91) | (6.50) | (10.51) | 0.73 | 0.39 | 2.29 | 2.29 | ||||||||
Investor C | 4.61 | (8.29) | (7.12) | (8.01) | 0.48 | 0.48 | 2.11 | 2.11 | ||||||||
Investor C1 | 4.49 | (8.21) | (7.09) | (7.98) | 0.65 | 0.65 | 2.28 | 2.28 | ||||||||
Investor C2 | 4.66 | (8.13) | (6.95) | (7.84) | 0.93 | 0.93 | 2.57 | 2.57 | ||||||||
Class R | 5.00 | (8.11) | (6.76) | (6.76) | 0.97 | 0.97 | 2.60 | 2.60 | ||||||||
Barclays Capital | ||||||||||||||||
U.S. Aggregate Index | — | (1.50) | 3.65 | 3.65 | 3.78 | 3.78 | 4.95 | 4.95 | ||||||||
6 Assuming maximum sales charges, if any. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees. 7 The Fund commenced operations on 12/7/2001. |
Past performance is not indicative of future results. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
5 |
About Fund Performance •BlackRock Sharesare not subject to any sales charge. BlackRock Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to September 24, 2007, BlackRock Share performance results are those of BlackRock Shares of a prede- cessor fund with no adjustments. •Institutional Sharesare not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to September 24, 2007, Institutional Share performance results are those of BlackRock Shares of a prede- cessor fund restated to reflect Institutional Share fees. •Service Sharesare not subject to any sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee) and are available only to eligible investors. Prior to September 24, 2007, Service Share performance results are those of Investor A Shares of a predecessor fund restated to reflect Service Share fees. •Investor A Sharesincur a maximum initial sales charge (front-end load) of 4% and a service fee of 0.25% per year (but no distribution fee). Prior to September 24, 2007, Investor A Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor A Share fees. •Investor A1 Sharesincur a maximum initial sales charge (front-end load) of 1% and a service fee of 0.10% per year (but no distribution fee). Prior to September 24, 2007, Investor A1 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor A1 Share fees. •Investor B Sharesare subject to a maximum contingent deferred sales charge of 4%, declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.50% per year and a service fee of 0.25% per year. Prior to September 24, 2007, Investor B Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor B Share fees. •Investor B1 Sharesare subject to a maximum contingent deferred sales charge of 1%, declining to 0% after three years. In addition, Investor B1 Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Prior to September 24, 2007, Investor B1 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor B1 Share fees. •Investor B2 Sharesare subject to a maximum contingent deferred sales charge of 4.50%, declining to 0% after six years. In addition, Investor B2 Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Prior to September 24, 2007, Investor B2 Share performance results are those of Investor B Shares of a predecessor fund, with no adjustments. |
•Investor C Sharesare subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. In addition, Investor C Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to September 24, 2007, Investor C Share per- formance results are those of Investor C Shares of a predecessor fund with no adjustments. •Investor C1 Sharesare subject to a distribution fee of 0.55% per year and a service fee of 0.25% per year. In addition, Investor C1 Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to September 24, 2007, Investor C1 Share per- formance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor C1 Share fees. •Investor C2 Sharesare subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. In addition, Investor C2 Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to September 24, 2007, Investor C2 Share per- formance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor C2 Share fees. •Class R Sharesdo not incur a maximum initial sales charge (front-end load) or deferred sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement plans. Prior to October 2, 2006, Class R Share performance results are those of the Class R Shares of a predecessor fund. Prior to the predecessor fund Class R Shares inception date, the Class R Share performance is based on the performance of the BlackRock Shares of the predecessor fund restated to reflect Class R Share fees. Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the per- formance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance tables on page 5 assume reinvestment of all dividends and capital gain distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to share- holders. The Fund’s Manager waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower. |
6 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Disclosure of Expenses Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on April 1, 2008 and held through September 30, 2008) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds. The table below provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.” |
The table also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports. The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. Therefore, the hypo- thetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher. |
Expense Example | ||||||||||||
Actual | Hypothetical2 | |||||||||||
Beginning | Ending | Expenses | Beginning | Ending | Expenses | |||||||
Account Value | Account Value | Paid During | Account Value | Account Value | Paid During | |||||||
April 1, 2008 | September 30, 2008 | the Period1 | April 1, 2008 | September 30, 2008 | the Period1 | |||||||
BlackRock | $1,000 | $922.00 | $2.07 | $1,000 | $1,022.85 | $2.17 | ||||||
Institutional | $1,000 | $921.20 | $2.79 | $1,000 | $1,022.10 | $2.93 | ||||||
Service | $1,000 | $920.40 | $3.79 | $1,000 | $1,021.05 | $3.99 | ||||||
Investor A | $1,000 | $919.70 | $4.42 | $1,000 | $1,020.40 | $4.65 | ||||||
Investor A1 | $1,000 | $920.20 | $3.84 | $1,000 | $1,021.00 | $4.04 | ||||||
Investor B | $1,000 | $916.70 | $7.48 | $1,000 | $1,017.20 | $7.87 | ||||||
Investor B1 | $1,000 | $918.90 | $6.09 | $1,000 | $1,018.65 | $6.41 | ||||||
Investor B2 | $1,000 | $920.90 | $4.03 | $1,000 | $1,020.80 | $4.24 | ||||||
Investor C | $1,000 | $917.10 | $7.09 | $1,000 | $1,017.60 | $7.47 | ||||||
Investor C1 | $1,000 | $917.90 | $7.14 | $1,000 | $1,017.55 | $7.52 | ||||||
Investor C2 | $1,000 | $918.70 | $6.28 | $1,000 | $1,018.45 | $6.61 | ||||||
Class R | $1,000 | $918.90 | $5.32 | $1,000 | $1,019.45 | $5.60 | ||||||
1 For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.43% for BlackRock, 0.58% for Institutional, 0.79% for Service, 0.92% for Investor A, 0.80% for Investor A1, 1.56% for Investor B, 1.27% for Investor B1, 0.84% for Investor B2, 1.48% for Investor C, 1.49% for Investor C1, 1.31% for Investor C2 and 1.11% for Class R), multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown). Currently, Investor B2 does not accrue distribution fees (12b-1 fees) due to regulatory fee limits. If, during the period, the distribution fees were accrued, the actual expense ratio would have been approximately 1.84%; the actual expenses paid would have been approximately $8.84; and the hypothetical expenses paid would have been approximately $9.27. 2 Hypothetical 5% return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 366. See above “Disclosure of Expenses” for further information on how expenses were calculated. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
7 |
Statement of Assets and Liabilities | BlackRock Total Return Fund | |
September 30, 2008 | ||
Assets | ||
Investment at value — Master Total Return Portfolio of Master Bond LLC (the “Master Portfolio”) (cost — $2,755,491,192) | $2,435,819,431 | |
Capital shares sold receivable | 9,829,274 | |
Withdrawals receivable from the Master Portfolio | 1,192,354 | |
Prepaid expenses | 59,779 | |
Other assets | 20,347 | |
Total assets | 2,446,921,185 | |
Liabilities | ||
Capital shares redeemed payable | 11,021,629 | |
Income dividends payable | 8,902,443 | |
Other affiliates payable | 874,687 | |
Distribution fees payable | 599,747 | |
Investment advisory fees payable | 325,452 | |
Officer’s and Directors’ fees payable | 845 | |
Total liabilities | 21,724,803 | |
Net Assets | $2,425,196,382 | |
Net Assets Consist of | ||
BlackRock Class Shares, $0.10 par value, 100,000,000 shares authorized | $ 3,638,344 | |
Institutional Shares, $0.10 par value, 250,000,000 shares authorized | 6,324,274 | |
Service Shares, $0.10 par value, 50,000,000 shares authorized | 13,034 | |
Investor A Shares, $0.10 par value, 100,000,000 shares authorized | 6,086,441 | |
Investor A1 Shares, $0.10 par value, 50,000,000 shares authorized | 1,074,837 | |
Investor B Shares, $0.10 par value, 250,000,000 shares authorized | 1,291,599 | |
Investor B1 Shares, $0.10 par value, 50,000,000 shares authorized | 245,284 | |
Investor B2 Shares, $0.10 par value, 50,000,000 shares authorized | 6,022 | |
Investor C Shares, $0.10 par value, 100,000,000 shares authorized | 1,547,741 | |
Investor C1 Shares, $0.10 par value, 100,000,000 shares authorized | 2,932,224 | |
Investor C2 Shares, $0.10 par value, 50,000,000 shares authorized | 148,779 | |
Class R Shares, $0.10 par value, 250,000,000 shares authorized | 569,760 | |
Paid-in capital in excess of par | 2,775,556,746 | |
Undistributed net investment income | 7,741,988 | |
Accumulated net realized loss | (62,308,930) | |
Net unrealized appreciation/depreciation | (319,671,761) | |
Net Assets | $2,425,196,382 | |
Net Asset Value | ||
BlackRock — Based on net assets of $369,607,431 and 36,383,436 shares outstanding | $ 10.16 | |
Institutional — Based on net assets of $642,176,669 and 63,242,735 shares outstanding | $ 10.15 | |
Service — Based on net assets of $1,324,257 and 130,336 shares outstanding | $ 10.16 | |
Investor A — Based on net assets of $618,345,801 and 60,864,407 shares outstanding | $ 10.16 | |
Investor A1 — Based on net assets of $109,124,928 and 10,748,365 shares outstanding | $ 10.15 | |
Investor B — Based on net assets of $131,142,314 and 12,915,990 shares outstanding | $ 10.15 | |
Investor B1 — Based on net assets of $24,911,727 and 2,452,840 shares outstanding | $ 10.16 | |
Investor B2 — Based on net assets of $611,702 and 60,224 shares outstanding | $ 10.16 | |
Investor C — Based on net assets of $157,146,757 and 15,477,408 shares outstanding | $ 10.15 | |
Investor C1 — Based on net assets of $297,811,347 and 29,322,237 shares outstanding | $ 10.16 | |
Investor C2 — Based on net assets of $15,098,905 and 1,487,794 shares outstanding | $ 10.15 | |
Class R — Based on net assets of $57,894,544 and 5,697,602 shares outstanding | $ 10.16 | |
See Notes to Financial Statements. |
8 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Statement of Operations | BlackRock Total Return Fund | |||
Year Ended September 30, 2008 | ||||
Investment Income | ||||
Net investment income allocated from the Master Portfolio: | ||||
Interest | $ 164,140,486 | |||
Dividends | 2,013,199 | |||
Expenses | (4,449,456) | |||
Total income | 161,704,229 | |||
Expenses | ||||
Investment advisory | 10,599,116 | |||
Service — Service | 4,030 | |||
Service — Investor A | 1,759,430 | |||
Service — Investor A1 | 133,046 | |||
Service — Investor B2 | 2,018 | |||
Service and distribution — Investor B | 1,247,742 | |||
Service and distribution — Investor B1 | 173,038 | |||
Service and distribution — Investor C | 1,605,751 | |||
Service and distribution — Investor C1 | 2,874,471 | |||
Service and distribution — Investor C2 | 90,524 | |||
Service and distribution — Class R | 321,652 | |||
Transfer agent — BlackRock | 76,675 | |||
Transfer agent — Institutional | 1,118,608 | |||
Transfer agent — Service | 2,798 | |||
Transfer agent — Investor A | 1,500,577 | |||
Transfer agent — Investor A1 | 318,495 | |||
Transfer agent — Investor B | 592,659 | |||
Transfer agent — Investor B1 | 113,584 | |||
Transfer agent — Investor B2 | 1,857 | |||
Transfer agent — Investor C | 661,422 | |||
Transfer agent — Investor C1 | 788,162 | |||
Transfer agent — Investor C2 | 65,786 | |||
Transfer agent — Class R | 217,091 | |||
Printing | 212,479 | |||
Registration | 131,462 | |||
Professional | 72,471 | |||
Officer and Directors | 3,552 | |||
Miscellaneous | 27,454 | |||
Total expenses | 24,715,950 | |||
Less fees waived by advisor | (3,087,156) | |||
Total expenses after fees waived | 21,628,794 | |||
Net investment income | 140,075,435 | |||
Realized and Unrealized Gain (Loss) Allocated from the Master Portfolio | ||||
Net realized gain from investments, futures, swaps, foreign currency, TBA sale commitments and options written | 7,050,809 | |||
Net change in unrealized appreciation/depreciation on investments, futures, swaps, foreign currency, options written and TBA sale commitments | (313,660,319) | |||
Total realized and unrealized loss | (306,609,510) | |||
Net Decrease in Net Assets Resulting from Operations | $ (166,534,075) | |||
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
9 |
Statements of Changes in Net Assets | BlackRock Total Return Fund | |||
Year Ended | ||||
September 30, | ||||
Increase (Decrease) in Net Assets: | 2008 | 2007 | ||
Operations | ||||
Net investment income | $ 140,075,435 | $ 25,974,264 | ||
Net realized gain | 7,050,809 | 614,855 | ||
Net change in unrealized appreciation/depreciation | (313,660,319) | 413,553 | ||
Net increase (decrease) in net assets resulting from operations | (166,534,075) | 27,002,672 | ||
Dividends to Shareholders From | ||||
Net investment income: | ||||
BlackRock | (24,241,317) | (22,990,136)1 | ||
Institutional | (39,607,234) | (835,421) | ||
Service | (78,874) | (54,310)2 | ||
Investor A | (33,849,664) | (621,528) | ||
Investor A1 | (6,540,091) | (140,805) | ||
Investor B | (6,900,088) | (155,787) | ||
Investor B1 | (1,530,110) | (37,390) | ||
Investor B2 | (38,335) | (29,281) | ||
Investor C | (6,756,749) | (185,522) | ||
Investor C1 | (15,218,476) | (320,647) | ||
Investor C2 | (795,282) | (17,587) | ||
Class R | (2,953,008) | (56,412) | ||
Decrease in net assets resulting from dividends to shareholders | (138,509,228) | (25,444,826) | ||
Capital Share Transactions | ||||
Net increase (decrease) in net assets derived from share transactions | (289,905,053) | 2,647,204,535 | ||
Net Assets | ||||
Total increase (decrease) in net assets | (594,948,356) | 2,648,762,381 | ||
Beginning of year | 3,020,144,738 | 371,382,357 | ||
End of year | $2,425,196,382 | $3,020,144,738 | ||
End of year undistributed (distributions in excess of) net investment income | $ 7,741,988 | $ (4,604,527) | ||
1 Includes distributions from BlackRock Total Return Portfolio Institutional Shares prior to September 24, 2007. 2 Includes distributions from BlackRock Total Return Portfolio Investor A Shares prior to September 24, 2007. |
See Notes to Financial Statements. |
10 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Financial Highlights | BlackRock Total Return Fund | |||||||||
BlackRock | ||||||||||
Year Ended September 30, | ||||||||||
2008 | 20071 | 2006 | 2005 | 2004 | ||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of year | $ 11.41 | $ 11.50 | $ 11.65 | $ 11.73 | $ 11.86 | |||||
Net investment income2 | 0.60 | 0.53 | 0.51 | 0.47 | 0.44 | |||||
Net realized and unrealized loss | (1.26) | (0.11) | (0.09) | (0.09) | (0.01) | |||||
Net increase (decrease) from investment operations | (0.66) | 0.42 | 0.42 | 0.38 | 0.43 | |||||
Dividends and distributions from: | ||||||||||
Net investment income | (0.59) | (0.51) | (0.51) | (0.46) | (0.41) | |||||
Net realized gain | — | — | (0.06) | — | (0.15) | |||||
Total dividends and distributions | (0.59) | (0.51) | (0.57) | (0.46) | (0.56) | |||||
Net asset value, end of year | $ 10.16 | $ 11.41 | $ 11.50 | $ 11.65 | $ 11.73 | |||||
Total Investment Return | ||||||||||
Based on net asset value | (6.11)% | 4.24% | 3.76% | 3.21% | 3.65% | |||||
Ratios to Average Net Assets | ||||||||||
Total expenses after waiver | 0.45%3 | 0.48%3 | 0.40% | 0.40% | 0.40% | |||||
Total expenses | 0.55%3 | 0.75%3 | 0.69% | 0.72% | 0.71% | |||||
Net investment income | 5.30%3 | 5.13%3 | 4.50% | 3.98% | 3.68% | |||||
Supplemental Data | ||||||||||
Net assets, end of year (000) | $ 369,607 | $ 490,237 | $ 366,353 | $ 326,033 | $ 285,096 | |||||
Portfolio turnover of the Fund | — | 238%4 | 192% | 358% | 412% | |||||
Portfolio turnover of the Master Portfolio | 1,081%5 | 153%6 | — | — | — |
1 On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure. 2 Based on average shares outstanding. 3 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 4 Represents the portfolio turnover for the period October 1, 2006 to September 24, 2007. 5 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 6 Represents the portfolio turnover for the year. The performance prior to September 24, 2007 set forth in this table is the financial data of BlackRock Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.134182. |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
11 |
Financial Highlights (continued) | BlackRock Total Return Fund | |||
Institutional | ||||
Period | ||||
September 24, | ||||
Year Ended | 20071 to | |||
September 30, | September 30, | |||
2008 | 2007 | |||
Per Share Operating Performance | ||||
Net asset value, beginning of period | $ 11.40 | $ 11.38 | ||
Net investment income2 | 0.58 | 0.01 | ||
Net realized and unrealized gain (loss) | (1.25) | 0.03 | ||
Net increase (decrease) from investment operations | (0.67) | 0.04 | ||
Dividends from net investment income | (0.58) | (0.02) | ||
Net asset value, end of period | $ 10.15 | $ 11.40 | ||
Total Investment Return | ||||
Based on net asset value | (6.26)% | 0.27%3 | ||
Ratios to Average Net Assets4 | ||||
Total expenses after waiver | 0.59% | 0.55%5 | ||
Total expenses | 0.68% | 0.67%5 | ||
Net investment income | 5.16% | 4.54%5 | ||
Supplemental Data | ||||
Net assets, end of period (000) | $ 642,177 | $ 837,730 | ||
Portfolio turnover of the Master Portfolio | 1,081%6 | 153%7 |
1 Commencement of operations. 2 Based on average shares outstanding. 3 Aggregate total investment return. 4 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 5 Annualized. 6 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 7 Represents the portfolio turnover for the year. |
See Notes to Financial Statements. |
12 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Financial Highlights (continued) | BlackRock Total Return Fund | |||||||||
Service | ||||||||||
Year Ended September 30, | ||||||||||
2008 | 20071 | 2006 | 2005 | 2004 | ||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of year | $ 11.41 | $ 11.50 | $ 11.64 | $ 11.72 | $ 11.78 | |||||
Net investment income2 | 0.55 | 0.50 | 0.45 | 0.43 | 0.43 | |||||
Net realized and unrealized gain (loss) | (1.25) | (0.12) | (0.07) | (0.10) | 0.01 | |||||
Net increase (decrease) from investment operations | (0.70) | 0.38 | 0.38 | 0.33 | 0.44 | |||||
Dividends and distributions from: | ||||||||||
Net investment income | (0.55) | (0.47) | (0.46) | (0.41) | (0.36) | |||||
Net realized gain | — | — | (0.06) | — | (0.14) | |||||
Total dividends and distributions | (0.55) | (0.47) | (0.52) | (0.41) | (0.50) | |||||
Net asset value, end of year | $ 10.16 | $ 11.41 | $ 11.50 | $ 11.64 | $ 11.72 | |||||
Total Investment Return | ||||||||||
Based on net asset value | (6.47)% | 3.88% | 3.38% | 2.77% | 3.78% | |||||
Ratios to Average Net Assets | ||||||||||
Total expenses after waiver | 0.81%3 | 0.91%3 | 0.88% | 0.80% | 0.78% | |||||
Total expenses | 0.96%3 | 1.25%3 | 31.07% | 1.08% | 1.07% | |||||
Net investment income | 4.92%3 | 4.80%3 | 3.93% | 3.57% | 3.74% | |||||
Supplemental Data | ||||||||||
Net assets, end of year (000) | $ 1,324 | $ 1,769 | —4 | —4 | $ 29 | |||||
Portfolio turnover of the Fund | — | 238%5 | 192% | 358% | 412% | |||||
Portfolio turnover of the Master Portfolio | 1,081%6 | 153%7 | — | — | — |
1 On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure. 2 Based on average shares outstanding. 3 Includes the Fund's share of the Master Portfolio’s allocated expenses and/or net investment income. 4 Amount is less than $1,000. 5 Represents the portfolio turnover for the period October 1, 2006 to September 24, 2007. 6 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 7 Represents the portfolio turnover for the year. The performance prior to September 24, 2007 set forth in this table is the financial data of Service Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.126588. |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
13 |
Financial Highlights (continued) | BlackRock Total Return Fund | ||||||||
Investor A | Investor A1 | ||||||||
Period | Period | ||||||||
September 24, | September 24, | ||||||||
Year Ended | 20071 to | Year Ended | 20071 to | ||||||
September 30, | September 30, | September 30, | September 30, | ||||||
2008 | 2007 | 2008 | 2007 | ||||||
Per Share Operating Performance | |||||||||
Net asset value, beginning of period | $ 11.41 | $ 11.38 | $ 11.40 | $ 11.38 | |||||
Net Investment income2 | 0.55 | 0.01 | 0.56 | 0.01 | |||||
Net realized and unrealized gain (loss) | (1.26) | 0.03 | (1.26) | 0.03 | |||||
Net increase (decrease) from investment operations | (0.71) | 0.04 | (0.70) | 0.04 | |||||
Dividends from net investment income | (0.54) | (0.01) | (0.55) | (0.02) | |||||
Net asset value, end of period | $ 10.16 | $ 11.41 | $ 10.15 | $ 11.40 | |||||
Total Investment Return3 | |||||||||
Based on net asset value | (6.56)% | 0.35%4 | (6.46)% | 0.27%4 | |||||
Ratios to Average Net Assets5 | |||||||||
Total expenses after waiver | 0.92% | 0.90%6 | 0.81% | 0.64%6 | |||||
Total expenses | 1.00% | 1.02%6 | 0.88% | 0.72%6 | |||||
Net investment income | 4.84% | 4.17%6 | 4.95% | 4.43%6 | |||||
Supplemental Data | |||||||||
Net assets, end of period (000) | $ 618,346 | $ 690,100 | $ 109,125 | $ 147,533 | |||||
Portfolio turnover of the Master Portfolio | 1,081%7 | 153%8 | 1,081%7 | 153%8 |
1 Commencement of operations. 2 Based on average shares outstanding. 3 Total investment returns exclude the effects of sales charges. 4 Aggregate total investment return. 5 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 6 Annualized. 7 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 8 Represents the portfolio turnover for the year. |
See Notes to Financial Statements. |
14 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Financial Highlights (continued) | BlackRock Total Return Fund | |||||||||
Investor B | Investor B1 | |||||||||
Period | Period | |||||||||
September 24, | September 24, | |||||||||
Year Ended | 20071 to | Year Ended | 20071 to | |||||||
September 30, | September 30, | September 30, | September 30, | |||||||
