Blackrock Bond Fund N-CSR Certified annual shareholder report (management investment company)

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. and Master Total Return Portfolio of Master Bond LLC

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC, 55 East 52^nd Street, New York, NY 10055

Registrants’ telephone number, including area code: (800) 441-7762

Date of fiscal year end: 09/30/2012

Date of reporting period: 09/30/2012

Item 1 – Report to Stockholders

September 30, 2012

Annual Report

BlackRock Total Return Fund | of BlackRock Bond Fund, Inc.

Not FDIC Insured § No Bank Guarantee § May Lose Value

Table of Contents
	Page
Dear Shareholder	3
Annual Report:
Fund Summary	4
About Fund Performance	6
Disclosure of Expenses	7
The Benefits and Risks of Leveraging	8
Derivative Financial Instruments	8
Fund Financial Statements:
Statement of Assets and Liabilities	9
Statement of Operations	10
Statements of Changes in Net Assets	11
Fund Financial Highlights	12
Fund Notes to Financial Statements	21
Fund Report of Independent Registered Public Accounting Firm	25
Important Tax Information	25
Master Portfolio Information	26
Master Portfolio Financial Statements:
Consolidated Schedule of Investments	27
Consolidated Statement of Assets and Liabilities	47
Consolidated Statement of Operations	48
Statements of Changes in Net Assets	49
Master Portfolio Financial Highlights	49
Master Portfolio Notes to Consolidated Financial Statements	50
Master Portfolio Report of Independent Registered Public Accounting Firm	60
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements	61
Officers and Directors	65
Additional Information	68
A World-Class Mutual Fund Family	71

2 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Dear Shareholder

Late in the summer of 2011, financial markets were upended by sovereign debt turmoil in the United States and Europe as well as growing concerns about the future of the global economy. Investor confidence had crumbled. However, the fourth quarter of 2011 brought improving economic data and more concerted efforts among European leaders toward stemming the region’s debt crisis, gradually drawing investors back to the markets. Improving sentiment carried over into early 2012 as investors felt some relief from the world’s financial woes. Volatility abated and risk assets (including stocks, commodities and high yield bonds) moved boldly higher through the first two months of 2012, while climbing Treasury yields pressured higher-quality fixed income assets.

Markets reversed course in the spring when Europe’s debt problems boiled over once again. High levels of volatility returned as political instability in Greece threatened the country’s membership in the eurozone. Spain faced severe deficit issues while the nation’s banks clamored for liquidity. Yields on Spanish and Italian government debt rose to levels deemed unsustainable. European leaders conferred and debated vehemently over the need for fiscal integration among the 17 nations comprising the euro currency bloc as a means to resolve the crisis for the long term.

Alongside the drama in Europe, investors were discouraged by gloomy economic reports from various parts of the world. A slowdown in China, a key powerhouse for global growth, became particularly worrisome. In the United States, disappointing jobs reports dealt a crushing blow to investor sentiment. Risk assets sold off in the second quarter as investors again retreated to safe haven assets.

Despite ongoing concerns about the health of the global economy and the debt crisis in Europe, most asset classes enjoyed a robust summer rally powered mainly by expectations for policy stimulus from central banks in Europe and the United States. Although global economic data continued to be mixed, the spate of downside surprises seen in the second quarter had receded and, outside of Europe, the risk of recession largely subsided. Additionally, in response to growing debt pressures, the European Central Bank allayed investors’ fears by stating its conviction to hold the eurozone together. Early in September, the European Central Bank announced a plan to purchase sovereign debt in the eurozone’s most troubled nations. Later that month, the US Federal Reserve announced its long-awaited — and surprisingly aggressive — stimulus program, committing to purchase $40 billion of agency mortgage-backed securities per month until the US economy exhibits enough strength to sustain real growth and improving labor market conditions. These central bank actions boosted risk assets globally as investors increased their risk appetites in their search for higher returns.

All asset classes performed well for the 12-month period ended September 30, 2012, with particularly strong returns from US stocks and high yield bonds. For the six-month period ended September 30, 2012, fixed income investments outperformed equities. US Treasury bonds posted exceptional gains by historical standards and outperformed investment-grade corporate bonds and tax-exempt municipals. High yield bonds also generated solid returns. US stocks finished the six-month period with modest gains, while international and emerging market stocks lagged other asset classes amid ongoing uncertainty. Near-zero short term interest rates continued to keep yields on money market securities near their all-time lows.

The financial world is more uncertain than ever, but there are new avenues of opportunity — new ways to invest and new markets in which to invest. We believe it’s our responsibility to help investors adapt to today’s new world of investing and build the portfolios these times require. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

Rob Kapito
President, BlackRock Advisors, LLC

“The financial world is more uncertain than ever, but there are new avenues of opportunity.”

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of September 30, 2012

	6-month		12-month
US large cap equities (S&P 500® Index)	3.43	%	30.20	%
US small cap equities (Russell 2000® Index)	1.60		31.91
International equities (MSCI Europe, Australasia, Far East Index)	(0.70	)	13.75
Emerging market equities (MSCI Emerging Markets Index)	(1.84	)	16.93
3-month Treasury bill (BofA Merrill Lynch 3-Month US Treasury Bill Index)	0.06		0.07
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)	6.78		5.66
US investment grade bonds (Barclays US Aggregate Bond Index)	3.68		5.16
Tax-exempt municipal bonds (S&P Municipal Bond Index)	4.50		8.84
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)	6.40		19.35

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

THIS PAGE NOT PART OF YOUR FUND REPORT 3

Fund Summary as of September 30, 2012

Investment Objective

BlackRock Total Return Fund’s (the “Fund”) investment objective is to realize a total return that exceeds that of the Barclays US Aggregate Bond Index.

Portfolio Management Commentary

How did the Fund perform?

•	The Fund, through its investment in Master Total Return Portfolio (the “Master Portfolio”), outperformed its benchmark, the Barclays US Aggregate Bond Index, for the 12-month period ended September 30, 2012.
What factors influenced performance?
•	The Fund’s outperformance versus its benchmark index was attributable to the Master Portfolio’s diversified exposure to high-quality spread sectors, which performed well despite heightened investor anxiety during the period. Whereas the first half of the reporting period was dominated by concerns about debt problems in Europe, the latter half was dominated by uncertainty around monetary policy in both the United States and Europe. In September, accommodative policy actions from the US and European central banks alleviated anxiety and increased investors’ risk appetite, despite lackluster fundamental economic data in the United States and the continuation of severe debt problems in Europe.
•	The Fund benefited mostly from the Master Portfolio’s exposure to securitized assets, including an overweight relative to the benchmark index in commercial mortgage-backed securities (“CMBS”) and an allocation to non-agency residential mortgage-backed securities (“MBS”), which are not represented in the benchmark index. Within CMBS, the Master Portfolio favored recently issued higher-quality multi-family securities, which performed well as the underlying fundamentals continued to improve in a strong rental market. Also contributing positively to performance was the Master Portfolio’s out-of-index exposure to high yield debt, an overweight to investment grade credit and security selection within industrials. Additional positive return contributions came from active trading in agency MBS and tactical exposures to sovereign debt and credit names in Europe.
•	Slightly detracting from performance were currency hedges designed to provide the Master Portfolio with downside protection against a global economic slowdown and volatility resulting from European debt concerns.
	Describe recent portfolio activity.
•	Throughout the 12-month period, the Master Portfolio actively managed duration while maintaining a slightly short duration bias. Near the end of the period, the Master Portfolio reduced its yield curve-flattening bias, finishing the period with a neutral curve stance versus the benchmark index.
•	The Master Portfolio tactically managed its corporate credit exposure throughout the period, cautiously seeking to take advantage of relative value opportunities in industrials and financials. However, following good performance in corporate credit early in 2012, the Master Portfolio began reducing exposure to the sector toward period end while adding to its securitized credit allocation. The Master Portfolio also added a small position in Italian sovereign debt.
•	The Master Portfolio added exposure to CMBS, which continues to benefit from improving commercial real estate markets. Given a relative lack of liquidity in certain segments of the securitized market, the Master Portfolio refrained from adding to its non-agency MBS holdings and instead added exposure to the more liquid sectors such as auto loan asset-backed securities (“ABS”). The Master Portfolio reduced its agency MBS allocation while shifting its positioning within the space toward lower-coupon and call-protected issues in light of increased refinancing activity in the mortgage market.
	Describe portfolio positioning at period end.
•	As of period end, the Master Portfolio maintained a slightly more cautious stance given the likelihood of financial market volatility increasing from the recent historically low levels. Headwinds for the remainder of 2012 include uncertainty around US political elections and the “fiscal cliff” (i.e., the expiration of the Bush-era tax cuts and other provisions coupled with automatic spending cuts at the turn of the year) as well as uncertainty around bailouts for the eurozone’s most debt-laden countries; however, the US economy appears well supported by monetary policy and resilient enough to grow at a modest pace.
•	Relative to the Barclays US Aggregate Bond Index, the Master Portfolio remained generally underweight to government-related sectors in favor of non-government spread sectors. Among spread sectors, the Master Portfolio held overweight allocations to investment grade credit, CMBS and ABS and out-of-index exposures to high yield corporate credit and non-agency MBS. Within the government space, the Master Portfolio maintained an underweight in US Treasuries and agency debentures, while holding an overweight in agency MBS. The Master Portfolio ended the period with a slightly short duration versus the benchmark index.

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, 2012

Total Return Based on a $10,000 Investment

1	Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory and administration fees. Institutional Shares do not have a sales charge.
2	The Master Portfolio typically invests more than 90% of its assets in a diversified portfolio of fixed-income securities such as corporate bonds and notes, mortgage-backed securities, asset-backed securities, convertible securities, preferred securities and government obligations. Under normal circumstances, the Master Portfolio invests at least 80% of its assets in bonds and invests primarily in investment grade fixed income securities.
3	This unmanaged market-weighted index is comprised of investment grade corporate bonds (rated BBB or better), mortgages and US Treasury and government agency issues with at least one year to maturity.

Performance Summary for the Period Ended September 30, 2012

							Average Annual Total Returns4
							1 Year						5 Years						10 Years
	Standardized 30-Day Yields			6-Month Total Returns			w/o sales charge			w/sales charge			w/o sales charge			w/sales charge			w/o sales charge			w/sales charge
BlackRock		3.05	%		5.93	%		9.77	%		N/A			5.69	%		N/A			5.02	%		N/A
Institutional		3.01			5.87			9.63			N/A			5.57			N/A			4.87			N/A
Service		2.68			5.74			9.28			N/A			5.31			N/A			4.57			N/A
Investor A		2.48			5.61			9.20			4.83	%		5.22			4.37	%		4.56			4.13	%
Investor A1		2.83			5.82			9.50			8.40			5.40			5.19			4.72			4.62
Investor B		2.19			5.28			8.42			4.42			4.53			4.19			3.94			3.94
Investor B1		2.87			5.60			8.92			7.92			4.85			4.85			4.25			4.25
Investor B2		3.03			5.95			9.63			5.13			5.41			5.09			4.23			4.23
Investor C		2.00			5.38			8.63			7.63			4.60			4.60			3.86			3.86
Investor C1		2.03			5.42			8.67			7.67			4.63			4.63			3.98			3.98
Investor C2		2.34			5.56			8.91			7.91			4.81			4.81			4.23			4.23
Class R		2.41			5.48			8.94			N/A			4.98			N/A			4.31			N/A
Barclays US Aggregate Bond Index		—			3.68			5.16			N/A			6.53			N/A			5.32			N/A

4	Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees.
	N/A — Not applicable as share class and index do not have a sales charge.
	Past performance is not indicative of future results.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 5

About Fund Performance

• BlackRock Shares are not subject to any sales charge. These 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 BlackRock Total Return Portfolio (the “Predecessor Fund”) with no adjustments.

• Institutional Shares are not subject to any sales charge. These 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 the Predecessor Fund restated to reflect Institutional Share fees.

• Service Shares are not subject to any sales charge. These 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 the Predecessor Fund restated to reflect Service Share fees.

• Investor A Shares are subject to a maximum initial sales charge (front-end load) of 4.00% 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 the Predecessor Fund restated to reflect Investor A Share fees.

• Investor A1 Shares are subject to a maximum initial sales charge (front-end load) of 1.00% 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 the Predecessor Fund restated to reflect Investor A1 Share fees.

• Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.00%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.50% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately ten years. (There is no initial sales charge for automatic share conversions.) Prior to September 24, 2007, Investor B Share performance results are those of BlackRock Shares of the Predecessor Fund restated to reflect Investor B Share fees.

• Investor B1 Shares are subject to a maximum CDSC of 1.00%, declining to 0% after three years. In addition, these shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A1 Shares after approximately ten years. (There is no initial sales charge for automatic share conversions.) Prior to September 24, 2007, Investor B1 Share performance results are those of BlackRock Shares of the Predecessor Fund restated to reflect Investor B1 Share fees.

• Investor B2 Shares are subject to a maximum CDSC of 4.50%, declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately seven years. (There is no initial sales charge for automatic share conversions.) Prior to September 24, 2007, Investor B2 Share performance results are those of Investor B Shares of the Predecessor Fund with no adjustments.

• Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these 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 C Share performance results are those of Investor C Shares of the Predecessor Fund with no adjustments.

• Investor C1 Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.55% per year and a service fee of 0.25% per year. Prior to September 24, 2007, Investor C1 Share performance results are those of BlackRock Shares of the Predecessor Fund restated to reflect Investor C1 Share fees.

• Investor C2 Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these 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 C2 Share performance results are those of BlackRock Shares of the Predecessor Fund restated to reflect Investor C2 Share fees.

• Class R Shares are not subject to any 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 and other similar plans. Prior to October 2, 2006, Class R Share performance results are those of the Class R Shares of the 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.

Investor A1, B, B1, B2, C1, and C2 Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans.

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month end. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Figures shown in the performance table on the previous page assume reinvestment of all dividends and distributions, if any, at net asset value (“NAV”) 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.

The Fund’s investment advisor, BlackRock Advisors, LLC (the “Manager”), waived and/or reimbursed a portion of the Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s performance would have been lower. The Manager is under no obligation to waive or reimburse or to continue waiving or reimbursing its fees after the applicable termination date. See Note 2 of the Notes to Financial Statements for additional information on waivers and reimbursements. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

6 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense example shown below (which is based on a hypothetical investment of $1,000 invested on April 1, 2012 and held through September 30, 2012) 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 expense example 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 expense example 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 the 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 expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges or exchange fees, if any. Therefore, the hypothetical 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 Account Value April 1, 2012		Ending Account Value September 30, 2012		Expenses Paid During the Period1		Beginning Account Value April 1, 2012		Ending Account Value September 30, 2012		Expenses Paid During the Period1		Annualized Expense Ratio
BlackRock	$	1,000.00	$	1,059.30	$	2.06	$	1,000.00		1,023.00		2.02		0.40	%
Institutional	$	1,000.00	$	1,058.70	$	2.57	$	1,000.00		1,022.50		2.53		0.50	%
Service	$	1,000.00	$	1,057.40	$	4.06	$	1,000.00		1,021.10		3.99		0.79	%
Investor A	$	1,000.00	$	1,056.10	$	4.42	$	1,000.00		1,020.70		4.34		0.86	%
Investor A1	$	1,000.00	$	1,057.30	$	3.24	$	1,000.00		1,021.90		3.18		0.63	%
Investor B	$	1,000.00	$	1,052.80	$	7.49	$	1,000.00		1,017.70		7.36		1.46	%
Investor B1	$	1,000.00	$	1,056.00	$	5.24	$	1,000.00		1,019.90		5.15		1.02	%
Investor B2	$	1,000.00	$	1,059.50	$	1.44	$	1,000.00		1,023.60		1.42		0.28	%
Investor C	$	1,000.00	$	1,052.90	$	7.60	$	1,000.00		1,017.60		7.47		1.48	%
Investor C1	$	1,000.00	$	1,054.20	$	7.14	$	1,000.00		1,018.10		7.01		1.39	%
Investor C2	$	1,000.00	$	1,055.60	$	5.81	$	1,000.00		1,019.40		5.70		1.13	%
Class R	$	1,000.00	$	1,054.80	$	5.65	$	1,000.00		1,019.50		5.55		1.10	%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown). Because the Fund invests significantly in the Master Portfolio, the expense example reflects the net expenses of both the Fund and the Master Portfolio in which it invests.
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 7

The Benefits and Risks of Leveraging

The Master Portfolio may utilize leverage to seek to enhance its yield. However, this objective cannot be achieved in all interest rate environments.

The Master Portfolio may utilize leverage by borrowing through entering into reverse repurchase agreements and/or treasury roll transactions. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage, which will be based on short-term interest rates, will normally be lower than the income earned by the Master Portfolio on its longer-term portfolio investments. To the extent that the total assets of the Master Portfolio (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Master Portfolio’s investors will benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is paid to shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the net assets. However, in order to benefit shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. If the yield curve becomes negatively sloped, meaning short-term interest rates exceed long-term interest rates, income to shareholders will be lower than if the Master Portfolio had not used leverage.

If short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental net income pickup will be reduced or eliminated completely. Furthermore, if prevailing short-term interest rates rise above long-term interest rates, the yield curve has a negative slope. In this case, the Master Portfolio pays higher short-term interest rates whereas the Master Portfolio’s total portfolio earns income based on lower long-term interest rates.

Furthermore, the value of the Master Portfolio’s investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. As a result, changes in interest rates can influence the Master Portfolio’s net assets positively or negatively in addition to the impact on the Master Portfolio’s performance from leverage discussed above.

The use of leverage may enhance opportunities for increased income to the Master Portfolio, but as described above, it also creates risks as short- or long-term interest rates fluctuate. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Master Portfolio’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Master Portfolio’s net income will be less than if leverage had not been used. The Master Portfolio may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Master Portfolio to incur losses. The use of leverage may limit the Master Portfolio’s ability to invest in certain types of securities or use certain types of hedging strategies. The Master Portfolio will incur expenses in connection with the use of leverage, all of which are borne by Master Portfolio investors and may reduce income.

Derivative Financial Instruments

The Master Portfolio may invest in various derivative financial instruments, including financial futures contracts, foreign currency exchange contracts, options and swaps, as specified in Note 2 of the Master Portfolio’s Notes to Consolidated Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate, foreign currency exchange rate and/or other risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Master Portfolio’s ability to use a derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require the Master Portfolio to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation the Master Portfolio can realize on an investment, may result in lower dividends paid to shareholders or may cause the Master Portfolio to hold an investment that it might otherwise sell. The Master Portfolio’s investments in these instruments are discussed in detail in the Master Portfolio’s Notes to Consolidated Financial Statements.