2008 | 2007 | 2008 | 2007 | |||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ 11.40 | $ 11.38 | $ 11.41 | $ 11.38 | ||||||
Net investment income2 | 0.47 | 0.01 | 0.50 | 0.01 | ||||||
Net realized and unrealized gain (loss) | (1.25) | 0.02 | (1.25) | 0.03 | ||||||
Net increase (decrease) from investment operations | (0.78) | 0.03 | (0.75) | 0.04 | ||||||
Dividends from net investment income | (0.47) | (0.01) | (0.50) | (0.01) | ||||||
Net asset value, end of period | $ 10.15 | $ 11.40 | $ 10.16 | $ 11.41 | ||||||
Total Investment Return3 | ||||||||||
Based on net asset value | (7.18)% | 0.26%4 | (6.91)% | 0.35%4 | ||||||
Ratios to Average Net Assets5 | ||||||||||
Total expenses after waiver | 1.57% | 1.43%6 | 1.30% | 1.12%6 | ||||||
Total expenses | 1.64% | 1.51%6 | 1.36% | 1.20%6 | ||||||
Net investment income | 4.18% | 3.64%6 | 4.46% | 3.96%6 | ||||||
Supplemental Data | ||||||||||
Net assets, end of period (000) | $ 131,142 | $ 193,973 | $ 24,912 | $ 42,961 | ||||||
Portfolio turnover of the Master Portfolio | 1,081%7 | 153%8 | 1,081%7 | 153%8 |
1 Commencement of operations. 2 Based on average shares outstanding. 3 Total investment returns exclude the effects of sales charges. 4 Aggregate total investment return. 5 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 6 Annualized. 7 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 8 Represents the portfolio turnover for the year. |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
15 |
Financial Highlights (continued) | BlackRock Total Return Fund | |||||||||
Investor B2 | ||||||||||
Year Ended September 30, | ||||||||||
2008 | 20071 | 2006 | 2005 | 2004 | ||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of year | $ 11.40 | $ 11.49 | $ 11.63 | $ 11.71 | $ 11.85 | |||||
Net investment income2 | 0.54 | 0.49 | 0.38 | 0.33 | 0.28 | |||||
Net realized and unrealized gain (loss) | (1.24) | (0.12) | (0.09) | (0.09) | — | |||||
Net increase (decrease) from investment operations | (0.70) | 0.37 | 0.29 | 0.24 | 0.28 | |||||
Dividends and distributions from: | ||||||||||
Net investment income | (0.54) | (0.46) | (0.37) | (0.32) | (0.27) | |||||
Net realized gain | — | — | (0.06) | — | (0.15) | |||||
Total dividends and distributions | (0.54) | (0.46) | (0.43) | (0.32) | (0.42) | |||||
Net asset value, end of year | $ 10.16 | $ 11.40 | $ 11.49 | $ 11.63 | $ 11.71 | |||||
Total Investment Return3 | ||||||||||
Based on net asset value | (6.50)% | 3.59% | 2.50% | 2.02% | 2.38% | |||||
Ratios to Average Net Assets | ||||||||||
Total expenses after waiver | 0.95%4 | 1.03%4 | 1.62% | 1.56% | 1.63% | |||||
Total expenses | 1.02%4 | 1.28%4 | 3.30% | 1.84% | 1.97% | |||||
Net investment income | 4.78%4 | 4.73%4 | 3.29% | 2.84% | 2.46% | |||||
Supplemental Data | ||||||||||
Net assets, end of year (000) | $ 612 | $ 1,027 | $ 226 | $ 137 | $ 103 | |||||
Portfolio turnover of the Fund | — | 238%5 | 192% | 358% | 412% | |||||
Portfolio turnover of the Master Portfolio | 1,081%6 | 153%7 | — | — | — |
1 On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure. 2 Based on average shares outstanding. 3 Total investment returns exclude the effects of sales charges. 4 Includes the Fund's share of the Master Portfolio’s allocated expenses and/or net investment income. 5 Represents the portfolio turnover for the period October 1, 2006 to September 24, 2007. 6 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 7 Represents the portfolio turnover for the year. The performance prior to September 24, 2007 set forth in this table is the financial data of Investor B Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.132883. |
See Notes to Financial Statements. |
16 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Financial Highlights (continued) | BlackRock Total Return Fund | |||||||||
Investor C | ||||||||||
Year Ended September 30, | ||||||||||
2008 | 20071 | 2006 | 2005 | 2004 | ||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of year | $ 11.40 | $ 11.49 | $ 11.63 | $ 11.71 | $ 11.86 | |||||
Net investment income2 | 0.48 | 0.16 | 0.38 | 0.32 | 0.31 | |||||
Net realized and unrealized gain (loss) | (1.26) | 0.16 | (0.09) | (0.08) | (0.03) | |||||
Net increase (decrease) from investment operations | (0.78) | 0.32 | 0.29 | 0.24 | 0.28 | |||||
Dividends and distributions from: | ||||||||||
Net investment income | (0.47) | (0.41) | (0.37) | (0.32) | (0.27) | |||||
Net realized gain | — | — | (0.06) | — | (0.16) | |||||
Total dividends and distributions | (0.47) | (0.41) | (0.43) | (0.32) | (0.43) | |||||
Net asset value, end of year | $ 10.15 | $ 11.40 | $ 11.49 | $ 11.63 | $ 11.71 | |||||
Total Investment Return3 | ||||||||||
Based on net asset value | (7.12)% | 3.12% | 2.50% | 2.02% | 2.28% | |||||
Ratios to Average Net Assets | ||||||||||
Total expenses after waiver | 1.50%4 | 1.53%4 | 1.62% | 1.56% | 1.63% | |||||
Total expenses | 1.95%4 | 2.08%4 | 10.03% | 1.84% | 1.97% | |||||
Net investment income | 4.24%4 | 3.85%4 | 3.27% | 2.78% | 2.46% | |||||
Supplemental Data | ||||||||||
Net assets, end of year (000) | $ 157,147 | $ 137,586 | $ 102 | $ 53 | —5 | |||||
Portfolio turnover of the Fund | — | 238%6 | 192% | 358% | 412% | |||||
Portfolio turnover of the Master Portfolio | 1,081%7 | 153%8 | — | — | — |
1 On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure. 2 Based on average shares outstanding. 3 Total investment returns exclude the effects of sales charges. 4 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 5 Amount is less than $1,000. 6 Represents the portfolio turnover for the period October 1, 2006 to September 24, 2007. 7 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 8 Represents the portfolio turnover for the year. The performance prior to September 24, 2007 set forth in this table is the financial data of Investor C Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share infor- mation listed have been restated to reflect the conversion ratio of 1.133781. |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
17 |
Financial Highlights (continued) | BlackRock Total Return Fund | |||||||||
Investor C1 | Investor C2 | |||||||||
Period | Period | |||||||||
September 24, | September 24, | |||||||||
Year Ended | 20071 to | Year Ended | 20071 to | |||||||
September 30, | September 30, | September 30, | September 30, | |||||||
2008 | 2007 | 2008 | 2007 | |||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ 11.41 | $ 11.38 | $ 11.40 | $ 11.37 | ||||||
Net investment income2 | 0.48 | 0.01 | 0.50 | 0.01 | ||||||
Net realized and unrealized gain (loss) | (1.25) | 0.03 | (1.26) | 0.03 | ||||||
Net increase (decrease) from investment operations | (0.77) | 0.04 | (0.76) | 0.04 | ||||||
Dividends from net investment income | (0.48) | (0.01) | (0.49) | (0.01) | ||||||
Net asset value, end of period | $ 10.16 | $ 11.41 | $ 10.15 | $ 11.40 | ||||||
Total Investment Return3 | ||||||||||
Based on net asset value | (7.09)% | 0.35%4 | (6.95)% | 0.35%4 | ||||||
Ratios to Average Net Assets5 | ||||||||||
Total expenses after waiver | 1.49% | 1.37%6 | 1.33% | 1.21%6 | ||||||
Total expenses | 1.55% | 1.45%6 | 1.40% | 1.29%6 | ||||||
Net investment income | 4.27% | 3.70%6 | 4.42% | 3.87%6 | ||||||
Supplemental Data | ||||||||||
Net assets, end of period (000) | $ 297,811 | $ 393,738 | $ 15,099 | $ 20,654 | ||||||
Portfolio turnover of the Master Portfolio | 1,081%7 | 153%8 | 1,081%7 | 153%8 |
1 Commencement of operations. 2 Based on average shares outstanding. 3 Total investment returns exclude the effects of sales charges. 4 Aggregate total investment return. 5 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 6 Annualized. 7 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 8 Represents the portfolio turnover for the year. |
See Notes to Financial Statements. |
18 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Financial Highlights (concluded) | BlackRock Total Return Fund | |||
Class R | ||||
Period | ||||
October 2, | ||||
Year Ended | 20061 to | |||
September 30, | September 30, | |||
2008 | 2007 | |||
Per Share Operating Performance | ||||
Net asset value, beginning of period | $ 11.41 | $ 11.50 | ||
Net investment income2 | 0.52 | 0.11 | ||
Net realized and unrealized gain (loss) | (1.25) | 0.26 | ||
Net increase (decrease) from investment operations | (0.73) | 0.37 | ||
Dividends from net investment income | (0.52) | (0.46) | ||
Net asset value, end of period | $ 10.16 | $ 11.41 | ||
Total Investment Return | ||||
Based on net asset value | (6.76)% | 3.48%3 | ||
Ratios to Average Net Assets4 | ||||
Total expenses after waiver | 1.13% | 1.10%5 | ||
Total expenses | 1.37% | 1.37%5 | ||
Net investment income | 4.62% | 4.01%5 | ||
Supplemental Data | ||||
Net assets, end of period (000) | $ 57,895 | $ 62,836 | ||
Portfolio turnover of the Fund | — | 238%6 | ||
Portfolio turnover of the Master Portfolio | 1,081%7 | 153%8 |
1 Commencement of operations. 2 Based on average shares outstanding. 3 Aggregate total investment return. 4 Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income. 5 Annualized. 6 Represents the portfolio turnover for the year. 7 Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. 8 Represents the portfolio turnover for the period October 1, 2006 to September 24, 2007. The performance prior to September 24, 2007 set forth in this table is the financial data of Class R Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share infor- mation listed have been restated to reflect the conservation ratio of 1.133286. |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
19 |
Notes to Financial Statements BlackRock Total Return Fund |
1. Significant Accounting Policies: BlackRock Total Return Fund (the “Fund”) is a series of BlackRock Bond Fund, Inc. (the “Bond Fund”) and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. The Fund seeks to achieve its investment objective by investing all of its assets in Master Total Return Portfolio (the “Master Portfolio”), of Master Bond LLC (the “Master LLC”), which has the same investment objective and strategies as the Fund. The value of the Fund’s investment in the Master Portfolio reflects the Fund’s proportionate interest in the net assets of the Master Portfolio. The performance of the Fund is directly affected by the per- formance of the Master Portfolio. The financial statements of the Master Portfolio, including the Schedule of Investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements. The Fund’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and esti- mates. Actual results may differ from these estimates. The percentage of the Master Portfolio owned by the Fund at September 30, 2008 was 75.1% . On September 24, 2007, the Fund acquired substantially all of the assets and assumed substantially all of the liabilities of BlackRock Total Return Portfolio (“Total Return Portfolio”), a portfolio of BlackRock Funds II. The Fund is the surviving entity in the Reorganization, however, Total Return Portfolio is the accounting survivor. As a result, the Fund assumed the performance and accounting history of Total Return Portfolio at the closing of the Reorganization. The Fund’s net assets as of September 24, 2007 of $2,538,462,638, including $6,028,458 of net unrealized depreciation, were combined with those of the Total Return Portfolio. The aggregate net assets immediately after the acquisition amounted to $3,034,201,488. Also on September 24, 2007, all of the portfolio securities held by the Fund were subsequently contributed to the Master Portfolio in exchange for an investment in the Master Portfolio. The Fund offers multiple classes of shares. On September 24, 2007, pursuant to the Reorganization, Investor A Shares of the Total Return Portfolio converted to Service Shares, Investor B Shares of the Total Return Portfolio converted to Investor B2 Shares, Institutional Shares of the Total Return Portfolio converted to BlackRock Shares and Investor C Shares and Class R Shares of Total Return Portfolio received Investor C Shares and Class R Shares of the Fund, respectively. Also, effective September 24, 2007, Institutional, Investor A, Investor A1, Investor B, Investor B1, Investor C1 and Investor C2 Shares commenced operations. Institutional and Service Shares are sold without a sales charge and only to certain eligible investors. Investor A and Investor A1 |
Shares are sold with a front-end sales charge. Investor B, Investor B1, Investor B2, Investor C, Investor C1 and Investor C2 Shares are subject to a contingent deferred sales charge and also bear certain expenses related to the distribution of such shares. In addition, Investor A1, Investor B, Investor B1, Investor B2, Investor C1 and Investor C2 Shares are sold only to certain eligible investors. Class R Shares commenced operations on October 2, 2006 and are sold only to certain retirement plans. The acquisition was accomplished by a tax-free exchange. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor A1, Investor B, Investor B1, Investor B2, Investor C, Investor C1, Investor C2 and Class R Shares bear certain expenses relat- ed to the shareholder servicing of such shares and Investor B, Investor B1, Investor B2, Investor C, Investor C1, Investor C2 and Class R Shares also bear certain expenses related to the distribution of such shares. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B, Investor B1 and Investor B2 shareholders may vote on certain changes to the Investor A and Investor A1 distribution plans as applica- ble). Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. The following is a summary of significant accounting policies followed by the Fund: Valuation of investments: The Fund records its investments in the Master Portfolio at fair value. Valuation of securities held by the Master Portfolio is discussed in Note 1 of the Master Portfolio’s Notes to Financial Statements, which are included elsewhere in this report. Investment Transactions and Net Investment Income: Investment trans- actions in the Master Portfolio are accounted for on a trade date basis. The Fund records daily its proportionate share of the Master Portfolio’s income, expenses and realized and unrealized gains and losses. In addi- tion, the Fund accrues its own expenses. Income and realized and unre- alized gains and losses on investments are allocated daily to each class based on its relative net assets. Dividends and Distributions to Shareholders: Dividends from net invest- ment income are declared daily and paid monthly. Distributions of capi- tal gains are recorded on the ex-dividend dates. |
20 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (continued) BlackRock Total Return Fund |
Income Taxes: It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment compa- nies and to distribute substantially all of its taxable income to its share- holders. Therefore, no federal income tax provision is required. Effective March 31, 2008, the Fund implemented Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, includ- ing investment companies, before being measured and recognized in the financial statements. The investment advisor has evaluated the applica- tion of FIN 48 to the Fund, and has determined that the adoption of FIN 48 did 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 limita- tions on the Fund’s U.S. federal tax returns remains open for the years ended September 30, 2005 through September 30, 2007. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Recent Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a frame- work for measuring fair value and expands disclosures about fair value measurements. The impact on the Fund’s financial statement disclo- sures, if any, is currently being assessed. In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“FAS 161”), was issued. FAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of opera- tions and financial position. In September 2008, FASB Staff Position No. 133-1 and FASB Interpretation No. 45-4 (the “FSP”), “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” was |
issued and is effective for fiscal years and interim periods ending after November 15, 2008. The FSP amends FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. The FSP also clarifies the effective date of FAS 161, whereby disclosures required by FAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The impact on the Fund’s financial statement disclosures, if any, is currently being assessed. Other: Expenses directly related to the Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro-rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets or other appropriate methods. 2. Investment Advisor Agreement and Other Transactions with Affiliates: The Bond Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Advisor”), an indirect, wholly owned sub- sidiary of BlackRock, Inc., to provide administrative services (other than investment advice and related portfolio activities). The Bond Fund has also entered into separate Distribution Agreements and Distribution Plans with FAM Distributors, Inc. (“FAMD”) and BlackRock Distributors, Inc. and its affiliates (“BDI”) (collectively, the “Distributor”). FAMD is a wholly owned subsidiary of Merrill Lynch Group, Inc., and BDI is an affiliate of BlackRock, Inc. Merrill Lynch & Co., Inc. (“Merrill Lynch”) and The PNC Financial Services Group, Inc. (“PNC”), are principal owners of BlackRock, Inc. The Advisor is responsible for the management of each of the Bond Fund’s portfolios, including the Fund, and provides the necessary per- sonnel, facilities and equipment to provide such services to the Bond Fund. The Advisor also performs certain administrative services neces- sary for the operation of the Bond Fund. For such services the Advisor receives, at the end of each month, a fee with respect to the Fund at the annual rates set forth below which are based upon the aggregate average daily value of the Bond Fund’s net assets at the following annual rates: 0.50% of the Bond Fund’s average daily net assets not exceeding $250 million; 0.45% of the average daily net assets in excess of $250 million but not exceeding $500 million; 0.40% of aver- age daily net assets in excess of $500 million but not exceeding $750 |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
21 |
Notes to Financial Statements (continued) BlackRock Total Return Fund |
million; and 0.35% of average daily net assets in excess of $750 mil- lion. For the year ended September 30, 2008, the aggregate average daily net assets of the Bond Fund, including the Fund and the Bond Fund’s other series, BlackRock High Income Fund, were approximately $4,163,791,000. The Advisor has contractually agreed to waive the Fund’s investment advisory fee in the amount of the Fund’s share of the investment advisory fee paid by the Master Portfolio. For the year ended September 30, 2008, the Advisor earned fees of $10,599,116 of which $1,876,932 were waived. For the year ended September 30, 2008, the Advisor contractually agreed to waive and/or reimburse fees and/or expenses in order to limit expenses (excluding interest expense and certain other fund expenses) as a percentage of average daily net assets allocated to each class of the Fund as follows: 0.40% (for BlackRock Shares), 0.55% (for Institutional Shares), 0.85% (for Service Shares), 0.90% (for Investor A Shares), 1.65% (for Investor B2 Shares), 1.65% (for Investor C Shares) and 1.10% (for Class R Shares) until February 1, 2009. In addition to the contractual waivers described above, the Advisor has voluntarily agreed to waive and/or reimburse fees or expenses in order to limit expenses (excluding interest expense and certain other Fund expenses) as a percentage of average daily net assets allocated to each class of the Fund as follows: 1.53% (for Investor B2 Shares) 1.45% (for Investor C Shares), 0.76% (for Service Shares) and 1.08% (for Class R Shares). As a result, the Advisor waived its fees in the amount of $1,210,224. The Advisor has entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Advisor, under which the Advisor pays BFM a fee that is a percentage of the investment advisory fee paid by the Fund to the Advisor. There is no increase in the aggregate fees paid by the Bond Fund for these services. Pursuant to the Distribution Plans adopted by the Bond Fund in accordance with Rule 12b-1 under the 1940 Act, the Fund pays the Distributor ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares as follows: |
Service | Distribution | |||
Fee | Fee | |||
Service | 0.25% | — | ||
Investor A | 0.25% | — | ||
Investor A1 | 0.10% | — | ||
Investor B | 0.25% | 0.50% | ||
Investor B1 | 0.25% | 0.25% | ||
Investor B2 | 0.25% | 0.75% | ||
Investor C | 0.25% | 0.75% | ||
Investor C1 | 0.25% | 0.55% | ||
Investor C2 | 0.25% | 0.25% | ||
Class R | 0.25% | 0.25% | ||
Pursuant to sub-agreements with the Distributor, broker-dealers, includ-
ing Merrill Lynch, Pierce, Fenner and Smith Incorporated (“MLPF&S”),
a wholly owned subsidiary of Merrill Lynch, and the Distributor provide
shareholder servicing and distribution services to the Fund. The ongoing
service and/or distribution fee compensates the Distributor and each
broker-dealer (including MLPF&S) for providing shareholder servicing
and/or distribution related services to Service, Investor A, Investor A1,
Investor B, Investor B1, Investor B2, Investor C, Investor C1, Investor C2
and Class R shareholders. For the year ended September 30, 2008
the Fund did not accrue Investor B2 distribution fees because of
regulatory limits.
For the year ended September 30, 2008, affiliates earned underwriting
discounts, direct commissions and dealer concessions on sales of the
Fund’s Investor A Shares, which totaled $848,549 and affiliates received
contingent deferred sales charges of $98,284, $1,508, $815, $89,514,
$11,919 and $81 relating to transactions in Investor B, Investor B1,
Investor B2, Investor C, Investor C1 and Investor C2 Shares, respectively.
Furthermore, affiliates received contingent deferred sales charges of
$4,151 relating to transactions subject to front-end sales charge waivers
on Investor A Shares. These amounts include payments to Hilliard Lyons,
which was considered an affiliate for a portion of the year.
Pursuant to written agreements, certain affiliates provide the Fund with
sub-accounting, recordkeeping, sub-transfer agency and other adminis-
trative services with respect to sub-accounts they service. For these
services, these affiliates receive an annual fee per shareholder account
which will vary depending on share class. For the year ended September
30, 2008, the Fund paid $4,558,311 in return for these services, which
are a component of the transfer agent fees in the accompanying
Statement of Operations.
22 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (continued) BlackRock Total Return Fund |
PNC Global Investment Servicing (U.S.) Inc., formerly PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the Advisor, serves as transfer agent. Each class of the Fund bears the costs of transfer agent fees associated with such respective classes. Transfer agency fees borne by each class of the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholders meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares of each class of the Fund, 12b-1 fee calculation, check writing, anti-money laundering services, and customer identification services. The Advisor maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to share- holder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended September 30, 2008, the following amounts have been accrued by the Fund to reimburse the Advisor for costs incurred running the call center, which are a component of the transfer agent fees in the accompanying Statement of Operations. |
Call Center | ||
Fees | ||
BlackRock | $2,826 | |
Institutional | $9,972 | |
Service | $ 124 | |
Investor A | $8,277 | |
Investor A1 | $1,353 | |
Investor B | $2,546 | |
Investor B1 | $ 452 | |
Investor B2 | $ 67 | |
Investor C | $2,432 | |
Investor C1 | $4,325 | |
Investor C2 | $ 210 | |
Class R | $ 569 | |
Certain officers and/or directors of the Bond Fund are officers and/or directors of BlackRock, Inc. or its affiliates. The Fund reimburses the Advisor for compensation paid to the Fund’s Chief Compliance Officer. 3. Income Tax Information: Reclassifications: Accounting principles generally accepted in the United States of America require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or on net asset values per share. The following permanent differences as of September 30, 2008 attributable to amortization methods on fixed |
income securities, foreign currency transactions, accounting for paydowns and accounting for swap agreements, were reclassified to the following accounts: |
Increase (decrease) paid-in capital | (399,530) | |
Increase (decrease) undistributed net investment income | 10,780,308 | |
Increase (decrease) accumulated net realized gain (loss) | (10,380,778) | |
The tax character of distributions paid during the years ended September 30, 2008 and September 30, 2007 were as follows: |
9/30/2008 | 9/30/2007 | |||
Distributions paid from: | ||||
Ordinary income | $138,509,228 | $25,444,826 | ||
Total taxable distributions | $138,509,228 | $25,444,826 | ||
As of September 30, 2008, the tax components of accumulated losses were as follows: |
Undistributed ordinary income | $ 12,729,875 | |
Capital loss carryforwards | (55,122,576) | |
Net unrealized losses* | (331,846,002) | |
Total accumulated net losses | $ (374,238,703) | |
* The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales, the difference between book and tax amortization methods for premiums and discounts on fixed income securities, the realization for tax purposes of unrealized gains (losses) on certain futures and foreign currency contracts, the deferral of post-October capital losses for tax purposes, accounting for swap agreements and other book/tax tem- porary differences. |
As of September 30, 2008, the Fund had a capital loss carryforward available to offset future realized capital gains through the indicated expiration dates: |
Expires September 30, | ||
2009 | $12,816,607 | |
2013 | 71,451 | |
2014 | 8,093,306 | |
2015 | 23,885,656 | |
2016 | 10,255,556 | |
Total | $55,122,576 | |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
23 |
Notes to Financial Statements (continued) | BlackRock Total Return Fund | |||||||||
4. Capital Share Transactions: | ||||||||||
Transactions in shares for each class were as follows: | ||||||||||
Year Ended | Year Ended | |||||||||
September 30, 2008 | September 30, 2007 | |||||||||
Shares | Amount | Shares | Amount | |||||||
BlackRock | ||||||||||
Shares sold | 4,628,710 | $ 52,477,533 | 20,100,906 | $203,203,853 | ||||||
Conversion of shares from Institutional shares | — | — | 638,927 | 6,376,491 | ||||||
Shares issued resulting from reorganization | — | — | 88 | 1,002 | ||||||
Shares issued to shareholders in reinvestment of dividends | 1,885,023 | 21,114,013 | 1,928,160 | 19,398,684 | ||||||
Total issued | 6,513,733 | 73,591,546 | 22,668,081 | 228,980,030 | ||||||
Shares redeemed | (13,097,624) | (147,546,681) | (15,836,259) | (101,695,357) | ||||||
Net increase (decrease) | (6,583,891) | $ (73,955,135) | 6,831,822 | $127,284,673 | ||||||
Institutional | ||||||||||
Shares sold | 14,337,660 | $ 160,960,965 | ||||||||
Shares issued to shareholders in reinvestment of dividends | 2,499,632 | 27,909,614 | ||||||||
Total issued | 16,837,292 | 188,870,579 | ||||||||
Shares redeemed | (27,058,472) | (304,379,234) | ||||||||
Net decrease | (10,221,180) | $(115,508,655) | ||||||||
Period | Period | |||||||||
September 24, 2007* to | October 1, 2006 to | |||||||||
September 30, 2007 | September 24, 2007** | |||||||||
Shares | Amount | Shares | Amount | |||||||
Institutional (concluded) | ||||||||||
Shares sold | 406,037 | $ 4,627,109 | 367,104 | $ 3,781,383 | ||||||
Shares issued resulting from reorganization | 75,665,114 | 860,809,633 | — | — | ||||||
Shares issued to shareholders in reinvestment of dividends | 11,768 | 134,157 | 43,930 | 492,566 | ||||||
Total issued | 76,082,919 | 865,570,899 | 411,034 | 4,273,949 | ||||||
Conversion of shares from BlackRock shares | — | — | (638,927) | (6,376,491) | ||||||
Shares redeemed | (2,619,004) | (29,852,242) | (208,614) | (1,335,499) | ||||||
Total redeemed | (2,619,004) | (29,852,242) | (847,541) | (7,711,990) | ||||||
Net increase (decrease) | 73,463,915 | $835,718,657 | (436,507) | $ (3,438,041) |
* Commencement of operations. ** On September 24, 2007, Institutional Shares were converted to BlackRock Shares. |
24 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
Notes to Financial Statements (continued) | BlackRock Total Return Fund | |||||||||
Year Ended | Year Ended | |||||||||
September 30, 2008 | September 30, 2007 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Service | ||||||||||
Shares sold | 24,841 | $ 280,763 | 2,020 | $ 20,698 | ||||||
Conversion of shares from Investor A shares | — | — | 155,022 | 1,557,971 | ||||||
Shares issued resulting from reorganization | — | — | 88 | 1,001 | ||||||
Shares issued to shareholders in reinvestment of dividends | 6,465 | 72,242 | 58 | 660 | ||||||
Total issued | 31,306 | 353,005 | 157,188 | 1,580,330 | ||||||
Shares redeemed | (56,019) | (626,677) | (2,151) | (22,031) | ||||||
Net increase (decrease) | (24,713) | $ (273,672) | 155,037 | $ 1,558,299 | ||||||
Period | ||||||||||
Year Ended | September 24, 2007* to | |||||||||
September 30, 2008 | September 30, 2007 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor A | ||||||||||
Shares sold | 17,821,322 | $ 201,397,182 | 503,711 | $ 5,753,905 | ||||||
Shares issued resulting from reorganization | — | — | 60,328,117 | 686,711,582 | ||||||
Shares issued to shareholders in reinvestment of dividends | 2,721,792 | 30,408,979 | 2,883 | 32,895 | ||||||
Total issued | 20,543,114 | 231,806,161 | 60,834,711 | 692,498,382 | ||||||
Shares redeemed | (20,161,940) | (225,686,317) | (351,478) | (4,004,320) | ||||||
Net increase | 381,174 | $ 6,119,844 | 60,483,233 | $688,494,062 | ||||||
* Commencement of operations. | ||||||||||
Period October 1, 2006 | ||||||||||
to September 24, 2007* | ||||||||||
Shares | Amount | |||||||||
Investor A (concluded) | ||||||||||
Shares sold | 164,938 | $ 1,666,370 | ||||||||
Shares issued to shareholders in reinvestment of dividends | 4,406 | 44,284 | ||||||||
Total issued | 169,344 | 1,710,654 | ||||||||
Conversion of shares to Service Shares | (155,022) | (1,557,971) | ||||||||
Shares redeemed | (43,698) | (233,019) | ||||||||
Total redeemed | (198,720) | (1,790,990) | ||||||||
Net decrease | (29,376) | $ (80,336) | ||||||||
* On September 24, 2007, Investor A Shares were converted to Service Shares. | ||||||||||
Period | ||||||||||
Year Ended | September 24, 2007* to | |||||||||
September 30, 2008 | September 30, 2007 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor A1 | ||||||||||
Shares sold | 2,830,817 | $ 31,918,774 | 113,381 | $ 1,291,687 | ||||||
Shares issued resulting from reorganization | — | — | 12,970,692 | 147,553,481 | ||||||
Shares issued to shareholders in reinvestment of dividends | 534,370 | 5,971,790 | 638 | 7,280 | ||||||
Total issued | 3,365,187 | 37,890,564 | 13,084,711 | 148,852,448 | ||||||
Shares redeemed | (5,555,500) | (62,280,566) | (146,033) | (1,663,265) | ||||||
Net increase (decrease) | (2,190,313) | $ (24,390,002) | 12,938,678 | $147,189,183 | ||||||
* Commencement of operations. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
25 |
Notes to Financial Statements (continued) | BlackRock Total Return Fund | |||||||||
Period | ||||||||||
Year Ended | September 24, 2007* to | |||||||||
September 30, 2008 | September 30, 2007 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor B | ||||||||||
Shares sold | 1,712,339 | $ 19,278,051 | 93,680 | $ 1,067,348 | ||||||
Shares issued resulting from reorganization | — | — | 17,057,414 | 194,056,260 | ||||||
Shares issued to shareholders in reinvestment of dividends | 498,001 | 5,568,643 | 1,733 | 19,756 | ||||||
Total issued | 2,210,340 | 24,846,694 | 17,152,827 | 195,143,364 | ||||||
Shares redeemed | (6,304,635) | (70,798,766) | (142,542) | (1,624,147) | ||||||
Net increase (decrease) | (4,094,295) | $ (45,952,072) | 17,010,285 | $193,519,217 | ||||||
* Commencement of operations. | ||||||||||
Investor B1 | ||||||||||
Shares sold | 431,347 | $ 4,854,779 | 23,753 | $ 270,785 | ||||||
Shares issued resulting from reorganization | — | — | 3,825,998 | 43,538,462 | ||||||
Shares issued to shareholders in reinvestment of dividends | 117,462 | 1,316,084 | 301 | 3,430 | ||||||
Total issued | 548,809 | 6,170,863 | 3,850,052 | 43,812,677 | ||||||
Shares redeemed | (1,862,400) | (20,947,774) | (83,621) | (953,527) | ||||||
Net increase (decrease) | (1,313,591) | $ (14,776,911) | 3,766,431 | $ 42,859,150 | ||||||
* Commencement of operations. | ||||||||||
Year Ended | ||||||||||
September 30, 2007* | ||||||||||
Shares | Amount | |||||||||
Investor B2 | ||||||||||
Shares sold | 1 | $ 10 | 95,533 | $ 963,204 | ||||||
Shares issued resulting from reorganization | — | — | 88 | 1,002 | ||||||
Shares issued to shareholders in reinvestment of dividends | 2,725 | 30,449 | 2,163 | 21,771 | ||||||
Total issued | 2,726 | 30,459 | 97,784 | 985,977 | ||||||
Shares redeemed | (32,579) | (367,939) | (30,034) | (181,070) | ||||||
Net increase (decrease) | (29,853) | $ (337,480) | 67,750 | $ 804,907 | ||||||
* On September 24, 2007, Investor B Shares were converted to Investor B2 Shares. | ||||||||||
Investor C | ||||||||||
Shares sold | 8,103,085 | $ 91,146,697 | 689,112 | $ 7,259,283 | ||||||
Shares issued resulting from reorganization | — | — | 11,486,320 | 130,627,924 | ||||||
Shares issued to shareholders in reinvestment of dividends | 547,326 | 6,094,016 | 5,921 | 59,704 | ||||||
Total issued | 8,650,411 | 97,240,713 | 12,181,353 | 137,946,911 | ||||||
Shares redeemed | (5,242,896) | (58,527,611) | (121,546) | (768,658) | ||||||
Net increase | 3,407,515 | $ 38,713,102 | 12,059,807 | $137,178,253 |
26 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (concluded) | BlackRock Total Return Fund | |||||||
Period | ||||||||
Year Ended | September 24, 2007* to | |||||||
September 30, 2008 | September 30, 2007 | |||||||
Shares | Amount | Shares | Amount | |||||
Investor C1 | ||||||||
Shares sold | 1,038,182 | $ 11,690,667 | 141,453 | $ 1,613,113 | ||||
Shares issued resulting from reorganization | — | — | 34,599,791 | 393,742,613 | ||||
Shares issued to shareholders in reinvestment of dividends | 1,184,526 | 13,244,116 | 1,964 | 22,407 | ||||
Total issued | 2,222,708 | 24,934,783 | 34,743,208 | 395,378,133 | ||||
Shares redeemed | (7,419,084) | (83,071,268) | (224,595) | (2,559,812) | ||||
Net increase (decrease) | (5,196,376) | $ (58,136,485) | 34,518,613 | $392,818,321 | ||||
* Commencement of operations. | ||||||||
Investor C2 | ||||||||
Shares sold | 199,604 | $ 2,243,704 | 8,943 | $ 101,881 | ||||
Shares issued resulting from reorganization | — | — | 1,837,573 | 20,895,323 | ||||
Shares issued to shareholders in reinvestment of dividends | 55,810 | 623,159 | 77 | 873 | ||||
Total issued | 255,414 | 2,866,863 | 1,846,593 | 20,998,077 | ||||
Shares redeemed | (579,711) | (6,516,126) | (34,502) | (392,995) | ||||
Net increase (decrease) | (324,297) | $ (3,649,263) | 1,812,091 | $ 20,605,082 | ||||
* Commencement of operations. | ||||||||
Period | ||||||||
October 2, 2006* to | ||||||||
September 30, 2007 | ||||||||
Shares | Amount | |||||||
Class R | ||||||||
Shares sold | 2,749,845 | $ 30,941,003 | 233,764 | $ 2,586,461 | ||||
Shares issued resulting from reorganization | — | — | 5,316,505 | 60,524,355 | ||||
Shares issued to shareholders in reinvestment of dividends | 263,989 | 2,947,526 | 316 | 3,474 | ||||
Total issued | 3,013,834 | 33,888,529 | 5,550,585 | 63,114,290 | ||||
Shares redeemed | (2,822,946) | (31,646,853) | (43,871) | (421,182) | ||||
Net increase | 190,888 | $ 2,241,676 | 5,506,714 | $ 62,693,108 | ||||
* Commencement of operations. | ||||||||
5. Subsequent Events: |
On September 15, 2008, Bank of America Corporation announced that it has agreed to acquire Merrill Lynch, one of the principal owners of BlackRock, Inc. The purchase has been approved by the directors of both companies. Subject to shareholder and regulatory approvals, the transaction is expected to close on or before December 31, 2008. Effective October 1, 2008, BlackRock Investments, Inc., an affiliate of the Advisor, replaced FAM Distributors, Inc. and BlackRock Distributors, Inc. as the sole distributor of the Bond Fund. The service and distribution fees will not change as a result of this transaction. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
27 |
Report of Independent Registered Public Accounting Firm BlackRock Total Return Fund |
To the Shareholders and Board of Directors of BlackRock Bond Fund, Inc.: We have audited the accompanying statement of assets and liabilities of BlackRock Total Return Fund, one of the portfolios constituting BlackRock Bond Fund, Inc. (the “Fund”) as of September 30, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assur- ance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that |
are appropriate in the circumstances, but not for the purpose of express- ing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by manage- ment, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. as of September 30, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Princeton, New Jersey November 26, 2008 |
Important Tax Information (unaudited) The following information is provided with respect to the ordinary income distributions paid by BlackRock Total Return Fund of BlackRock Bond Fund, Inc. for the fiscal year ended September 30, 2008: |
Federal Obligation Interest | ||||
Months Paid: | October 2007 – September 2008 | 2.25%1 | ||
Interest-Related Dividends for Non-U.S. Residents | ||||
Months Paid: | October 2007 – December 2007 | 97.51%2 | ||
January 2008 – September 2008 | 83.98%2 | |||
1 The law varies in each state as to whether and what percentage of dividend income attributable to federal obligations is exempt from state income tax. We recommend that you consult your tax advisor to determine if any portion of the dividends you received is exempt from state income taxes. 2 Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations. |
28 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Portfolio Information Master Total Return Portfolio |
As of September 30, 2008 | ||
Percent of | ||
Long-Term | ||
Asset Mix | Investments | |
U.S. Government Agency Mortgage-Backed Securities | 41% | |
Non-U.S. Government Agency Mortgage-Backed Securities | 26 | |
Asset-Backed Securities | 12 | |
Corporate Bonds | 11 | |
U.S. Government & Agency Obligations | 4 | |
U.S. Government Agency Mortgage-Backed Securities — | ||
Collateralized Mortgage Obligations | 3 | |
Preferred Securities | 2 | |
Foreign Government Obligations | 1 | |
Percent of | ||
Corporate | ||
Bond | ||
Credit Rating1 | Investments | |
AAA/Aaa | 13% | |
AA/Aa | 26 | |
A/A | 30 | |
BBB/Baa | 26 | |
BB/Ba | 2 | |
B/B | 3 | |
1 Using the higher of Standard & Poor’s or Moody’s Investors Service. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
29 |
Schedule of Investments September 30, 2008 Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | Par | |||||||||||||
Asset-Backed Securities | (000) | Value | Asset-Backed Securities | (000) | Value | |||||||||
ACE Securities Corp. (a): | Daimler Chrysler Auto Trust Series 2006-D | |||||||||||||
Series 2003-OP1 Class A2, | Class A3, 4.98%, 2/08/11 | USD | 20,507 | $ 20,458,282 | ||||||||||
3.567%, 12/25/33 | USD | 581 | $ 507,186 | First Franklin Mortgage Loan Asset Backed | ||||||||||
Series 2005-ASP1 Class M1, | Certificates Series 2005-FF10 Class A6, | |||||||||||||
3.887%, 9/25/35 | 11,203 | 3,607,366 | 3.557%, 11/25/35 (a) | 11,670 | 9,703,916 | |||||||||
Aegis Asset Backed Securities Trust Series | Ford Credit Auto Owner Trust Series 2006-B | |||||||||||||
2006-1 Class A1, 3.287%, 1/25/37 (a) | 247 | 238,717 | Class A4, 5.25%, 9/15/11 | 18,700 | 18,501,309 | |||||||||
American Express Issuance Trust Series 2008-2 | HSI Asset Securitization Corp. Trust Series | |||||||||||||
Class A, 4.02%, 1/18/11 | 25,950 | 25,824,431 | 2006-HE1 Class 2A1, 3.257%, 10/25/36 (a) | 13,000 | 12,347,266 | |||||||||
Banc of America Securities Auto Trust Series | Harley-Davidson Motorcycle Trust Series 2006-2 | |||||||||||||
2006-G1 Class A4, 5.17%, 12/20/10 | 29,100 | 28,698,728 | Class A2, 5.35%, 3/15/13 | 9,784 | 9,592,023 | |||||||||
Bank of America Credit Card Trust Series | Home Equity Asset Trust Series 2005-1 Class A2, | |||||||||||||
2008-A9 Class A9, 4.07%, 7/16/12 | 24,950 | 24,765,051 | 3.487%, 5/25/35 (a) | 898 | 722,644 | |||||||||
Bank One Issuance Trust Series 2002-A6 | Honda Auto Receivables Owner Trust Series | |||||||||||||
Class A, 2.678%, 6/15/12 (a) | 32,000 | 31,550,320 | 2006-3 Class A3, 5.12%, 10/15/10 | 17,506 | 17,534,199 | |||||||||
Bear Stearns Asset Backed Securities Trust (a): | IXIS Real Estate Capital Trust Series 2007-HE1 | |||||||||||||
Series 2005-4 Class A, 3.537%, 1/25/36 | 3,034 | 2,738,116 | Class A1, 3.267%, 5/25/37 (a) | 15,133 | 14,074,097 | |||||||||
Series 2005-HE10 Class A2, | ||||||||||||||
3.497%, 11/25/35 | 8,806 | 8,372,663 | Irwin Home Equity Corp. Series 2005-C | |||||||||||
Series 2005-SD1 Class 1A2, | Class 1A1, 3.467%, 4/25/30 (a) | 1,993 | 1,873,014 | |||||||||||
3.507%, 7/25/27 | 9,112 | 8,213,520 | JPMorgan Mortgage Acquisition Corp. Series | |||||||||||
Series 2006-HE8 Class 1A1, | 2006-HE3 Class A2, 2.541%, 11/25/36 (a) | 6,143 | 5,897,357 | |||||||||||
3.277%, 10/25/36 | 6,419 | 6,114,205 | Lehman XS Trust Series 2005-5N Class 3A2, | |||||||||||
Series 2006-HE10 Class 21A1, | 3.567%, 11/25/35 (a) | 12,173 | 5,323,020 | |||||||||||
3.277%, 12/25/36 | 10,069 | 9,366,986 | ||||||||||||
Long Beach Mortgage Loan Trust Series 2006-11 | ||||||||||||||
Capital Auto Receivables Asset Trust Series | Class 2A1, 3.267%, 12/25/36 (a) | 10,183 | 9,702,006 | |||||||||||
2004-2 Class D, 5.82%, 5/15/12 (b) | 4,850 | 4,760,503 | ||||||||||||
MBNA Credit Card Master Note Trust (a): | ||||||||||||||
Carrington Mortgage Loan Trust Series 2006-NC5 | Series 2002-A5 Class A5, | |||||||||||||
Class A1, 3.257%, 1/25/37 (a) | 10,789 | 10,253,376 | 2.668%, 10/17/11 | 25,945 | 25,795,622 | |||||||||
Chase Issuance Trust: | Series 2006-A4 Class A4, 2.478%, 9/15/11 | 3,650 | 3,629,828 | |||||||||||
Series 2005-A5 Class A5, | Morgan Stanley ABS Capital I (a): | |||||||||||||
2.508%, 2/15/12 (a) | 3,600 | 3,570,005 | Series 2005-HE1 Class A2MZ, | |||||||||||
Series 2006-A3 Class A3, | 3.507%, 12/25/34 | 820 | 614,855 | |||||||||||
2.478%, 7/15/11 (a) | 2,375 | 2,358,844 | Series 2007-NC1 Class A2A, | |||||||||||
Series 2007-A17 Class A, 5.12%, 10/15/14 | 25,300 | 24,678,604 | 3.257%, 11/25/36 | 9,942 | 9,445,126 | |||||||||
Series 2008-A9 Class A9, 4.26%, 5/15/13 | 26,140 | 25,470,019 | ||||||||||||
New Century Home Equity Loan Trust Series | ||||||||||||||
Chase Manhattan Auto Owner Trust Series | 2005-2 Class A2MZ, 3.467%, 6/25/35 (a) | 2,543 | 2,006,753 | |||||||||||
2005-B Class A4, 4.88%, 6/15/12 | 3,265 | 3,270,389 | ||||||||||||
Option One Mortgage Loan Trust Series 2003-4 | ||||||||||||||
Citibank Credit Card Issuance Trust Series | Class A2, 3.527%, 7/25/33 (a) | 2,898 | 2,344,392 | |||||||||||
2006-A2 Class A2, 4.85%, 2/10/11 | 2,550 | 2,552,516 | ||||||||||||
Park Place Securities, Inc. Series 2005-WCH1 (a): | ||||||||||||||
Citibank Omni Master Trust Series 2007-A9A | Class A1B, 3.507%, 1/25/35 | 786 | 747,157 | |||||||||||
Class A9, 4.288%, 12/23/13 (a) | 32,890 | 32,695,887 | Class A3D, 3.547%, 1/25/35 | 695 | 585,509 | |||||||||
Countrywide Asset Backed Certificates (a): | RAAC Series 2005-SP2 Class 2A, | |||||||||||||
Series 2003-2 Class M1, 4.479%, 6/26/33 | 1,911 | 446,059 | 3.507%, 6/25/44 (a) | 12,050 | 7,470,767 | |||||||||
Series 2003-BC3 Class A2, | ||||||||||||||
3.517%, 9/25/33 | 909 | 707,398 | Residential Asset Mortgage Products, Inc. (a): | |||||||||||
Series 2004-5 Class A, 3.657%, 10/25/34 | 1,947 | 1,778,685 | Series 2005-RS3 Class AI2, | |||||||||||
Series 2004-13 Class AF4, | 3.377%, 3/25/35 | 1,839 | 1,590,458 | |||||||||||
4.583%, 1/25/33 | 10,300 | 10,017,075 | Series 2006-RS4 Class A1, | |||||||||||
Series 2006-8 Class 2A1, 3.237%, 1/25/46 | 235 | 232,026 | 3.287%, 7/25/36 | 275 | 272,706 | |||||||||
Series 2006-21 Class 2A1, | Residential Asset Securities Corp. Series | |||||||||||||
3.257%, 5/25/37 | 12,094 | 11,605,347 | 2003-KS5 Class AIIB, 3.787%, 7/25/33 (a) | 1,257 | 1,015,373 | |||||||||
Series 2006-25 Class 2A1, | ||||||||||||||