8 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Statement of Assets and Liabilities BlackRock Total Return Fund

September 30, 2012
Assets
Investments at value — Master Portfolio (cost — $2,900,653,514)	$	2,994,330,175
Capital shares sold receivable		7,865,981
Investment advisor receivable		30,977
Total assets		3,002,227,133
Liabilities
Income dividends payable		5,660,629
Capital shares redeemed payable		3,639,347
Advisory fees payable		581,572
Contributions payable to the Master Portfolio		4,226,634
Service and distribution fees payable		547,772
Officer’s fees payable		603
Other accrued expenses payable		975,538
Total liabilities		15,632,095
Net Assets	$	2,986,595,038
Net Assets Consist of
Paid-in capital	$	2,972,697,761
Distributions in excess of net investment income		(124,135	)
Accumulated net realized loss		(79,655,249	)
Net unrealized appreciation/depreciation		93,676,661
Net Assets	$	2,986,595,038
Net Asset Value
BlackRock — Based on net assets of $524,234,797 and 44,619,824 shares outstanding, 450 million shares authorized, $0.10 par value	$	11.75
Institutional — Based on net assets of $879,843,389 and 74,882,949 shares outstanding, 500 million shares authorized, $0.10 par value	$	11.75
Service — Based on net assets of $672,046 and 57,179 shares outstanding, 50 million shares authorized, $0.10 par value	$	11.75
Investor A — Based on net assets of $1,070,123,613 and 91,042,591 shares outstanding, 450 million shares authorized, $0.10 par value	$	11.75
Investor A1 — Based on net assets of $46,438,217 and 3,953,798 shares outstanding, 50 million shares authorized, $0.10 par value	$	11.75
Investor B — Based on net assets of $31,004,860 and 2,639,891 shares outstanding, 250 million shares authorized, $0.10 par value	$	11.74
Investor B1 — Based on net assets of $4,476,636 and 381,023 shares outstanding, 50 million shares authorized, $0.10 par value	$	11.75
Investor B2 — Based on net assets of $3,453 and 294 shares outstanding, 50 million shares authorized, $0.10 par value	$	11.76	1
Investor C — Based on net assets of $241,627,558 and 20,572,419 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.75
Investor C1 — Based on net assets of $144,824,357 and 12,325,587 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.75
Investor C2 — Based on net assets of $8,455,109 and 720,037 shares outstanding, 50 million shares authorized, $0.10 par value	$	11.74
Class R — Based on net assets of $34,891,003 and 2,968,258 shares outstanding, 250 million shares authorized, $0.10 par value	$	11.75

¹ The net asset value is calculated based on net assets of $3,452.82 and shares outstanding of 293.623.

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	9

Statement of Operations BlackRock Total Return Fund

Year Ended September 30, 2012
Investment Income
Net investment income allocated from the Master Portfolio:
Interest — unaffiliated	$	134,241,180
Dividends — affiliated		539,603
Foreign taxes withheld		(53,203	)
Interest — affiliated		657
Total expenses		(8,582,277	)
Fees waived		16,359
Total income		126,162,319
Fund Expenses
Investment advisory		11,242,570
Service — Service		1,531
Service — Investor A		2,507,915
Service — Investor A1		47,897
Service and distribution — Investor B		291,628
Service and distribution — Investor B1		30,809
Service and distribution — Investor B2		38
Service and distribution — Investor C		2,278,090
Service and distribution — Investor C1		1,209,219
Service and distribution — Investor C2		44,183
Service and distribution — Class R		163,764
Transfer agent — BlackRock		37,968
Transfer agent — Institutional		1,156,107
Transfer agent — Service		1,518
Transfer agent — Investor A		1,855,646
Transfer agent — Investor A1		69,803
Transfer agent — Investor B		164,623
Transfer agent — Investor B1		19,012
Transfer agent — Investor B2		207
Transfer agent — Investor C		446,506
Transfer agent — Investor C1		324,488
Transfer agent — Investor C2		25,988
Transfer agent — Class R		88,142
Registration		335,295
Printing		190,080
Professional		157,741
Officer		2,504
Miscellaneous		50,404
Total expenses		22,743,676
Less fees waived by Manager		(3,630,008	)
Less transfer agent fees waived and/or reimbursed — class specific		(426,113	)
Less service and distribution fees reimbursed — Investor B2		(38	)
Total expenses after fees waived and/or reimbursed		18,687,517
Net investment income		107,474,802
Realized and Unrealized Gain Allocated from the Master Portfolio
Net realized gain from investments, financial futures contracts, options written, swaps, borrowed bonds, short sales and foreign currency transactions		51,473,892
Net change in unrealized appreciation/depreciation on investments, financial futures contracts, options written, swaps, borrowed bonds and foreign currency translations		105,038,914
Total realized and unrealized gain		156,512,806
Net Increase in Net Assets Resulting from Operations	$	263,987,608

See Notes to Financial Statements.
10	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Statements of Changes in Net Assets BlackRock Total Return Fund

	Year Ended September 30,
Increase (Decrease) in Net Assets:	2012			2011
Operations
Net investment income	$	107,474,802		$	137,237,521
Net realized gain (loss)		51,473,892			(5,402,634	)
Net change in unrealized appreciation/depreciation		105,038,914			(56,211,290	)
Net increase in net assets resulting from operations		263,987,608			75,623,597
Dividends to Shareholders From
Net investment income:
BlackRock		(22,046,321	)		(34,452,850	)
Institutional		(35,690,807	)		(40,670,567	)
Service		(22,221	)		(27,850	)
Investor A		(35,673,174	)		(35,643,382	)
Investor A1		(1,756,922	)		(2,160,200	)
Investor B		(1,091,526	)		(1,954,536	)
Investor B1		(195,154	)		(346,694	)
Investor B2		(600	)		(1,660	)
Investor C		(6,704,653	)		(7,426,838	)
Investor C1		(4,495,134	)		(6,158,466	)
Investor C2		(282,282	)		(342,453	)
Class R		(1,087,121	)		(1,260,958	)
Decrease in net assets resulting from dividends to shareholders		(109,045,915	)		(130,446,454	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(421,201,540	)		327,763,957
Net Assets
Total increase (decrease) in net assets		(266,259,847	)		272,941,100
Beginning of year		3,252,854,885			2,979,913,785
End of year	$	2,986,595,038		$	3,252,854,885
Distributions in excess of net investment income	$	(124,135	)	$	(17,264,573	)

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	11

Financial Highlights BlackRock Total Return Fund

	BlackRock
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.14		$	11.32		$	10.55		$	10.16		$	11.41
Net investment income1		0.45			0.49			0.57			0.54			0.60
Net realized and unrealized gain (loss)		0.62			(0.21	)		0.74			0.47			(1.26	)
Net increase (decrease) from investment operations		1.07			0.28			1.31			1.01			(0.66	)
Dividends from net investment income		(0.46	)		(0.46	)		(0.54	)		(0.62	)		(0.59	)
Net asset value, end of year	$	11.75		$	11.14		$	11.32		$	10.55		$	10.16
Total Investment Return2
Based on net asset value		9.77	%		2.58	%		12.73	%		10.64	%		(6.11	)%
Ratios to Average Net Assets3
Total expenses		0.68	%		0.94	%		0.99	%		0.59	%		0.55	%
Total expenses after fees waived and/or reimbursed		0.55	%4		0.85	%4		0.89	%		0.44	%		0.45	%
Net investment income		3.92	%4		4.39	%4		4.69	%		5.72	%		5.30	%
Supplemental Data
Net assets, end of year (000)	$	524,235		$	745,536		$	860,675		$	681,677		$	369,607
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
12	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Financial Highlights (continued) BlackRock Total Return Fund

	Institutional
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.14		$	11.31		$	10.55		$	10.15		$	11.40
Net investment income1		0.43			0.48			0.50			0.55			0.58
Net realized and unrealized gain (loss)		0.62			(0.20	)		0.78			0.46			(1.25	)
Net increase (decrease) from investment operations		1.05			0.28			1.28			1.01			(0.67	)
Dividends from net investment income		(0.44	)		(0.45	)		(0.52	)		(0.61	)		(0.58	)
Net asset value, end of year	$	11.75		$	11.14		$	11.31		$	10.55		$	10.15
Total Investment Return2
Based on net asset value		9.63	%		2.54	%		12.49	%		10.60	%		(6.26	)%
Ratios to Average Net Assets3
Total expenses		0.82	%		1.08	%		1.14	%		0.77	%		0.68	%
Total expenses after fees waived and/or reimbursed		0.69	%4		0.98	%4		1.00	%		0.58	%		0.59	%
Net investment income		3.81	%4		4.26	%4		4.58	%		5.72	%		5.16	%
Supplemental Data
Net assets, end of year (000)	$	879,843		$	1,039,894		$	522,408		$	453,847		$	642,177
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	13

Financial Highlights (continued) BlackRock Total Return Fund

	Service
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.15		$	11.32		$	10.56		$	10.16		$	11.41
Net investment income1		0.41			0.44			0.42			0.54			0.55
Net realized and unrealized gain (loss)		0.61			(0.19	)		0.84			0.45			(1.25	)
Net increase (decrease) from investment operations		1.02			0.25			1.26			0.99			(0.70	)
Dividends from net investment income		(0.42	)		(0.42	)		(0.50	)		(0.59	)		(0.55	)
Net asset value, end of year	$	11.75		$	11.15		$	11.32		$	10.56		$	10.16
Total Investment Return2
Based on net asset value		9.28	%		2.31	%		12.22	%		10.37	%		(6.47	)%
Ratios to Average Net Assets3
Total expenses		1.18	%		1.37	%		1.40	%		0.98	%		0.96	%
Total expenses after fees waived and/or reimbursed		0.92	%4		1.18	%4		1.23	%		0.78	%		0.81	%
Net investment income		3.57	%4		4.00	%4		4.44	%		5.48	%		4.92	%
Supplemental Data
Net assets, end of year (000)	$	672		$	610		$	936		$	1,323		$	1,324
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
14	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Financial Highlights (continued) BlackRock Total Return Fund

	Investor A															Investor A1
	Year Ended September 30,															Year Ended September 30,
	2012			2011			2010			2009			2008			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.15		$	11.32		$	10.56		$	10.16		$	11.41		$	11.14		$	11.31		$	10.55		$	10.15		$	11.40
Net investment income1		0.40			0.44			0.44			0.53			0.55			0.42			0.46			0.49			0.54			0.56
Net realized and unrealized gain (loss)		0.61			(0.16	)		0.81			0.45			(1.26	)		0.62			(0.20	)		0.78			0.45			(1.26	)
Net increase (decrease) from investment operations		1.01			0.28			1.25			0.98			(0.71	)		1.04			0.26			1.27			0.99			(0.70	)
Dividends from net investment income		(0.41	)		(0.45	)		(0.49	)		(0.58	)		(0.54	)		(0.43	)		(0.43	)		(0.51	)		(0.59	)		(0.55	)
Net asset value, end of year	$	11.75		$	11.15		$	11.32		$	10.56		$	10.16		$	11.75		$	11.14		$	11.31		$	10.55		$	10.15
Total Investment Return2
Based on net asset value		9.20	%		2.23	%		12.16	%		10.25	%		(6.56	)%		9.50	%		2.41	%		12.40	%		10.36	%		(6.46	)%
Ratios to Average Net Assets3
Total expenses		1.12	%		1.38	%		1.42	%		1.04	%		1.00	%		0.94	%		1.20	%		1.27	%		0.93	%		0.88	%
Total expenses after fees waived and/or reimbursed		1.00	%4		1.29	%4		1.30	%		0.89	%		0.92	%		0.82	%4		1.10	%4		1.09	%		0.80	%		0.81	%
Net investment income		3.50	%4		3.95	%4		4.22	%		5.42	%		4.84	%		3.69	%4		4.11	%4		4.55	%		5.55	%		4.95	%
Supplemental Data
Net assets, end of year (000)	$	1,070,124		$	939,439		$	942,652		$	588,731		$	618,346		$	46,438		$	49,333		$	64,599		$	72,851		$	109,125
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	15

Financial Highlights (continued) BlackRock Total Return Fund

	Investor B															Investor B1
	Year Ended September 30,															Year Ended September 30,
	2012			2011			2010			2009			2008			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.14		$	11.31		$	10.55		$	10.15		$	11.40		$	11.14		$	11.32		$	10.55		$	10.16		$	11.41
Net investment income1		0.31			0.36			0.41			0.46			0.47			0.35			0.39			0.41			0.49			0.50
Net realized and unrealized gain (loss)		0.61			(0.19	)		0.78			0.45			(1.25	)		0.63			(0.20	)		0.82			0.44			(1.25	)
Net increase (decrease) from investment operations		0.92			0.17			1.19			0.91			(0.78	)		0.98			0.19			1.23			0.93			(0.75	)
Dividends from net investment income		(0.32	)		(0.34	)		(0.43	)		(0.51	)		(0.47	)		(0.37	)		(0.37	)		(0.46	)		(0.54	)		(0.50	)
Net asset value, end of year	$	11.74		$	11.14		$	11.31		$	10.55		$	10.15		$	11.75		$	11.14		$	11.32		$	10.55		$	10.16
Total Investment Return2
Based on net asset value		8.42	%		1.54	%		11.51	%		9.50	%		(7.18	)%		8.92	%		1.76	%		11.97	%		9.71	%		(6.91	)%
																		��
Ratios to Average Net Assets3
Total expenses		1.86	%		2.03	%		2.08	%		1.72	%		1.64	%		1.49	%		1.73	%		1.78	%		1.44	%		1.36	%
Total expenses after fees waived and/or reimbursed		1.74	%4		1.94	%4		1.90	%		1.58	%		1.57	%		1.37	%4		1.64	%4		1.58	%		1.30	%		1.30	%
Net investment income		2.76	%4		3.25	%4		3.75	%		4.76	%		4.18	%		3.12	%4		3.56	%4		4.09	%		5.05	%		4.46	%
Supplemental Data
Net assets, end of year (000)	$	31,005		$	49,275		$	77,806		$	93,722		$	131,142		$	4,477		$	8,364		$	12,080		$	15,886		$	24,912
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
16	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Financial Highlights (continued) BlackRock Total Return Fund

	Investor B2
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.16		$	11.32		$	10.56		$	10.16		$	11.40
Net investment income1		0.43			0.49			0.48			0.54			0.54
Net realized and unrealized gain (loss)		0.62			(0.20	)		0.77			0.44			(1.24	)
Net increase (decrease) from investment operations		1.05			0.29			1.25			0.98			(0.70	)
Dividends from net investment income		(0.45	)		(0.45	)		(0.49	)		(0.58	)		(0.54	)
Net asset value, end of year	$	11.76		$	11.16		$	11.32		$	10.56		$	10.16
Total Investment Return2
Based on net asset value		9.63	%		2.68	%		12.14	%		10.28	%		(6.50	)%
Ratios to Average Net Assets3
Total expenses		2.31	%		2.03	%		1.58	%		1.01	%		1.02	%
Total expenses after fees waived and/or reimbursed		0.57	%4		0.85	%4		1.34	%		0.88	%		0.95	%
Net investment income		3.78	%4		4.36	%4		4.38	%		5.53	%		4.78	%
Supplemental Data
Net assets, end of year (000)	$	3		$	15		$	75		$	223		$	612
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	17

Financial Highlights (continued) BlackRock Total Return Fund

	Investor C
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.14		$	11.31		$	10.55		$	10.15		$	11.40
Net investment income1		0.33			0.37			0.39			0.47			0.48
Net realized and unrealized gain (loss)		0.62			(0.19	)		0.79			0.45			(1.26	)
Net increase (decrease) from investment operations		0.95			0.18			1.18			0.92			(0.78	)
Dividends from net investment income		(0.34	)		(0.35	)		(0.42	)		(0.52	)		(0.47	)
Net asset value, end of year	$	11.75		$	11.14		$	11.31		$	10.55		$	10.15
Total Investment Return2
Based on net asset value		8.63	%		1.61	%		11.46	%		9.61	%		(7.12	)%
Ratios to Average Net Assets3
Total expenses		1.88	%		2.18	%		2.24	%		1.90	%		1.95	%
Total expenses after fees waived and/or reimbursed		1.62	%4		1.91	%4		1.93	%		1.48	%		1.50	%
Net investment income		2.89	%4		3.35	%4		3.64	%		4.81	%		4.24	%
Supplemental Data
Net assets, end of year (000)	$	241,628		$	220,431		$	228,349		$	167,345		$	157,147
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
18	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Financial Highlights (continued) BlackRock Total Return Fund

	Investor C1															Investor C2
	Year Ended September 30,															Year Ended September 30,
	2012			2011			2010			2009			2008			2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.14		$	11.32		$	10.55		$	10.16		$	11.41		$	11.13		$	11.31		$	10.55		$	10.15		$	11.40
Net investment income1		0.33			0.38			0.41			0.47			0.48			0.36			0.39			0.43			0.49			0.50
Net realized and unrealized gain (loss)		0.62			(0.21	)		0.79			0.44			(1.25	)		0.62			(0.20	)		0.78			0.44			(1.26	)
Net increase (decrease) from investment operations		0.95			0.17			1.20			0.91			(0.77	)		0.98			0.19			1.21			0.93			(0.76	)
Dividends from net investment income		(0.34	)		(0.35	)		(0.43	)		(0.52	)		(0.48	)		(0.37	)		(0.37	)		(0.45	)		(0.53	)		(0.49	)
Net asset value, end of year	$	11.75		$	11.14		$	11.32		$	10.55		$	10.16		$	11.74		$	11.13		$	11.31		$	10.55		$	10.15
Total Investment Return2
Based on net asset value		8.67	%		1.56	%		11.67	%		9.50	%		(7.09	)%		8.91	%		1.73	%		11.79	%		9.74	%		(6.95	)%
Ratios to Average Net Assets3
Total expenses		1.70	%		1.94	%		2.00	%		1.62	%		1.55	%		1.48	%		1.77	%		1.80	%		1.46	%		1.40	%
Total expenses after fees waived and/or reimbursed		1.58	%4		1.85	%4		1.83	%		1.48	%		1.49	%		1.36	%4		1.68	%4		1.64	%		1.33	%		1.33	%
Net investment income		2.92	%4		3.37	%4		3.79	%		4.85	%		4.27	%		3.14	%4		3.54	%4		3.99	%		4.99	%		4.42	%
Supplemental Data
Net assets, end of year (000)	$	144,824		$	161,362		$	215,515		$	229,174		$	297,811		$	8,455		$	9,419		$	11,481		$	12,881		$	15,099
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	6		1,754	%7		708	%8		1,081	%9		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	19

Financial Highlights (concluded) BlackRock Total Return Fund

	Class R
	Year Ended September 30,
	2012			2011			2010			2009			2008
Per Share Operating Performance
Net asset value, beginning of year	$	11.15		$	11.32		$	10.56		$	10.16		$	11.41
Net investment income1		0.37			0.41			0.44			0.51			0.52
Net realized and unrealized gain (loss)		0.61			(0.19	)		0.78			0.45			(1.25	)
Net increase (decrease) from investment operations		0.98			0.22			1.22			0.96			(0.73	)
Dividends from net investment income		(0.38	)		(0.39	)		(0.46	)		(0.56	)		(0.52	)
Net asset value, end of year	$	11.75		$	11.15		$	11.32		$	10.56		$	10.16
Total Investment Return2
Based on net asset value		8.94	%		1.99	%		11.86	%		10.01	%		(6.76	)%
Ratios to Average Net Assets3
Total expenses		1.46	%		1.74	%		1.78	%		1.45	%		1.37	%
Total expenses after fees waived and/or reimbursed		1.24	%4		1.50	%4		1.56	%		1.11	%		1.13	%
Net investment income		3.27	%4		3.68	%4		4.07	%		5.23	%		4.62	%
Supplemental Data
Net assets, end of year (000)	$	34,891		$	29,175		$	43,338		$	46,658		$	57,895
Portfolio turnover of the Master Portfolio		1,346	%5		1,771	%6		1,754	%7		708	%8		1,081	%9

1	Based on average shares outstanding.
2	Where applicable, total investment returns include the reinvestment of dividends and distributions.
3	Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.
4	Includes the Fund’s share of the Master Portfolio’s allocated fees waived of less than 0.01%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
8	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
9	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Financial Statements.
20	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Notes to Financial Statements BlackRock Total Return Fund

1. Organization and Significant Accounting Policies:

BlackRock Total Return Fund (the “Fund”) is a series of BlackRock Bond Fund, Inc. (the “Corporation”) 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”), an affiliate of the Fund, which has the same investment objective and strategies as the Fund. The Master LLC is organized as a Delaware limited liability company. 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 percentage of the Master Portfolio owned by the Fund at September 30, 2012 was 86.3%. The performance of the Fund is directly affected by the performance of the Master Portfolio. The consolidated financial statements of the Master Portfolio, including the Consolidated 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 (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund offers multiple classes of shares. BlackRock and Institutional Shares are sold without a sales charge and only to certain eligible investors. Service Shares are sold without a sales charge. Investor A and Investor A1 Shares are generally sold with a front-end sales charge. Investor B, Investor B1, Investor B2, Investor C, Investor C1 and Investor C2 Shares may be subject to a CDSC. In addition, Investor A1, Investor B, Investor B2, Investor C and Investor C2 Shares are sold only to certain eligible investors. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. 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 related 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. Investor B Shares and Investor B1 automatically convert to Investor A Shares and Investor A1 Shares, respectively, after approximately ten years. Investor A1, B, B1, B2, C1 and C2 Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. 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 material changes to the Investor A distribution and service plan).