3.277%, 6/25/37 | 16,409 | 15,743,174 | ||||||||||||
Series 2006-26 Class 2A1, | ||||||||||||||
3.287%, 6/25/37 | 8,771 | 8,387,723 | ||||||||||||
See Notes to Financial Statements. 30 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | U.S. Government Agency | Par | ||||||||||||
Asset-Backed Securities | (000) | Value | Mortgage-Backed Securities | (000) | Value | |||||||||
SLM Student Loan Trust Series 2008-5 (a): | Fannie Mae Guaranteed Pass-Through | |||||||||||||
Class A2, 3.90%, 10/25/16 | USD | 33,280 | $ 32,847,726 | Certificates: | ||||||||||
Class A3, 4.10%, 1/25/18 | 8,410 | 8,394,458 | 4.00%, 10/20/38 (e) | USD | 37,000 | $ 35,184,706 | ||||||||
Class A4, 4.50%, 7/25/23 | 22,670 | 22,479,935 | 4.558%, 1/01/35 (a) | 1,491 | 1,521,326 | |||||||||
Small Business Administration: | 5.00%, 10/15/23 – 10/15/38 (e) | 220,951 | 215,669,775 | |||||||||||
Series 2002-P10 Class 1, | 5.052%, 8/01/38 (a) | 17,758 | 17,691,874 | |||||||||||
5.199%, 8/10/12 | 179 | 177,906 | 5.18%, 8/01/38 (a) | 18,304 | 18,042,955 | |||||||||
Series 2004-P10 Class 1, | �� | 5.50%, 7/01/14 – 10/15/38 (e) | 639,690 | 638,368,032 | ||||||||||
4.504%, 2/10/14 | 755 | 719,573 | 6.00%, 1/01/21 – 10/15/38 (e) | 150,757 | 152,747,217 | |||||||||
6.28%, 8/01/11 | 1,800 | 1,852,267 | ||||||||||||
Soundview Home Equity Loan Trust (a): | 6.50%, 12/01/28 – 10/15/38 (e) | 240,012 | 246,136,989 | |||||||||||
Series 2005-OPT3 Class A4, | 7.00%, 3/01/31 – 9/01/36 | 269 | 281,438 | |||||||||||
3.507%, 11/25/35 | 24,900 | 22,682,344 | ||||||||||||
Series 2007-OPT1 Class 2A1, | Freddie Mac Mortgage Participation Certificates: | |||||||||||||
3.287%, 6/25/37 | 2,434 | 2,320,579 | 4.00%, 5/01/10 | 444 | 443,868 | |||||||||
4.931%, 7/01/38 (a) | 19,535 | 19,413,073 | ||||||||||||
Structured Asset Receivables Corp. Series | 5.00%, 10/15/23 – 10/15/38 (e) | 74,172 | 72,282,541 | |||||||||||
2003-2 Class, 3.186%, 1/21/09 (a)(h) | 242 | 238,640 | 5.298%, 7/01/38 (a) | 21,900 | 22,155,266 | |||||||||
Structured Asset Securities Corp.: | 5.306%, 8/01/38 (a) | 17,225 | 17,438,758 | |||||||||||
Series 2003-Al2 Class A, | 5.45%, 9/01/38 (a) | 11,760 | 11,763,035 | |||||||||||
3.357%, 1/25/31 (b) | 516 | 381,876 | 5.50%, 8/01/17 – 10/15/38 (e) | 203,924 | 203,320,507 | |||||||||
Series 2004-23XS Class 2A1, | 5.675%, 1/01/37 (a) | 2,193 | 2,225,855 | |||||||||||
3.507%, 1/25/35 (a) | 3,627 | 2,353,574 | 6.00%, 5/01/13 – 10/15/38 (e) | 93,549 | 94,695,441 | |||||||||
Series 2006-BC6 Class A2, | 6.50%, 6/01/31 – 12/01/34 | 963 | 993,291 | |||||||||||
3.287%, 1/25/37 (a) | 13,562 | 12,719,244 | 7.00%, 2/01/31 – 4/01/32 | 2,392 | 2,517,573 | |||||||||
Series 2007-BC1 Class A2, | Ginnie Mae MBS Certificates: | |||||||||||||
3.257%, 2/25/37 (a) | 1,882 | 1,764,820 | 3.75%, 5/20/34 (a) | 2,362 | 2,355,367 | |||||||||
USAA Auto Owner Trust Series 2006-4: | 5.00%, 3/15/17 (e) | 23,000 | 22,532,813 | |||||||||||
Class A3, 5.01%, 6/15/11 | 19,049 | 19,062,754 | 5.50%, 11/15/33 – 10/15/38 (e) | 58,762 | 58,683,258 | |||||||||
Class A4, 4.98%, 10/15/12 | 21,651 | 21,424,422 | 6.00%, 11/15/28 – 10/21/38 (e) | 90,845 | 92,076,431 | |||||||||
Total Asset-Backed Securities — 19.6% | 637,340,449 | 6.50%, 4/15/31 – 10/15/38 (e) | 129,218 | 132,141,243 | ||||||||||
7.00%, 4/15/29 – 6/15/35 | 32,454 | 34,068,305 | ||||||||||||
7.50%, 4/15/31 – 3/15/32 | 429 | 461,938 | ||||||||||||
Total U.S. Government Agency | ||||||||||||||
U.S. Government & Agency Obligations | Mortgage-Backed Securities — 65.2% | 2,117,065,142 | ||||||||||||
Fannie Mae: | ||||||||||||||
4%, 1/26/09 (c) | 3,445 | 3,453,134 | ||||||||||||
2.875%, 10/12/10 | 34,550 | 34,391,968 | U.S. Government Agency Mortgage-Backed | |||||||||||
Securities — Collateralized Mortgage Obligations | ||||||||||||||
Federal Home Loan Banks, 5.375%, 5/15/19 (c) | 36,340 | 37,697,335 | ||||||||||||
Fannie Mae Trust: | ||||||||||||||
Resolution Funding Corp. (d): | Series 360 Class 2, 5%, 8/01/35 (f) | 33,436 | 7,333,786 | |||||||||||
6.29%, 7/15/18 | 100 | 65,147 | Series 363 Class 2, 5.50%, 11/01/35 (f) | 2,427 | 532,113 | |||||||||
6.30%, 10/15/18 | 100 | 64,073 | Series 367 Class 2, 5.50%, 1/25/36 (f) | 2,755 | 604,494 | |||||||||
U.S. Treasury Bonds, 8.125%, 8/15/19 | 19,700 | 26,439,547 | Series 378 Class 4, 5%, 7/01/36 (f) | 32,597 | 6,423,183 | |||||||||
U.S. Treasury Inflation Indexed Bonds: | Series 378 Class 5, 5%, 7/01/36 (f) | 7,611 | 1,494,408 | |||||||||||
3.875%, 1/15/09 | 9,746 | 9,719,814 | Series 1999-7 Class AB, 6%, 3/25/29 | 535 | 545,924 | |||||||||
1.625%, 1/15/15 | 40,773 | 39,699,195 | Series 2003-41 Class XU, 4%, 7/25/15 | 18,444 | 18,390,521 | |||||||||
2.375%, 1/15/25 | 6,446 | 6,245,746 | Series 2004-29 Class HC, 7.50%, 7/25/30 | 1,053 | 1,100,279 | |||||||||
2%, 1/15/26 | 8,421 | 7,689,003 | Series 2004-60 Class LB, 5%, 4/25/34 | 1,845 | 1,837,245 | |||||||||
1.75%, 1/15/28 | 13,385 | 11,677,102 | Series 2005-63 Class PA, 5.50%, 10/25/24 | 11,579 | 11,657,920 | |||||||||
Series 2006-26 Class QA, 5.50%, 6/25/26 | 1,900 | 1,928,055 | ||||||||||||
U.S. Treasury Notes: | Series 2006-M2 Class A2A, | |||||||||||||
4%, 8/15/18 | 26,300 | 26,673,960 | 5.271%, 10/25/32 (a) | 4,600 | 4,566,125 | |||||||||
4.375%, 2/15/38 | 1,360 | 1,377,318 | Series 2007-22 Class PA, 5.50%, 3/25/37 | 14,408 | 14,586,189 | |||||||||
Total U.S. Government & Agency Obligations — 6.3% | 205,193,342 | Series 2007-108 Class AN, | ||||||||||||
8.92%, 11/25/37 (a) | 15,482 | 17,021,789 | ||||||||||||
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 31 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
U.S. Government Agency Mortgage-Backed | Par | Non-U.S. Government Agency | Par | |||||||||||
Securities — Collateralized Mortgage Obligations | (000) | Value | Mortgage-Backed Securities | (000) | Value | |||||||||
Freddie Mac Multiclass Certificates: | Collateralized Mortgage Obligations (continued) | |||||||||||||
Series 232 Class IO, 5%, 8/01/35 (f) | USD | 1,013 | $ 222,283 | Credit Suisse Mortgage Capital Certificate Series | ||||||||||
Series 2684 Class SP, 4.986%, 1/15/33 (f) | 3,840 | 558,349 | 2006-8 Class 3A1, 6%, 10/25/21 | USD | 6,265 | $ 4,501,066 | ||||||||
Series 2687 Class PM, 4.50%, 11/15/26 | 10,699 | 10,706,581 | First Horizon Asset Securities, Inc. Series | |||||||||||
Series 2825 Class VP, 5.50%, 6/15/15 | 1,558 | 1,589,655 | 2005-AR3 Class 3A1, 5.499%, 8/25/35 (a) | 5,029 | 4,552,962 | |||||||||
Series 3068 Class VA, 5.50%, 10/15/16 | 9,236 | 9,379,314 | GMAC 93, 7.43%, 12/01/22 | 15,719 | 16,033,312 | |||||||||
Series 3137 Class XP, 6%, 4/15/36 | 15,216 | 15,619,545 | GSR Mortgage Loan Trust Series 2005-AR4 | |||||||||||
Series 3208 Class PS, 4.586%, 8/15/36 (f) | 19,541 | 2,027,331 | Class 6A1, 5.25%, 7/25/35 (a) | 16,106 | 14,128,238 | |||||||||
Series 3210 Class PA, 6%, 3/15/29 | 11,609 | 11,843,629 | Harborview Mortgage Loan Trust (a): | |||||||||||
Series 3316 Class SB, 4.729%, 8/15/35 (f) | 3,254 | 330,461 | Series 2005-8 Class 1A2A, 3.36%, 9/19/35 | 875 | 564,206 | |||||||||
Total U.S. Government Agency | Series 2005-10 Class 2A1A, | |||||||||||||
Mortgage-Backed Securities — | 3.34%, 11/19/35 | 1,655 | 1,042,883 | |||||||||||
Collateralized Mortgage Obligations — 4.3% | 140,299,179 | Series 2006-9 Class 2A1A, | ||||||||||||
3.24%, 11/19/36 | 8,934 | 5,449,615 | ||||||||||||
Homebanc Mortgage Trust Series 2006-2 | ||||||||||||||
Class A1, 3.387%, 12/25/36 (a) | 11,195 | 7,646,104 | ||||||||||||
Non-U.S. Government Agency | Impac Secured Assets CMN Owner Trust Series | |||||||||||||
Mortgage-Backed Securities | 2004-3 (a): | |||||||||||||
Collateralized Mortgage Obligations — 21.8% | Class 1A4, 3.607%, 11/25/34 | 2,333 | 1,830,868 | |||||||||||
Banc of America Alternative Loan Trust Series | Class M1, 3.807%, 11/25/34 | 11,950 | 4,421,500 | |||||||||||
2004-7 Class 4A1, 5%, 8/25/19 | 929 | 866,709 | Indymac Index Mortgage Loan Trust Series | |||||||||||
Banc of America Funding Corp. Series 2004-3 | 2006-AR41 Class A3, 3.387%, 2/25/37 (a) | 17,605 | 9,961,909 | |||||||||||
Class 2A2, 5%, 9/25/19 | 12,636 | 11,913,449 | JPMorgan Mortgage Trust: | |||||||||||
Bear Stearns Adjustable Rate Mortgage Trust (a): | Series 2005-A5 Class TA1, | |||||||||||||
Series 2005-4 Class 3A1, 5.372%, 8/25/35 | 90,254 | 80,826,805 | 5.435%, 8/25/35 (a) | 39,582 | 33,901,328 | |||||||||
Series 2006-2 Class 2A1, 5.65%, 7/25/36 | 36,538 | 25,981,561 | Series 2006-A2 Class 4A1, | |||||||||||
BlackRock Capital Finance LP Series 1997-R2 | 3.885%, 8/25/34 (a) | 2,605 | 2,376,268 | |||||||||||
Class AP, 1.297%, 12/25/35 (a)(b)(g)(h) | 10 | 10,232 | Series 2006-S2 Class 2A2, | |||||||||||
Citigroup Mortgage Loan Trust, Inc. (a): | 5.875%, 7/25/36 | 2,965 | 2,782,799 | |||||||||||
Series 2005-4 Class A, 5.343%, 8/25/35 | 44,037 | 37,792,488 | Series 2007-S1 Class 1A2, 5.50%, 3/25/22 | 1,879 | 1,743,570 | |||||||||
Series 2007-AR4 Class 2A2A, | Luminent Mortgage Trust Series 2006-7 | |||||||||||||
5.74%, 3/25/37 | 13,314 | 10,695,434 | Class 1A1, 3.387%, 12/25/36 (a) | 24,443 | 13,688,144 | |||||||||
Citimortgage Alternative Loan Trust Series | Maryland Insurance Backed Securities Trust | |||||||||||||
2007-A8 Class A1, 6%, 10/25/37 | 25,458 | 18,839,114 | Series 2006-1A Class, 5.55%, 12/10/65 (h) | 2,500 | 1,725,000 | |||||||||
Collateralized Mortgage Obligation Trust Series 57 | Master Asset Securitization Trust Series 2003-9 | |||||||||||||
Class D, 9.90%, 2/01/19 | 20 | 21,346 | Class 1A1, 5%, 10/25/18 | 6,333 | 5,970,771 | |||||||||
Countrywide Alternative Loan Trust: | Ocwen Residential MBS Corp. Series 1998-R2 | |||||||||||||
Series 2004-18CB Class 2A5, | Class AP, 9.952%, 11/25/34 (a)(b) | 29 | 18,871 | |||||||||||
3.657%, 9/25/34 (a) | 1,216 | 1,103,196 | Opteum Mortgage Acceptance Corp. Series | |||||||||||
Series 2005-21B Class A17, 6%, 6/25/35 | 23,866 | 18,182,758 | 2006-2 Class A1A, 3.267%, 7/25/36 (a) | 1,053 | 998,660 | |||||||||
Series 2006-01A0 Class 1A1, | Residential Accredit Loans, Inc. Series 2007-Q03 | |||||||||||||
3.815%, 8/25/46 (a) | 4,036 | 2,492,671 | Class A1, 3.367%, 3/25/47 (a) | 9,595 | 5,661,117 | |||||||||
Series 2006-0A21 Class A1, | Structured Adjustable Rate Mortgage Loan Trust | |||||||||||||
3.378%, 3/20/47 (a) | 10,682 | 6,541,400 | Series 2007-3 Class 2A1, | |||||||||||
Series 2006-OC8 Class 2A1A, | 5.731%, 4/25/37 (a) | 27,250 | 21,338,846 | |||||||||||
3.297%, 11/25/36 (a) | 1,745 | 1,623,232 | Structured Asset Securities Corp. Series 2005 (a): | |||||||||||
Series 2006-OC9 Class A1, | GEL2 Class A, 3.487%, 4/25/35 | 1,509 | 1,293,608 | |||||||||||
3.282%, 9/25/35 (a) | 11,177 | 9,819,237 | OPT1 Class A4M, 3.557%, 11/25/35 | 5,877 | 5,143,140 | |||||||||
Series 2006-OC10 Class 2A1, | WaMu Mortgage Pass-Through Certificates: | |||||||||||||
3.297%, 11/25/36 (a) | 10,072 | 8,947,908 | Series 2000-1 Class B1, | |||||||||||
Series 2006-OC11 Class 2A1, | 3.747%, 1/25/40 (a)(b)(h) | 1 | 203 | |||||||||||
3.307%, 1/25/37 (a) | 15,837 | 14,388,010 | Series 2003-S8 Class A2, 5%, 9/25/18 | 12,707 | 11,980,432 | |||||||||
Countrywide Home Loan Mortgage | Series 2006-AR18 Class 1A1, | |||||||||||||
Pass-Through Trust: | 5.342%, 1/25/37 (a) | 29,239 | 23,166,636 | |||||||||||
Series 2003-J10 Class 2A1, 5%, 11/25/18 | 5,715 | 5,569,885 | Series 2007-HY3 Class 1A1, | |||||||||||
Series 2004-29 Class1A1, | 5.662%, 3/25/37 (a) | 68,091 | 52,071,883 | |||||||||||
3.477%, 2/25/35 (a) | 504 | 332,832 | Series 2007-HY3 Class 4A1, | |||||||||||
Series 2006-0A5 Class 2A1, | 5.348%, 3/25/37 (a) | 36,861 | 30,962,866 | |||||||||||
3.407%, 4/25/46 (a) | 4,941 | 2,980,838 | Series 2007-0A4 Class 1A, | |||||||||||
Series 2006-0A5 Class 3A1, | 3.625%, 5/25/47 (a) | 5,348 | 3,209,048 | |||||||||||
3.407%, 4/25/46 (a) | 9,173 | 5,595,642 | Series 2007-0A5 Class 1A, | |||||||||||
Series 2007-16 Class A1, 6.50%, 10/25/37 | 12,973 | 10,188,097 | 3.605%, 6/25/47 (a) | 9,237 | 5,706,670 |
See Notes to Financial Statements. 32 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Non-U.S. Government Agency | Par | Non-U.S. Government Agency | Par | |||||||||
Mortgage-Backed Securities | (000) | Value | Mortgage-Backed Securities | (000) | Value | |||||||
Collateralized Mortgage Obligations (concluded) | Commercial Mortgage-Backed Securities (continued) | |||||||||||
Wells Fargo Mortgage Backed Securities Trust (a): | GE Capital Commercial Mortgage Corp.: | |||||||||||
Series 2005-AR10 Class 2A2, | Series 2001-3 Class A2, 6.07%, 6/10/38 USD | 1,670 | $ 1,652,644 | |||||||||
4.17%, 6/25/35 | USD | 25,035 | $ 21,925,257 | Series 2002-1A Class A3, | ||||||||
Series 2005-AR15 Class 2A1, | 6.269%, 12/10/35 | 1,730 | 1,717,998 | |||||||||
5.11%, 9/25/35 | 38,662 | 33,319,225 | Series 2005-C4 Class A4, | |||||||||
Series 2006-AR2 Class 2A5, | 5.512%, 11/10/45 (a) | 2,900 | 2,659,946 | |||||||||
5.105%, 3/25/36 | 34,580 | 30,714,551 | GMAC Commercial Mortgage Securities, Inc.: | |||||||||
Series 2006-AR3 Class A4, | Series 1998-C2 Class D, 6.50%, 5/15/35 | 11,072 | 11,041,682 | |||||||||
5.704%, 3/25/36 | 35,611 | 28,582,313 | Series 1999-C1 Class A2, | |||||||||
Series 2006-AR4 Class 2A4, | 6.175%, 5/15/33 (a) | 9,039 | 9,015,378 | |||||||||
5.774%, 4/25/36 | 1,500 | 1,212,100 | Series 1999-C2 Class A2, 6.945%, 9/15/33 | 1,127 | 1,127,178 | |||||||
Series 2006-AR12 Class 2A1, | Series 1999-C3 Class A2, | |||||||||||
6.10%, 9/25/36 | 8,117 | 6,980,468 | 7.179%, 8/15/36 (a) | 993 | 997,003 | |||||||
Series 2006-AR15 Class A1, | Series 2000-C1 Class A2, | |||||||||||
5.660%, 10/25/36 | 7,727 | 6,371,070 | 7.724%, 3/15/33 (a) | 1,419 | 1,437,688 | |||||||
Series 2006-AR17 Class A1, | Series 2000-C2 Class A2, | |||||||||||
5.33%, 10/25/36 | 13,321 | 10,633,650 | 7.455%, 8/16/33 (a) | 1,204 | 1,222,976 | |||||||
708,324,001 | Series 2000-C2 Class A2, | |||||||||||
5.667%, 5/10/40 (a) | 2,465 | 2,349,065 | ||||||||||
Commercial Mortgage-Backed Securities — 18.4% | Series 2001-C1 Class B, | |||||||||||
Banc of America Commercial Mortgage, Inc.: | 6.67%, 4/15/34 (a) | 15,000 | 15,095,628 | |||||||||
Series 2004-7 Class 4A1, 6.503%, 4/15/36 | 1,688 | 1,694,526 | Series 2004-C3 Class AAB, | |||||||||
Series 2006-2 Class A4, 5.929%, 5/10/45 (a) | 5,460 | 4,941,085 | 4.702%, 12/10/41 | 700 | 650,402 | |||||||
Bear Stearns Commercial Mortgage Securities: | GS Mortgage Securities Corp. II: | |||||||||||
Series 1998-C1 Class A2, 6.44%, 6/16/30 | 1,095 | 1,092,372 | Series 2003-C1 Class X2, | |||||||||
Series 2000-WF2 Class A2, | 1.029%, 1/10/40 (f) | 12,429 | 137,840 | |||||||||
7.32%, 10/15/32 (a) | 1,400 | 1,421,900 | Series 2004-GG2 Class A4, | |||||||||
Series 2006-PW11 Class AJ, | 4.964%, 8/10/38 | 1,625 | 1,579,519 | |||||||||
5.623%, 3/11/39 (a)(b) | 7,100 | 5,264,796 | Series 2006-GG6 Class A2, | |||||||||
Series 2007-PW15 Class A4, | 5.506%, 4/10/38 (a) | 18,650 | 18,135,834 | |||||||||
5.331%, 2/11/44 | 20,950 | 17,561,312 | Series 2006-GG8 Class A4, | |||||||||
CS First Boston Mortgage Securities Corp.: | 5.56%, 11/10/39 | 23,675 | 20,945,246 | |||||||||
Series 1998-C2 Class A2, 6.30%, 11/15/30 | 251 | 251,285 | Greenwich Capital Commercial Funding Corp.: | |||||||||
Series 2001-CK6 Class A3, | Series 2004-GG1 Class A4, | |||||||||||
6.387%, 8/15/36 | 325 | 324,420 | 4.755%, 6/10/36 | 20,425 | 20,087,824 | |||||||
Series 2002-CKS4 Class A2, | Series 2005-GG3 Class A3, | |||||||||||
5.183%, 11/15/36 | 2,415 | 2,306,271 | 4.569%, 8/10/42 | 2,445 | 2,310,424 | |||||||
Series 2002-CP5 Class A1, | JPMorgan Chase Commercial Mortgage | |||||||||||
4.106%, 12/15/35 | 8,428 | 8,027,175 | Securities Corp.: | |||||||||
Series 2003-C3 Class A5, 3.936%, 5/15/38 | 2,320 | 2,079,108 | Series 2001-CIB2 Class A3, | |||||||||
Chase Commercial Mortgage Securities Corp.: | 6.429%, 4/15/35 | 21,558 | 21,583,471 | |||||||||
Series 1999-2 Class A2, 7.198%, 1/15/32 | 18,096 | 18,245,662 | Series 2001-CIB3 Class A3, | |||||||||
Series 2000-1 Class A2, 7.757%, 4/15/32 | 18,019 | 18,302,257 | 6.465%, 11/15/35 | 2,120 | 2,120,261 | |||||||
Citigroup Commercial Mortgage Trust Series | Series 2001-CIBC Class A3, | |||||||||||
2007-C6 Class AM, 5.889%, 12/10/49 (a) | 8,750 | 6,785,724 | 6.26%, 3/15/33 | 1,074 | 1,073,911 | |||||||
Citigroup/Deutsche Bank Commercial Mortgage | Series 2006-CB17 Class A4, | |||||||||||
Trust Series 2007-CD5 Class A4, | 5.429%, 12/12/43 | 2,720 | 2,362,549 | |||||||||
5.886%, 11/15/44 (a) | 10,075 | 8,635,909 | Series 2007-LD1 Class A2, | |||||||||
Commercial Mortgage Pass-Through | 5.992%, 6/15/49 (a) | 9,700 | 9,128,279 | |||||||||
Certificates (a): | Series 2007-LD12 Class A2, | |||||||||||
Series 2004-LB3A Class A3, 5.09%, 7/10/37 | 9,900 | 9,636,274 | 5.827%, 2/15/51 | 7,882 | 7,384,699 | |||||||
Series 2007-C9 Class A4, 6.01%, 12/10/49 | 24,360 | 20,959,675 | LB Commercial Conduit Mortgage Trust Series | |||||||||
DLJ Commercial Mortgage Corp. Series | 1999-C2 Class A2, 7.325%, 10/15/32 | 10,968 | 11,041,691 | |||||||||
2000-CKP1 Class A1B, 7.18%, 11/10/33 | 1,936 | 1,966,171 | LB-UBS Commercial Mortgage Trust: | |||||||||
First Union National Bank Commercial Mortgage: | Series 2000-C3 Class A2, | |||||||||||
Series 2000-C1 Class A2, | 7.95%, 5/15/25 (a) | 23,389 | 23,829,235 | |||||||||
7.841%, 5/17/32 | 12,406 | 12,639,138 | Series 2000-C4 Class A2, 7.37%, 8/15/26 | 1,088 | 1,106,115 | |||||||
Series 2001-C2 Class A2, | Series 2005-C2 Class AJ, | |||||||||||
6.663%, 1/12/43 | 2,141 | 2,156,578 | 5.205%, 4/15/30 (a) | 1,100 | 883,150 |
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 33 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Non-U.S. Government Agency | Par | Par | ||||||||||||
Mortgage-Backed Securities | (000) | Value | Corporate Bonds | (000) | Value | |||||||||
Commercial Mortgage-Backed Securities (concluded) | Aerospace & Defense — 0.1% | |||||||||||||
LB-UBS Commercial Mortgage Trust: (concluded): | BAE Systems Holdings, Inc., | |||||||||||||
Series 2005-C3 Class A5, | 5.20%, 8/15/15 (b) | USD | 340 | $ 317,309 | ||||||||||
4.739%, 7/15/30 | USD | 15,850 | $ 14,108,760 | L-3 Communications Corp.: | ||||||||||
Series 2006-C1 Class A4, 5.156%, 2/15/31 | 22,956 | 20,116,733 | 5.875%, 1/15/15 | 860 | 778,300 | |||||||||
Series 2006-C7 Class A2, 5.30%, 11/15/38 | 20,170 | 19,192,413 | Series B, 6.375%, 10/15/15 | 762 | 701,040 | |||||||||
Series 2007-C1 Class A4, 5.424%, 2/15/40 | 20,390 | 17,122,507 | United Technologies Corp., 2.881%, 6/01/09 (a) | 1,150 | 1,147,572 | |||||||||
Series 2007-C2 Class A3, 5.43%, 2/15/40 | 18,425 | 15,454,494 | 2,944,221 | |||||||||||
Series 2007-C7 Class A3, | ||||||||||||||
5.866%, 9/15/45 (a) | 20,314 | 17,407,524 | Airlines — 0.1% | |||||||||||
Merrill Lynch Mortgage Trust Series 2007-C1 | American Airlines, Inc. Series 2003-1, | |||||||||||||
Class AM, 6.023%, 6/12/50 (a)(g) | 1,275 | 997,363 | 3.857%, 1/09/12 | 2,134 | 1,941,960 | |||||||||
Morgan Stanley Capital I: | Continental Airlines, Inc. Series 2002-1, | |||||||||||||
Series 1999-FNV Class A2, | 6.563%, 8/15/13 | 2,555 | 2,312,275 | |||||||||||
6.53%, 3/15/31 (a) | 169 | 168,553 | 4,254,235 | |||||||||||
Series 2005-HQ5 Class A4, | Capital Markets — 3.0% | |||||||||||||
5.168%, 1/14/42 | 8,000 | 7,342,318 | The Bear Stearns Cos., Inc.: | |||||||||||
Series 2006-IQ11 Class A2, | 3.186%, 7/19/10 (a) | 4,995 | 4,894,970 | |||||||||||
5.693%, 10/15/42 (a) | 6,715 | 6,510,101 | 6.95%, 8/10/12 | 13,615 | 13,752,838 | |||||||||
Series 2006-IQ12 Class A4, | Goldman Sachs Capital II, 5.793% (a)(i) | 6,895 | 3,029,042 | |||||||||||
5.332%, 12/15/43 | 10,265 | 8,903,422 | The Goldman Sachs Group, Inc., | |||||||||||
Series 2007-HQ12 Class A2, | 5.25%, 10/15/13 | 16,810 | 14,139,681 | |||||||||||
5.811%, 4/12/49 (a) | 3,520 | 3,291,632 | Lehman Brothers Holdings, Inc. (j)(k): | |||||||||||
Series 2007-IQ15 Class AM, | 5.625%, 1/24/13 | 8,005 | 1,000,625 | |||||||||||
6.077%, 6/11/49 (a) | 1,825 | 1,431,922 | 6.75%, 12/28/17 | 7,180 | 8,975 | |||||||||
Morgan Stanley Dean Witter Capital I Series | Series I, 5.25%, 2/06/12 | 8,415 | 1,051,875 | |||||||||||
2000-LIFE Class A2, 7.57%, 11/15/36 (a) | 17,772 | 17,971,927 | Series MTN, 7%, 9/27/27 | 8,000 | 1,000,000 | |||||||||
Prudential Mortgage Capital Funding, LLC Series | Morgan Stanley, 4.57%, 1/09/12 (a) | 43,250 | 28,604,079 | |||||||||||
2001-Rock Class A2, 6.605%, 5/10/34 | 2,165 | 2,179,345 | UBS AG: | |||||||||||
Prudential Securities Secured Financing | 5.75%, 4/25/18 | 16,000 | 13,916,000 | |||||||||||
Corp. Series 2000-C1 Class A2, | Series DPNT, 5.875%, 12/20/17 | 16,715 | 14,841,633 | |||||||||||
7.727%, 5/17/32 (a) | 18,113 | 18,364,670 | ||||||||||||
Salomon Brothers Mortgage Securities VII, Inc.: | 96,239,718 | |||||||||||||
Series 1999-C1 Class A2, | Commercial Banks — 0.6% | |||||||||||||
7.15%, 5/18/32 (a) | 59 | 58,366 | Corporacion Andina de Fomento, | |||||||||||
Series 2000-C3 Class A2, | 6.875%, 3/15/12 | 5,125 | 5,347,430 | |||||||||||
6.592%, 12/18/33 | 1,629 | 1,636,787 | HSBC Bank USA NA, 4.625%, 4/01/14 | 415 | 373,214 | |||||||||
Series 2001-C2 Class A3, | Royal Bank of Scotland Group Plc, | |||||||||||||
6.499%, 10/13/11 | 5,029 | 5,039,125 | 6.99% (a)(b)(i) | 11,575 | 8,626,280 | |||||||||
WaMu Commercial Mortgage Securities Trust | SunTrust Bank Series CD, 4.415%, 6/15/09 | 430 | 432,317 | |||||||||||
Series 2005-C1A Class X, 2.10%, 5/25/36 (f) | 13,738 | 476,428 | SunTrust Banks, Inc., 4%, 10/15/08 | 325 | 324,902 | |||||||||
Wachovia Bank Commercial Mortgage Trust: | Wachovia Bank NA, 6.60%, 1/15/38 | 5,000 | 2,962,235 | |||||||||||
Series 2005-C21 Class A3, | Wells Fargo & Co.: | |||||||||||||
5.384%, 10/15/44 (a) | 9,420 | 9,204,697 | 4.625%, 8/09/10 | 255 | 253,944 | |||||||||
Series 2006-C25 Class A4, | 4.875%, 1/12/11 | 740 | 737,675 | |||||||||||
5.926%, 5/15/43 (a) | 17,875 | 16,051,107 | 19,057,997 | |||||||||||
Series 2006-C25 Class A5, | ||||||||||||||
5.926%, 5/15/43 (a) | 19,075 | 17,065,491 | Computers & Peripherals — 0.3% | |||||||||||
Series 2006-C28 Class A2, | International Business Machines Corp., | |||||||||||||
5.50%, 10/15/48 | 15,101 | 14,442,483 | 5.70%, 9/14/17 | 8,245 | 7,986,750 | |||||||||
Series 2006-C28 Class AJ, | Consumer Finance — 0.7% | |||||||||||||
5.632%, 10/15/48 (a) | 2,045 | 1,487,963 | FIA Card Services NA, 4.625%, 8/03/09 | 3,135 | 3,062,431 | |||||||||
Series 2006-C29 Class A4, | HSBC Finance Corp., 6.50%, 11/15/08 | 5,375 | 5,355,897 | |||||||||||
5.308%, 11/15/48 | 24,400 | 20,903,237 | SLM Corp.: | |||||||||||
Series 2006-C29 Class AJ, | 3%, 1/26/09 (a) | 4,475 | 4,161,925 | |||||||||||
5.368%, 11/15/48 (a) | 2,345 | 1,663,479 | 5.40%, 10/25/11 | 6,000 | 4,200,000 | |||||||||
595,562,121 | 5.125%, 8/27/12 | 1,450 | 942,500 | |||||||||||
Series A, 4%, 1/15/09 | 6,310 | 5,174,200 | ||||||||||||
Total Non-U.S. Government Agency | ||||||||||||||
Mortgage-Backed Securities — 40.2% | 1,303,886,122 | 22,896,953 | ||||||||||||
See Notes to Financial Statements. 34 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | Par | |||||||||||||
Corporate Bonds | (000) | Value | Corporate Bonds | (000) | Value | |||||||||
Diversified Financial Services — 4.3% | Electric Utilities — 0.7% | |||||||||||||
Bank of America Corp.: | Florida Power & Light Co.: | |||||||||||||
7.80%, 2/15/10 | USD | 75 | $ 73,709 | 5.625%, 4/01/34 | USD | 150 | $ 133,794 | |||||||
4.875%, 9/15/12 | 5,555 | 5,133,153 | 5.95%, 2/01/38 | 7,475 | 6,940,463 | |||||||||
7.80%, 9/15/16 | 5,000 | 4,771,450 | 6.40%, 6/15/38 | 6,650 | 6,297,084 | |||||||||
6%, 9/01/17 (c) | 2,025 | 1,746,775 | Nevada Power Co., 6.65%, 4/01/36 | 3,755 | 3,327,208 | |||||||||
5.75%, 12/01/17 | 6,485 | 5,499,202 | Sierra Pacific Power Co., 6%, 5/15/16 | 5,130 | 4,809,047 | |||||||||
Bank of America NA, 5.30%, 3/15/17 (c) | 900 | 747,629 | Southern California Edison Co. Series 08-A, | |||||||||||
Citigroup, Inc.: | 5.95%, 2/01/38 | 2,800 | 2,548,896 | |||||||||||
4.125%, 2/22/10 | 1,540 | 1,421,217 | 24,056,492 | |||||||||||
5.625%, 8/27/12 | 10,305 | 8,882,271 | ||||||||||||
5.30%, 10/17/12 | 6,400 | 5,697,434 | Energy Equipment & Services — 0.1% | |||||||||||
Ford Motor Credit Co. LLC: | Transocean, Inc.: | |||||||||||||
5.80%, 1/12/09 | 545 | 517,463 | 6%, 3/15/18 | 1,685 | 1,572,604 | |||||||||
9.75%, 9/15/10 | 2,445 | 1,753,268 | 6.80%, 3/15/38 | 1,880 | 1,724,909 | |||||||||
General Electric Capital Corp.: | 3,297,513 | |||||||||||||
5%, 11/15/11 | 18,780 | 18,173,631 | Food Products — 0.5% | |||||||||||
5.875%, 2/15/12 | 385 | 373,196 | Kraft Foods, Inc.: | |||||||||||
6.75%, 3/15/32 | 5,000 | 4,173,430 | 6.50%, 8/11/17 | 7,555 | 7,269,444 | |||||||||
6.15%, 8/07/37 | 10,470 | 8,016,251 | 6.125%, 2/01/18 | 8,350 | 7,822,088 | |||||||||
6.375%, 11/15/67 (a) | 10,075 | 8,152,408 | ||||||||||||
Series A, 5%, 12/01/10 | 43,550 | 42,070,781 | 15,091,532 | |||||||||||
Series MTN, 5%, 4/10/12 | 225 | 210,395 | Gas Utilities — 0.0% | |||||||||||
JPMorgan Chase & Co.: | El Paso Natural Gas Co.: | |||||||||||||
5.75%, 10/15/08 | 375 | 374,780 | 8.625%, 1/15/22 | 130 | 129,839 | |||||||||
7.125%, 6/15/09 | 100 | 99,817 | 8.375%, 6/15/32 | 5 | 4,790 | |||||||||
4.50%, 11/15/10 | 10 | 9,705 | 134,629 | |||||||||||
JPMorgan Chase Bank NA: | ||||||||||||||
6%, 7/05/17 | 12,725 | 11,620,686 | Health Care Providers & Services — 0.1% | |||||||||||
Series BKNT, 6%, 10/01/17 | 9,865 | 9,042,131 | UnitedHealth Group, Inc., 5.80%, 3/15/36 | 3,465 | 2,628,733 | |||||||||
WellPoint, Inc., 5.95%, 12/15/34 | 410 | 341,170 | ||||||||||||
138,560,782 | ||||||||||||||
2,969,903 | ||||||||||||||
Diversified Telecommunication Services — 1.1% | ||||||||||||||
AT&T, Inc.: | Hotels, Restaurants & Leisure — 0.2% | |||||||||||||
5.50%, 2/01/18 | 9,750 | 8,682,570 | American Real Estate Partners LP: | |||||||||||
6.50%, 9/01/37 | 17,575 | 14,950,701 | 8.125%, 6/01/12 | 75 | 63,750 | |||||||||
Cincinnati Bell, Inc., 7.25%, 7/15/13 | 200 | 180,000 | 7.125%, 2/15/13 | 1,890 | 1,445,850 | |||||||||
Citizens Communications Co., 6.25%, 1/15/13 | 235 | 220,019 | Harrah’s Operating Co., Inc., | |||||||||||
Comcast Cable Holdings LLC, 7.875%, 8/01/13 | 150 | 155,875 | 10.75%, 2/01/18 (b)(l) | 9,100 | 3,750,844 | |||||||||
GTE Corp.: | 5,260,444 | |||||||||||||
6.84%, 4/15/18 | 8,030 | 7,582,167 | Household Durables — 0.0% | |||||||||||
6.94%, 4/15/28 | 75 | 63,638 | Belvoir Land LLC Series A-1, 5.27%, 12/15/47 | 325 | 242,291 | |||||||||
Qwest Communications International, Inc., | Irwin Land LLC Series A-2, 5.40%, 12/15/47 | 600 | 451,128 | |||||||||||
7.50%, 2/15/14 | 3,180 | 2,750,700 | ||||||||||||
Qwest Corp., 6.069%, 6/15/13 (a) | 135 | 114,750 | 693,419 | |||||||||||
Telecom Italia Capital SA, 5.25%, 10/01/15 | 275 | 228,910 | Independent Power Producers | |||||||||||
Telefonica Europe BV, 7.75%, 9/15/10 | 160 | 163,354 | & Energy Traders — 0.2% | |||||||||||
Verizon Maryland, Inc. Series B, | AES Ironwood LLC, 8.875%, 11/30/25 | 85 | 85,440 | |||||||||||
5.125%, 6/15/33 | 95 | 64,272 | AES Red Oak LLC Series B, 9.20%, 11/30/29 | 50 | 48,750 | |||||||||
Verizon New Jersey, Inc., 7.85%, 11/15/29 | 35 | 31,528 | NRG Energy, Inc., 7.375%, 2/01/16 | 90 | 81,000 | |||||||||
Verizon Virginia, Inc. Series A, 4.625%, 3/15/13 | 60 | 55,219 | Texas Competitive Electric Holdings Co. LLC | |||||||||||
Wind Acquisition Finance SA, | Series B, 10.25%, 11/01/15 (b) | 7,835 | 7,071,088 | |||||||||||
10.75%, 12/01/15 (b) | 150 | 147,000 | 7,286,278 | |||||||||||
Windstream Corp.: | ||||||||||||||
8.125%, 8/01/13 | 240 | 228,000 | Insurance — 1.1% | |||||||||||
8.625%, 8/01/16 | 255 | 235,238 | American General Corp., 7.50%, 8/11/10 | 150 | 98,622 | |||||||||
American International Group, Inc.: | ||||||||||||||
35,853,941 | 6.25%, 5/01/36 | 5,255 | 2,435,819 | |||||||||||
Berkshire Hathaway Finance Corp., | ||||||||||||||
3.375%, 10/15/08 | 500 | 499,796 |
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 35 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | Par | |||||||||||||
Corporate Bonds | (000) | Value | Corporate Bonds | (000) | Value | |||||||||
Insurance (concluded) | Multi-Utilities — 0.0% | |||||||||||||
Chubb Corp., 6.375%, 3/29/67 (a) | USD | 6,825 | $ 5,204,568 | CenterPoint Energy, Inc., 7.25%, 9/01/10 | USD | 480 | $ 486,470 | |||||||
Hartford Life Global Funding Trusts, | Multiline Retail — 0.7% | |||||||||||||
2.989%, 9/15/09 (a) | 1,285 | 1,260,717 | Target Corp., 6%, 1/15/18 | 24,975 | 23,645,930 | |||||||||
Lincoln National Corp., 7%, 5/17/66 (a) | 4,185 | 3,191,422 | ||||||||||||
MetLife, Inc., 6.40%, 12/15/36 | 7,995 | 4,984,371 | Oil, Gas & Consumable Fuels — 1.2% | |||||||||||
Metropolitan Life Global Funding I, | Anadarko Petroleum Corp.: | |||||||||||||
5.125%, 4/10/13 (b) | 11,675 | 11,341,982 | 5.95%, 9/15/16 | 7,000 | 6,433,805 | |||||||||
Monument Global Funding Ltd., | 6.45%, 9/15/36 | 6,185 | 4,849,337 | |||||||||||
2.668%, 6/16/10 (a) | 2,510 | 2,489,162 | Canadian Natural Resources, Ltd., | |||||||||||
Reinsurance Group of America, | 5.90%, 2/01/18 | 2,625 | 2,310,331 | |||||||||||
6.75%, 12/15/65 (a) | 4,415 | 2,874,969 | Compton Petroleum Finance Corp., | |||||||||||
7.625%, 12/01/13 | 20 | 17,550 | ||||||||||||
34,381,428 | ConocoPhillips Australia Funding Co., | |||||||||||||
Life Sciences Tools & Services — 0.0% | 4.42%, 4/09/09 (a) | 988 | 978,333 | |||||||||||
Bio-Rad Laboratories, Inc., 6.125%, 12/15/14 | 100 | 93,000 | ConocoPhillips, 7%, 3/30/29 | 80 | 80,695 | |||||||||
Media — 1.8% | Consolidated Natural Gas Co.: | |||||||||||||
CSC Holdings, Inc. Series B: | Series A, 5%, 3/01/14 | 235 | 219,882 | |||||||||||
8.125%, 7/15/09 | 860 | 851,400 | Series C, 6.25%, 11/01/11 | 150 | 151,339 | |||||||||
8.125%, 8/15/09 | 125 | 123,750 | Devon Financing Corp. ULC, 7.875%, 9/30/31 | 3,100 | 3,147,945 | |||||||||
Cablevision Systems Corp. Series B, | Enterprise Products Operating LP, | |||||||||||||
8.334%, 4/01/09 (a) | 605 | 597,437 | 4.95%, 6/01/10 | 450 | 446,252 | |||||||||
Comcast Cable Communications Holdings, Inc., | Gazprom OAO, 7.288%, 8/16/37 (b) | 6,500 | 4,615,000 | |||||||||||
8.375%, 3/15/13 | 670 | 702,689 | MidAmerican Energy Holdings Co.: | |||||||||||
Comcast Corp.: | 5.95%, 5/15/37 | 7,100 | 5,811,847 | |||||||||||
5.90%, 3/15/16 | 425 | 389,535 | 6.50%, 9/15/37 | 5,175 | 4,540,338 | |||||||||
6.50%, 1/15/17 | 7,050 | 6,625,971 | Overseas Shipholding Group, Inc., | |||||||||||
7.05%, 3/15/33 | 155 | 139,015 | 7.50%, 2/15/24 | 115 | 101,775 | |||||||||
6.50%, 11/15/35 | 125 | 104,365 | Petrobras International Finance Co., | |||||||||||
6.45%, 3/15/37 | 7,000 | 5,645,941 | 5.875%, 3/01/18 | 3,255 | 2,958,411 | |||||||||
6.95%, 8/15/37 | 9,175 | 7,825,844 | Tennessee Gas Pipeline Co., 7%, 10/15/28 | 920 | 788,396 | |||||||||
Cox Communications, Inc., 7.125%, 10/01/12 | 3,895 | 3,968,487 | XTO Energy, Inc., 6.75%, 8/01/37 | 3,250 | 2,883,780 | |||||||||
News America, Inc.: | 40,335,016 | |||||||||||||
7.125%, 4/08/28 | 125 | 113,441 | Paper & Forest Products — 0.0% | |||||||||||
7.625%, 11/30/28 | 140 | 133,778 | Georgia-Pacific Corp., 7.125%, 1/15/17 (b) | 340 | 303,450 | |||||||||
6.40%, 12/15/35 | 5,210 | 4,376,561 | ||||||||||||
6.75%, 1/09/38 | 5,060 | 4,925,247 | Pharmaceuticals — 0.3% | |||||||||||
Shaw Communications, Inc., 7.20%, 12/15/11 | 3,135 | 3,087,975 | Bristol-Myers Squibb Co.: | |||||||||||
TCI Communications, Inc., 8.75%, 8/01/15 | 360 | 382,326 | 5.875%, 11/15/36 | 550 | 484,686 | |||||||||
Time Warner Cable, Inc., 5.85%, 5/01/17 | 9,475 | 8,347,835 | 6.875%, 8/01/97 | 75 | 68,840 | |||||||||
Time Warner Cos., Inc.: | GlaxoSmithKline Capital, Inc., 4.85%, 5/15/13 | 8,050 | 7,902,886 | |||||||||||
9.125%, 1/15/13 | 9,715 | 10,200,672 | 8,456,412 | |||||||||||
7.57%, 2/01/24 | 720 | 649,012 | Real Estate Investment Trusts (REITs) — 0.0% | |||||||||||
Time Warner Entertainment Co. LP, | AvalonBay Communities, Inc., 6.625%, 9/15/11 | 180 | 180,329 | |||||||||||
8.375%, 3/15/23 | 150 | 148,592 | Camden Property Trust, 4.70%, 7/15/09 | 380 | 372,205 | |||||||||
Time Warner, Inc., 6.75%, 4/15/11 | 200 | 199,553 | Rouse Co. LP, 3.625%, 3/15/09 | 340 | 302,600 | |||||||||
59,539,426 | 855,134 | |||||||||||||
Metals & Mining — 0.4% | Software — 0.2% | |||||||||||||
AK Steel Corp., 7.75%, 6/15/12 | 170 | 163,200 | Oracle Corp., 5.75%, 4/15/18 | 5,980 | 5,552,460 | |||||||||
Aleris International, Inc., 9%, 12/15/14 (l) | 140 | 86,800 | ||||||||||||
Arch Western Finance LLC, 6.75%, 7/01/13 | 795 | 747,300 | Wireless Telecommunication Services — 0.1% | |||||||||||
Freeport-McMoRan Copper & Gold, Inc.: | Rogers Wireless, Inc., 7.50%, 3/15/15 | 140 | 142,309 | |||||||||||
7.084%, 4/01/15 (a) | 2,310 | 2,212,726 | Sprint Nextel Corp., 6%, 12/01/16 | 375 | 288,750 | |||||||||
8.25%, 4/01/15 | 3,060 | 3,006,450 | Vodafone Group Plc: | |||||||||||
8.375%, 4/01/17 | 5,710 | 5,624,350 | 5%, 12/16/13 | 275 | 259,602 | |||||||||
Ispat Inland ULC, 9.75%, 4/01/14 | 415 | 438,690 | 5%, 9/15/15 | 55 | 48,403 | |||||||||
6.15%, 2/27/37 | 4,325 | 3,473,451 | ||||||||||||
12,279,516 | ||||||||||||||
4,212,515 | ||||||||||||||
Total Corporate Bonds — 17.8% | 576,725,564 |
See Notes to Financial Statements. 36 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | Par | |||||||||||
Foreign Government Obligations | (000) | Value | Short-Term Securties | (000) | Value | |||||||
Bundesrepublik Deutschland: | U.S. Government & Agency Obligations — 1.6% | |||||||||||
Series 05, 4%, 1/04/37 | EUR | 8,675 | $ 11,051,456 | Federal Home Loan Banks, 0.35%, | ||||||||
Series 07, 4.25%, 7/04/39 | 5,600 | 7,432,714 | 10/14/08 (m) | USD 3,500 | $ 3,499,558 | |||||||
Israel Government AID Bond: | Freddie Mac, 2.35%, 11/17/08 (m) | 47,400 | 47,257,668 | |||||||||
5.50%, 9/18/23 | USD | 850 | 920,066 | Total Short-Term Securities | ||||||||
5.50%, 4/26/24 | 625 | 677,213 | (Cost — $50,757,226) — 1.6% | 50,757,226 | ||||||||
Mexican Bonos: | ||||||||||||
Series M 10, 7.25%, 12/15/16 | MXN | 92,000 | 7,835,121 | |||||||||
Series M 20, 10%, 12/05/24 | 307,840 | 31,948,762 | ||||||||||
Mexico Government International Bond, | ||||||||||||
6.375%, 1/16/13 | USD | 2,378 | 2,444,584 | Options Purchased | Contracts(n) | |||||||
Total Foreign Government Obligations — 1.9% | 62,309,916 | Call Swaptions Purchased | ||||||||||
Receive a fixed rate of 5.36% and pay a floating | ||||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
June 2013 | 57 | 2,427,611 | ||||||||||
Receive a fixed rate of 5.47% and pay a floating | ||||||||||||
Preferred Securities | rate based on 3-month LIBOR, expiring | |||||||||||
May 2012 | 16 | 1,191,383 | ||||||||||
Capital Trusts | Receive a fixed rate of 5.525% and pay a floating | |||||||||||
Capital Markets — 0.2% | rate based on 3-month LIBOR, expiring | |||||||||||
Credit Suisse Guernsey Ltd., 5.86% (a)(i) | 8,346 | 6,318,481 | May 2012 | 174 | 13,466,020 | |||||||
Lehman Brothers Holdings Capital Trust V, | Receive a fixed rate of 5.705% and pay a floating | |||||||||||
5.857% (a)(i)(j)(k) | 1,868 | 187 | rate based on 3-month LIBOR, expiring | |||||||||
May 2012 | 52 | 4,428,604 | ||||||||||
6,318,668 | Receive a fixed rate of 5.78% and pay a floating | |||||||||||
Commercial Banks — 0.5% | rate based on 3-month LIBOR, expiring | |||||||||||
BAC Capital Trust VI, 5.625%, 3/08/35 | 3,555 | 2,713,883 | August 2010 | 126 | 11,337,535 | |||||||
BAC Capital Trust XI, 6.625%, 5/23/36 | 45 | 34,795 | 32,851,153 | |||||||||
Barclays Bank Plc (a): | ||||||||||||
7.434% (b)(i) | 200 | 162,863 | Put Swaptions Purchased | |||||||||
8.55%, 9/18/49 (b)(i) | 6,660 | 6,114,746 | Pay a fixed rate of 6.50% and receive a floating | |||||||||
Wachovia Corp. Series K, 7.98% (a)(i) | 13,987 | 5,845,727 | rate based on 3-month LIBOR, expiring | |||||||||
September 2009 | 98 | 592,432 | ||||||||||
14,872,014 | Pay a fixed rate of 6.50% and receive a floating | |||||||||||
Diversified Financial Services — 1.3% | rate based on 3-month LIBOR, expiring | |||||||||||
Bank of America Corp.: | September 2009 | 32 | 194,457 | |||||||||
Series K, 8% (a)(i) | 14,630 | 11,585,014 | Pay a fixed rate of 6.50% and received a floating | |||||||||
Series M, 8.125% (a)(i) | 7,525 | 6,079,749 | rate based on 3-month LIBOR, expiring | |||||||||
Citigroup, Inc., 8.30%, 12/21/77 (a) | 13,020 | 9,700,694 | September 2009 | 50 | 304,300 | |||||||
JPMorgan Chase & Co., 7.90% (a)(i) | 18,025 | 15,174,887 | Pay a fixed rate of 5.36% and receive a floating | |||||||||
42,540,344 | rate based on 3-month LIBOR, expiring | |||||||||||
June 2013 | 57 | 1,625,929 | ||||||||||
Insurance — 0.5% | Pay a fixed rate of 5.47% and receive a floating | |||||||||||
American International Group, Inc., 8.175%, | rate based 3-month LIBOR, expiring | |||||||||||
5/15/58 (a)(b) | 14,660 | 2,348,444 | May 2012 | 16 | 665,022 | |||||||
Lincoln National Corp., 6.05%, 4/20/67 (a) | 2,500 | 1,650,000 | Pay a fixed rate of 5.525% and receive a floating | |||||||||
Progressive Corp., 6.70%, 6/15/37 (a) | 6,460 | 5,263,375 | rate based on 3-month LIBOR, expiring | |||||||||
The Travelers Cos., Inc., 6.25%, 3/15/67 (a) | 5,715 | 4,395,601 | May 2012 | 174 | 7,051,853 | |||||||
ZFS Finance (USA) Trust V, 6.50%, 5/09/67 (a)(b) | 5,275 | 3,534,250 | Pay a fixed rate of 5.705% and receive a floating | |||||||||
17,191,670 | rate based on 3-month LIBOR, expiring | |||||||||||
Total Capital Trusts — 2.5% | 80,922,696 | May 2012 | 52 | 1,881,487 | ||||||||
Pay a fixed rate of 5.78% and receive a floating | ||||||||||||
rate based 3-month LIBOR, expiring | ||||||||||||
August 2010 | 126 | 2,708,564 | ||||||||||
Preferred Stocks | Shares | 15,024,044 | ||||||||||
Diversified Financial Services — 0.1% | Total Options Purchased | |||||||||||
Citigroup, Inc. Series AA, 8.125% | 166,500 | 2,747,250 | (Cost — $32,669,996) — 1.5% | 47,875,197 | ||||||||
Total Preferred Stocks — 0.1% | 2,747,250 | Total Investments Before TBA Sale Commitments and | ||||||||||
Options Written (Cost — $5,630,838,013*) — 161.0% | 5,225,122,083 | |||||||||||
Total Preferred Securities — 2.6% | 83,669,946 | |||||||||||
Total Long-Term Investments | ||||||||||||
(Cost — $5,547,410,791) — 157.9% | 5,126,489,660 |
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 37 |
Schedule of Investments (continued) Master Total Return Portfolio (Percentages shown are based on Net Assets) |
Par | ||||||||||||
TBA Sale Commitments | (000) | Value | Options Written | Contracts(n) | Value | |||||||
Fannie Mae Guaranteed Pass-Through | Put Swaptions Written (concluded) | |||||||||||
Certificates: | Receive a fixed rate of 4.87% and pay a floating | |||||||||||
5.50%, 7/01/14 – 10/15/38 | USD | (134,900) | $ (134,630,200) | rate based on 3-month LIBOR expiring | ||||||||
6.00%, 1/01/21 – 10/15/38 | (135,800) | (137,603,018) | February 2010 | 116 | $ (4,676,423) | |||||||
6.50%, 12/01/28 – 10/15/38 | (188,500) | (193,302,980) | Receive a fixed rate of 5.01% and pay a floating | |||||||||
Total TBA Sale Commitments | rate based on 3-month LIBOR, expiring | |||||||||||
(Proceeds Received — $ 468,811,859) — (14.3)% | (465,536,198) | November 2008 | 43 | (268,168) | ||||||||
Receive a fixed rate of 5.025% and pay a floating | ||||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
November 2010 | 30 | (1,377,900) | ||||||||||
Receive a fixed rate of 5.40% and pay a floating | ||||||||||||
Options Written | Contracts(n) | rate based on 3-month LIBOR, expiring | ||||||||||
Call Swaptions Written | December 2010 | 55 | (1,893,430) | |||||||||
Pay a fixed rate of 4.20% and receive a floating | Receive a fixed rate of 5.485% and pay a floating | |||||||||||
rate based 3-month LIBOR, expiring | rate based on 3-month LIBOR, expiring | |||||||||||
November 2008 | 78 | (695,647) | October 2009 | 5 | (96,844) | |||||||
Pay a fixed rate of 4.58% and receive a floating | Receive a fixed rate of 5.53% and pay a floating | |||||||||||
rate based on 3-month LIBOR, expiring | rate based on 3-month LIBOR, expiring | |||||||||||
May 2009 | 33 | (1,097,858) | October 2010 | 108 | (3,127,050) | |||||||
Pay a fixed rate of 4.74% and receive a floating | Receive a fixed rate of 5.67% and pay a floating | |||||||||||
rate based on 3-month LIBOR, expiring | rate based on 3-month LIBOR, expiring | |||||||||||
May 2009 | 125 | (4,968,662) | January 2010 | 4 | (62,974) | |||||||
Pay a fixed rate of 5.01% and receive a floating | (20,286,746) | |||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
November 2008 | 43 | (1,987,772) | Total Options Written | |||||||||
Pay a fixed rate of 5.025% and receive a floating | (Premiums Received — $46,237,193) — (1.5)% | (49,353,187) | ||||||||||
rate based on 3-month LIBOR, expiring | Total Investments — 145.2% | 4,710,232,698 | ||||||||||
November 2010 | 30 | (1,679,550) | Liabilities in Excess of Other Assets — (45.2%) | (1,465,283,722) | ||||||||
Pay a fixed rate of 5.40% and receive a floating | Net Assets — 100.0% | $ 3,244,948,976 | ||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
December 2010 | 55 | (3,930,135) | ||||||||||
Pay a fixed rate of 5.53% and receive a floating | * The cost and unrealized appreciation (depreciation) of investments as of | |||||||||||
rate based on 3-month LIBOR, expiring | September 30, 2008, as computed for federal income tax purposes, were | |||||||||||
October 2010 | 108 | (8,335,491) | as follows: | |||||||||
Pay a fixed rated of 4.87% and receive a floating | Aggregate cost | $ 5,635,832,202 | ||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
February 2010 | 116 | (5,627,292) | Gross unrealized appreciation | $ 23,373,816 | ||||||||
Pay a fixed rated of 5.485% and receive a floating | Gross unrealized depreciation | (434,083,935) | ||||||||||
rate based on expiring 3-month LIBOR expiring, | Net unrealized depreciation | $ (410,710,119) | ||||||||||
October 2009 | 5 | (420,136) | ||||||||||
Pay a fixed rated of 5.67% and receive a floating | (a) Variable rate security. Rate shown is as of report date. | |||||||||||
rate based on 3-month LIBOR, expiring | (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. | |||||||||||
January 2010 | 4 | (323,898) | These securities may be resold in transactions exempt from registration to quali- | |||||||||
(29,066,441) | fied institutional investors. | |||||||||||
Put Swaptions Written | (c) All or a portion of security has been pledged as collateral in connection with | |||||||||||
Receive a fixed rate of 3.10% and pay a floating | open financial futures contracts, swaps and option contracts. | |||||||||||
rate based on 3-month LIBOR, expiring | (d) Represents a zero-coupon bond. Rate shown reflects the effective yield at the | |||||||||||
October 2008 | 172 | (1,282,427) | time of purchase. | |||||||||
Receive a fixed rate of 3.30% and pay a floating | ||||||||||||
rate based on 3-month LIBOR, expiring | (e) Represents or includes a to-be-announced transaction. The Master Portfolio has | |||||||||||
October 2008 | 348 | (1,850,644) | committed to purchasing securities for which all specific information is not avail- | |||||||||
Receive a fixed rate of 4.58% and pay a floating | able at this time. | |||||||||||
rate based on 3-month LIBOR, expiring | (f) Represents the interest only portion of a mortgage-backed security and has | |||||||||||
May 2009 | 33 | (1,138,138) | either a nominal or a notional amount of principal. | |||||||||
Receive a fixed rate of 4.70% and pay a floating | ||||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
November 2008 | 78 | (963,935) | ||||||||||
Receive a fixed rate of 4.74% and pay a floating | ||||||||||||
rate based on 3-month LIBOR, expiring | ||||||||||||
May 2009 | 125 | (3,548,813) |
See Notes to Financial Statements. 38 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (continued) Master Total Return Portfolio |
(g) Investments in companies considered to be an affiliate of the Master Portfolio, | • Foreign currency exchange contracts as of September 30, 2008 were as follows: | |||||||||||||||||||||||||||
for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were | ||||||||||||||||||||||||||||
as follows: | Unrealized | |||||||||||||||||||||||||||
Currency | Currency Settlement | Appreciation | ||||||||||||||||||||||||||