The following is a summary of significant accounting policies followed by the Fund:

Valuation: US GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund’s policy is to fair value its financial instruments at market value. The Fund records its investment in the Master Portfolio at fair value based on the Fund’s proportionate interest in the net assets of the Master Portfolio. Valuation of securities held by the Master Portfolio is discussed in Note 1 of the Master Portfolio’s Notes to Consolidated Financial Statements, which are included elsewhere in this report.

Investment Transactions and Investment Income: For financial reporting purposes, contributions to and withdrawals from the Master Portfolio are accounted 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. Realized and unrealized gains and losses are adjusted for utilizing partnership tax allocation rules. In addition, the Fund accrues its own expenses. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The portion of distributions that exceeds the Fund’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital. Distributions in excess of the Fund’s taxable income and net capital gains, but not in excess of the Fund’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. Capital losses carried forward from years beginning before 2011 do not reduce earnings and profits, even if such carried forward losses offset current year realized gains. The character and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended September 30, 2012. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the 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. Expenses directly related to the Fund and other shared expenses pro rated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 21

Notes to Financial Statements (continued) BlackRock Total Return Fund

The Corporation, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays the Manager a monthly fee based on a percentage of the Fund’s average daily net assets at the following annual rates:

Average Daily Net Assets	Investment Advisory Fee
First $250 Million		0.50%
$250 Million – $500 Million		0.45%
$500 Million – $750 Million		0.40%
Greater than $750 Million		0.35%

The Manager contractually agreed to waive the Fund’s investment advisor’s fee in the amount of the Fund’s share of the investment advisor’s fee paid to the Master Portfolio. For the year ended September 30, 2012, the Manager waived $2,140,612, which is included in fees waived by Manager in the Statement of Operations.

The Manager contractually agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business, in order to limit expenses. The expense limitations as a percentage of average daily net assets are 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, 2013. The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement unless approved by the Board, including a majority of the Independent Directors. In addition to the contractual waivers described above, the Manager has voluntarily agreed to waive and/or reimburse fees or expenses in order to limit expenses (excluding interest expense, dividend expense, acquired fund fees and expenses and certain other Fund expenses) as a percentage of average daily net assets allocated to each class of the Fund as follows: 0.76% (for Service Shares), 1.53% (for Investor B2 Shares), 1.45% (for Investor C Shares) and 1.08% (for Class R Shares). These voluntary waivers may be reduced or discontinued at any time. As a result, the Manager waived the following amounts, which are included in transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations:

BlackRock	$	37,968
Institutional		15,506
Service		843
Investor A		7,814
Investor B2		207
Investor C		331,936
Investor C1		27
Class R		31,812
Total	$	426,113

In addition, the Manager waived $1,489,396, which is included in fees waived by Manager in the Statement of Operations.

The Manager entered into sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”), BlackRock International Limited (“BIL”) and BlackRock (Singapore) Limited (“BRS”), each an affiliate of the Manager. The Manager pays BFM, BIL and BRS for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Master Portfolio to the Manager.

The Corporation, on behalf of the Fund, entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL 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 of the Fund as follows:

	Service Fee	Distribution 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 %1
Investor C	0.25 %	0.75 %
Investor C1	0.25 %	0.55 %
Investor C2	0.25 %	0.25 %
Class R	0.25 %	0.25 %

¹ Investor B2 did not pay a portion of its respective distribution fees during the year.

Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Service, Investor A, Investor A1, Investor B, Investor B2, Investor C, Investor C1, Investor C2 and Class R shareholders.

For the year ended September 30, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares, which totaled $130,893.

For the year ended September 30, 2012, affiliates received the following CDSCs:

Investor A	$	6,398
Investor B	$	7,588
Investor B1	$	102
Investor C	$	47,341
Investor C1	$	1,075

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended September 30, 2012, the Fund reimbursed the Manager the

22 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Notes to Financial Statements (continued) BlackRock Total Return Fund

following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations:

BlackRock	$	2,446
Institutional	$	8,430
Service	$	73
Investor A	$	8,196
Investor A1	$	564
Investor B	$	934
Investor B1	$	90
Investor B2	$	12
Investor C	$	2,938
Investor C1	$	2,105
Investor C2	$	116
Class R	$	312

For the year ended September 30, 2012, the Fund received reimbursements of $29,603 from an affiliate, which is included in capital share transactions on the Statements of Changes in Net Assets, relating to processing errors.

Certain officers and/or directors of the Corporation are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Corporation’s Chief Compliance Officer.

3. Income Tax Information:

US GAAP requires 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 net asset values per share. The following permanent differences as of September 30, 2012 attributable to foreign currency transactions, distributions in excess of taxable income, the accounting for swap agreements, and the classification of investments were reclassified to the following accounts:

Paid-in capital	$	(16,585,115	)
Distributions in excess of net investment income	$	18,711,551
Accumulated net realized loss	$	(2,126,436	)

The tax character of distributions paid during the fiscal years ended September 30, 2012 and September 30, 2011 was as follows:

	9/30/12		9/30/11
Ordinary income	$	109,045,915	$	130,446,454

As of September 30, 2012, the tax components of accumulated net earnings were as follows:

Capital loss carryforward	$	(78,419,319	)
Net unrealized gains1		92,316,596
Total	$	13,897,277

¹ The difference between book-basis and tax-basis net unrealized gains was attributable primarily to the timing and recognition of partnership income.

As of September 30, 2012, the Fund had a capital loss carryforward available to offset future realized capital gains of $78,419,319, all of which is due to expire September 30, 2018.

During the year ended September 30, 2012, the Fund utilized $25,833,430 of its capital loss carryforward.

4. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Year Ended September 30, 2012						Year Ended September 30, 2011
		Shares			Amount			Shares			Amount
BlackRock
Shares sold		10,918,994		$	122,898,366			18,997,302		$	212,204,696
Shares issued to shareholders in reinvestment of dividends		1,913,896			21,786,057			3,022,610			33,792,406
Shares redeemed		(35,136,374	)		(392,928,671	)		(31,140,323	)		(348,941,293	)
Net decrease		(22,303,484	)	$	(248,244,248	)		(9,120,411	)	$	(102,944,191	)
Institutional
Shares sold and automatic conversion of shares		31,030,996		$	351,648,055			84,842,928		$	957,726,022
Shares issued to shareholders in reinvestment of dividends		2,534,633			28,837,736			3,166,969			35,378,219
Shares redeemed		(52,029,703	)		(587,247,865	)		(40,836,168	)		(456,767,157	)
Net increase (decrease)		(18,464,074	)	$	(206,762,074	)		47,173,729		$	536,337,084
Service
Shares sold and automatic conversion of shares		6,983		$	79,577			1,149		$	12,834
Shares issued to shareholders in reinvestment of dividends		1,805			20,602			2,197			24,580
Shares redeemed		(6,341	)		(70,963	)		(31,296	)		(349,461	)
Net increase (decrease)		2,447		$	29,216			(27,950	)	$	(312,047	)
Investor A
Shares sold and automatic conversion of shares		21,235,417		$	241,099,270			23,285,222		$	259,989,684
Shares issued to shareholders in reinvestment of dividends		2,824,182			32,242,268			2,934,513			32,818,294
Shares redeemed		(17,301,795	)		(196,864,085	)		(25,202,664	)		(281,910,825	)
Net increase		6,757,804		$	76,477,453			1,017,071		$	10,897,153

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 23

Notes to Financial Statements (concluded) BlackRock Total Return Fund

	Year Ended September 30, 2012						Year Ended September 30, 2011
	Shares			Amount			Shares			Amount
Investor A1
Shares sold and automatic conversion of shares		718,792		$	8,134,012			839,148		$	9,376,766
Shares issued to shareholders in reinvestment of dividends		124,930			1,423,616			160,515			1,794,158
Shares redeemed		(1,319,352	)		(14,927,162	)		(2,280,529	)		(25,514,230	)
Net decrease		(475,630	)	$	(5,369,534	)		(1,280,866	)	$	(14,343,306	)
Investor B
Shares sold		379,554		$	4,291,078			458,920		$	5,133,360
Shares issued to shareholders in reinvestment of dividends		66,249			754,115			135,334			1,512,752
Shares redeemed and automatic conversion of shares		(2,230,179	)		(25,246,648	)		(3,047,462	)		(34,039,499	)
Net decrease		(1,784,376	)	$	(20,201,455	)		(2,453,208	)	$	(27,393,387	)
Investor B1
Shares sold and automatic conversion of shares		58,008		$	656,019			93,574		$	1,045,713
Shares issued to shareholders in reinvestment of dividends		15,169			172,605			26,281			293,830
Shares redeemed		(442,939	)		(5,023,458	)		(436,548	)		(4,873,262	)
Net decrease		(369,762	)	$	(4,194,834	)		(316,693	)	$	(3,533,719	)
Investor B2
Shares issued to shareholders in reinvestment of dividends		53		$	601			131		$	1,476
Shares redeemed		(1,140	)		(13,322	)		(5,404	)		(60,488	)
Net decrease		(1,087	)	$	(12,721	)		(5,273	)	$	(59,012	)
Investor C
Shares sold		6,876,681		$	77,980,023			8,652,630		$	96,620,437
Shares issued to shareholders in reinvestment of dividends		455,445			5,196,359			547,822			6,121,108
Shares redeemed		(6,550,732	)		(74,205,769	)		(9,594,504	)		(107,202,583	)
Net increase (decrease)		781,394		$	8,970,613			(394,052	)	$	(4,461,038	)
Investor C1
Shares sold and automatic conversion of shares		1,110,887		$	12,587,827			665,915		$	7,426,219
Shares issued to shareholders in reinvestment of dividends		297,825			3,396,170			455,744			5,094,934
Shares redeemed		(3,566,704	)		(40,412,431	)		(5,682,775	)		(63,522,241	)
Net decrease		(2,157,992	)	$	(24,428,434	)		(4,561,116	)	$	(51,001,088	)
Investor C2
Shares sold and automatic conversion of shares		75,918		$	859,338			96,460		$	1,076,422
Shares issued to shareholders in reinvestment of dividends		20,260			230,884			24,912			278,274
Shares redeemed		(222,137	)		(2,516,396	)		(290,679	)		(3,245,300	)
Net decrease		(125,959	)	$	(1,426,174	)		(169,307	)	$	(1,890,604	)
Class R
Shares sold		1,713,611		$	19,424,045			1,085,414		$	12,112,312
Shares issued to shareholders in reinvestment of dividends		95,258			1,087,900			111,879			1,251,362
Shares redeemed		(1,457,939	)		(16,551,293	)		(2,407,912	)		(26,895,562	)
Net increase (decrease)		350,930		$	3,960,652			(1,210,619	)	$	(13,531,888	)
Total Net Increase (Decrease)		(37,789,789	)	$	(421,201,540	)		28,651,305		$	327,763,957

5. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

24 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Report of Independent Registered Public Accounting Firm BlackRock Total Return Fund

To the Shareholders of BlackRock Total Return Fund and Board of Directors of BlackRock Bond Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of BlackRock Total Return Fund (the “Fund”), a series of BlackRock Bond Fund, Inc. as of September 30, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended.These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our 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 Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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, 2012, 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
Boston, Massachusetts
November 28, 2012

Important Tax Information (Unaudited)

The following information is provided with respect to the ordinary income distributions paid by the Fund during the fiscal year ended September 30, 2012.

Federal Obligation Interest1		6.41	%
Interest Related Dividends for Non-U.S. Residents2
Months Paid:	October 2011 – December 2011	97.17	%
	January 2012 – September 2012	71.47	%

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 US withholding tax for nonresident aliens and foreign corporations.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 25

Master Portfolio Information	Master Total Return Portfolio
As of September 30, 2012

Portfolio Composition	Percent of Long-Term Investments
US Government Sponsored Agency Securities		51	%
Corporate Bonds		17
US Treasury Obligations		13
Non-Agency Mortgage-Backed Securities		7
Asset-Backed Securities		5
Foreign Agency Obligations		4
Floating Rate Loan Interests		2
Preferred Securities		1

Credit Quality Allocations1	Percent of Long-Term Investments
AAA/Aaa2		79	%
AA/Aa		2
A		8
BBB/Baa		7
BB/Ba		2
B		2

1	Using the higher of Standard & Poor’s (“S&P’s”) or Moody’s Investors Service (“Moody’s”).
2	Includes US Government Sponsored Agency Securities and US Treasury Obligations, which are deemed AAA/Aaa by the investment advisor.

26 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Consolidated Schedule of Investments September 30, 2012	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Asset-Backed Securities	Par (000)		Value
321 Henderson Receivables I LLC (a):
Series 2010-1A, Class A, 5.56%, 7/15/59	USD	8,090	$	9,091,804
Series 2010-2A, Class A, 4.07%, 1/15/48		4,088		4,285,079
Series 2010-3A, Class A, 3.82%, 12/15/48		7,881		8,234,032
ACE Securities Corp. (b):
Series 2003-OP1, Class A2, 0.94%, 12/25/33		581		481,158
Series 2006-CW1, Class A2C, 0.36%, 7/25/36		1,680		1,050,240
AH Mortgage Advance Trust (a):
Series SART-1, Class A1R, 2.23%, 5/10/43		3,370		3,382,806
Series SART-3, Class 1A1, 2.98%, 3/13/43		5,685		5,722,220
AmeriCredit Automobile Receivables Trust:
Series 2011-5, Class C, 3.44%, 10/08/17		4,050		4,227,516
Series 2012-2, Class C, 2.64%, 10/10/17		3,080		3,153,209
Series 2012-2, Class D, 3.38%, 4/09/18		4,230		4,341,156
Series 2012-3, Class C, 2.42%, 5/08/18		2,880		2,929,812
Series 2012-3, Class D, 3.03%, 7/09/18		1,910		1,937,621
Series 2012-4, Class B, 1.31%, 11/08/17		1,825		1,827,555
Series 2012-4, Class C, 1.93%, 8/08/18		2,865		2,870,558
Series 2012-4, Class D, 2.68%, 10/09/18		1,040		1,041,882
Series 2012-4, Class E, 3.82%, 2/10/20		3,645		3,652,181
Bear Stearns Asset-Backed Securities Trust, Series 2006-HE10, Class 21A1, 0.29%, 12/25/36 (b)		1,875		1,785,975
Capital One Multi-Asset Execution Trust, Series 4-3C, 6.63%, 6/17/14 (b)	GBP	3,400		5,601,321
Capital Trust Re CDO Ltd., Series 2006-4A, Class A1, 0.53%, 10/20/43 (a)(b)	USD	5,674		4,966,000
CarMax Auto Owner Trust:
Series 2012-1, Class B, 1.76%, 8/15/17		1,860		1,880,107
Series 2012-1, Class C, 2.20%, 10/16/17		1,150		1,167,472
Series 2012-1, Class D, 3.09%, 8/15/18		1,430		1,444,759
Chesapeake Funding LLC (a)(b):
Series 2012-1A, Class B, 1.83%, 11/07/23		2,630		2,636,785
Series 2012-1A, Class C, 2.23%, 11/07/23		1,690		1,694,337
Countrywide Asset-Backed Certificates (b):
Series 2003-BC3, Class A2, 0.84%, 9/25/33		672		602,210
Series 2004-5, Class A, 0.67%, 10/25/34		776		705,174
Series 2006-17, Class 2A2, 0.37%, 3/25/47		974		761,204
Series 2007-1, Class 2A1, 0.27%, 7/25/37		7		6,849
Series 2007-12, Class 2A1, 0.57%, 8/25/47		34		33,609
Credit Acceptance Auto Loan Trust, Series 2012-2A, Class A, 1.52%, 3/16/20 (a)		4,165		4,164,292
DT Auto Owner Trust (a):
Series 2011-2A, Class B, 2.12%, 2/16/16		3,899		3,901,636
Series 2011-3A, Class C, 4.03%, 2/15/17		2,460		2,496,435
Series 2012-1A, Class B, 2.26%, 10/16/17		2,700		2,705,994
Series 2012-1A, Class C, 3.38%, 10/16/17		1,780		1,785,739
Series 2012-1A, Class D, 4.94%, 7/16/18		3,885		3,944,083
Series 2012-2, Class B, 1.85%, 4/17/17		530		530,939
Series 2012-2, Class C, 2.72%, 4/17/17		200		200,431
Series 2012-2A, Class D, 4.35%, 3/15/19		1,370		1,374,059
Asset-Backed Securities	Par (000)		Value
Ford Credit Floorplan Master Owner Trust:
Series 2010-5, Class D, 2.41%, 9/15/15 (a)	USD	1,620	$	1,639,129
Series 2011-2, Class C, 2.37%, 9/15/15		3,860		3,870,993
Series 2011-2, Class D, 2.86%, 9/15/15		2,685		2,692,494
Series 2012-1, Class C, 1.72%, 1/15/16 (b)		4,380		4,397,130
Series 2012-1, Class D, 2.32%, 1/15/16 (b)		4,100		4,126,650
Series 2012-2, Class C, 2.86%, 1/15/19		1,030		1,056,785
Series 2012-2, Class D, 3.50%, 1/15/19		1,820		1,851,794
Series 2012-4, Class C, 1.39%, 9/15/16		2,125		2,126,625
Series 2012-4, Class D, 2.09%, 9/15/16		3,710		3,713,167
GSAA Home Equity Trust, Series 2006-5, Class 2A1, 0.29%, 3/25/36 (b)		31		16,778
Home Equity Asset Trust, Series 2007-2, Class 2A1, 0.33%, 7/25/37 (b)		49		48,163
Hyundai Auto Receivables Trust, Series 2012-A, Class D, 2.61%, 5/15/18		2,555		2,590,803
ING Investment Management (a)(b):
Series 2012-2A, Class A, 1.97%, 10/15/22		7,045		7,045,000
Series 2012-3A, Class A, 1.81%, 10/15/22 (c)		12,895		12,851,918
Morgan Stanley ABS Capital I, Series 2005-HE1, Class A2MZ, 0.52%, 12/25/34 (b)		820		738,953
Motor Plc, Series 2012-X, Class A2, 1.27%, 2/25/20 (b)	GBP	3,428		5,547,212
Nelnet Student Loan Trust (b):
Series 2006-1, Class A5, 0.54%, 8/23/27	USD	6,505		6,172,900
Series 2008-3, Class A4, 2.08%, 11/25/24		5,600		5,880,168
New Century Home Equity Loan Trust, Series 2005-2, Class A2MZ, 0.48%, 6/25/35 (b)		2,543		2,516,342
Option One Mortgage Loan Trust, Series 2003-4, Class A2, 0.86%, 7/25/33 (b)		1,572		1,301,964
OZLM Funding Ltd., Series 2012-2A, Class A1, 1.87%, 10/30/23 (a)(b)(c)		7,530		7,530,000
PFS Financing Corp., Series 2012-AA, Class A, 1.42%, 2/15/16 (a)(b)		4,400		4,415,022
RAAC, Series 2005-SP2, Class 2A, 0.52%, 6/25/44 (b)		5,752		4,705,635
Residential Asset Securities Corp., Series 2003-KS5, Class AIIB, 0.80%, 7/25/33 (b)		714		538,788
Santander Consumer Acquired Receivables Trust (a):
Series 2011-S1A, Class B, 1.66%, 8/15/16		5,412		5,428,675
Series 2011-S1A, Class C, 2.01%, 8/15/16		4,064		4,077,868
Series 2011-WO, Class C, 3.19%, 10/15/15		6,580		6,774,386
Santander Drive Auto Receivables Trust:
Series 2010-2, Class C, 3.89%, 7/17/17		9,885		10,265,246
Series 2011-1, Class D, 4.01%, 2/15/17		8,000		8,175,304
Series 2011-S1A, Class B, 1.48%, 5/15/17 (a)		3,999		4,010,130
Series 2011-S1A, Class D, 3.10%, 5/15/17 (a)		3,027		3,038,469
Series 2012-1, Class B, 2.72%, 5/16/16		2,260		2,302,495
Series 2012-1, Class C, 3.78%, 11/15/17		3,045		3,192,984
Series 2012-2, Class C, 3.20%, 2/15/18		6,490		6,615,218
Series 2012-2, Class D, 3.87%, 2/15/18		4,020		4,137,677
Series 2012-3, Class B, 1.94%, 12/15/16		6,245		6,272,878

Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Consolidated Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:
AUD	Australian Dollar
BRL	Brazilian Real
CAD	Canadian Dollar
CHF	Swiss Franc
CNY	Chinese Yuan Renminbi
EUR	Euro
FTSE	Financial Times Stock Exchange
GBP	British Pound
LIBOR	London Interbank Offered Rate
MXN	Mexican New Peso
NOK	Norwegian Krone
RB	Revenue Bonds
SEK	Swedish Krona
S&P	Standard and Poor’s
TBA	To Be Announced
USD	US Dollar

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	27

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Asset-Backed Securities	Par (000)		Value
Santander Drive Auto Receivables Trust (concluded):
Series 2012-3, Class C, 3.01%, 4/16/18	USD	8,515	$	8,634,491
Series 2012-3, Class D, 3.64%, 5/15/18		7,005		7,143,762
Series 2012-4, Class C, 2.94%, 12/15/17		4,600		4,700,262
Series 2012-4, Class D, 3.50%, 6/15/18		6,210		6,314,862
Series 2012-5, Class B, 1.56%, 8/15/18		4,090		4,102,638
Series 2012-5, Class C, 2.70%, 8/15/18		1,950		1,979,658
Series 2012-5, Class D, 3.30%, 9/17/18		1,660		1,706,216
Scholar Funding Trust, Series 2011-A, Class A, 1.35%, 10/28/43 (a)(b)		5,437		5,322,610
SLM Student Loan Trust:
Series 2004-B, Class A2, 0.59%, 6/15/21 (b)		5,433		5,298,984
Series 2005-A, Class A3, 0.59%, 6/15/23 (b)		10,935		9,753,058
Series 2008-5, Class A4, 2.15%, 7/25/23 (b)		4,690		4,944,085
Series 2011-C, Class A2B, 4.54%, 10/17/44 (a)		3,190		3,501,819
Series 2012-A, Class A1, 1.62%, 8/15/25 (a)(b)		2,946		2,978,288
Series 2012-A, Class A2, 3.83%, 1/17/45 (a)		2,750		2,939,967
Series 2012-C, Class A1, 1.32%, 8/15/23 (a)(b)		5,938		5,979,649
Series 2012-C, Class A2, 3.31%, 10/15/46 (a)		10,125		10,699,330
Series 2012-D, Class A2, 2.95%, 2/15/46 (a)		12,220		12,702,666
Small Business Administration:
Series 2003-P10A, Class 1, 4.52%, 2/10/13		5		5,543
Series 2004-P10A, Class 1, 4.50%, 2/10/14		151		155,378
Soundview Home Equity Loan Trust, Series 2006-EQ1, Class A2, 0.33%, 10/25/36 (b)		8		7,686
Structured Asset Securities Corp.:
Series 2003-AL2, Class A, 3.36%, 1/25/31 (a)		1,227		1,230,466
Series 2004-23XS, Class 2A1, 0.52%, 1/25/35 (b)		2,034		1,695,103
Series 2005-GEL2, Class A, 0.50%, 4/25/35 (b)		579		541,110
Series 2006-BC6, Class A2, 0.30%, 1/25/37 (b)		339		338,386
Series 2007-BC1, Class A2, 0.27%, 2/25/37 (b)		218		214,177
World Financial Network Credit Card Master Trust:
Series 2012-C, Class A, 2.23%, 8/15/22		8,570		8,691,015
Series 2012-C, Class B, 3.57%, 8/15/22		3,000		3,016,473
Series 2012-C, Class C, 4.55%, 8/15/22		5,030		5,055,854
Total Asset-Backed Securities — 10.8%				373,937,518
Corporate Bonds
Aerospace & Defense — 0.0%
Meccanica Holdings USA, Inc., 6.25%, 7/15/19 (a)		714		672,957
Auto Components — 0.3%
BorgWarner, Inc., 4.63%, 9/15/20		2,925		3,250,845
Continental Rubber Of America Corp., 4.50%, 9/15/19 (a)		5,370		5,485,455
Jaguar Land Rover Plc, 8.25%, 3/15/20	GBP	1,098		1,910,461
				10,646,761
Corporate Bonds	Par (000)		Value
Automobiles — 0.1%
Porsche International Financing Plc, 3.88%, 2/01/16	EUR	2,725	$	3,754,237
Beverages — 0.5%
Anheuser-Busch InBev NV, 2.00%, 12/16/19		3,520		4,549,475
Anheuser-Busch InBev Worldwide, Inc.:
2.50%, 7/15/22	USD	2,770		2,809,234
3.75%, 7/15/42		2,964		2,971,294
Pernod-Ricard SA (a):
5.75%, 4/07/21		1,040		1,237,330
4.45%, 1/15/22		3,810		4,200,350
5.50%, 1/15/42		2,260		2,578,891
Refresco Group BV, 7.38%, 5/15/18	EUR	379		468,770
				18,815,344
Capital Markets — 1.0%
The Goldman Sachs Group, Inc., 5.75%, 1/24/22	USD	30,136		34,712,935
Chemicals — 0.7%
Arkema SA, 3.85%, 4/30/20 (c)	EUR	2,100		2,876,199
Ineos Finance Plc, 7.50%, 5/01/20 (a)	USD	565		573,475
Linde AG, 1.75%, 9/17/20	EUR	3,981		5,049,278
LyondellBasell Industries NV, 5.75%, 4/15/24	USD	5,000		5,687,500
Rockwood Specialties Group, Inc., 4.63%, 10/15/20		2,355		2,390,325
Tronox Finance LLC, 6.38%, 8/15/20 (a)		7,645		7,721,450
				24,298,227
Commercial Banks — 3.4%
Banco Santander SA:
3.25%, 2/17/15	EUR	2,100		2,709,345
4.13%, 1/09/17		1,400		1,817,564
Bank of India, 6.25%, 2/16/21	USD	4,670		4,977,501
Caisse Centrale Desjardins du Quebec (a):
2.55%, 3/24/16		6,965		7,405,884
1.60%, 3/06/17		3,615		3,727,065
Canadian Imperial Bank of Commerce, 2.60%, 7/02/15 (a)		5,910		6,247,461
Discover Bank:
8.70%, 11/18/19		1,980		2,556,548
7.00%, 4/15/20		5,720		6,889,706
Eksportfinans ASA:
5.50%, 5/25/16		1,310		1,336,200
5.50%, 6/26/17		275		280,500
HSBC Bank Brasil SA — Banco Multiplo, 4.00%, 5/11/16 (a)		15,610		16,058,787
HSBC Bank Plc, 3.10%, 5/24/16 (a)		7,630		8,040,395
ICICI Bank Ltd., 4.75%, 11/25/16 (a)		6,450		6,679,626
ING Bank NV:
1.11%, 5/23/16 (b)		600		558,000
2.00%, 8/28/20	EUR	4,290		5,542,082
Intesa Sanpaolo SpA, 3.75%, 3/02/20 (b)		600		665,013
Lloyds TSB Bank Plc:
11.88%, 12/16/21 (b)		4,680		6,904,723
6.50%, 9/17/40	GBP	350		669,459
National Agricultural Cooperative Federation, 3.50%, 2/08/17 (a)	USD	8,300		8,758,260
Oversea-Chinese Banking Corp. Ltd., 3.75%, 11/15/22 (b)		10,000		10,334,150
Santander International Debt SAU, 4.13%, 10/04/17	EUR	850		1,049,448
Sparebank 1 Boligkreditt AS, 2.30%, 6/30/17 (a)	USD	8,220		8,579,214
The Toronto-Dominion Bank, 1.63%, 9/14/16 (a)		5,650		5,840,970
				117,627,901

See Notes to Consolidated Financial Statements.
28	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Corporate Bonds	Par (000)		Value
Commercial Services & Supplies — 0.1%
EC Finance Plc, 9.75%, 8/01/17	EUR	180	$	243,453
Verisure Holding AB, 8.75%, 9/01/18		1,101		1,464,359
				1,707,812
Construction & Engineering — 0.1%
H&E Equipment Services, Inc., 7.00%, 9/01/22 (a)	USD	1,605		1,669,200
Construction Materials — 0.1%
Buzzi Unicem SpA, 6.25%, 9/28/18	EUR	1,892		2,437,392
Consumer Finance — 0.7%
Ford Motor Credit Co. LLC:
2.75%, 5/15/15	USD	7,960		8,117,903
6.63%, 8/15/17		3,018		3,500,626
SLM Corp.:
6.25%, 1/25/16		7,120		7,725,200
6.00%, 1/25/17		5,000		5,443,750
Series A, 0.75%, 1/27/14 (b)		35		33,989
				24,821,468
Containers & Packaging — 0.1%
GCL Holdings SCA, 9.38%, 4/15/18	EUR	906		1,181,719
Rock-Tenn Co., 4.00%, 3/01/23 (a)	USD	2,880		2,926,538
				4,108,257
Distributors — 0.1%
VWR Funding, Inc., 7.25%, 9/15/17 (a)		3,926		3,984,890
Diversified Financial Services — 4.7%
AyT Cedulas Cajas Global:
4.00%, 3/21/17	EUR	1,100		1,175,357
Series 2, 3.50%, 3/14/16		800		875,346
Series 8, 4.25%, 6/14/18		200		206,815
AyT Cedulas Cajas VIII Fondo de Titulizacion de Activos, Series VIII, 4.25%, 11/18/19		300		296,335
AyT Cedulas Cajas IX Fondo de Titulizacion, 3.75%, 3/31/15		1,800		2,083,446
AyT Cedulas Cajas X Fondo de Titulizacion, Series X, 3.75%, 6/30/25		2,900		2,437,210
Bank of America Corp.:
3.88%, 3/22/17	USD	5,130		5,520,588
7.63%, 6/01/19		3,000		3,746,193
5.70%, 1/24/22 (d)		20,285		23,825,970
Series L, 5.65%, 5/01/18		4,585		5,227,707
Cedulas TDA 6 Fondo de Titulizacion de Activos:
3.88%, 5/23/25	EUR	900		769,435
Series A-6, 4.25%, 4/10/31		2,600		2,148,266
Cedulas TDA 7 Fondo de Titulizacion de Activos, Series 7, 3.50%, 6/20/17		100		102,804
Citigroup, Inc.:
4.59%, 12/15/15	USD	23,100		25,064,124
4.45%, 1/10/17		1,900		2,086,918
Gala Group Finance Plc, 8.88%, 9/01/18	GBP	1,777		2,740,371
HLP Finance Ltd., 4.75%, 6/25/22	USD	7,250		7,702,842
JPMorgan Chase & Co.:
4.50%, 1/24/22		4,830		5,357,677
3.25%, 9/23/22		11,591		11,752,045
JPMorgan Chase Bank NA, Series BKNT:
6.00%, 7/05/17		13,805		16,186,708
6.00%, 10/01/17		6,475		7,662,353
Reynolds Group Issuer, Inc.:
7.88%, 8/15/19		5,260		5,680,800
6.88%, 2/15/21		3,120		3,291,600
Tiers Trust, Series 2012-1, 2.19%, 5/12/14 (a)(b)		18,466		18,466,000
TMX Finance LLC, 13.25%, 7/15/15		4,000		4,440,000
ZFS Finance (USA) Trust V, 6.50%, 5/09/37 (a)(b)		2,513		2,657,498
				161,504,408
Corporate Bonds	Par (000)		Value
Diversified Telecommunication Services — 0.6%
AT&T, Inc., 5.35%, 9/01/40	USD	4,235	$	5,097,288
Level 3 Financing, Inc., 8.13%, 7/01/19		4,474		4,753,625
OTE Plc, 7.25%, 2/12/15 (e)	EUR	450		445,270
Telefonica Emisiones SAU, 5.60%, 3/12/20	GBP	500		793,301
Telenet Finance V Luxembourg SCA, 6.75%, 8/15/24	EUR	1,129		1,465,330
Verizon Communications, Inc.:
3.50%, 11/01/21	USD	5,110		5,637,495
6.40%, 2/15/38		1,878		2,531,095
				20,723,404
Electric Utilities — 2.7%
Alabama Power Co., 3.95%, 6/01/21 (d)		5,015		5,666,805
The Cleveland Electric Illuminating Co.:
8.88%, 11/15/18		1,199		1,620,910
5.95%, 12/15/36		2,175		2,525,060
DONG Energy A/S, 2.63%, 9/19/22	EUR	1,814		2,315,928
Duke Energy Carolinas LLC, 4.25%, 12/15/41	USD	3,915		4,127,056
Electricite de France SA, 2.75%, 3/10/23	EUR	4,900		6,193,477
Florida Power & Light Co., 5.95%, 2/01/38	USD	3,645		4,973,694
Florida Power Corp., 6.40%, 6/15/38		2,646		3,640,629
Georgia Power Co., 3.00%, 4/15/16		8,985		9,635,828
Hydro-Quebec:
8.40%, 1/15/22		8,220		11,853,363
8.05%, 7/07/24		21,145		31,322,765
Iberdrola International BV, 4.50%, 9/21/17	EUR	800		1,039,217
Jersey Central Power & Light Co., 7.35%, 2/01/19	USD	2,730		3,502,740
Southern California Edison Co., Series 08-A, 5.95%, 2/01/38		2,825		3,798,159
Trans-Allegheny Interstate Line Co., 4.00%, 1/15/15 (a)		2,815		2,949,126
				95,164,757
Electronic Equipment, Instruments & Components — 0.1%
Techem Energy Metering Service GmbH & Co. KG, 7.88%, 10/01/20	EUR	1,600		2,158,164
Energy Equipment & Services — 1.8%
Calfrac Holdings LP, 7.50%, 12/01/20 (a)(f)	USD	1,050		1,039,500
Ensco Plc, 3.25%, 3/15/16		1,880		2,005,778
EOG Resources, Inc., 2.63%, 3/15/23		4,936		4,989,200
FTS International Services LLC/FTS International Bonds, Inc., 8.13%, 11/15/18 (a)		2,407		2,563,455
MEG Energy Corp. (a):
6.50%, 3/15/21		4,100		4,387,000
6.38%, 1/30/23		1,580		1,686,650
Peabody Energy Corp., 6.25%, 11/15/21 (a)		4,540		4,517,300
Pride International, Inc., 6.88%, 8/15/20		2,650		3,354,701
Seadrill, Ltd., 5.63%, 9/15/17 (a)		4,840		4,876,300
Transocean, Inc.:
5.05%, 12/15/16		8,125		9,079,338
2.50%, 10/15/17		4,560		4,585,276
6.00%, 3/15/18		10,330		12,062,661
3.80%, 10/15/22		5,640		5,669,199
				60,816,358
Food & Staples Retailing — 0.0%
Bakkavor Finance 2 Plc, 8.25%, 2/15/18	GBP	520		755,726