Purchase | Sale | Realized | Purchased | Sold | Date | (Depreciation) | ||||||||||||||||||||||
Affiliate | Cost | Cost | Gain | Income | ||||||||||||||||||||||||
AUD | 21,138,000 | USD | 17,648,116 | 10/03/08 | $ (944,969) | |||||||||||||||||||||||
BlackRock Capital | EUR | 825,300 | USD | 1,302,147 | 10/23/08 | (137,374) | ||||||||||||||||||||||
Finance LP | EUR | 22,000,000 | USD | 31,280,700 | 10/23/08 | (231,379) | ||||||||||||||||||||||
Series 1997-R2 | EUR | 1,505,000 | USD | 2,211,688 | 10/23/08 | (87,632) | ||||||||||||||||||||||
Class AP, 1.297% | NZD | 1,251,500 | USD | 844,087 | 10/23/08 | (9,113) | ||||||||||||||||||||||
due 12/25/35 | — | $ 3,079 | $ 13 | $ 1,176 | USD | 5,362,624 | AUD | 6,400,000 | 10/03/08 | 305,374 | ||||||||||||||||||
Merrill Lynch, Mortgage | USD | 3,737,923 | AUD | 4,455,000 | 10/03/08 | 217,603 | ||||||||||||||||||||||
Trust Series | USD | 47,711,286 | EUR | 30,485,276 | 10/23/08 | 4,686,417 | ||||||||||||||||||||||
2007-C1, Class AM, | USD | 540,507 | EUR | 342,000 | 10/23/08 | 57,831 | ||||||||||||||||||||||
6.023%, 6/12/50 | — | — | — | $75,555 | USD | 8,407,606 | EUR | 5,755,000 | 10/23/08 | 285,386 | ||||||||||||||||||
USD | 22,791,745 | MXN 229,171,000 | 10/23/08 | 1,900,650 | ||||||||||||||||||||||||
(h) Security is fair valued. | ||||||||||||||||||||||||||||
(i) Security is a perpetual in nature and has no stated maturity date. | USD | 939,212 | NZD | 1,251,500 | 10/23/08 | 104,238 | ||||||||||||||||||||||
(j) Non-income producing security. | Total | $7,420,679 | ||||||||||||||||||||||||||
(k) Issuer filed for bankruptcy or is in default of interest payments. | ||||||||||||||||||||||||||||
• Swaps outstanding as of September 30, 2008 were as follows: | ||||||||||||||||||||||||||||
(l) Represents a payment-in-kind security which may pay interest/dividends in | ||||||||||||||||||||||||||||
additional par/shares. | Notional | Unrealized | ||||||||||||||||||||||||||
(m) Rate shown is the yield to maturity as of the date of purchase. | Amount | Appreciation | ||||||||||||||||||||||||||
(n) One contract represents a notional amount of $1,000,000. | (000) | (Depreciation) | ||||||||||||||||||||||||||
• For Master Portfolio compliance purposes, the Master Portfolio’s industry classifi- | Receive a fixed rate of 3.401% and pay | |||||||||||||||||||||||||||
cations refer to any one or more of the industry sub-classifications used by | 3.875% on Treasury Inflation Protected | |||||||||||||||||||||||||||
one or more widely recognized market indexes or ratings group indexes, and/or | Securities adjusted principal | |||||||||||||||||||||||||||
as defined by Master Portfolio management. This definition may not apply for | Broker, JPMorgan Chase | |||||||||||||||||||||||||||
purposes of this report, which may combine industry sub-classifications for | Expires January 2009 | USD | 19,239 | $ (674,209) | ||||||||||||||||||||||||
reporting ease. These industry classifications are unaudited. | Receive a fixed rate of 5.496% and pay a | |||||||||||||||||||||||||||
• Financial futures contracts purchased as of September 30, 2008 were | floating rate based on 3-month LIBOR | |||||||||||||||||||||||||||
as follows: | Broker, Bank of America NA | |||||||||||||||||||||||||||
Expires July 2009 | USD | 10,000 | 172,492 | |||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||
Expiration | Face | Appreciation | Receive a fixed rate of 4.05% and pay a | |||||||||||||||||||||||||
Contracts | Issue | Date | Value | (Depreciation) | floating rate based on 3-month LIBOR | |||||||||||||||||||||||
293 | Long Gilt | December | Broker, Barclays Bank PLC | |||||||||||||||||||||||||
2008 | $ 58,371,445 | $ 48,321 | Expires December 2009 | USD | 57,800 | 586,302 | ||||||||||||||||||||||
230 | Euro-Bund | December | Receive a fixed rate of 4.51% and pay a | |||||||||||||||||||||||||
Future | 2008 | $ 36,924,230 | 334,650 | floating rate based on 3-month LIBOR | ||||||||||||||||||||||||
6,056 | 5-Year U.S. | December | Broker, UBS AG | |||||||||||||||||||||||||
Treasury Bond | 2008 | $687,276,138 | (7,584,763) | Expires September 2010 | USD | 5,600 | 111,456 | |||||||||||||||||||||
3,073 | 10-Year U.S. | December | ||||||||||||||||||||||||||
Treasury Bond | 2008 | $359,903,812 | (7,661,187) | Receive a fixed rate of 5% and pay a | ||||||||||||||||||||||||
floating rate based on 3-month LIBOR | ||||||||||||||||||||||||||||
Total | $(14,862,979) | |||||||||||||||||||||||||||
Broker, Deutsche Bank AG London | ||||||||||||||||||||||||||||
Expires November 2010 | USD | 4,000 | 123,144 | |||||||||||||||||||||||||
• Financial futures contracts sold as of September 30, 2008 were as follows: | ||||||||||||||||||||||||||||
Receive a fixed rate of 5.158% and pay a | ||||||||||||||||||||||||||||
floating rate based on 3-month LIBOR | ||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||
Expiration | Face | Appreciation | Broker, Goldman Sachs Capital Markets, L | |||||||||||||||||||||||||
Contracts | Issue | Date | Value | (Depreciation) | Expires November 2010 | USD | 5,700 | 193,514 | ||||||||||||||||||||
1,295 | Euro Dollar | June | ||||||||||||||||||||||||||
Future | 2009 | $314,229,999 | $ 321,999 | |||||||||||||||||||||||||
3,839 | 2-Year U.S. | December | ||||||||||||||||||||||||||
Treasury Bond | 2008 | $815,325,978 | (4,060,585) | |||||||||||||||||||||||||
3,249 | 30-Year U.S. | December | ||||||||||||||||||||||||||
Treasury Bond | 2008 | $384,598,362 | 3,906,940 | |||||||||||||||||||||||||
Total | $ 168,354 |
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 39 |
Schedule of Investments (continued) Master Total Return Portfolio |
Swaps outstanding as of September 30, 2008 were as follows (continued): | ||||||||||||||
Notional | Unrealized | Notional | Unrealized | |||||||||||
Amount | Appreciation | Amount | Appreciation | |||||||||||
(000) | (Depreciation) | (000) | (Depreciation) | |||||||||||
Bought credit default protection on | Receive a fixed rate of 5.14% and pay a | |||||||||||||
RadioShack Corp. and pay 1.16% | floating rate based on 6-month British Pound | |||||||||||||
Broker, UBS AG | Sterling LIBOR | |||||||||||||
Expires December 2010 | USD | 7,625 | $ 31,081 | Broker, Deutsche Bank AG London | ||||||||||
Bought credit default protection on Limited | Expires April 2013 | GBP | 19,300 | $ (134,709) | ||||||||||
Brands, Inc. and pay 1.065% | Pay a fixed rate of 3.87375% and receive a | |||||||||||||
Broker, UBS AG | floating rate based on 3-month LIBOR | |||||||||||||
Expires December 2010 | USD | 7,625 | 240,943 | Broker, Bank of America N.A. | ||||||||||
Bought credit default protection on Sara Lee | Expires May 2013 | USD 125,900 | 866,502 | |||||||||||
Corp. and pay 0.604% | Receive a fixed rate of 4.32375% and pay a | |||||||||||||
Broker, JPMorgan Chase | floating rate based on 3-month LIBOR | |||||||||||||
Expires March 2011 | USD | 7,720 | (33,828) | Broker, Citibank N.A. | ||||||||||
Bought credit default protection on | Expires July 2013 | USD 106,700 | 1,142,075 | |||||||||||
Computer Sciences Corp. and pay 0.88% | Bought credit default protection on Eastman | |||||||||||||
Broker, Morgan Stanley Capital Services Inc. | Chemical Co. and pay 0.68% | |||||||||||||
Expires June 2011 | USD | 7,770 | (75,765) | Broker, Morgan Stanley Capital Services Inc. | ||||||||||
Receive a fixed rate of 4.906% and pay a | Expires September 2013 | USD | 7,800 | (37,706) | ||||||||||
floating rate based on 3-month LIBOR | Pay a fixed rate of 5.071% and receive a | |||||||||||||
Broker, UBS AG | floating rate based on 3-month LIBOR | |||||||||||||
Expires December 2011 | USD 150,000 | 5,100,976 | Broker, UBS AG | |||||||||||
Receive a fixed rate of 4.897% and pay a | Expires March 2017 | USD | 70,300 | (3,331,482) | ||||||||||
floating rate based on 3-month LIBOR | Pay a fixed rate of 5.305% and receive a | |||||||||||||
Broker, JPMorgan Chase | floating rate based on 3-month LIBOR | |||||||||||||
Expires December 2011 | USD 165,000 | 5,627,752 | Broker, Citibank N.A. | |||||||||||
Receive a fixed rate of 4.867% and pay a | Expires October 2017 | USD 154,400 | (9,875,785) | |||||||||||
floating rate based on 3-month LIBOR | Pay a fixed rate of 5.7575% and receive a | |||||||||||||
Broker, UBS AG | floating rate based on 3-month LIBOR | |||||||||||||
Expires October 2012 | USD 100,400 | 3,345,308 | Broker, Credit Suisse Securities | |||||||||||
Receive a fixed rate of 3.77375% and pay a | Expires July 2018 | USD 100,000 | (7,900,967) | |||||||||||
floating rate based on 3-month LIBOR | Pay a fixed rate of 5.46% and receive a | |||||||||||||
Broker, Bank of America NA | floating rate based on 3-month LIBOR | |||||||||||||
Expires January 2013 | USD | 85,200 | (795,946) | Broker, JPMorgan Chase | ||||||||||
Sold credit default protection on SLM Corp. | Expires August 2018 | USD | 34,400 | (1,831,959) | ||||||||||
and receive 5.00% | Pay a fixed rate of 4.205% and receive a | |||||||||||||
Broker, Barclays Bank PLC | floating rate based on 3-month LIBOR | |||||||||||||
Expires March 2013 | USD | 5,000 | (1,390,800) | Broker, Deutsche Bank AG London | ||||||||||
Expires September 2018 | USD | 35,000 | 742,142 |
See Notes to Financial Statements. 40 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Schedule of Investments (concluded) Master Total Return Portfolio |
Swaps outstanding as of September 30, 2008 were as follows (concluded): | ||||||
Notional | Unrealized | |||||
Amount | Appreciation | |||||
(000) | (Depreciation) | |||||
Pay a fixed rate of 4.65% and receive a | ||||||
floating rate based on 3-month LIBOR | ||||||
Broker, UBS AG | ||||||
Expires November 2018 | USD | 13,300 | $ (147,710) | |||
Receive a fixed rate of 5.411% and pay a | ||||||
floating rate based on 3-month LIBOR | ||||||
Broker, JPMorgan Chase | ||||||
Expires August 2022 | USD | 24,125 | 1,992,820 | |||
Receive a fixed rate of 5.411% and pay a | ||||||
floating rate based on 3-month LIBOR | ||||||
Broker, Goldman Sachs Capital Markets, L | ||||||
Expires April 2027 | USD | 1,700 | 155,668 | |||
Total | $ (5,798,691) | |||||
•Currency Abbreviations: AUD Australian Dollar GBP British Pound EUR Euro MXN Mexican Peso NZD New Zealand Dollar USD U.S. Dollar |
See Notes to Financial Statements. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
41 |
Statement of Assets and Liabilities | Master Total Return Portfolio | |
September 30, 2008 | ||
Assets | ||
Investments at value — unaffiliated (cost — $5,629,550,416) | $5,224,114,488 | |
Investments at value — affiliated (cost — $1,287,597) | 1,007,595 | |
Cash | 8,023,834 | |
Foreign currency at value (cost — $1,107,720) | 1,124,118 | |
Unrealized appreciation on swaps | 20,432,175 | |
Unrealized appreciation on foreign currency exchange contracts | 8,831,146 | |
Investments sold receivable | 1,278,188,483 | |
Interest receivable | 30,342,942 | |
Swaps receivable | 13,506,300 | |
Principal paydowns receivable | 529,548 | |
Margin variation receivable | 462,546 | |
Other assets | 9,061 | |
Prepaid expenses | 72,235 | |
Total assets | 6,586,644,471 | |
Liabilities | ||
TBA sale commitments (proceeds — $468,811,859) | 465,536,198 | |
Options written at value (premiums received — $46,237,193) | 49,353,187 | |
Unrealized depreciation on swaps | 26,230,866 | |
Unrealized depreciation on foreign currency exchange contracts | 1,410,467 | |
Cash held as collateral for swaptions | 6,500,000 | |
Investments purchased payable | 2,777,090,297 | |
Swaps payable | 11,060,813 | |
Swap premiums received | 3,125,880 | |
Other liabilities payable | 642,284 | |
Withdrawals payable from investor | 310,660 | |
Other accrued expenses payable | 219,857 | |
Investment advisory fees payable | 184,646 | |
Other affiliates payable | 28,339 | |
Officer’s and Directors’ fees payable | 2,001 | |
Total liabilities | 3,341,695,495 | |
Net Assets | $3,244,948,976 | |
Net Assets Consist of | ||
Investors’ capital | $3,663,650,242 | |
Net unrealized appreciation/depreciation | (418,701,266) | |
Net Assets | $3,244,948,976 |
See Notes to Financial Statements. 42 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Statement of Operations | Master Total Return Portfolio | |
Year Ended September 30, 2008 | ||
Investment Income | ||
Interest | $ 213,895,702 | |
Interest from affiliates | 76,731 | |
Dividends | 2,609,043 | |
Total income | 216,581,476 | |
Expenses | ||
Investment advisory | 2,447,772 | |
Accounting services�� | 700,045 | |
Custodian | 303,650 | |
Officer and Directors | 114,655 | |
Professional | 112,232 | |
Printing | 9,874 | |
Miscellaneous | 192,427 | |
Total expenses excluding interest expense | 3,880,655 | |
Interest expense | 1,933,643 | |
Total expenses | 5,814,298 | |
Less fees paid indirectly | (33,270) | |
Total expenses after fees paid indirectly | 5,781,028 | |
Net investment income | 210,800,448 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) from: | ||
Investments, including TBA sale commitments (including $13 from affiliates) | 31,478,331 | |
Futures and swaps | (41,989,651) | |
Options written | 11,784,902 | |
Foreign currency | 8,235,928 | |
9,509,510 | ||
Net change in unrealized appreciation/depreciation on: | ||
Investments | (403,033,220) | |
Futures and swaps | (16,063,420) | |
Options written | (1,939,822) | |
TBA sale commitments | 6,350,386 | |
Foreign currency | 2,693,150 | |
(411,992,926) | ||
Total realized and unrealized loss | (402,483,416) | |
Net Decrease in Net Assets Resulting from Operations | $ (191,682,968) | |
See Notes to Financial Statements. BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 43 |
Statements of Changes in Net Assets | Master Total Return Portfolio | |||
Year Ended | ||||
September 30, | ||||
Increase (Decrease) in Net Assets: | 2008 | 2007 | ||
Operations | ||||
Net investment income | $ 210,800,448 | $ 177,256,403 | ||
Net realized gain (loss) | 9,509,510 | (15,687,220) | ||
Net change in unrealized appreciation/depreciation | (411,992,926) | (10,886,334) | ||
Net increase (decrease) in net assets resulting from operations | (191,682,968) | 150,682,849 | ||
Capital Transactions | ||||
Proceeds from contributions | 808,890,417 | 1,930,068,321 | ||
Fair value of withdrawals | (1,352,430,633) | (1,002,815,645) | ||
Net increase (decrease) in net assets derived from capital transactions | (543,540,216) | 927,252,676 | ||
Net Assets | ||||
Total increase (decrease) in net assets | (735,223,184) | 1,077,935,525 | ||
Beginning of year | 3,980,172,160 | 2,902,236,635 | ||
End of year | $3,244,948,976 | $3,980,172,160 | ||
Financial Highlights | Master Total Return Portfolio | |||||||||
Period | ||||||||||
October 1, 20031 | ||||||||||
Year Ended September 30, | to September 30, | |||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||
Total Investment Return | ||||||||||
Total investment return | (5.76)% | 4.45% | 3.88% | 3.13% | 4.34%2 | |||||
Ratios to Average Net Assets | ||||||||||
Total expenses after fees paid indirectly and excluding interest expense | 0.10% | 0.10% | 0.12% | 0.10% | 0.10%3 | |||||
Total expenses after fees paid indirectly | 0.15% | 0.10% | 0.12% | 0.10% | 0.10%3 | |||||
Total expenses | 0.15% | 0.10% | 0.12% | 0.10% | 0.10%3 | |||||
Net investment income | 5.59% | 5.35% | 4.90% | 3.81% | 3.39%3 | |||||
Supplemental Data | ||||||||||
Net assets, end of period (000) | $ 3,244,949 | $ 3,980,172 | $ 2,902,237 | $ 2,871,830 | $ 2,726,752 | |||||
Portfolio turnover | 1,081%4 | 153% | 208% | 235% | 258% |
1 | Commencement of operations. |
2 | Aggregate total investment return. |
3 | Annualized. |
4 | Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%. |
See Notes to Financial Statements. |
44 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements Master Total Return Portfolio |
1. Significant Accounting Policies: Master Total Return Portfolio (the “Master Portfolio”) is a part of Master Bond LLC (the “Master LLC”) and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and is organized as a Delaware limited liability company. The Limited Liability Company Agreement permits the Directors to issue non-transferable interests in the Master LLC, subject to certain limitations. The Master Portfolio’s financial statements are prepared in conformity with accounting princi- ples generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. The following is a summary of significant accounting policies followed by the Master Portfolio: Valuation of Investments: The Master Portfolio values its corporate bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services selected under the supervision of the Master LLC’s Board of Directors (the “Board”). In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such invest- ments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments, and calculated yield measures based on valuation technology commonly employed in the market for such investments. Investments in open-end investment companies are valued at net-asset value each business day. Financial futures contracts traded on exchanges are valued at their last sale price. Swap agreements are valued by quoted fair values received daily by the pricing service or through brokers. Short-term securities are valued at amortized cost. Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used unless it is determined that such prior day’s price no longer reflects the fair value of the security. Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless its determined that such prior no longer reflects the Fair value option. Over-the-counter options are valued by an independent pricing service using a mathematical model that incorporates a number of market data factors. |
In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment, the investment will be valued by a method approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the invest- ment advisor and/or sub-advisor seeks to determine the price that the Master Portfolio might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof. Generally, trading in foreign securities is substantially completed each day at various times prior to the close of business on the New York Stock Exchange (“NYSE”). The values of such securities used in computing the net assets of the Master Portfolio’s are determined as of such times. Foreign currency exchange rates will generally be determined as of the close of business on the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of business on the NYSE that may not be reflected in the computation of the Master Portfolio’s net assets. If events (for example, a company announcement, market vola-tility or a natural disaster) occur during such periods that are expected to materially affect the value of such securities, those securities may be valued at their fair value as determined in good faith by the Board or by the investment advisor using a pricing service and/or procedures approved by the Board. Derivative Financial Instruments: The Master Portfolio may engage in various portfolio investment strategies both to increase the return of the Master Portfolio and to hedge, or protect, its exposure to interest rate movements and movements in the securities markets. Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying security, or if the counterparty does not perform under the contract. •Financial futures contracts — The Master Portfolio may purchase or sell financial futures contracts and options on such futures contracts. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Master Portfolio deposits and maintains as col- lateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Master Portfolio agrees to receive from, or pay, to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are recorded by the Master Portfolio as unrealized gains or losses. When the contract is closed, the Master Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
45 |
Notes to Financial Statements (continued) Master Total Return Portfolio
•Foreign currency exchange contracts — The Master Porfolio may enter
into foreign currency exchange contracts as a hedge against either
specific transactions or portfolio positions. Foreign currency exchange
contracts, when used by the Master Portfolio, help to manage the
overall exposure to the foreign currency backing some of the invest-
ments held by the Master Portfolio. The contract is marked-to-market
daily and the change in market value is recorded by the Master
Portfolio as an unrealized gain or loss. When the contract is closed,
the Master Portfolio records a realized gain or loss equal to the dif-
ference between the value at the time it was opened and the value
at the time it was closed.
•Foreign currency options and futures — The Master Portfolio may also
purchase or sell listed or over-the-counter foreign currency options,
foreign currency futures and related options on foreign currency
futures as a short or long hedge against possible variations in foreign
exchange rates. When foreign currency is purchased or sold through
an exercise of a foreign currency option, the related premium paid
(or received) is added to (or deducted from) the basis of the foreign
currency acquired or deducted from (or added to) the proceeds of
the foreign currency sold. Such transactions may be effected with
respect to hedges on non-US dollar denominated securities owned
by the Master Portfolio, sold by the Master Portfolio but not yet deliv-
ered, or committed or anticipated to be purchased by the Master
Portfolio.
•Options — The Master Portfolio may purchase and write call and
put options. When the Master Portfolio writes an option, an amount
equal to the premium received by the Master Portfolio is reflected
as an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value
of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold.
When an option expires (or the Master Portfolio enters into a closing
transaction), the Master Portfolio realizes a gain or loss on the option
to the extent of the premiums received or paid (or gain or loss to
the extent the cost of the closing transaction exceeds the premium
received or paid).
A call option gives the purchaser of the option the right (but not the
obligation) to buy, and obligates the seller to sell (when the option is
exercised), the underlying position at the exercise price at any time
or at a specified time during the option period. A put option gives the
holder the right to sell and obligates the writer to buy the underlying
position at the exercise price at any time or at a specified time dur-
ing the option period.
•Swaps — The Master Portfolio may enter into swap agreements con-
tracts in which the Master Portfolio and a counterparty agree to make
periodic net payments on a specified notional amount. These period-
ic payments received or made by the Master Portfolio are recorded in
the accompanying Statement of Operations as realized gains or loss-
es, respectively. Gains or losses are realized upon termination of the
swap agreements. Swaps are marked-to-market daily and changes in
value are recorded as unrealized appreciation (depreciation). When
the swap is terminated, the Master Portfolio will record a realized
gain or loss equal to the difference between the proceeds from (or
cost of) the closing transaction and the Master Portfolio’s basis in
the contract, if any.
Credit default swaps — Credit default swaps are agreements in which
one party pays fixed periodic payments to a counterparty in consider-
ation for a guarantee from the counterparty to make a specific pay-
ment should a negative credit event take place.
Interest rate swaps — Interest rate swaps are agreements in which
one party pays a floating rate of interest on a notional principal
amount and receives a fixed rate of interest on the same notional
principal amount for a specified period of time. Alternatively, a party
may pay a fixed rate and receive a floating rate. In more complex
swaps, the notional principal amount may decline (or amortize) over
time.
Total return swaps — Total return swaps are agreements in which one
party commits to pay interest in exchange for a market-linked return.
To the extent the total return of the security or index underlying the
transaction exceeds or falls short of the offsetting interest rate obli-
gation, the Master Portfolio will receive a payment from or make a
payment to the counterparty.
•Swap options — Swap options (swaptions) are similar to options on
securities except that instead of selling or purchasing the right to buy
or sell a security, the writer or purchaser of the swap option is granti-
ng or buying the right to enter into a previously agreed upon interest
rate swap agreement at any time before the expiration of the option.
Foreign Currency Transactions: Foreign currency amounts are trans-
lated into United States dollars on the following basis: (i) market value
of investment securities, assets and liabilities at the current rate of
exchange; and (ii) purchases and sales of investment securities, income
and expenses at the rates of exchange prevailing on the respective dates
of such transactions.
The Master Portfolio reports foreign currency related transactions as
components of realized gains for financial reporting purposes, whereas
such components are treated as ordinary income for federal income
tax purposes.
Asset-Backed and Mortgage-Backed Securities: The Master Portfolio
may invest in asset-backed securities. Asset-backed securities are
generally issued as pass-through certificates, which represent undivided
46 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 |
Notes to Financial Statements (continued) Master Total Return Portfolio |
fractional ownership interests in an underlying pool of assets, or as debt
instruments, which are also known as collateralized obligations, and are
generally issued as the debt of a special purpose entity organized solely
for the purpose of owning such assets and issuing such debt. Asset-
backed securities are often backed by a pool of assets representing
the obligations of a number of different parties. The yield characteristics
of certain asset-backed securities may differ from traditional debt securi-
ties. One such major difference is that all or a principal part of the
obligations may be prepaid at any time because the underlying assets
(i.e., loans) may be prepaid at any time. As a result, a decrease in inter-
est rates in the market may result in increases in the level of prepay-
ments as borrowers, particularly mortgagors, refinance and repay their
loans. An increased prepayment rate with respect to an asset-backed
security subject to such a prepayment feature will have the effect of
shortening the maturity of the security. If the Master Portfolio has pur-
chased such an asset-backed security at a premium, a faster than
anticipated prepayment rate could result in a loss of principal to the
extent of the premium paid.
The Master Portfolio may purchase in the secondary market certain
mortgage pass-through securities. There are a number of important
differences among the agencies and instrumentalities of the U.S.
Government that issue mortgage-related securities and among the
securities that they issue. For example, mortgage-related securities
guaranteed by the Government National Mortgage Association (“GNMA”)
are guaranteed as to the timely payment of principal and interest by
GNMA and such guarantee is backed by the full faith and credit of
the United States. However, mortgage-related securities issued by the
Federal National Mortgage Association (“FNMA”) include FNMA guaran-
teed Mortgage Pass-Through Certificates which are solely the obligations
of the FNMA, are not backed by or entitled to the full faith and credit of
the United States and are supported by the right of the issuer to borrow
from the Treasury.
The Master Portfolio invests a significant portion of its assets in securities
backed by commercial or residential mortgage loans or in issuers that
hold mortgage and other asset-backed securities. Please see the Schedule
of Investments for these securities. Changes in economic conditions,
including delinquencies and/or defaults on assets underlying these secu-
rities, can affect the value, income and/or liquidity of such positions.
Capital Trusts: These securities are typically issued by corporations,
generally in the form of interest-bearing notes with preferred securities
characteristics, or by an affiliated business trust of a corporation, gener-
ally in the form of beneficial interests in subordinated debentures or
similarly structured securities. The securities can be structured as either
fixed or adjustable coupon securities that can have either a perpetual or
stated maturity date. Dividends can be deferred without creating an
event of default or acceleration, although maturity cannot take place
unless all cumulative payment obligations have been met. The deferral
of payments does not affect the purchase or sale of these securities in
the open market. Payments on these securities are treated as interest
rather than dividends for Federal income tax purposes. These securities
can have a rating that is slightly below that of the issuing company’s
senior debt securities.
Mortgage Dollar Rolls: The Master Portfolio may sell mortgage-backed
securities for delivery in the current month and simultaneously contract
to repurchase substantially similar (same type, coupon and maturity)
securities on a specific future date at an agreed-upon price. The market
value of the securities that the Master Portfolio is required to purchase
may decline below the agreed upon repurchase price of those securities.
Pools of mortgages collateralizing those securities may have different
prepayment histories than those sold. During the period between the
sale and the repurchase, the Master Portfolio will not be entitled to
receive interest and principal payments on the securities sold. Proceeds
of the sale will be invested in additional instruments for the Master
Portfolio, and the income from these investments will generate income
for the Master Portfolio. If such income does not exceed the income,
capital appreciation and gain or loss that would have been realized on
the securities sold as part of the dollar roll, the use of this technique
will diminish the investment performance of the Master Portfolio com-
pared with what the performance would have been without the use of
dollar rolls.
Preferred Stock: The Master Portfolio may invest in preferred stocks.
Preferred stock has a preference over common stock in liquidation
(and generally in receiving dividends as well) but is subordinated to the
liabilities of the issuer in all respects. As a general rule, the market value
of preferred stock with a fixed dividend rate and no conversion element
varies inversely with interest rates and perceived credit risk, while the
market price of convertible preferred stock generally also reflects some
element of conversion value. Because preferred stock is junior to debt
securities and other obligations of the issuer, deterioration in the credit
quality of the issuer will cause greater changes in the value of a pre-
ferred stock than in a more senior debt security with similar stated yield
characteristics. Unlike interest payments on debt securities, preferred
stock dividends are payable only if declared by the issuer’s board of
directors. Preferred stock also may be subject to optional or mandatory
redemption provisions.
Reverse Repurchase Agreements: The Master Portfolio may enter into
reverse repurchase agreements with qualified third party broker-dealers.
Interest on the value of the reverse repurchase agreements issued
and outstanding is based upon competitive market rates at the time of
issuance. At the time the Master Portfolio enters into a reverse repur-
chase agreement, it identifies for segregation certain liquid securities
having a value not less than the repurchase price, including accrued
interest, of the reverse repurchase agreement. The Master Portfolio may
utilize reverse repurchase agreements when it is anticipated that the
interest income to be earned from the investment of the proceeds of
the transaction is greater than the interest expense of the transaction.
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
47 |
Notes to Financial Statements (continued) Master Total Return Portfolio |
TBA Commitments: The Master Portfolio may enter into to-be-announced (“TBA”) commitments to purchase or sell securities for a fixed price at a future date. TBA commitments are considered securities in themselves, and involve a risk of loss if the value of the security to be purchased or sold declines or increases prior to settlement date, which is in addition to the risk of decline in the value of the Master Portfolio’s other assets. Unsettled TBA commitments are valued at the current market value of the underlying securities, according to the procedures described under “Valuation of Investments.” Zero-Coupon Bonds: The Master Portfolio may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments. Segregation: In cases in which the 1940 Act and the interpretive posi- tions of the Securities and Exchange Commission (“SEC”) require that the Master Portfolio segregate assets in connection with certain invest- ments (e.g., reverse repurchase agreements, swaps, swaptions or futures contracts), the Master Portfolio will, consistent with certain interpretive letters issued by the SEC, designate on its books and records cash or other liquid debt securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Investment Transactions and Investment Income: Investment transac- tions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Master Portfolio has determined the ex-dividend dates. Interest income is recognized on the accrual basis. The Master Portfolio amortizes all premiums and discounts on debt securities. Income Taxes: The Master Portolio is classified as a partnership for feder- al income tax purposes. As such, each investor in the Master Portfolio is treated as owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Master Portfolio. Therefore, no federal income tax provision is required. Under the applicable foreign tax laws, a withholding tax may be imposed on the interest, dividends and capital gains at various rates. It is intended that the Master Portfolio’s assets will be managed so an investor in the Master Portfolio can satisfy the requirements of Subchapter M of the Internal Revenue Code. |
Effective March 31, 2008, the Master Portfolio 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 thresh- old a tax position must meet in connection with accounting for uncer- tainties in income tax positions taken or expected to be taken by an entity, including investment companies, before being measured and rec- ognized in the financial statements. The investment advisor has evaluated the application of FIN 48 to the Master Portfolio, and has determined that the adoption of FIN 48 did not have a material impact on the Master Portfolio’s financial statements. The Master Portfolio files U.S. federal and various state and local returns. No income tax returns are currently under examination. The statute of limitations on the Master Portfolio’s U.S. federal tax returns remains open for the years ended September 30, 2005 through September 30, 2007. The statute of limitations on the Master Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Recent Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a frame- work for measuring fair value and expands disclosures about fair value measurements. The impact on the Master Portfolio’s financial statement disclosures, if any, is currently being assessed. In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“FAS 161”), was issued. FAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of opera- tions and financial position. In September 2008, FASB Staff Position No. 133-1 and FASB Interpretation No. 45-4 (the “FSP”), “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” was issued and is effective for fiscal years and interim periods ending after November 15, 2008. The FSP amends FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” to require disclosures by sellers of credit derivatives, including credit derivatives embedded in hybrid instruments. The FSP also clarifies the effective date of FAS 161, whereby disclosures required by FAS 161 are effective for financial statements issued for fiscal years and interim periods begin- ning after November 15, 2008. The impact on the Master Portfolios’ financial statement disclosures, if any, is currently being assessed. Other: Expenses directly related to the Master Portfolio are charged to that Master Portfolio. Other operating expenses shared by several funds |
48 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Notes to Financial Statements (continued) Master Total Return Portfolio |
are pro-rated among those funds on the basis of relative net assets or other appropriate methods. 2. Investment Advisory Agreement and Other Transactions with Affiliates: The Master LLC, on behalf of the Master Portfolio, entered into an Investment Advisory Agreement with BlackRock Advisors LLC (the “Advisor”), an indirect, wholly owned subsidiary of BlackRock, Inc., to provide investment advisory and administration services. Merrill Lynch & Co., Inc. (“Merrill Lynch”) and The PNC Financial Services Group, Inc., are principal owners of BlackRock, Inc. The Advisor is responsible for the management of the Master Portfolio’s portfolio and provides the necessary personnel, facilities and equipment to provide such services to the Master Portfolio. For such services, the Master Portfolio pays a monthly fee based upon upon the aggregate average daily value of the net assets of the Master Portfolio and BlackRock High Income Fund of BlackRock Bond Fund, Inc. at an annual rate of 0.20% of the aggregate average daily net assets not exceeding $250 million; 0.15% of the aggregate average daily net assets in excess of $250 million but less than $500 milion; 0.10% of average daily net assets in excess of $500 million but less than $750 million and 0.05% of the aggregate average daily net assets in excess of $750 million. For the year ended September 30, 2008, the aggregate average daily net assets of the Master Portfolio and BlackRock High Income Fund was approximately $5,047,454,000. The Advisor has entered into a separate sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Advisor, under which the Advisor pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fee paid by the Master Portfolio to the Advisor. For the year ended September 30, 2008, the Master Portfolio reimbursed the Advisor $64,013 for certain accounting services, which are included in accounting services in the Statement of Operations. Pursuant to the terms of the custody agreement, custodian fees may be reduced by amounts calculated on uninvested cash balances, which are shown on the Statement of Operations as fees paid indirectly. Certain officers and/or directors of the Master LLC are officers and/or directors of BlackRock, Inc. or its affiliates. The Master Portfolio reimburses the Advisor for compensation paid to the Master Portfolio’s Chief Compliance Officer. 3. Investments: Purchases and sales of investments, excluding short-term securities and government securities, for the year ended September 30, 2008 were $1,369,104,786 and $1,893,085,401, respectively. |
For the year ended September 30, 2008, purchases and sales (includ- ing paydowns) of U.S. government securities were $66,159,605,396 and $66,768,457,801, respectively. Transactions in options written for the year ended September 30, 2008 were as follows: |
Premiums | ||||
Contracts† | Received | |||
Outstanding call options written, | ||||
beginning of year | 1,068 | $ 5,656,328 | ||
Options written | 1,870 | 30,974,208 | ||
Options expired | (1,516) | (7,676,752) | ||
Options exercised | (39) | (1,106,880) | ||
Options closed | (786) | (6,568,209) | ||
Outstanding call options written, end | ||||
of year | 597 | $ 21,278,695 | ||
† Some contracts represent a notional amount of $1,000,000. | ||||
Premiums | ||||
Contracts† | Received | |||
Outstanding put options written, | ||||
beginning of year | 1,068 | $ 5,640,703 | ||
Options written | 2,708 | 35,237,679 | ||
Options expired | (1,288) | (8,488,495) | ||
Options exercised | (1) | (46,280) | ||
Options closed | (1,370) | (7,385,109) | ||
Outstanding put options written, end | ||||
of year | 1,117 | $ 24,958,498 | ||
† Some contracts represent a notional amount of $1,000,000. | ||||
4. Short-Term Borrowings: |
The Master Portfolio, along with certain other funds managed by the Advisor and its affiliates, is party to a $500,000,000 credit agreement with a group of lenders, which expires November 2008 and was sub- sequently renewed. The Master Portfolio may borrow under the credit agreement to fund shareholder redemptions and for other lawful pur- poses other than for leverage. The Master Portfolio may borrow up to the maximum amount allowable under the Master Portfolio’s current prospectus and statement of additional information, subject to various other legal, regulatory or contractual limits. The Master Portfolio pays a commitment fee of 0.06% per annum based on the Master Portfolio’s pro rata share of the unused portion of the credit agreement which is included in miscellaneous in the Statement of Operations. Amounts borrowed under the credit agreement bear interest at a rate equal to, at each fund’s election, the federal funds rate plus 0.35% or a base rate as defined in the credit agreement. The Master Portfolio did not borrow under the credit agreement during the year ended September 30, 2008. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
49 |
Notes to Financial Statements (concluded) | Master Total Return Portfolio | |||
5. Reverse Repurchase Agreement: | On September 24, 2007, an investor of the Master Portfolio acquired all | |||
For the year ended September 30, 2008, the Master Portfolio’s average | of the net assets of BlackRock Total Return Portfolio of BlackRock Funds | |||
amount outstanding was approximately $69,529,000 and the daily | II, pursuant to a plan of reorganization. As a result of the reorganization, | |||
weighted average interest rate was 2.78%. | which included $2,150,618 of net unrealized depreciation, the Master | |||
Portfolio received an in-kind contribution of portfolio securities. | ||||
6. Acquisitions: | ||||
7. Subsequent Event: | ||||
On October 16, 2006, an investor of the Master Portfolio acquired all of | ||||
the net assets of BlackRock Intermediate Term Fund of BlackRock Bond | On September 15, 2008, Bank of America Corporation announced that | |||
Fund, Inc. pursuant to a plan of reorganization. As a result of the reor- | it has agreed to acquire Merrill Lynch, one of the principal owners of | |||
ganization, which included $674,588 of net unrealized depreciation, the | BlackRock, Inc. The purchase has been approved by the directors of both | |||
Master Portfolio received an in-kind contribution of portfolio securities. | companies. Subject to shareholder and regulatory approvals, the trans- | |||
action is expected to close on or before December 31, 2008. | ||||
Report of Independent Registered Public Accounting Firm | Master Total Return Portfolio |
To the Shareholders and Board of Directors of Master Bond LLC: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Master Total Return Portfolio of Master Bond LLC (the “Master LLC”), as of September 30, 2008, and the related statement of operations for the year then ended, the state- ments of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Master LLC’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assur- ance about whether the financial statements and financial highlights are free of material misstatement. The Master LLC is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Master LLC’s internal |
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by manage- ment, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of the securities owned as of September 30, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit- ing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Master Total Return Portfolio of Master Bond LLC as of September 30, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. |
Deloitte & Touche LLP Princeton, New Jersey November 26, 2008 |
50 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement |
The Board of Directors (the “Board,” the members of which are referred to as “Directors”) of BlackRock Total Return Fund (the “Portfolio”) of BlackRock Bond Fund, Inc. (the “Fund”) and of Master Total Return Portfolio (the “Master Portfolio”) of Master Bond LLC (the “Master LLC”) met in April and June 2008 to consider the approval of Master LLC’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Advisor”), the Master LLC’s investment advisor. The Portfolio is a “feeder” fund that invests all of its assets in the Master Portfolio, which has the same investment objectives and strategies as the Portfolio. All investments are made at the Master Portfolio level. The Board also considered the approval of the sub- advisory agreement (the “Subadvisory Agreement”) between the Advisor and BlackRock Financial Management, Inc. (the “Subadvisor”). The Advisor and the Subadvisor are referred to herein as “BlackRock.” For simplicity, the Portfolio, Fund, Master Portfolio and Master LLC are referred to herein as the “Fund.” The Advisory Agreement and the Subadvisory Agreement are referred to herein as the “Agreements.” Activities and Composition of the Board The Board of the Fund consists of fifteen individuals, twelve of whom are not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Directors”). The Directors are responsible for the oversight of the oper- ations of the Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Directors have retained independent legal counsel to assist them in con- nection with their duties. The Chairman of the Board is an Independent Director. The Board established four standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee and a Performance Oversight Committee, each of which is composed of, and chaired by Independent Directors. The Agreements Upon the consummation of the combination of BlackRock’s investment management business with Merrill Lynch & Co., Inc.’s investment man- agement business, including Merrill Lynch Investment Managers, L. ., and certain affiliates (the “Transaction”), the Fund entered into the Advisory Agreement with an initial two-year term and the Advisor entered into the Subadvisory Agreement with the Subadvisor with an initial two- year term. Consistent with the 1940 Act, prior to the expiration of the Agreements’ respective initial two-year term, the Board is required to consider the continuation of the Fund’s Agreements on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Fund by the personnel of BlackRock and its affiliates, including invest- ment management, administrative services, shareholder services, over- sight of fund accounting and custody, marketing services and assistance in meeting legal and regulatory requirements. The Board also received and assessed information regarding the services provided to the Fund by certain unaffiliated service providers. |
Throughout the year, the Board, acting directly and through its commit- tees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Fund’s Agreements, including the services and support provided to the Fund and its shareholders. Among the matters the Board considered were: (a) investment perform- ance for one, three and five years, as applicable, against peer funds, as well as senior management and portfolio managers’ analysis of the reasons for underperformance, if applicable; (b) fees, including advisory, administration, if applicable, and other fees paid to BlackRock and its affiliates by the Fund, such as transfer agency fees and fees for market- ing and distribution; (c) Fund operating expenses; (d) the resources devoted to and compliance reports relating to the Fund’s investment objective, policies and restrictions, (e) the Fund’s compliance with its Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting guidelines approved by the Board; (i) execution quality; (j) valuation and liquidity procedures; and (k) periodic overview of BlackRock’s business, including BlackRock’s response to the increasing scale of its business. Board Considerations in Approving the Agreements The Approval Process: At an in-person meeting held on April 10, 2008, the Board reviewed materials relating to its consideration of the Agreements. At an in-person meeting held on June 5-6, 2008, the Fund’s Board, including the Independent Directors, unanimously approved the continuation of the Advisory Agreement between the Advisor and the Fund for a one-year term ending June 30, 2009 and the Subadvisory Agreement between the Advisor and BlackRock Financial Management, Inc. for a one-year term ending June 30, 2009. In considering the approval of the Agreements, the Board received and discussed various materials provided to it in advance of the April 10, 2008 meeting. As a result of the discussions that occurred during the April 10, 2008 meeting, the Board requested and BlackRock provided additional information, as detailed below, in advance of the June 5 – 6, 2008 Board meeting. The Board considered all factors it believed relevant with respect to the Fund, including, among other factors: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Fund and BlackRock portfolio management; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and certain affiliates from the rela- tionship with the Fund; (d) economies of scale; and (e) other factors. Prior to the April 10, 2008 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in an ongoing process with BlackRock to continuously review the nature and scope of the information provided to better assist its deliberations. These materials included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses, and the investment performance of the Fund as compared with a peer group |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008 51 |
Disclosure of Investment Advisory Agreement and Subadvisory Agreement (continued) |
of funds as determined by Lipper (“Peers”); (b) information on the profitability of the Agreements to BlackRock and certain affiliates, including their other relationships with the Fund, and a discussion of fall-out benefits; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional and closed-end funds, under similar investment man- dates, as well as the performance of such other clients; (d) a report on economies of scale; (e) sales and redemption data regarding the Fund’s shares; and (f) an internal comparison of management fees classified by Lipper, if applicable. At the April 10, 2008 meeting, the Board requested and subsequently received from BlackRock (i) a comprehensive analysis of total expenses on a fund-by-fund basis; (ii) further analysis of investment performance; (iii) further data regarding Fund profitability, Fund size and Fund fee levels; and (iv) additional information on sales and redemptions. The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Fund shares, services related to the valu- ation and pricing of Fund portfolio holdings, and direct and indirect benefits to BlackRock and its affiliates from their relationship with the Fund. The Board did not identify any particular information as control- ling, and each Director may have attributed different weights to the various items considered. A. Nature, Extent and Quality of the Services: The Board, including the Independent Directors, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds as classified by Lipper and the performance of at least one relevant index or combination of indices. The Board met with BlackRock’s senior management personnel respon- sible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by the Fund’s portfolio management team discussing Fund performance and the Fund’s invest- ment objective, strategies and outlook. The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and the Fund’s portfolio management team, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also reviewed BlackRock’s compensation structure with respect to the Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent. In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Fund. BlackRock and its affiliates provide the Fund with certain |