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	29

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Corporate Bonds	Par (000)		Value
Food Products — 0.7%
Kraft Foods Group, Inc. (a):
3.50%, 6/06/22	USD	7,942	$	8,391,446
5.00%, 6/04/42		3,505		3,910,097
Kraft Foods, Inc.:
6.50%, 8/11/17		6,049		7,437,155
6.50%, 2/09/40		3,653		4,948,102
				24,686,800
Gas Utilities — 0.1%
Snam SpA, 3.88%, 3/19/18	EUR	2,483		3,197,083
Health Care Equipment & Supplies — 0.4%
Boston Scientific Corp., 6.25%, 11/15/15	USD	13,154		14,916,649
Health Care Providers & Services — 0.5%
Coventry Health Care, Inc., 5.45%, 6/15/21		3,063		3,585,897
HCA, Inc., 7.25%, 9/15/20		3,925		4,396,000
Tenet Healthcare Corp.:
10.00%, 5/01/18		147		169,785
6.25%, 11/01/18		4,905		5,407,763
8.88%, 7/01/19		2,660		3,005,800
UnitedHealth Group, Inc., 3.38%, 11/15/21		1,630		1,737,852
WellPoint, Inc., 3.30%, 1/15/23		655		662,487
				18,965,584
Hotels, Restaurants & Leisure — 0.3%
Cirsa Funding Luxembourg SA, 8.75%, 5/15/18	EUR	898		1,089,064
Enterprise Inns Plc, 6.50%, 12/06/18	GBP	500		708,493
Punch Taverns Finance Plc, Series A1R, 7.27%, 4/15/22		760		1,159,749
Wyndham Worldwide Corp., 4.25%, 3/01/22	USD	6,430		6,608,503
				9,565,809
Household Durables — 0.2%
K. Hovnanian Enterprises, Inc., 7.25%, 10/15/20 (a)(c)		3,615		3,705,375
Spie BondCo 3 SCA, 11.00%, 8/15/19	EUR	1,165		1,571,937
				5,277,312
Household Products — 0.0%
Ontex IV SA, 9.00%, 4/15/19		370		457,638
Independent Power Producers & Energy Traders — 0.5%
Constellation Energy Group Inc., 5.15%, 12/01/20	USD	670		787,503
Energy Future Intermediate Holding Co. LLC, 10.00%, 12/01/20		7,690		8,651,250
Exelon Generation Co. LLC, 4.25%, 6/15/22 (a)		1,946		2,059,010
Laredo Petroleum, Inc.:
9.50%, 2/15/19		1,925		2,180,062
7.38%, 5/01/22		655		707,400
NRG Energy, Inc., 6.63%, 3/15/23 (a)		2,105		2,152,363
				16,537,588
Industrial Conglomerates — 0.2%
Sequa Corp., 11.75%, 12/01/15 (a)		2,500		2,625,000
Siemens Financieringsmaatschappij NV, 2.75%, 9/10/25	GBP	2,600		4,145,368
				6,770,368
Insurance — 3.4%
Achmea BV, 5.13% (g)	EUR	1,110		1,251,956
Allianz Finance II BV, 5.75%, 7/08/41 (b)		4,400		5,715,793
American International Group, Inc.:
3.80%, 3/22/17	USD	8,028		8,635,013
5.45%, 5/18/17		4,150		4,731,681
4.88%, 6/01/22		8,719		9,825,938
8.18%, 5/15/58 (b)		1,970		2,410,788
Corporate Bonds	Par (000)		Value
Insurance (concluded)
Hartford Life Global Funding Trusts, 0.57%, 6/16/14 (b)	USD	13,275	$	13,063,861
ING Verzekeringen NV, 2.09%, 6/21/21 (b)	EUR	2,880		3,552,906
Lincoln National Corp., 7.00%, 6/15/40	USD	2,860		3,563,591
Manulife Financial Corp., 3.40%, 9/17/15		12,215		12,790,131
Metropolitan Life Global Funding I (a):
2.50%, 1/11/13		24,245		24,378,032
5.13%, 6/10/14		1,600		1,715,926
Prudential Financial, Inc.:
4.75%, 9/17/15		10,790		11,883,049
7.38%, 6/15/19		3,690		4,666,370
5.38%, 6/21/20		2,085		2,410,237
5.88%, 9/15/42 (b)		7,704		7,896,600
				118,491,872
IT Services — 0.1%
First Data Corp. (a):
7.38%, 6/15/19		2,290		2,361,562
8.25%, 1/15/21		265		264,338
				2,625,900
Machinery — 0.2%
UR Merger Sub Corp. (a):
5.75%, 7/15/18		753		795,356
7.38%, 5/15/20		4,565		4,907,375
7.63%, 4/15/22		1,874		2,052,030
				7,754,761
Media — 3.1%
CBS Corp.:
4.63%, 5/15/18		1,785		2,031,507
8.88%, 5/15/19		3,440		4,610,955
5.75%, 4/15/20		2,820		3,390,582
CCH II LLC, 13.50%, 11/30/16		2,726		2,957,922
Clear Channel Worldwide Holdings, Inc.:
9.25%, 12/15/17		1,854		1,988,415
Series B, 9.25%, 12/15/17		6,242		6,725,755
Comcast Cable Communications Holdings, Inc., 9.46%, 11/15/22		2,225		3,322,005
Comcast Corp.:
5.88%, 2/15/18		6,350		7,725,264
4.65%, 7/15/42		10,370		11,091,845
Cox Communications, Inc., 8.38%, 3/01/39 (a)		6,180		9,409,322
DIRECTV Holdings LLC:
4.38%, 9/14/29	GBP	1,312		2,124,320
6.38%, 3/01/41	USD	2,372		2,776,874
5.15%, 3/15/42		2,033		2,068,325
Intelsat Jackson Holdings SA, 7.25%, 4/01/19		4,072		4,397,760
NBC Universal Media LLC:
5.15%, 4/30/20		3,508		4,157,275
2.88%, 1/15/23		2,765		2,759,940
The New York Times Co., 6.63%, 12/15/16		4,100		4,458,750
Time Warner Cable, Inc.:
5.50%, 9/01/41		3,590		4,062,394
4.50%, 9/15/42		10,958		10,928,161
Time Warner, Inc., 4.70%, 1/15/21		2,080		2,389,011
Unitymedia Hessen GmbH & Co. KG, 8.13%, 12/01/17 (a)		5,000		5,375,000
Virgin Media Secured Finance Plc:
6.50%, 1/15/18		3,740		4,095,300
5.25%, 1/15/21		4,870		5,649,955
				108,496,637

See Notes to Consolidated Financial Statements.
30	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Corporate Bonds	Par   (000)		Value
Metals & Mining — 0.5%
BHP Billiton Finance, Ltd.:
3.25%, 9/24/27	EUR	1,755	$	2,230,567
4.30%, 9/25/42	GBP	3,312		5,312,650
New Gold, Inc., 7.00%, 4/15/20 (a)	USD	690		731,400
Novelis, Inc., 8.75%, 12/15/20		6,865		7,602,987
Schmolz + Bickenbach Luxembourg SA, 9.88%, 5/15/19	EUR	1,199		1,290,399
Steel Dynamics, Inc., 6.38%, 8/15/22 (a)	USD	1,345		1,388,713
				18,556,716
Multi-Utilities — 0.2%
Dominion Resources, Inc., 1.95%, 8/15/16		6,345		6,557,862
Multiline Retail — 0.6%
Macy’s Retail Holdings, Inc.:
5.90%, 12/01/16		9,259		10,809,762
7.45%, 7/15/17		8,380		10,361,560
				21,171,322
Oil, Gas & Consumable Fuels — 4.6%
Boston Gas Co., 4.49%, 2/15/42 (a)		2,575		2,830,141
BP Capital Markets Plc, 3.13%, 10/01/15		23,849		25,465,914
Consol Energy, Inc., 8.25%, 4/01/20		624		653,640
El Paso Corp., 7.75%, 1/15/32		2,000		2,329,238
El Paso Pipeline Partners Operating Co. LLC, 6.50%, 4/01/20		7,195		8,535,688
Energy Transfer Partners LP, 6.50%, 2/01/42		6,125		7,067,821
Enterprise Products Operating LLC, Series L, 6.30%, 9/15/17		6,350		7,723,626
EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (a)		1,260		1,348,200
EP Energy LLC/Everest Acquisition Finance, Inc., 7.75%, 9/01/22 (a)		1,525		1,555,500
Kinder Morgan Energy Partners LP, 5.95%, 2/15/18		2,900		3,491,220
Linn Energy LLC, 6.25%, 11/01/19 (a)		6,000		5,970,000
MarkWest Energy Partners LP, 5.50%, 2/15/23		1,525		1,597,438
MidAmerican Energy Holdings Co., 6.50%, 9/15/37		25		33,477
Nexen, Inc.:
6.40%, 5/15/37		6,050		7,679,912
7.50%, 7/30/39		1,645		2,344,288
OGX Petroleo e Gas Participacoes SA (a):
8.50%, 6/01/18 (f)		1,422		1,279,800
8.38%, 4/01/22		2,190		1,905,300
PDC Energy, Inc., 7.75%, 10/15/22 (a)		1,085		1,085,000
Petrobras International Finance Co.:
3.88%, 1/27/16		15,335		16,221,516
5.75%, 1/20/20		15,835		18,048,701
Phillips 66, 2.95%, 5/01/17 (a)		6,600		6,982,114
Pioneer Natural Resources Co., 6.88%, 5/01/18		2,900		3,520,951
Plains All American Pipeline LP/PAA Finance Corp., 8.75%, 5/01/19		900		1,210,188
Range Resources Corp.:
7.25%, 5/01/18		7,335		7,756,763
5.75%, 6/01/21		2,235		2,402,625
SandRidge Energy, Inc., 7.50%, 3/15/21 (a)		3,325		3,424,750
Valero Energy Corp., 6.63%, 6/15/37		4,083		4,928,038
Western Gas Partners LP:
5.38%, 6/01/21		7,087		8,055,084
4.00%, 7/01/22		2,920		3,044,450
The Williams Cos., Inc., 7.88%, 9/01/21		1,425		1,868,365
				160,359,748

Corporate Bonds	Par  (000)		Value
Paper & Forest Products — 0.4%
International Paper Co.:
4.75%, 2/15/22	USD	5,855	$	6,648,481
6.00%, 11/15/41		6,320		7,701,148
				14,349,629
Pharmaceuticals — 0.4%
Teva Pharmaceutical Finance Co. BV, Series 2, 3.65%, 11/10/21		2,120		2,298,110
Teva Pharmaceutical Finance II BV/Teva Pharmaceutical Finance III LLC, 3.00%, 6/15/15		4,610		4,899,715
Teva Pharmaceutical Finance IV BV, 3.65%, 11/10/21		5,000		5,420,070
				12,617,895
Real Estate Investment Trusts (REITs) — 0.5%
Hammerson Plc, 2.75%, 9/26/19	EUR	1,268		1,630,584
Klepierre, 2.75%, 9/17/19		1,200		1,528,767
Ventas Realty LP/Ventas Capital Corp., 4.75%, 6/01/21	USD	3,040		3,341,054
Vornado Realty LP, 5.00%, 1/15/22		8,255		9,134,306
				15,634,711
Real Estate Management & Development — 0.4%
China Resources Land, Ltd., 4.63%, 5/19/16		3,000		3,170,316
IVG Immobilien AG, 8.00% (b)(g)	EUR	1,300		818,577
Realogy Corp., 7.88%, 2/15/19 (a)(f)	USD	4,210		4,420,500
The Unique Pub Finance Co. Plc, Series A4, 5.66%, 6/30/27	GBP	4,712		6,543,683
				14,953,076
Road & Rail — 0.3%
Burlington Northern Santa Fe LLC:
3.05%, 9/01/22	USD	6,080		6,292,915
4.38%, 9/01/42		2,366		2,503,259
				8,796,174
Software — 0.0%
BMC Software, Inc., 4.25%, 2/15/22		1,360		1,408,128
Specialty Retail — 0.2%
House of Fraser Funding Plc, 8.88%, 8/15/18	GBP	944		1,436,719
Phones4u Finance Plc, 9.50%, 4/01/18		990		1,608,643
QVC, Inc., 7.50%, 10/01/19 (a)	USD	4,225		4,674,988
				7,720,350
Thrifts & Mortgage Finance — 0.1%
Northern Rock Asset Management Plc, 5.63%, 6/22/17 (a)		4,145		4,657,737
Wireless Telecommunication Services — 1.6%
America Movil SAB de CV:
2.38%, 9/08/16		8,025		8,350,727
3.13%, 7/16/22		3,153		3,249,110
4.38%, 7/16/42		1,512		1,568,192
Cricket Communications, Inc., 7.75%, 5/15/16		3,869		4,081,795
Crown Castle Towers LLC, 6.11%, 1/15/20 (a)		16,500		19,872,336
MetroPCS Wireless, Inc., 7.88%, 9/01/18		282		304,560
SBA Tower Trust, 5.10%, 4/17/17 (a)		3,700		4,123,202
Sprint Capital Corp., 6.88%, 11/15/28		2,003		1,842,760
Sprint Nextel Corp., 9.00%, 11/15/18 (a)		10,660		12,792,000
				56,184,682
Total Corporate Bonds — 36.6%				1,271,092,229

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	31

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Floating Rate Loan Interests (b)	Par  (000)		Value
Capital Markets — 0.1%
Nuveen Investments, Inc., Extended Term Loan, 5.86% – 5.95%, 5/12/17	USD	3,000	$	2,975,640
Chemicals — 0.1%
Styron Sarl LLC, Term Loan B, 8.00%, 8/02/17		2,649		2,534,206
Consumer Finance — 0.1%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17		4,000		3,913,000
Diversified Telecommunication Services — 0.8%
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		12,517		12,524,448
Level 3 Financing, Inc.:
Term Loan B2, 5.75%, 9/03/18		8,000		7,996,640
Term Loan B3, 4.75%, 8/01/19		8,000		8,000,000
				28,521,088
Energy Equipment & Services — 0.2%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		2,693		2,812,996
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		4,930		5,161,918
				7,974,914
Food Products — 0.1%
Advance Pierre Foods, Term Loan (First Lien), 7.00% – 7.50%, 9/30/16		1,970		1,974,357
Del Monte Foods Co., Term Loan, 4.50%, 3/08/18		2,397		2,392,608
				4,366,965
Health Care Providers & Services — 0.2%
inVentiv Health, Inc., Combined Term Loan, 6.50%, 8/04/16		5,905		5,698,397
Hotels, Restaurants & Leisure — 0.5%
Caesars Entertainment Operating Co., Inc.,
Term Loan B1, 3.22%, 1/28/15		10,000		9,685,700
Motel 6, Mezzanine Term Loan, 10.00%, 10/15/17		6,030		6,030,000
				15,715,700
Industrial Conglomerates — 0.0%
Sequa Corp., Incremental Term Loan, 6.25%, 12/03/14		670		673,287
IT Services — 0.2%
First Data Corp.:
Extended 2018 Term Loan B, 4.22%, 3/23/18		6,090		5,782,839
Initial Tranche B-2 Term Loan, 2.97%, 9/24/14		24		23,957
				5,806,796
Machinery — 0.0%
Terex Corp., Term Loan B, 5.50%, 4/28/17		990		993,406
Media — 0.1%
UPC Financing Partnership, Term Loan, 4.75%, 12/29/17		1,152		1,156,503
Oil, Gas & Consumable Fuels — 0.4%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17		3,260		3,268,313
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		9,959		9,959,317
				13,227,630

Floating Rate Loan Interests (b)	Par  (000)		Value
Pharmaceuticals — 0.0%
Pharmaceutical Product Development, Inc.,
Term Loan B, 6.25%, 12/05/18	USD	993	$	1,000,936
Professional Services — 0.0%
Emdeon, Inc., Term Loan B1, 5.00%, 11/02/18		929		933,417
Real Estate Investment Trusts (REITs) — 0.0%
iStar Financial, Inc., Term Loan A1, 5.00%, 6/28/13		664		665,397
Real Estate Management & Development — 0.1%
Realogy Corp.:
Extended Letter of Credit, 4.47%, 10/10/16		214		211,087
Extended Term Loan, 4.48%, 10/10/16		2,742		2,704,483
				2,915,570
Wireless Telecommunication Services — 0.2%
Vodafone Americas Finance 2, Inc., Term Loan B, 6.25%, 7/11/16		7,219		7,435,312
Total Floating Rate Loan Interests — 3.1%				106,508,164

Foreign Agency Obligations
Autonomous Community of Madrid Spain:
3.00%, 11/05/13	CHF	1,250	1,276,715
3.00%, 7/29/14		260	252,674
Autonomous Community of Valencia Spain:
2.13%, 2/22/13	EUR	3,390	3,437,219
5.50%, 4/26/13		200	247,218
4.75%, 3/20/14		340	393,531
3.25%, 7/06/15		500	506,824
Brazilian Government International Bond,
7.13%, 1/20/37	USD	1,725	2,600,438
Bundesobligation, 0.50%, 4/07/17	EUR	25,530	32,958,889
Bundesrepublik Deutschland, 4.25%, 7/04/18		4,960	7,666,463
Cyprus Government International Bond, 3.75%, 6/03/13		820	964,173
Deutsche Bundesrepublik Inflation Linked Bond, 0.10%, 4/15/23		33,925	46,210,731
Italy Buoni Poliennali Del Tesoro:
3.75%, 8/01/15		3,300	4,324,862
4.75%, 6/01/17		34,445	45,697,234
5.25%, 8/01/17		8,695	11,805,973
4.75%, 9/01/21		660	844,893
2.10%, 9/15/21		7,576	8,572,493
5.50%, 11/01/22		13,060	17,284,554
2.55%, 9/15/41		2,046	1,984,312
Mexico Government International Bond:
5.63%, 1/15/17	USD	3,840	4,488,960
5.13%, 1/15/20		8,275	9,888,625
Netherlands Government Bond (a):
4.50%, 7/15/17	EUR	5,050	7,643,334
1.25%, 1/15/18		6,535	8,559,626
Poland Government International Bond:
6.38%, 7/15/19	USD	1,280	1,580,800
5.13%, 4/21/21		4,130	4,811,450
Portugal Government International Bond,
3.50%, 3/25/15		12,800	11,873,843
Russian Foreign Bond Eurobond, 7.50%, 3/31/30		13,388	16,902,508
South Africa Government International Bond, 5.50%, 3/09/20		3,165	3,758,437

See Notes to Consolidated Financial Statements.
32	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Foreign Agency Obligations	Par  (000)		Value
Spain Government Bond:
4.00%, 7/30/15	EUR	3,350	$	4,302,979
4.25%, 10/31/16		3,520		4,437,883
Turkey Government International Bond:
7.00%, 3/11/19	USD	2,670		3,237,375
5.63%, 3/30/21		3,870		4,411,800
6.25%, 9/26/22		2,760		3,302,892
Total Foreign Agency Obligations — 8.0%				276,229,708

Investment Companies	Shares
Diversified Financial Services — 0.4%
iShares JPMorgan USD Emerging Markets Bond Fund (h)		114,500	13,884,270

Non-Agency Mortgage-Backed Securities	Par  (000)
Collateralized Mortgage Obligations — 4.7%
BlackRock Capital Finance LP, Series 1997-R2, Class AP, 1.24%, 12/25/35 (a)(b)(h)	USD	9	8,543
Citigroup Mortgage Loan Trust, Inc., Series 2007-2, Class 2A, 6.00%, 11/25/36		262	263,768
Collateralized Mortgage Obligation Trust, Series 57, Class D, 9.90%, 2/01/19		9	10,893
Countrywide Alternative Loan Trust:
Series 2005-21CB, Class A17, 6.00%, 6/25/35		14,751	14,289,067
Series 2006-43CB, Class 1A10, 6.00%, 2/25/37		6,411	4,893,282
Series 2006-J4, Class 2A8, 6.00%, 7/25/36		12,094	9,301,392
Series 2006-OA10, Class 1A1, 1.02%, 8/25/46 (b)		2,425	1,581,803
Series 2006-OA21, Class A1, 0.41%, 3/20/47 (b)		23,431	14,052,463
Series 2007-22, Class 2A16, 6.50%, 9/25/37		14,157	10,676,293
Countrywide Home Loan Mortgage Pass-Through Trust (b):
Series 2004-29, Class1A1, 0.76%, 2/25/35		892	804,396
Series 2006-OA5, Class 2A1, 0.42%, 4/25/46		3,872	2,481,461
Series 2006-OA5, Class 3A1, 0.42%, 4/25/46		5,761	3,960,891
Credit Suisse Mortgage Capital Certificates (a)(b):
Series 2010-20R, Class 9A1, 3.10%, 1/27/36		7,694	7,625,332
Series 2011-2R, Class 1A1, 2.77%, 3/27/37		4,902	4,691,220
Series 2011-2R, Class 2A1, 2.62%, 7/27/36		14,226	14,013,008
Series 2011-5R, Class 3A1, 5.64%, 9/27/47		6,653	6,494,416
First Horizon Asset Securities, Inc., Series 2005-AR3, Class 3A1, 2.60%, 8/25/35 (b)		2,112	1,897,452
Fosse Master Issuer Plc (b):
Series 2010-3, Class A2, 2.44%, 10/18/54	GBP	1,900	3,147,488
Series 2012-1A, Class 2A2, 1.86%, 10/18/54 (a)	USD	3,645	3,719,442
Gemgarto, Series 2012-1, Class A1, 3.66%, 5/14/45 (b)	GBP	1,890	2,996,761
Gosforth Funding Plc, Series 2012-1, Class A, 2.19%, 12/19/47 (b)		3,308	5,476,596

Non-Agency Mortgage-Backed Securities	Par (000)		Value
Collateralized Mortgage Obligations (concluded)
GSR Mortgage Loan Trust, Series 2005-AR2, Class 2A1, 2.86%, 4/25/35 (b)	USD	5,761	$	5,526,778
Homebanc Mortgage Trust (b):
Series 2005-4, Class A1, 0.49%, 10/25/35		23,333		16,917,000
Series 2006-2, Class A1, 0.40%, 12/25/36		6,716		4,621,629
Impac Secured Assets CMN Owner Trust, Series 2004-3, Class 1A4, 1.02%, 11/25/34 (b)		1,001		997,521
JPMorgan Mortgage Trust:
Series 2006-S2, Class 2A2, 5.88%, 6/25/21		3,972		3,854,241
Series 2007-S1, Class 1A2, 5.50%, 3/25/22		1,124		1,117,607
Lanark Master Issuer Plc, Series 2012-2X, Class 2A, 2.33%, 12/22/54 (b)	GBP	2,673		4,440,829
Permanent Master Issuer Plc, Series 2010-1X, Class 2A1, 2.13%, 7/15/42 (b)		3,000		4,940,496
Residential Mortgage Securities, Ltd., 2.78%, 2/14/41 (b)		2,037		3,336,219
Silk Road Finance Number Three Plc, 2.24%, 6/21/55 (b)		2,100		3,468,002
				161,606,289
Commercial Mortgage-Backed Securities — 10.3%
Banc of America Commercial Mortgage Trust 2007-3, Series 2007-3, Class AM, 5.53%, 6/10/49 (b)	USD	4,015		4,254,655
Banc of America Large Loan, Inc., Series 2010-HLTN, Class HLTN, 1.97%, 11/15/15 (a)(b)		11,469		11,455,901
Banc of America Merrill Lynch Commercial Mortgage, Inc.:
Series 2005-3, Class A3A, 4.62%, 7/10/43		850		866,997
Series 2007-3, Class A4, 5.53%, 6/10/49 (b)		2,730		3,132,743
Bear Stearns Commercial Mortgage Securities (b):
Series 2005-PW10, Class AM, 5.45%, 12/11/40		1,350		1,437,402
Series 2006-PW11, Class A4, 5.45%, 3/11/39		175		198,901
Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2007-CD4, Class A2B, 5.21%, 12/11/49		1,394		1,420,299
Commercial Mortgage Pass-Through Certificates, Series 2012-LTRT, Class A2, 3.40%, 10/05/30 (a)(c)		9,085		9,402,975
Credit Suisse Mortgage Capital Certificates, Series 2010-RR1, Class 2A, 5.70%, 9/15/40 (a)(b)		4,730		5,419,137
CS First Boston Mortgage Securities Corp.:
Series 2002-CKN2, Class A3, 6.13%, 4/15/37		3		3,029
Series 2003-C3, Class A5, 3.94%, 5/15/38		3,026		3,060,081
Series 2003-CPN1, Class A2, 4.60%, 3/15/35		509		511,740
DBRR Trust (a):
Series 2011-C32, Class A3A, 5.94%, 6/17/49 (b)		3,800		4,404,694
Series 2012-EZ1, Class A, 0.95%, 9/25/45		15,660		15,688,139
Extended Stay America Trust, Series 2010-ESHA (a):
Class C, 4.86%, 11/05/27		1,935		1,952,355
Class D, 5.50%, 11/05/27		2,510		2,530,017
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class A2, 5.42%, 12/10/49		20,196		20,207,566

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	33

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Non-Agency Mortgage-Backed Securities	Par  (000)		Value
Commercial Mortgage-Backed Securities (continued)
GMAC Commercial Mortgage Securities, Inc., Series 2003-C2, Class A2, 5.46%, 5/10/40 (b)	USD	2,775	$	2,861,827
Greenwich Capital Commercial Funding Corp.:
Series 2005-GG3, Class A3, 4.57%, 8/10/42		1,273		1,282,076
Series 2006-GG7, Class AJ, 6.06%, 7/10/38 (b)		3,370		2,994,440
Series 2007-GG11, Class A4, 5.74%, 12/10/49		1,850		2,157,944
GS Mortgage Securities Corp. II:
Series 2005-GG4, Class A4, 4.76%, 7/10/39		13,351		14,383,286
Series 2006-GG8, Class AJ, 5.62%, 11/10/39		3,580		3,038,568
Series 2006-GG8, Class AM, 5.59%, 11/10/39		1,470		1,612,475
Series 2007-GG10, Class A4, 5.98%, 8/10/45 (b)		984		1,126,730
Series 2012-ALOH, Class A, 3.55%, 4/10/34 (a)		13,040		14,084,556
Series 2012-SHOP, Class A, 2.93%, 6/05/31 (a)		3,810		4,006,889
Series 2012-SHOP, Class C, 3.63%, 6/05/31 (a)		1,740		1,781,823
JPMorgan Chase Commercial Mortgage Securities Corp.:
Series 2006-CB14, Class AM, 5.64%, 12/12/44 (b)		5,065		5,277,467
Series 2007-CB19, Class AM, 5.92%, 2/12/49 (b)		2,000		2,078,432
Series 2007-CB20, Class AJ, 6.08%, 2/12/51 (b)		3,705		3,399,515
Series 2007-CB20, Class AM, 5.88%, 2/12/51 (b)		7,013		7,799,976
Series 2007-LD11, Class A2, 5.80%, 6/15/49 (b)		23,437		24,208,131
Series 2008-C2, Class ASB, 6.13%, 2/12/51 (b)		2,595		2,821,994
Series 2012-CBX, Class A4, 3.48%, 6/16/45		1,910		2,078,007
Series 2012-HSBC, Class D, 4.52%, 7/05/32 (a)(b)		4,000		4,274,584
LB-UBS Commercial Mortgage Trust (b):
Series 2003-C7, Class A3, 4.56%, 9/15/27		107		107,558
Series 2007-C6, Class A4, 5.86%, 7/15/40		8,450		9,987,672
Series 2007-C7, Class A3, 5.87%, 9/15/45		3,800		4,526,370
Merrill Lynch Mortgage Trust, Series 2004-KEY2, Class A4, 4.86%, 8/12/39 (b)		7,190		7,681,954
Merrill Lynch/Countrywide Commercial Mortgage Trust:
Series 2006-2, Class A2, 5.88%, 6/12/46 (b)		4,195		4,245,377
Series 2007-9, Class ASB, 5.64%, 9/12/49		25,000		26,337,250
Morgan Stanley Bank of America Merrill Lynch Trust (a)(c):
Series 2012-CKSV, Class A2, 3.28%, 10/15/22		2,900		2,972,259
Series 2012-CKSV, Class CK, 4.30%, 10/15/22		8,496		7,392,905

Non-Agency Mortgage-Backed Securities	Par (000)		Value
Commercial Mortgage-Backed Securities (concluded)
Morgan Stanley Capital I:
Series 1998-WF2, Class G, 6.34%, 7/15/30 (a)(b)	USD	5,026	$	5,272,405
Series 2004-HQ4, Class A7, 4.97%, 4/14/40		8,900		9,439,687
Series 2007-HQ11, Class A2, 5.36%, 2/12/44		8,991		9,000,845
Series 2007-HQ12, Class A2FX, 5.76%, 4/12/49 (b)		937		984,270
Series 2007-IQ15, Class AM, 6.08%, 6/11/49 (b)		4,505		4,746,036
Series 2007-XLC1, Class A2, 0.56%, 7/17/17		4,357		4,101,475
Series 2012-C4, Class C, 5.71%, 3/15/45 (a)(b)		6,100		6,735,474
Series 2012-C4, Class D, 5.71%, 3/15/45 (a)(b)		4,500		4,487,864
Series 2012-XA, Class A, 2.00%, 7/27/49		6,452		6,508,617
Morgan Stanley Reremic Trust (a):
Series 2009-GG10, Class A4A, 5.98%, 8/12/45 (b)		5,375		6,313,824
Series 2009-IO, Class B, 5.70%, 7/17/56 (i)		6,500		5,736,250
Series 2011-IO, Class A, 2.50%, 3/23/51		2,694		2,716,006
ORES NPL LLC, Series 2012-LV1, Class A, 4.00%, 9/25/44 (a)		2,970		2,994,651
RBSCF Trust, Series 2010-RR3, Class WBTA, 6.12%, 2/16/51 (a)(b)		15,388		18,125,002
Wachovia Bank Commercial Mortgage Trust:
Series 2006-C28, Class A2, 5.50%, 10/15/48		4,355		4,373,418
Series 2007-C33, Class A4, 6.12%, 2/15/51 (b)		9,310		10,974,349
WaMu Commercial Mortgage Securities Trust, Series 2005-C1A, Class X, 1.35%, 5/25/36 (a)(b)		2,795		49,528
WF-RBS Commercial Mortgage Trust, Series 2012-C6, Class D, 5.75%, 4/15/45 (a)(b)		7,000		6,504,491
				359,530,888
Interest Only Commercial Mortgage-Backed Securities — 0.6%
Commercial Mortgage Pass Through Certificates, Series 2012-CR1, Class XA, 2.45%, 5/15/45 (b)		44,028		6,077,975
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2012-CBX, Class XA, 2.23%, 6/16/45 (b)		21,055		2,456,323
Morgan Stanley Capital I, Series 2012-C4, Class XA, 2.89%, 3/15/45 (a)(b)		41,991		6,127,339
Wells Fargo Reremic Trust, Series 2012-IO, Class A, 1.75%, 8/20/21 (a)		6,503		6,478,494
				21,140,131
Total Non-Agency Mortgage-Backed Securities — 15.6%				542,277,308

Preferred Securities
Capital Trusts
Capital Markets — 0.0%
State Street Capital Trust IV, 1.39%, 6/01/77 (b)	770	570,387
Commercial Banks — 0.2%
Fifth Third Capital Trust IV, 6.50%, 4/15/67 (b)	5,410	5,423,525

See Notes to Consolidated Financial Statements.
34	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Capital Trusts	Par (000)		Value
Consumer Finance — 0.2%
Capital One Capital VI, 8.88%, 5/15/40	USD	6,845	$	6,959,736
Insurance — 0.5%
MetLife Capital Trust IV, 7.88%, 12/15/67 (a)		6,045		7,133,100
Swiss Re Capital I LP, 6.85% (a)(b)(g)		6,125		6,232,187
XL Group Plc, Series E, 6.50% (b)(g)		3,443		3,167,560
				16,532,847
Total Capital Trusts — 0.9%				29,486,495
Preferred Stocks	Shares
Thrifts & Mortgage Finance — 0.0%
Fannie Mae, Series S I, 8.25%		110,000		95,700
Freddie Mac, Series Z I, 8.38%		120,000		102,000
Total Preferred Stocks — 0.0%				197,700
Trust Preferreds — 0.1%
Commercial Banks — 0.1%
Citigroup Capital XIII, 7.88%, 10/30/40 (b)(j)		149,440		4,112,869
Total Preferred Securities — 1.0%				33,797,064
Taxable Municipal Bonds	Par  (000)
New York City Municipal Water Finance Authority, RB, Second General Resolution, Series EE:
5.38%, 6/15/43	USD	4,410		5,206,005
5.50%, 6/15/43		5,285		6,312,510
Total Taxable Municipal Bonds — 0.3%				11,518,515
US Government Sponsored Agency Securities
Agency Obligations — 1.2%
Fannie Mae:
1.75%, 5/07/13 (f)		3,450		3,480,795
1.83%, 10/09/19 (f)(i)		13,295		11,695,319
6.63%, 11/15/30		1,450		2,225,039
Freddie Mac:
2.50%, 4/23/14 (f)		6,100		6,314,879
4.38%, 7/17/15 (f)		7,950		8,828,698
4.88%, 6/13/18 (f)		4,300		5,235,796
3.75%, 3/27/19 (k)		3,650		4,253,531
				42,034,057
Collateralized Mortgage Obligations — 1.0%
Fannie Mae Mortgage-Backed Securities:
Series 2005-48, Class AR, 5.50%, 2/25/35		36		39,805
Series 2006-M2, Class A2A, 5.27%, 10/25/32 (b)		4,515		5,187,359
Series 2003-W5, Class A, 0.44%, 4/25/33 (b)		9		8,805

US Government Sponsored Agency Securities	Par  (000)		Value
Collateralized Mortgage Obligations (concluded)
Freddie Mac Mortgage-Backed Securities:
Series 2825, Class VP, 5.50%, 6/15/15	USD	702	$	732,852
Series K013, Class A2, 3.97%, 1/25/21 (b)		4,060		4,688,658
Series K017, Class A2, 2.87%, 12/25/21		18,060		19,300,740
Ginnie Mae Mortgage-Backed Securities, Series 2009-63, Class AC, 4.18%, 1/16/38		4,350		4,653,112
				34,611,331
Commercial Mortgage-Backed Securities — 0.0%
Freddie Mac Mortgage-Backed Securities, Series K706, Class C, 4.02%, 11/25/44 (a)(b)		1,520		1,456,297
Interest Only Collateralized Mortgage Obligations — 0.5%
Fannie Mae Mortgage-Backed Securities:
Series 2011-123, Class CS, 6.39%, 10/25/41		20,917		2,981,631
Series 2012-94, Class IK, 4.00%, 9/25/42		20,992		3,504,008
Freddie Mac Mortgage-Backed Securities (b):
Series K009, Class X1, 1.51%, 8/25/20		44,116		3,727,569
Series K019, Class X1, 1.75%, 3/25/22		10,293		1,264,883
Series K707, Class X1, 1.56%, 12/25/18		23,010		1,866,530
Series K710, Class X1, 1.78%, 5/25/19		17,100		1,671,485
				15,016,106
Mortgage-Backed Securities — 104.2%
Fannie Mae Mortgage-Backed Securities:
2.50%, 10/15/27 – 11/15/27 (l)		326,500		342,956,094
3.00%, 10/15/27 – 10/15/42 (l)		361,700		382,688,376
3.05%, 3/01/41 (b)		3,548		3,722,882
3.15%, 3/01/41 (b)		4,354		4,562,433
3.30%, 12/01/40 (b)		6,890		7,306,318
3.50%, 7/01/26 – 10/15/42 (l)		263,308		282,389,242
4.00%, 2/01/25 – 10/15/42 (l)		337,428		363,514,777
4.50%, 2/01/25 – 11/15/42 (f)(l)		573,095		620,818,194
4.99%, 8/01/38 (b)		5,506		5,916,847
5.00%, 9/01/33 – 11/15/42 (l)		331,290		361,662,061
5.50%, 12/01/32 – 11/15/42 (l)		135,646		149,188,432
5.60%, 10/01/38 (b)		45		48,044
6.00%, 2/01/34 – 11/15/42 (l)		349,187		386,177,338
6.50%, 5/01/40		31,304		35,670,945
Freddie Mac Mortgage-Backed Securities:
2.26%, 10/01/36 (b)		56		59,282
2.57%, 2/01/37 (b)		116		123,482
2.63%, 2/01/37 (b)		40		42,587
2.92%, 6/01/42 (b)		6,761		7,143,151
3.02%, 2/01/41 (b)		5,727		6,012,641
3.50%, 10/15/27 – 10/15/42 (l)		35,500		37,929,156
4.00%, 10/15/27 – 11/15/42 (l)		103,700		111,273,052
4.50%, 10/15/42 – 11/15/42 (l)		139,600		150,113,632
5.00%, 10/01/36 – 5/01/39		45,908		49,935,441
5.50%, 4/01/38 – 1/01/40		29,512		32,184,566
Ginnie Mae Mortgage-Backed Securities:
1.75%, 5/20/34 (b)		1,377		1,433,787
3.50%, 9/20/42 – 10/15/42 (l)		48,400		52,983,264
4.00%, 10/15/40 – 8/15/42		55,355		61,058,851
4.50%, 5/20/40 – 10/15/42 (f)(l)		97,366		107,815,654
5.00%, 10/20/39 – 10/15/42 (l)		47,060		52,071,566
				3,616,802,095
Total US Government Sponsored Agency Securities — 106.9%				3,709,919,886

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	33

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

US Treasury Obligations	Par  (000)		Value
US Treasury Bonds, 2.75%, 8/15/42 (f)	USD	97,146	$	95,536,773
US Treasury Inflation-Indexed Bonds:
0.13%, 4/15/17 (f)		102,629		110,558,739
0.13%, 7/15/22		8,180		8,938,332
2.13%, 2/15/41		15,932		23,403,294
0.75%, 2/15/42		8,614		9,358,620
US Treasury Notes:
0.25%, 8/31/14		8,205		8,206,600
0.25%, 9/30/14		129,535		129,565,311
0.25%, 9/15/15 (f)		211,610		211,246,242
0.88%, 4/30/17		86		87,520
0.50%, 7/31/17		560		557,244
0.63%, 8/31/17 (f)		159,528		159,627,205
0.63%, 9/30/17		57,785		57,775,986
1.00%, 8/31/19 (f)		145,535		145,171,162
1.63%, 8/15/22 (f)		18,873		18,852,153
Total US Treasury Obligations — 28.2%				978,885,181
Total Long-Term Investments (Cost — $7,173,724,223) — 210.9%				7,318,049,843
Short-Term Securities	Shares
Money Market Funds — 0.2%
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (h)(m)		9,146,877		9,146,877
	Par  (000)
Borrowed Bond Agreements — 5.4%
Barclays Bank Plc, NY:
(0.25)%, open	EUR	1,186		1,524,189
(0.08)%, open		2,831		3,637,546
(0.10)%, open		5,793		7,444,015
(0.38)%, open		2,390		3,071,015
0.05%, open		3,948		5,073,736
0.00%, 12/27/12		3,430		4,408,166
0.02%, open		5,880		7,556,455
0.05%, open		827		1,063,158
1.25%, open		2,975		3,822,885
0.15%, open		9,251		11,887,476
0.05%, open		815		1,047,420
0.05%, open		2,006		2,577,296
0.03%, open		8,745		11,238,209
BNP Paribas, 0.21%, open	USD	1,096		1,096,250
Citigroup, 0.00%, open	EUR	8,180		10,511,835
Credit Suisse:
0.12%, open	USD	104		104,375
0.21%, open		94,540		94,540,000
(0.15)%, 10/01/12		1,343		1,343,350
UBS AG, (0.28)%, 10/04/12	EUR	11,364		14,603,787
				186,551,163
Total Short-Term Securities (Cost — $196,531,347) — 5.6%				195,698,040