administrative, transfer agency, shareholder and other services (in addi- tion to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In addition to investment advisory services, BlackRock and its affiliates provide the Fund with other services, including (i) preparing disclosure documents, such as the prospectus, the statement of addi- tional information and shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compli- ance support; and (vi) performing other administrative functions neces- sary for the operation of the Fund, such as tax reporting and fulfilling regulatory filing requirements. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and com- pliance departments. B. The Investment Performance of the Fund and BlackRock: The Board, including the Independent Directors, also reviewed and considered the performance history of the Fund. In preparation for the April 10, 2008 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of the Fund’s per- formance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of the Fund as compared to a representative group of similar funds as determined by Lipper and to all funds in the Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of the Fund throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years. The Fund ranked in the third quartile on a net basis against its Lipper peer universe for each of the one, three and five year periods ended December 31, 2007, respectively. In considering the Advisory Agreement, the Board expressed its concern with the Fund’s third quartile perform- ance. The Board discussed the processes and the resources dedicated to the management of the Fund with BlackRock’s senior management and will continue its ongoing dialogue with BlackRock on the Fund’s performance. C. Consideration of the Advisory Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from the Relationship with the Fund: The Board, including the Independent Directors, reviewed the Fund’s contractual advisory fee rates compared with the other funds in its Lipper category. It also compared the Fund’s total expenses to those of other comparable funds. The Board consid- ered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts. |
52 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement (concluded) |
The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it pro- vided the Fund. The Board was also provided with a profitability analy- sis that detailed the revenues earned and the expenses incurred by BlackRock and certain affiliates that provide services to the Fund. The Board reviewed BlackRock’s profitability with respect to the Fund and each fund the Board currently oversees for the year ended December 31, 2007 compared to aggregated profitability data provided for the year ended December 31, 2005. In addition, the Board considered the cost of the services provided to the Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the manage- ment of the Fund and concluded that there was a reasonable basis for the allocation. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality invest- ment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that are expected by the Board. The Board also noted that although the Fund (the Portfolio invests all of its assets into the Master Portfolio, a series of Master LLC, in a master- feeder arrangement) has contractual advisory fees higher than its Peers, the Fund paid actual advisory fees, net of fee waivers, that were lower than or equal to the median of its Peers. The Board took into account that BlackRock has contractually agreed to waive the Portfolio’s advisory fee in the amount of the Portfolio’s share of the advisory fee paid by the Master Portfolio for as long as the Portfolio invests in the Master Portfolio, thereby lowering Fund expenses. The Board also took into account that the Master Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Master Portfolio increases, thereby allowing shareholders the poten- tial to participate in economies of scale. The Board further noted that BlackRock has agreed to contractually cap the total annual operating expenses, excluding certain expenses, of one or more share classes of the Portfolio, at certain levels. The Board observed that those expense caps benefited shareholders by limiting total fees. D. Economies of Scale: The Board, including the Independent Directors, considered the extent to which economies of scale might be realized as the assets of the Fund increase and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to partici- pate in these economies of scale. The Board, including the Independent Directors, considered whether the shareholders would benefit from economies of scale and whether there was potential for future realization |
of economies with respect to the Fund. The Board considered that the funds in the BlackRock fund complex share common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as stand-alone entities. The Board also considered the anticipated efficiencies in the processes of BlackRock’s overall operations as it continues to add per- sonnel and commit capital to expand the scale of operations. The Board found, based on its review of comparable funds, that the Fund’s man- agement fee is appropriate in light of the scale of the Fund. E. Other Factors: The Board also took into account other ancillary or “fall-out” benefits that BlackRock may derive from its relationship with the Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals that manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, transfer agency and distribution serv- ices. The Board also noted that BlackRock may use third party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts. In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and trade execu- tion practices throughout the year. Conclusion The Board approved the continuation of the Advisory Agreement between the Advisor and the Fund for a one-year term ending June 30, 2009 and the Subadvisory Agreement between the Advisor and BlackRock Financial Management, Inc. for a one-year term ending June 30, 2009. Based upon their evaluation of all these factors in their totality, the Board, including the Independent Directors, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Fund and the Fund’s shareholders. In arriving at a decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together. The Independent Directors were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Fund reflect the result of several years of review by the Directors and predecessor Directors, and discussions between the Directors (and predecessor Directors) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Directors’ conclusions may be based in part on their consideration of these arrangements in prior years. |
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
53 |
Officers and Directors | ||||||||||
Number of | ||||||||||
Position(s) | BlackRock- | |||||||||
Held with | Length of | Advised Funds | ||||||||
Name, Address | Fund/ | Time Served | and Portfolios | Public | ||||||
and Year of Birth | Master LLC | as a Director2 | Principal Occupation(s) During Past 5 Years | Overseen | Directorships | |||||
Non-Interested Directors1 | ||||||||||
Robert M. Hernandez | Chairman of the | Since | Formerly Director, Vice Chairman and Chief Financial Officer of USX | 37 Funds | ACE Limited | |||||
40 East 52nd Street | Board, Director | 2007 | Corporation (energy and steel business) from 1991 to 2001. | 104 Portfolios | (insurance company); | |||||
New York, NY 10022 | and Member | Eastman Chemical | ||||||||
1944 | of the Audit | Company (chemical); | ||||||||
Committee | RTI International | |||||||||
Metals, Inc. (metals); | ||||||||||
TYCO Electronics | ||||||||||
(electronics) | ||||||||||
Fred G. Weiss | Vice Chairman | Since | Managing Director, FGW Associates (consulting and investment | 37 Funds | Watson | |||||
40 East 52nd Street | of the Board, | 2007 | company) since 1997; Director, Michael J. Fox Foundation for | 104 Portfolios | Pharmaceutical Inc. | |||||
New York, NY 10022 | Chairman of the | Parkinson’s Research since 2000; Formerly Director of BTG | ||||||||
1941 | Audit Committee | International Plc (a global technology commercialization company) | ||||||||
and Director | from 2001 to 2007. | |||||||||
James H. Bodurtha | Director | Since | Director, The China Business Group, Inc. (consulting firm) since 1996 | 37 Funds | None | |||||
40 East 52nd Street | 2002 | and formerly Executive Vice President thereof from 1996 to 2003; | 104 Portfolios | |||||||
New York, NY 10022 | Chairman of the Board, Berkshire Holding Corporation since 1980. | |||||||||
1944 | ||||||||||
Bruce R. Bond | Director | Since | Formerly Trustee and Member of the Governance Committee, State | 37 Funds | None | |||||
40 East 52nd Street | 2007 | Street Research Mutual Funds from 1997 to 2005; Formerly Board | 104 Portfolios | |||||||
New York, NY 10022 | Member of Governance, Audit and Finance Committee, Avaya Inc. | |||||||||
1946 | (computer equipment) from 2003 to 2007. | |||||||||
Donald W. Burton | Director | Since | Managing General Partner, The Burton Partnership, LP (an investment | 37 Funds | Knology, Inc. (tele- | |||||
40 East 52nd Street | 2007 | partnership) since 1979; Managing General Partner, The South Atlantic | 104 Portfolios | communications); | ||||||
New York, NY 10022 | Venture Funds since 1983; Member of the Investment Advisory Council | Capital Southwest | ||||||||
1944 | of the Florida State Board of Administration from 2001 to 2007. | (financial) | ||||||||
Honorable | Director | Since | Partner and Head of International Practice, Covington and Burling | 37 Funds | UPS Corporation | |||||
Stuart E. Eizenstat | 2007 | (law firm) since 2001; International Advisory Board Member, The Coca | 104 Portfolios | (delivery service) | ||||||
40 East 52nd Street | Cola Company since 2002; Advisory Board Member BT Americas | |||||||||
New York, NY 10022 | (telecommunications) since 2004; Member of the Board of Directors, | |||||||||
1943 | Chicago Climate Exchange (environmental) since 2006; Member of the | |||||||||
International Advisory Board GML (energy) since 2003. | ||||||||||
Kenneth A. Froot | Director | Since | Professor, Harvard University since 1992. | 37 Funds | None | |||||
40 East 52nd Street | 2005 | 104 Portfolios | ||||||||
New York, NY 10022 | ||||||||||
1957 | ||||||||||
John F. O’Brien | Director | Since | Trustee, Woods Hole Oceanographic Institute since 2003; Formerly | 37 Funds | Cabot Corporation | |||||
40 East 52nd Street | 2007 | Director, Allmerica Financial Corporation from 1995 to 2003; Formerly | 104 Portfolios | (chemicals); LKQ | ||||||
New York, NY 10022 | Director, ABIOMED from 1989 to 2006; Formerly Director, Ameresco, | Corporation (auto | ||||||||
1943 | Inc. (energy solutions company) from 2006 to 2007. | parts manufacturing); | ||||||||
TJX Companies, Inc. | ||||||||||
(retailer) | ||||||||||
Roberta Cooper Ramo | Director | Since | Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, .A. (law firm) | 37 Funds | None | |||||
40 East 52nd Street | 2002 | since 1993; Chairman of the Board, Cooper’s Inc., (retail) since 2000; | 104 Portfolios | |||||||
New York, NY 10022 | Director of ECMC Group (service provider to students, schools and | |||||||||
1942 | lenders) since 2001; President Elect, The American Law Institute, | |||||||||
(non-profit), 2007; Formerly President, American Bar Association from | ||||||||||
1995 to 1996. | ||||||||||
54 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Officers and Directors (continued) | ||||||||||
Number of | ||||||||||
Position(s) | BlackRock- | |||||||||
Held with | Length of | Advised Funds | ||||||||
Name, Address | Fund/ | Time Served | and Portfolios | Public | ||||||
and Year of Birth | Master LLC | as a Director2 | Principal Occupation(s) During Past 5 Years | Overseen | Directorships | |||||
Non-Interested Directors1 (concluded) | ||||||||||
Jean Margo Reid | Director | Since | Self-employed consultant since 2001; Director and Secretary, SCB, | 37 Funds | None | |||||
40 East 52nd Street | 2004 | Inc. (holding company) since 1998; Director and Secretary, SCB | 104 Portfolios | |||||||
New York, NY 10022 | Partners, Inc. (holding company) since 2000; Director, Covenant | |||||||||
1945 | House (non-profit) from 2001 to 2004. | |||||||||
David H. Walsh | Director | Since | Director, National Museum of Wildlife Art since 2007; Director, | 37 Funds | None | |||||
40 East 52nd Street | 2007 | Ruckleshaus Institute and Haub School of Natural Resources at the | 104 Portfolios | |||||||
New York, NY 10022 | University of Wyoming since 2006; Director, The American Museum | |||||||||
1941 | of Fly Fishing since 1997; Formerly Consultant with Putnam Investments | |||||||||
from 1993 to 2003; Formerly Director, The National Audubon Society | ||||||||||
from 1998 to 2005. | ||||||||||
Richard R. West | Director | Since | Dean Emeritus, New York University’s Leonard N. Stern School of | 37 Funds | Bowne & Co., Inc. | |||||
40 East 52nd Street | and Member | 1980 | Business Administration since 1995. | 104 Portfolios | (financial printers); | |||||
New York, NY 10022 | of the Audit | Vornado Realty Trust | ||||||||
1938 | Committee | (real estate | ||||||||
company); | ||||||||||
Alexander’s Inc. | ||||||||||
(real estate | ||||||||||
company) | ||||||||||
1 Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. | ||||||||||
2 Following the combination of Merrill Lynch Investment Managers, L (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various | ||||||||||
legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the | ||||||||||
chart shows certain directors as joining the Fund’s board in 2007, each director first became a member of the board of directors of other legacy | ||||||||||
MLIM or legacy BlackRock Funds as follows: James H. Bodurtha since 1995; Bruce R. Bond since 2005; Donald W. Burton since 2002; Stuart E. | ||||||||||
Eizenstat since 2001; Kenneth A. Froot since 2005; Robert M. Hernandez since 1996; John F. O’Brien since 2004; Roberta Cooper Ramo since | ||||||||||
2000; Jean Margo Reid since 2004; David H. Walsh since 2003; Fred G. Weiss since 1998; and Richard R. West since 1978. | ||||||||||
Interested Directors1 | ||||||||||
Richard S. Davis | Director | Since | Managing Director, BlackRock, Inc. since 2005; Formerly Chief | 184 Funds | None | |||||
40 East 52nd Street | 2007 | Executive Officer, State Street Research & Management Company | 295 Portfolios | |||||||
New York, NY 10022 | from 2000 to 2005; Formerly Chairman of the Board of Trustees, | |||||||||
1945 | State Street Research Mutual Funds from 2000 to 2005; Formerly | |||||||||
Chairman, SSR Realty from 2000 to 2004. | ||||||||||
Laurence D. Fink | Director | Since | Chairman and Chief Executive Officer of BlackRock, Inc. since its | 37 Funds | None | |||||
40 East 52nd Street | 2007 | formation in 1998 and of BlackRock, Inc.’s predecessor entities since | 104 Portfolios | |||||||
New York, NY 10022 | 1988 and Chairman of the Executive and Management Committees; | |||||||||
1952 | Formerly Managing Director, The First Boston Corporation, Member of | |||||||||
its Management Committee, Co-head of its Taxable Fixed Income | ||||||||||
Division and Head of its Mortgage and Real Estate Products Group; | ||||||||||
Chairman of the Board of several of BlackRock’s alternative investment | ||||||||||
vehicles; Director of several of BlackRock’s offshore funds; Member of | ||||||||||
the Board of Trustees of New York University, Chair of the Financial Affairs | ||||||||||
Committee and a member of the Executive Committee, the Ad Hoc | ||||||||||
Committee on Board Governance, and the Committee on Trustees; Co- | ||||||||||
Chairman of the NYU Hospitals Center Board of Trustees, Chairman of | ||||||||||
the Development/Trustee Stewardship Committee and Chairman of the | ||||||||||
Finance Committee; Trustee, The Boys’ Club of New York. | ||||||||||
Henry Gabbay | Director | Since | Consultant, BlackRock, Inc. since 2007; Formerly Managing Director, | 184 Funds | None | |||||
40 East 52nd Street | 2007 | BlackRock, Inc. from 1989 to 2007; Formerly Chief Administrative | 295 Portfolios | |||||||
New York, NY 10022 | Officer, BlackRock Advisors, LLC from 1998 to 2007; Formerly President | |||||||||
1947 | of BlackRock Funds and BlackRock Bond Allocation Target Shares from | |||||||||
2005 to 2007 and Treasurer of certain closed-end funds in the | ||||||||||
BlackRock fund complex from 1989 to 2006. |
1 Messrs. Davis and Fink are both “interested persons,” as defined in the Investment Company Act of 1940, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Mr. Gabbay is an “interested person” of the Fund due to his consulting arrangement with BlackRock, Inc. as well as his ownership of BlackRock, Inc. and PNC Securities. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. |
SEPTEMBER 30, 2008 |
55 |
Officers and Directors (concluded) | ||||||||||||
Position(s) | ||||||||||||
Held with | ||||||||||||
Name, Address | Fund/ | Length of | ||||||||||
and Year of Birth | Master LLC | Time Served | Principal Occupation(s) During Past 5 Years | |||||||||
Fund Officers1 | ||||||||||||
Donald C. Burke | Fund/Master LLC | Since | Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director of Merrill Lynch Investment | |||||||||
40 East 52nd Street | President | 2007 | Managers, L (“MLIM”) and Fund Asset Management, L (“FAM”) in 2006; First Vice President thereof from | |||||||||
New York, NY 10022 | and Chief | 1997 to 2005; Treasurer thereof from 1999 to 2006 and Vice President thereof from 1990 to 1997. | ||||||||||
1960 | Executive | |||||||||||
Officer | ||||||||||||
Anne F. Ackerley | Vice | Since | Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer of BlackRock’s U.S. Retail Group since | |||||||||
40 East 52nd Street | President | 2007 | 2006; Head of BlackRock’s Mutual Fund Group from 2000 to 2006; Merrill Lynch & Co., Inc. from 1984 to 1986 | |||||||||
New York, NY 10022 | and from 1988 to 2000, most recently as First Vice President and Operating Officer of the Mergers and | |||||||||||
1962 | Acquisitions Group. | |||||||||||
Neal J. Andrews | Chief | Since | Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice President and Line of Business Head of | |||||||||
40 East 52nd Street | Financial | 2007 | Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. (formerly PFPC Inc.) from | |||||||||
New York, NY 10022 | Officer | 1992 to 2006. | ||||||||||
1966 | ||||||||||||
Jay M. Fife | Treasurer | Since | Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Formerly Assistant Treasurer of the | |||||||||
40 East 52nd Street | 2007 | MLIM/FAM advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006. | ||||||||||
New York, NY 10022 | ||||||||||||
1970 | ||||||||||||
Brian . Kindelan | Chief | Since | Chief Compliance Officer of the BlackRock-advised Funds since 2007; Anti-Money Laundering Officer of the | |||||||||
40 East 52nd Street | Compliance | 2007 | BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005; | |||||||||
New York, NY 10022 | Officer of the | Director and Senior Counsel of BlackRock Advisors, Inc. from 2001 to 2004 and Vice President and Senior | ||||||||||
1959 | Fund/Master LLC | Counsel thereof from 1998 to 2000; Formerly Senior Counsel of The PNC Bank Corp. from 1995 to 1998. | ||||||||||
Howard B. Surloff | Secretary | Since | Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at BlackRock, Inc. since 2006; Formerly | |||||||||
40 East 52nd Street | 2007 | General Counsel (U.S.) of Goldman Sachs Asset Management, L from 1993 to 2006. | ||||||||||
New York, NY 10022 | ||||||||||||
1965 | ||||||||||||
1 Officers of the Fund/Master LLC serve at the pleasure of the Board of Directors. | ||||||||||||
Further information about the Fund’s Officers and Directors is available in the Fund’s Statement of Additional Information, which can be obtained | ||||||||||||
without charge by calling (800) 441-7762. | ||||||||||||
Custodian | Transfer Agent | Accounting Agent | Independent Registered | Legal Counsel | ||||||||
State Street Bank and | PNC Global Investment | State Street Bank and | Public Accounting Firm | Willkie Farr & Gallagher LLP | ||||||||
Trust Company | Servicing (U.S.) Inc. | Trust Company | Deloitte & Touche LLP | New York, NY 10019 | ||||||||
Boston, MA 02101 | New York, NY 10286 | Princeton, NJ 08540 | Princeton, NJ 08540 |
56 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
Additional Information BlackRock Privacy Principles BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following infor- mation 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 appli- cations, forms or other documents; (ii) information about your transac- tions 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. |
Availability of Additional Information |
Electronic copies of most financial reports and prospectuses are available on the Fund’s website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund’s electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) | Access the BlackRock website at http://www.blackrock.com/edelivery |
2) | Click on the applicable link and follow the steps to sign up |
3) | Log into your account |
Householding
The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and it is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Fund at (800) 441-7762.
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
57 |
Additional Information (concluded)
Availability of Additional Information (concluded) Availability of Proxy Voting Policies and Procedures A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling toll-free (800) 441-7762; (2) at www.blackrock.com; and (3) on the Securities and Exchange Commission’s (the “SEC”) website at http://www.sec.gov. Availability of Proxy Voting Record Information about how the Fund/Master LLC votes proxies relating to securities held in the Fund’s/Master LLC’s portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov. |
Availability of Quarterly Portfolio Schedule
The Fund/Master LLC files its complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form
N-Q. The Fund’s/Master LLC Forms N-Q are available on the SEC’s
website at http://www.sec.gov and may also be reviewed and copied at
the SEC’s Public Reference Room in Washington, D.C. Information on the
operation of the Public Reference Room may be obtained by calling
(800) SEC-0330. The Fund’s/Master LLC Forms N-Q may also be
obtained upon request and without charge by calling (800) 441-7762.
Shareholder Privileges Account Information Call us at (800) 441-7762 from 8:00 AM – 6:00 PM EST to get infor- mation about your account balances, recent transactions and share prices. You can also reach us on the Web at www.blackrock.com/funds. Automatic Investment Plans Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds. |
Systematic Withdrawal Plans Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account is at least $10,000. Retirement Plans Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans. |
58 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2008
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.
Equity Funds | ||||
BlackRock All-Cap Global Resources Portfolio | BlackRock Global Opportunities Portfolio | BlackRock Mid-Cap Value Equity Portfolio | ||
BlackRock Asset Allocation Portfolio† | BlackRock Global Resources Portfolio | BlackRock Mid Cap Value Opportunities Fund | ||
BlackRock Aurora Portfolio | BlackRock Global SmallCap Fund | BlackRock Natural Resources Trust | ||
BlackRock Balanced Capital Fund† | BlackRock Health Sciences Opportunities Portfolio* | BlackRock Pacific Fund | ||
BlackRock Basic Value Fund | BlackRock Healthcare Fund | BlackRock Science & Technology | ||
BlackRock Capital Appreciation Portfolio | BlackRock Index Equity Portfolio* | Opportunities Portfolio | ||
BlackRock Equity Dividend Fund | BlackRock International Fund | BlackRock Small Cap Core Equity Portfolio | ||
BlackRock EuroFund | BlackRock International Index Fund | BlackRock Small Cap Growth Equity Portfolio | ||
BlackRock Focus Growth Fund | BlackRock International Opportunities Portfolio | BlackRock Small Cap Growth Fund II | ||
BlackRock Focus Value Fund | BlackRock International Value Fund | BlackRock Small Cap Index Fund | ||
BlackRock Fundamental Growth Fund | BlackRock Large Cap Core Fund | BlackRock Small Cap Value Equity Portfolio* | ||
BlackRock Global Allocation Fund† | BlackRock Large Cap Core Plus Fund | BlackRock Small/Mid-Cap Growth Portfolio | ||
BlackRock Global Dynamic Equity Fund | BlackRock Large Cap Growth Fund | BlackRock S&P 500 Index Fund | ||
BlackRock Global Emerging Markets Fund | BlackRock Large Cap Value Fund | BlackRock U.S. Opportunities Portfolio | ||
BlackRock Global Financial Services Fund | BlackRock Latin America Fund | BlackRock Utilities and Telecommunications Fund | ||
BlackRock Global Growth Fund | BlackRock Mid-Cap Growth Equity Portfolio | BlackRock Value Opportunities Fund | ||
Fixed Income Funds | ||||
BlackRock Emerging Market Debt Portfolio | BlackRock Inflation Protected Bond Portfolio | BlackRock Short-Term Bond Fund | ||
BlackRock Enhanced Income Portfolio | BlackRock Intermediate Bond Portfolio II | BlackRock Strategic Income Portfolio | ||
BlackRock GNMA Portfolio | BlackRock Intermediate Government | BlackRock Total Return Fund | ||
BlackRock Government Income Portfolio | Bond Portfolio | BlackRock Total Return Portfolio II | ||
BlackRock High Income Fund | BlackRock International Bond Portfolio | BlackRock World Income Fund | ||
BlackRock High Yield Bond Portfolio | BlackRock Long Duration Bond Portfolio | |||
BlackRock Income Portfolio† | BlackRock Low Duration Bond Portfolio | |||
BlackRock Income Builder Portfolio† | BlackRock Managed Income Portfolio | |||
Municipal Bond Funds | ||||
BlackRock AMT-Free Municipal Bond Portfolio | BlackRock Intermediate Municipal Fund | BlackRock New York Municipal Bond Fund | ||
BlackRock California Insured Municipal Bond Fund | BlackRock Kentucky Municipal Bond Portfolio | BlackRock Ohio Municipal Bond Portfolio | ||
BlackRock Delaware Municipal Bond Portfolio | BlackRock Municipal Insured Fund | BlackRock Pennsylvania Municipal Bond Fund | ||
BlackRock Florida Municipal Bond Fund | BlackRock National Municipal Fund | BlackRock Short-Term Municipal Fund | ||
BlackRock High Yield Municipal Fund | BlackRock New Jersey Municipal Bond Fund | |||
Target Risk & Target Date Funds | ||||
BlackRock Prepared Portfolios | BlackRock Lifecycle Prepared Portfolios | |||
Conservative Prepared Portfolio | Prepared Portfolio 2010 | Prepared Portfolio 2030 | ||
Moderate Prepared Portfolio | Prepared Portfolio 2015 | Prepared Portfolio 2035 | ||
Growth Prepared Portfolio | Prepared Portfolio 2020 | Prepared Portfolio 2040 | ||
Aggressive Growth Prepared Portfolio | Prepared Portfolio 2025 | Prepared Portfolio 2045 | ||
Prepared Portfolio 2050 | ||||
* See the prospectus for information on specific limitations on investments in the fund. | ||||
† Mixed asset fund. |
BlackRock mutual funds are currently distributed by BlackRock Investments, Inc. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 882-0052 or from your financial advisor. The prospectus should be read carefully before investing.
BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.
SEPTEMBER 30, 2008 |
59 |
This report is not authorized for use as an offer of sale or a solici- tation of an offer to buy shares of the Fund unless accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representa- tion of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change. BlackRock Bond Fund, Inc. 100 Bellevue Parkway Wilmington, DE 19809 |
#10251-1-9/08 |
Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com. Item 3 – Audit Committee Financial Expert – The registrant’s board of directors or trustees, as applicable (the “board of directors”) has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: Ronald W. Forbes (term ended, effective November 1, 2007) Robert M. Hernandez (term began, effective November 1, 2007) Fred G. Weiss (term began, effective November 1, 2007) Richard R. West Under applicable securities laws, a person determined to be an audit committee financial expert will not deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. Item 4 – Principal Accountant Fees and Services |
(a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees3 | |||||||||||||
Current | Previous | Current | Previous | Current | Previous | Current | Previous | |||||||||
Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | Fiscal Year | |||||||||
Entity Name | End | End | End | End | End | End | End | End | ||||||||
BlackRock Total | $6,800 | $6,600 | $0 | $0 | $6,100 | $6,100 | $1,049 | $1,042 | ||||||||
Return Fund | ||||||||||||||||
Master Total Return | ||||||||||||||||
Portfolio | $48,300 | $45,500 | $0 | $0 | $9,200 | $9,200 | $0 | $0 | ||||||||
1 The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. 2 The nature of the services include tax compliance, tax advice and tax planning. 3 The nature of the services include a review of compliance procedures and attestation thereto. |
(e)(1) Audit Committee Pre-Approval Policies and Procedures: The registrant’s audit committee (the “Committee”) has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant’s affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC’s auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non- audit services provided to the registrant which have a direct impact on the operation or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 for all of the registrants the Committee oversees. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels. Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but |
permissible services). The Committee is informed of each service approved subject to general pre- approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to one or more of its members the authority to approve the provision of and fees for any specific engagement of permitted non- audit services, including services exceeding pre-approved cost levels. (e)(2) None of the services described in each of Items 4(b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not Applicable (g) Affiliates’ Aggregate Non-Audit Fees: |
Current Fiscal Year | Previous Fiscal Year | |||
Entity Name | End | End | ||
BlackRock Total Return Fund | $294,649 | $291,642 | ||
Master Total Return Portfolio | $296,700 | $293,700 | ||
(h) The registrant’s audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrant’s investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. Regulation S-X Rule 2-01(c)(7)(ii) – $287,500, 0% Item 5 – Audit Committee of Listed Registrants – Not Applicable Item 6 – Investments (a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form. (b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing. Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not Applicable Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable Item 10 – Submission of Matters to a Vote of Security Holders – The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures. Item 11 – Controls and Procedures 11(a) – The registrant’s principal executive and principal financial officers or persons performing similar functions have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under |
the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended. 11(b) – There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a- 3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. Item 12 – Exhibits attached hereto 12(a)(1) – Code of Ethics – See Item 2 12(a)(2) – Certifications – Attached hereto 12(a)(3) – Not Applicable 12(b) – Certifications – Attached hereto |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC By: /s/ Donald C. Burke Donald C. Burke Chief Executive Officer of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC Date: November 24, 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 Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC Date: November 24, 2008 By: /s/ Neal J. Andrews Neal J. Andrews Chief Financial Officer (principal financial officer) of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC Date: November 24, 2008 |