Options Purchased	Contracts		Value
Exchange-Traded Call Options — 0.0%
CAC 40 Index, Strike Price USD 3,350.00, Expires 11/16/12		90	$	113,746
DAX Index, Strike Price USD 7,100.00, Expires 11/16/12		72		66,663
Eurodollar 3-Year Mid-Curve Options, Strike Price USD 98.88, Expires 11/16/12		1,490		968,500
FTSE MIB Index, Strike Price USD 15,000.00, Expires 11/16/12		40		53,972
				1,202,881
	Notional Amount (000)
Over-the-Counter Barrier Options — 0.0%
GBP Currency Put/USD Currency Call, Strike Price USD 1.62, Barrier Price USD 1.58, Expires 10/17/12, Broker BNP Paribas SA	GBP	2,505		14,628
USD Currency, Barrier Price CAD 1.01, Expires 12/17/12, Broker BNP Paribas SA	USD	80		37,920
USD Currency Put/BRL Currency Call, Strike Price BRL 2.05, Barrier Price BRL 2.01, Expires 10/09/12, Broker Barclays Plc		3,579		17,010
	Contracts
S&P 500 Index, Strike Price USD 1,200.00, Barrier Price USD 900.00, Expires 12/21/12, Broker Goldman Sachs International		48,193		134,665
				204,223
	Notional Amount (000)
Over-the-Counter Call Options — 0.0%
EUR Currency:
Strike Price USD 295.00, Expires 11/02/12, Broker Deutsche Bank AG	EUR	4,930		22,560
Strike Price USD 1.29, Expires 12/20/12, Broker Royal Bank of Scotland Group Plc		9,150		175,691
				198,251
Over-the-Counter Interest Rate Call Swaptions — 0.1%
Receive a fixed rate of 2.25% and pay a floating rate based on 3-month LIBOR, Expires 11/09/12, Broker Bank of America Corp.	USD	21,000		58,073
Receive a fixed rate of 1.55% and pay a floating rate based on 3-month LIBOR, Expires 12/14/12, Broker JPMorgan Chase & Co.		20,400		89,793
Receive a fixed rate of 2.68% and pay a floating rate based on 3-month LIBOR, Expires 3/11/13, Broker Citigroup, Inc.		9,500		485,947
Receive a fixed rate of 1.16% and pay a floating rate based on 3-month LIBOR, Expires 7/11/13, Broker Citigroup, Inc.		5,700		72,552
Receive a fixed rate of 1.07% and pay a floating rate based on 3-month LIBOR, Expires 7/25/13, Broker Deutsche Bank AG		93,800		903,669
				1,610,034

See Notes to Consolidated Financial Statements.
36	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Options Purchased		Notional Amount (000)		Value
Over-the-Counter Credit Default Put Swaptions — 0.0%
Bought credit default protection on iTraxx — Crossover Index Series 17, Version 1, Strike Price USD 500, Expires 10/17/12, Broker JPMorgan Chase & Co.	EUR		8,000	$	107,332
Bought credit default protection on iTraxx — Crossover Index Series 17, Version 1, Strike Price USD 500, Expires 10/17/12, Broker JPMorgan Chase & Co.			4,010		53,800
Bought credit default protection on iTraxx — Crossover Index Series 17, Version 1, Strike Price USD 550, Expires 10/17/12, Broker JPMorgan Chase & Co.			4,010		19,744
Bought credit default protection on iTraxx — Sub Europe Financial Index Series 17, Version 1, Strike Price USD 200, Expires 10/17/12, Broker Citigroup, Inc.			20,810		302,256
					483,132
Over-the-Counter Interest Rate Put Swaptions — 0.1%
Pay a fixed rate of 2.30% and receive a floating rate based on 3-month LIBOR, Expires 11/23/12, Broker Citigroup, Inc.	USD		25,000		17,755
Pay a fixed rate of 2.68% and receive a floating rate based on 3-month LIBOR, Expires 3/11/13, Broker Citigroup, Inc.			9,500		443,294
Pay a fixed rate of 2.13% and receive a floating rate based on 3-month LIBOR, Expires 3/21/13, Broker Deutsche Bank AG			57,000		9,445
Pay a fixed rate of 1.16% and receive a floating rate based on 3-month LIBOR, Expires 7/11/13, Broker Citigroup, Inc.			5,700		37,382
Pay a fixed rate of 1.07% and receive a floating rate based on 3-month LIBOR, Expires 7/25/13, Broker Deutsche Bank AG			93,800		802,975
Pay a fixed rate of 4.50% and receive a floating rate based on 3-month LIBOR, Expires 3/20/17, Broker Deutsche Bank AG			20,100		493,077
					1,803,928
Over-the-Counter Put Options — 0.0%
AUD Currency, Strike Price USD 1.01, Expires 10/12/12, Broker Citigroup, Inc.			7,400		4,803
EUR Currency:
Strike Price USD 1.26, Expires 10/03/12, Broker UBS AG			8,200		853
Strike Price USD 1.18, Expires 12/20/12, Broker Bank of America Corp.			27,670		40,500
					46,156
Total Options Purchased (Cost — $8,387,589) — 0.2%					5,548,605
Total Investments Before Borrowed Bonds, TBA Sale Commitments and Options Written (Cost — $7,378,643,159*) — 216.7%					7,519,296,488

Borrowed Bonds		Par (000)		Value
Belgium Government Bond:
3.25%, 9/28/16	EUR		8,790	$	(12,317,838	)
4.25%, 9/28/21			5,725		(8,496,495	)
5.50%, 9/28/17			7,340		(11,347,109	)
France Government Bond OAT:
3.00%, 4/25/22			10,450		(14,372,812	)
3.75%, 4/25/17			7,320		(10,636,002	)
4.00%, 10/25/17			10,785		(16,071,200	)
4.00%, 4/25/18			4,960		(7,355,419	)
Spain Government Bond:
3.40%, 4/30/14			805		(1,033,524	)
4.00%, 7/30/15			3,350		(4,302,979	)
4.25%, 10/31/16			3,490		(4,400,060	)
US Treasury Bonds:
3.00%, 5/15/42	USD		100		(103,688	)
3.13%, 11/15/41			1,000		(1,065,312	)
US Treasury Notes:
0.88%, 4/30/17			92,800		(94,112,285	)
1.63%, 8/15/22			1,340		(1,338,534	)
Total Borrowed Bonds (Proceeds — $183,304,930) — (5.4)%					(186,953,257	)
TBA Sale Commitments (l)
Fannie Mae Mortgage-Backed Securities:
2.50%, 10/15/27 – 11/15/27			285,300		(299,657,469	)
3.00%, 10/15/27 – 10/15/42			331,600		(351,105,406	)
3.50%, 10/15/27 – 10/15/42			177,500		(190,048,969	)
4.00%, 10/15/27 – 10/15/42			256,500		(276,154,605	)
4.50%, 11/15/27 – 11/15/42			495,200		(535,926,493	)
5.00%, 10/15/42 – 11/15/42			295,600		(322,365,829	)
5.50%, 10/15/42			75,800		(83,095,750	)
6.00%, 11/15/42			291,400		(321,723,813	)
6.50%, 10/15/42			5,600		(6,294,750	)
Freddie Mac Mortgage-Backed Securities:
4.00%, 10/15/42			46,300		(49,765,268	)
4.50%, 10/15/42			69,800		(75,067,722	)
Ginnie Mae Mortgage-Backed Securities:
3.50%, 10/15/42			21,400		(23,406,248	)
4.00%, 10/15/42			14,600		(16,085,812	)
4.50%, 10/15/42			16,600		(18,267,780	)
Total TBA Sale Commitments (Proceeds — $2,562,157,464) — (74.0)%					(2,568,965,914	)
Options Written		Contracts
Exchange-Traded Call Options — (0.0)%
Eurodollar 3-Year Mid-Curve Options, Strike Price USD 99.13, Expires 11/16/12			2,235		(460,969	)
		Notional Amount (000)
Over-the-Counter Barrier Options — (0.0)%
USD Currency, Barrier Price CAD 1.01, Expires 11/05/12, Broker BNP Paribas SA	USD		80		(25,142	)
Over-the-Counter Call Options — (0.0)%
EUR Currency:
Strike Price USD 1.29, Expires 12/20/12, Broker Bank of America Corp.			27,720		(532,258	)
Strike Price USD 310.00, Expires 11/02/12, Broker Deutsche Bank AG			4,930		(3,389	)
					(535,647	)

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	37

Consolidated Schedule of Investments (continued)	Master Total Return Portfolio
	(Percentages shown are based on Net Assets)

Options Written		Notional Amount (000)		Value
Over-the-Counter Interest Rate Call Swaptions — (0.3)%
Pay a fixed rate of 3.90% and receive a floating rate based on 3-month LIBOR, Expires 6/09/14, Broker Royal Bank of Scotland Plc	USD		50,000	$	(6,082,855	)
Pay a fixed rate of 1.25% and receive a floating rate based on 3-month LIBOR, Expires 6/20/14, Broker Barclays Plc			25,400		(285,013	)
Pay a fixed rate of 1.00% and receive a floating rate based on 3-month LIBOR, Expires 7/10/14, Broker Bank of America Corp.			37,900		(221,612	)
Pay a fixed rate of 1.00% and receive a floating rate based on 3-month LIBOR, Expires 7/11/14, Broker Bank of America Corp.			48,200		(282,539	)
Pay a fixed rate of 1.00% and receive a floating rate based on 3-month LIBOR, Expires 7/14/14, Broker Bank of America Corp.			38,000		(222,870	)
Pay a fixed rate of 1.43% and receive a floating rate based on 3-month LIBOR, Expires 7/28/14, Broker Deutsche Bank AG			16,800		(263,972	)
Pay a fixed rate of 3.65% and receive a floating rate based on 3-month LIBOR, Expires 3/27/17, Broker JPMorgan Chase & Co.			8,900		(868,117	)
					(8,226,978	)
Over-the-Counter Credit Default Put Swaptions — (0.0)%
Sold credit default protection on iTraxx — Crossover Index Series 18, Version 1, Strike Price USD 675, Expires 11/21/12, Broker Citigroup, Inc. (n)(o)	EUR		16,000		(153,393	)
Sold credit default protection on iTraxx — Europe Sub Financial Index Series 17, Version 1, Strike Price USD 130, Expires 10/17/12, Broker Citigroup, Inc. (n)(p)			32,020		(185,164	)
Sold credit default protection on iTraxx — Europe Sub Financial Index Series 17, Version 1, Strike Price USD 130, Expires 10/17/12, Broker JPMorgan Chase & Co. (n)(p)			16,030		(92,698	)
Sold credit default protection on iTraxx — Europe Sub Financial Index Series 17, Version 1, Strike Price USD 140, Expires 10/17/12, Broker JPMorgan Chase & Co. (n)(p)			16,030		(52,856	)
					(484,111	)
Over-the-Counter Interest Rate Put Swaptions — (0.1)%
Receive a fixed rate of 3.90% and pay a floating rate based on 3-month LIBOR, Expires 6/09/14, Broker Royal Bank of Scotland Plc	USD		50,000		(60,125	)
Receive a fixed rate of 2.25% and pay a floating rate based on 3-month LIBOR, Expires 6/20/14, Broker Barclays Plc			25,400		(153,264	)
Receive a fixed rate of 2.00% and pay a floating rate based on 3-month LIBOR, Expires 7/10/14, Broker Bank of America Corp.			37,900		(324,310	)
Receive a fixed rate of 2.00% and pay a floating rate based on 3-month LIBOR, Expires 7/11/14, Broker Bank of America Corp.			48,200		(413,744	)

Options Written	Notional Amount (000)		Value
Over-the-Counter Interest Rate Put Swaptions (concluded)
Receive a fixed rate of 2.00% and pay a floating rate based on 3-month LIBOR, Expires 7/14/14, Broker Bank of America Corp. USD		38,000	$	(327,670	)
Receive a fixed rate of 1.95% and pay a floating rate based on 3-month LIBOR, Expires 7/16/14, Broker Citigroup, Inc.		29,900		(274,996	)
Receive a fixed rate of 1.43% and pay a floating rate based on 3-month LIBOR, Expires 7/28/14, Broker Deutsche Bank AG		16,800		(287,369	)
Receive a fixed rate of 6.00% and pay a floating rate based on 3-month LIBOR, Expires 3/20/17, Broker Deutsche Bank AG		40,200		(435,788	)
Receive a fixed rate of 3.65% and pay a floating rate based on 3-month LIBOR, Expires 3/27/17, Broker JPMorgan Chase & Co.		8,900		(369,642	)
				(2,646,908	)
Over-the-Counter Put Options — (0.0)%
EUR Currency, Strike Price USD 1.10, Expires 12/20/12, Broker Bank of America Corp.		27,670		(5,654	)
Total Options Written (Premiums Received — $10,652,756) — (0.4)%				(12,385,409	)
Total Investments, Net of Borrowed Bonds, TBA Sale Commitments and Options Written — 136.9%				4,750,991,908
Liabilities in Excess of Other Assets — (36.9)%				(1,280,841,357	)
Net Assets — 100.0%			$	3,470,150,551

* As of September 30, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	7,387,176,110
Gross unrealized appreciation	$	156,663,864
Gross unrealized depreciation		(24,543,486	)
Net unrealized appreciation	$	132,120,378

(a)	Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(b)	Variable rate security. Rate shown is as of report date.
(c)	When-issued security. Unsettled when-issued transactions were as follows:

Counterparty	Value		Unrealized Appreciation
Bank of America Corp.	$	10,365,164		—
Credit Suisse Group AG	$	3,705,375	$	90,375
Deutsche Bank AG	$	9,402,975	$	207,227
JPMorgan Chase & Co.	$	7,530,000		—
Société Générale	$	2,876,199	$	9,277
Wells Fargo & Co.	$	12,851,918		—

(d)	All or a portion of security has been pledged as collateral in connection with swaps.
(e)	Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date.
(f)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.
(g)	Security is perpetual in nature and has no stated maturity date.

See Notes to Consolidated Financial Statements.
38	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

(h) Investments in issuers considered to be an affiliate of the Master Portfolio during the year ended September 30, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Par/Shares Held at September 30, 2011		Par/Shares Purchased		Par/Shares Sold			Par/Shares Held at September 30, 2012		Value at September 30, 2012		Income		Realized Gain
BlackRock Capital Finance LP, Series 1997-R2, Class AP, 1.24%, 12/25/2035	$	9,098		—	$	(555	)	$	8,543	$	8,543	$	761		—
BlackRock Liquidity Funds, TempFund, Institutional Class		208,292,969		—		(199,146,092	)1		9,146,877	$	9,146,877	$	30,352	$	456
iShares JPMorgan USD Emerging Markets Bond Fund		114,500		—		—			114,500	$	13,884,270	$	603,299		—

¹ Represents net shares sold.

(i)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(j)	Convertible security.
(k)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(l)	Represents or includes a TBA transaction. Unsettled TBA transactions as of September 30, 2012 were as follows:

Counterparty	Value			Unrealized Appreciation (Depreciation)
Bank of America Corp.	$	(97,121,078	)	$	(1,370,148	)
Barclays Plc	$	(10,746,032	)	$	171,679
BNP Paribas SA	$	(14,425,766	)	$	(67,211	)
Citigroup, Inc.	$	224,630,124		$	1,672,453
Credit Suisse Group AG	$	(130,785,975	)	$	337,247
Deutsche Bank AG	$	(306,178,993	)	$	(438,622	)
Goldman Sachs Group, Inc.	$	(59,337,251	)	$	(945,575	)
JPMorgan Chase & Co.	$	317,023,632		$	2,495,906
Morgan Stanley	$	23,323,143		$	90,370
Nomura Trust and Banking Co., Ltd.	$	82,267,504		$	128,833
Royal Bank of Canada	$	(4,452,000	)	$	5,250
Royal Bank of Scotland Group Plc	$	(17,663,767	)	$	115,737
UBS AG	$	24,478,142		$	97,900
Wells Fargo & Co	$	26,502,657		$	119,157

(m)	Represents the current yield as of report date.
(n)	The maximum potential amount that the Master Portfolio may pay should a negative credit event take place as defined under the terms of the agreement.
(o)	Rated BB– using S&P’s rating of the underlying securities.
(p)	Rated A using S&P’s rating of the underlying securities.
•	Reverse repurchase agreements outstanding as of September 30, 2012 were as follows:

Counterparty	Interest Rate			Trade Date		Maturity Date		Face Value		Face Value Including Accrued Interest
UBS AG		(0.25	)%		7/02/12		Open	$	855,750	$	855,209
UBS AG		(2.50	)%		7/02/12		Open		3,589,025		3,566,344
Deutsche Bank AG		0.14	%		7/20/12		Open		3,258,500		3,259,425
Deutsche Bank AG		0.14	%		7/20/12		Open		4,869,100		4,870,482
Credit Suisse Group AG		0.21	%		7/24/12		Open		9,232,072		9,235,788
Deutsche Bank AG		0.23	%		7/25/12		Open		6,374,500		6,377,269
Deutsche Bank AG		0.23	%		7/25/12		Open		8,874,188		8,878,044
Deutsche Bank AG		0.23	%		7/25/12		Open		3,506,062		3,507,586

Reverse repurchase agreements outstanding as of September 30, 2012 were as follows (concluded):

Counterparty	Interest Rate			Trade Date		Maturity Date		Face Value		Face Value Including Accrued Interest
Credit Suisse Group AG		(0.25	)%		8/20/12		Open	$	1,315,350	$	1,314,966
Credit Suisse Group AG		0.32	%		9/12/12		10/11/12		170,607,215		170,651,194
Credit Suisse Group AG		0.33	%		9/20/12		10/11/12		44,549,000		44,557,576
Bank of America Corp.		0.11	%		9/28/12		10/01/12		152,292,628		152,294,024
Bank of America Corp.		0.25	%		9/28/12		10/01/12		109,837,500		109,839,788
BNP Paribas SA		0.27	%		9/28/12		10/01/12		96,417,107		96,419,277
Credit Suisse Group AG		(0.18	)%		9/28/12		10/01/12		56,700,197		56,699,346
Credit Suisse Group AG		0.09	%		9/28/12		10/01/12		145,171,163		145,172,251
Deutsche Bank AG		0.28	%		9/28/12		10/01/12		211,345,488		211,350,419
Total								$	1,028,794,845	$	1,028,848,988

• Financial futures contracts purchased as of September 30, 2012 were as follows:

Contracts	Issue	Exchange	Expiration		Notional Value		Unrealized Appreciation (Depreciation)
339	10-Year Australian Treasury Bond	Australian Securities Exchange	December 2012	AUD	44,621,031	$	1,241,711
822	2-Year US Treasury Note	Chicago Board of Trade	December 2012	USD	181,276,688		30,997
36	30-Year US Treasury Bond	Chicago Board of Trade	December 2012	USD	5,377,500		54,566
826	5-Year US Treasury Note	Chicago Board of Trade	December 2012	USD	102,946,703		5,459
49	Euro-OAT Future	Eurex	December 2012	EUR	8,434,488		37,237
138	CBOE Volatility Index (VIX) Futures	Chicago Board Options Exchange	February 2013	USD	3,056,700		(44,728	)
193	90-Day Euro-Dollar Future	Chicago Mercantile	September 2015	USD	47,878,475		63,555

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	39

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

Financial futures contracts purchased as of September 30, 2012 were as follows (concluded):

Contracts	Issue	Exchange	Expiration	Notional Value		Unrealized Appreciation (Depreciation)
193	90-Day Euro-Dollar Future	Chicago Mercantile	December 2015	USD	47,818,162	$	75,786
371	90-Day Euro-Dollar Future	Chicago Mercantile	March 2016	USD	91,803,950		120,315
193	90-Day Euro-Dollar Future	Chicago Mercantile	June 2016	USD	47,687,888		97,957
Total						$	1,682,855

• Financial futures contracts sold as of September 30, 2012 were as follows:

Contracts	Issue	Exchange	Expiration	Notional Value		Unrealized Appreciation (Depreciation)
148	CBOE Volatility Index (VIX) Futures	Chicago Board Options Exchange	October 2012	USD	2,427,200	$	(10,052	)
1,082	3-Year Australian Treasury Bond	Australian Securities Exchange	December 2012	AUD	124,035,732		(1,058,278	)
2,146	10-Year US Treasury Note	Chicago Board of Trade	December 2012	USD	286,457,469		(553,428	)
109	Euro BOBL	Eurex	December 2012	EUR	17,605,451		(18,016	)
586	Euro-Bund	Eurex	December 2012	EUR	106,758,359		(686,161	)
2	Euro-Schatz	Eurex	December 2012	EUR	284,561		(337	)
116	Long Gilt Bond	London Financial Futures	December 2012	GBP	22,594,143		(151,498	)
25	S&P 500 E-Mini Index Future	Chicago Mercantile	December 2012	USD	1,792,750		14,533
226	Ultra Long US Treasury Bond	Chicago Board of Trade	December 2012	USD	37,339,438		405,373
Total						$	(2,057,864	)

• Foreign currency exchange contracts as of September 30, 2012 were as follows:

Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
EUR	15,721,000	USD	20,204,000	Royal Bank of Scotland Group Plc	10/01/12	$	(1,733	)
BRL	688,397	USD	339,012	Citigroup, Inc.	10/02/12		418
BRL	685,981	USD	338,778	UBS AG	10/02/12		(540	)
USD	338,778	BRL	688,397	Citigroup, Inc.	10/02/12		(651	)
USD	337,822	BRL	685,981	UBS AG	10/02/12		(558	)
AUD	2,550,000	USD	2,634,762	Citigroup, Inc.	10/03/12		14,049
CAD	3,900,000	USD	3,992,649	Citigroup, Inc.	10/03/12		(28,394	)

Foreign currency exchange contracts as of September 30, 2012 were as follows (continued):

Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
GBP	357,871	USD	580,239	JPMorgan Chase & Co.	10/09/12	$	(2,933	)
USD	579,625	GBP	357,871	Goldman Sachs Group, Inc.	10/09/12		2,320
USD	290,111	GBP	178,936	UBS AG	10/09/12		1,457
AUD	1,460,000	USD	1,514,830	Citigroup, Inc.	10/12/12		535
AUD	2,240,000	USD	2,250,640	Goldman Sachs Group, Inc.	10/12/12		74,304
USD	3,720,017	AUD	3,700,000	Goldman Sachs Group, Inc.	10/12/12		(120,292	)
CHF	2,659,000	USD	2,829,515	UBS AG	10/17/12		(34	)
GBP	1,000,000	USD	1,601,833	Citigroup, Inc.	10/17/12		11,294
GBP	12,374,000	USD	19,399,673	Citigroup, Inc.	10/17/12		561,164
GBP	2,700,000	USD	4,326,386	Credit Suisse Group AG	10/17/12		29,058
NOK	25,565,000	SEK	29,256,586	HSBC Holdings Plc	10/17/12		4,499
SEK	29,553,523	NOK	25,565,000	BNP Paribas SA	10/17/12		40,693
USD	206,574	CAD	210,000	UBS AG	10/17/12		(6,823	)
USD	160,868	CHF	157,000	Citigroup, Inc.	10/17/12		(6,198	)
USD	4,387,919	CHF	4,294,000	Deutsche Bank AG	10/17/12		(181,389	)
USD	2,167,529	CHF	2,125,000	Royal Bank of Scotland Group Plc	10/17/12		(93,714	)
USD	260,686	EUR	207,000	Citigroup, Inc.	10/17/12		(5,493	)
USD	20,207,066	EUR	15,721,000	Royal Bank of Scotland Group Plc	10/17/12		(8,401	)
USD	3,303,103	GBP	2,037,000	Citigroup, Inc.	10/17/12		17,163
USD	3,142,735	GBP	1,933,000	Citigroup, Inc.	10/17/12		24,560
USD	5,859,621	GBP	3,612,000	Deutsche Bank AG	10/17/12		33,006
USD	64,970,794	GBP	41,852,000	UBS AG	10/17/12		(2,541,809	)
USD	4,090,396	GBP	2,615,000	UBS AG	10/17/12		(127,932	)
USD	3,426,880	GBP	2,192,500	UBS AG	10/17/12		(109,902	)
USD	2,152,127	GBP	1,388,000	UBS AG	10/17/12		(86,893	)
USD	1,556,560	GBP	1,000,000	Westpac Banking Corp.	10/17/12		(56,567	)
CAD	16,682,661	AUD	16,365,000	Deutsche Bank AG	10/19/12		(23,229	)
USD	10,958,995	AUD	10,488,000	UBS AG	10/19/12		80,021
USD	24,731,535	EUR	18,853,000	UBS AG	10/19/12		488,188
EUR	23,281,000	USD	28,629,880	Citigroup, Inc.	10/22/12		1,308,375
MXN	111,628,000	USD	8,600,000	Bank of America Corp.	10/22/12		59,588
MXN	55,422,700	USD	4,300,000	Royal Bank of Scotland Group Plc	10/22/12		(561	)
MXN	55,426,570	USD	4,300,000	Royal Bank of Scotland Group Plc	10/22/12		(261	)

See Notes to Consolidated Financial Statements.
40	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

Foreign currency exchange contracts as of September 30, 2012 were as follows (concluded):

Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
USD	193,554,750	EUR	157,875,000	Citigroup, Inc.	10/22/12	$	(9,464,966	)
USD	34,445,502	EUR	27,546,000	Citigroup, Inc.	10/22/12		(977,340	)
USD	12,429,067	EUR	9,909,000	Citigroup, Inc.	10/22/12		(313,434	)
USD	3,961,657	EUR	3,100,000	Citigroup, Inc.	10/22/12		(24,795	)
USD	5,125,360	EUR	4,004,000	Citigroup, Inc.	10/22/12		(23,593	)
USD	925,302	EUR	734,000	Citigroup, Inc.	10/22/12		(18,587	)
USD	766,646	EUR	610,000	Citigroup, Inc.	10/22/12		(17,785	)
USD	12,776,026	EUR	9,866,000	Deutsche Bank AG	10/22/12		88,821
USD	4,510,737	EUR	3,613,000	Royal Bank of Scotland Group Plc	10/22/12		(135,409	)
USD	12,636,137	EUR	9,883,000	UBS AG	10/22/12		(72,929	)
MXN	15,298,368	AUD	1,131,667	Deutsche Bank AG	12/19/12		12,262
MXN	15,305,769	AUD	1,131,667	Deutsche Bank AG	12/19/12		12,833
MXN	15,302,896	AUD	1,131,667	JPMorgan Chase & Co.	12/19/12		12,611
USD	7,973,897	CNY	51,320,000	Standard Chartered Plc	6/07/13		(44,793	)
USD	7,987,549	CNY	51,320,000	Standard Chartered Plc	6/07/13		(31,141	)
USD	8,273,320	CNY	53,305,000	Credit Suisse Group AG	8/19/13		(22,984	)
Total						$	(11,674,844	)

• Credit default swaps on single-name issues — buy protection outstanding as of September 30, 2012 were as follows:

Issuer	Pay Fixed Rate		Counterparty	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
Portugal Government Bond	1.00	%	JPMorgan Chase & Co.	6/20/15	USD	12,800	$	7,614
The New York Times Co.	1.00	%	Barclays Plc	12/20/16	USD	3,100		(50,489	)
Ireland Government Bond	1.00	%	Citigroup, Inc.	12/20/16	USD	4,000		(472,200	)
Banca Monte dei Paschi di Siena SpA	5.00	%	Deutsche Bank AG	12/20/16	EUR	750		44,333
Transocean Worldwide, Inc.	1.00	%	Goldman Sachs Group, Inc	12/20/16	USD	5,750		(103,826	)
Ireland Government Bond	1.00	%	Citigroup, Inc.	3/20/17	USD	2,000		(171,005	)
Ireland Government Bond	1.00	%	Goldman Sachs Group, Inc.	3/20/17	USD	11,000		(1,235,719	)
Banca Monte dei Paschi di Siena SpA	5.00	%	JPMorgan Chase & Co.	3/20/17	EUR	3,800		397,076
Banco de Sabadell SA	5.00	%	BNP Paribas SA	6/20/17	EUR	720		(12,671	)
Caixa Bank SA	3.00	%	BNP Paribas SA	6/20/17	EUR	540		14,525

Credit default swaps on single-name issues — buy protection outstanding as of September 30, 2012 were as follows (continued):

Issuer	Pay Fixed Rate		Counterparty	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
Caixa Bank SA	3.00	%	BNP Paribas SA	6/20/17	EUR	720	$	21,337
Portugal Government Bond	1.00	%	Citigroup, Inc.	6/20/17	USD	6,000		(950,918	)
Svenska Cellulosa Aktiebolaget SCA	1.00	%	Morgan Stanley	6/20/17	EUR	2,565		(32,943	)
Compagne de Saint-Gobain	1.00	%	Barclays Plc	9/20/17	EUR	555		(6,242	)
Spain Government Bond	1.00	%	Barclays Plc	9/20/17	USD	1,400		(88,111	)
Spain Government Bond	1.00	%	Barclays Plc	9/20/17	USD	2,300		(159,313	)
Banco Santander SA	3.00	%	BNP Paribas SA	9/20/17	EUR	1,050		(20,730	)
Banco Santander SA	3.00	%	BNP Paribas SA	9/20/17	EUR	850		(24,049	)
Barclays Plc	1.00	%	BNP Paribas SA	9/20/17	EUR	2,000		(9,390	)
Peugeot SA	5.00	%	BNP Paribas SA	9/20/17	EUR	5,950		49,179
Royal Bank of Scotland	5.00	%	BNP Paribas SA	9/20/17	EUR	1,680		(111,748	)
Spain Government Bond	1.00	%	BNP Paribas SA	9/20/17	USD	2,440		(125,063	)
Banco Bilbao Vizcaya Argentaria SA	3.00	%	Citigroup, Inc.	9/20/17	EUR	5,890		(134,447	)
Banco Bilbao Vizcaya Argentaria SA	3.00	%	Citigroup, Inc.	9/20/17	EUR	5,445		(124,289	)
Banco Bilbao Vizcaya Argentaria SA	3.00	%	Citigroup, Inc.	9/20/17	EUR	1,010		(56,020	)
Hartford Financial Services Group	1.00	%	Citigroup, Inc.	9/20/17	USD	1,000		(42,276	)
Ireland Government Bond	1.00	%	Citigroup, Inc.	9/20/17	USD	500		(40,472	)
Banco Bilbao Vizcaya Argentaria SA	3.00	%	Deutsche Bank AG	9/20/17	EUR	800		(19,027	)
Royal Bank of Scotland	3.00	%	Deutsche Bank AG	9/20/17	EUR	2,200		(111,973	)
Société Générale SA	3.00	%	Deutsche Bank AG	9/20/17	EUR	1,200		(30,352	)
Royal Bank of Scotland	5.00	%	JPMorgan Chase & Co.	9/20/17	EUR	1,000		(66,548	)
Société Générale SA	3.00	%	JPMorgan Chase & Co.	9/20/17	EUR	1,200		(34,457	)
Banco Bilbao Vizcaya Argentaria SA	3.00	%	UBS AG	9/20/17	EUR	510		(29,636	)
Telenor ASA	1.00	%	Barclays Plc	12/20/17	EUR	3,660		8,465
Volvo AB	1.00	%	Barclays Plc	12/20/17	EUR	750		5,916
Clariant AG	1.00	%	BNP Paribas SA	12/20/17	EUR	1,300		(23,799	)

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	41

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

Credit default swaps on single-name issues — buy protection outstanding as of September 30, 2012 were as follows (concluded):

Issuer	Pay Fixed Rate		Counterparty		Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
Henkel AG & Co. KGaA		1.00%	Credit Suisse Group AG			12/20/17	EUR	1,950	$	(638	)
Akzo Nobel NV		1.00%		Deutsche Bank AG		12/20/17	EUR	2,500		(15,835	)
Telekom Austria AG		1.00%		Deutsche Bank AG		12/20/17	EUR	4,380		64,966
Compagne de Saint-Gobain		1.00%		Goldman Sachs Group, Inc.		12/20/17	EUR	750		(222	)
Clariant AG		1.00%		JPMorgan Chase & Co.		12/20/17	EUR	3,540		7,493
Diageo Plc		1.00%		Deutsche Bank AG		12/20/17	EUR	3,650		(2,998	)
UPM-Kymmene Oyj		5.00%		JPMorgan Chase & Co.		12/20/17	EUR	1,770		(3,876	)
Total									$	(3,690,378	)

• Credit default swaps on single-name issues — sold protection outstanding as of September 30, 2012 were as follows:

Issuer

Receive Fixed Rate

Counterparty

Expiration Date

Issuer Credit Rating1

Notional Amount (000)2

Unrealized Appreciation (Depreciation)

Hellenic Telecommunications Organization SA

5.00%

Citigroup, Inc.

6/20/13

B–

EUR

360

$

36,833

Hellenic Telecommunications Organization SA

5.00%

Citigroup, Inc.

6/20/13

B–

EUR

540

92,167

Hellenic Telecommunications Organization SA

5.00%

JPMorgan Chase & Co.

6/20/13

B–

EUR

900

2,215

Hellenic Telecommunications Organization SA

5.00%

JPMorgan Chase & Co.

6/20/13

B–

EUR

900

120,031

ARAMARK Corp.

5.00%

JPMorgan Chase & Co.

6/20/16

B+

USD

1,850

135,113

Banca Monte dei Paschi di Siena SpA

3.00%

BNP Paribas SA

9/20/16

BBB–

EUR

2,000

(353,131

)

Banca Monte dei Paschi di Siena SpA

5.00%

Deutsche Bank AG

9/20/16

BBB–

EUR

750

(145,566

)

MetLife, Inc.

1.00%

Deutsche Bank AG

9/20/16

A–

USD

3,680

146,639

Banca Monte dei Paschi di Siena SpA

3.00%

JPMorgan Chase & Co.

9/20/16

BBB–

EUR

2,200

(519,662

)

MetLife, Inc.

1.00%

Morgan Stanley

9/20/16

A–

USD

4,580

176,589

MetLife, Inc.

1.00%

Morgan Stanley

9/20/16

A–

USD

2,770

87,216

Italy Government Bond

1.00%

Citigroup, Inc.

12/20/16

BBB+

USD

4,000

180,861

MetLife, Inc.

1.00%

Citigroup, Inc.

12/20/16

A–

USD

3,060

94,142

MetLife, Inc.

1.00%

Citigroup, Inc.

12/20/16

A–

USD

2,880

103,519

MetLife, Inc.

1.00%

Citigroup, Inc.

3/20/17

A–

USD

2,380

46,656

Credit default swaps on single-name issues — sold protection outstanding as of September 30, 2012 were as follows (continued):

Issuer

Receive Fixed Rate

Counterparty

Expiration Date

Issuer Credit Rating1

Notional Amount (000)2

Unrealized Appreciation (Depreciation)

Energy Transfer Partners LP

1.00%

Credit Suisse Group AG

3/20/17

BBB–

USD

5,000

$

190,759

MetLife, Inc.

1.00%

UBS AG

3/20/17

A–

USD

4,930

96,645

Unity Media Plc

5.00%

Barclays Plc

6/20/17

B–

EUR

1,160

111,226

Sunrise Communications Holdings

5.00%

Citigroup, Inc.

6/20/17

B–

EUR

1,160

130,430

Virgin Media Finance Plc

5.00%

Citigroup, Inc.

6/20/17

BB

EUR

670

74,673

Anadarko Petroleum Corp.

1.00%

Credit Suisse Group AG

6/20/17

BBB–

USD

11,580

240,196

Anadarko Petroleum Corp.

1.00%

Morgan Stanley

6/20/17

BBB–

USD

3,700

95,201

Anadarko Petroleum Corp.

1.00%

UBS AG

6/20/17

BBB–

USD

2,931

72,920

Ardagh Packaging Finance Plc

5.00%

Barclays Plc

9/20/17

CCC+

EUR

370

26,224

Gas Natural SDG SA

1.00%

Barclays Plc

9/20/17

BBB

EUR

800

48,169

Gas Natural SDG SA

1.00%

Barclays Plc

9/20/17

BBB

EUR

750

67,125

Repsol YPF SA

1.00%

Barclays Plc

9/20/17

BBB–

EUR

750

74,451

Credit Suisse Group AG

1.00%

BNP Paribas SA

9/20/17

A

EUR

2,000

54,862

Iberdrola SA

1.00%

Barclays Plc

9/20/17

BBB+

EUR

2,440

134,006

Lloyds TSB Bank Plc

5.00%

BNP Paribas SA

9/20/17

A

EUR

1,680

139,546

Anadarko Petroleum Corp.

1.00%

Citigroup, Inc.

9/20/17

BBB–

USD

5,000

(39,462

)

BNP Paribas SA

1.00%

Citigroup, Inc.

9/20/17

AA–

EUR

1,200

31,412

Italy Government Bond

1.00%

Citigroup, Inc.

9/20/17

BBB+

USD

500

26,574

Lincoln National Corp.

1.00%

Citigroup, Inc.

9/20/17

A–

USD

1,000

37,486

M-real Oyj

5.00%

Citigroup, Inc.

9/20/17

B–

EUR

3,470

107,047

MetLife, Inc.

1.00%

Citigroup, Inc.

9/20/17

A–

USD

10,000

(121,217

)

Anadarko Petroleum Corp.

1.00%

Credit Suisse Group AG

9/20/17

BBB–

USD

5,000

8,224

Ardagh Packaging Finance Plc

5.00%

Credit Suisse Group AG

9/20/17

CCC+

EUR

550

40,590

BNP Paribas SA

1.00%

Deutsche Bank AG

9/20/17

AA–

EUR

1,200

21,667

Lloyds TSB Bank Plc

3.00%

Deutsche Bank AG

9/20/17

A

EUR

2,200

122,275

Lloyds TSB Bank Plc

5.00%

Deutsche Bank AG

9/20/17

A

EUR

1,000

87,924

Metsa Board Oyj

5.00%

Goldman Sachs Group, Inc.

9/20/17

B–

EUR

800

(14,210

)

Finmeccanica SpA

5.00%

JPMorgan Chase & Co.

9/20/17

BBB–

EUR

840

72,287

See Notes to Consolidated Financial Statements.
42	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

Credit default swaps on single-name issues — sold protection outstanding as of September 30, 2012 were as follows (concluded):

Issuer	Receive Fixed Rate		Counterparty		Expiration Date		Issuer Credit Rating1		Notional Amount (000)2		Unrealized Appreciation (Depreciation)
Finmeccanica SpA		5.00%		UBS AG		9/20/17		BBB–	EUR	1,000	$	104,195
J Sainsbury Plc		1.00%		BNP Paribas SA		12/20/17		Not Rated	EUR	800		(3,505	)
Deutsche Telekom AG		1.00%		Citigroup, Inc.		12/20/17		BBB+	EUR	550		(4,005	)
France Telecom SA		1.00%		Citigroup, Inc.		12/20/17		A–	EUR	1,220		(12,274	)
Vodafone Group Plc		1.00%		Citigroup, Inc.		12/20/17		A–	EUR	910		(4,966	)
Deutsche Telekom AG		1.00%		Deutsche Bank AG		12/20/17		BBB+	EUR	1,500		(8,724	)
Imperial Tobacco Group Plc		1.00%		Deutsche Bank AG		12/20/17		BBB	EUR	1,500		(13,386	)
Tesco Plc		1.00%		Deutsche Bank AG		12/20/17		A–	EUR	3,500		(14,164	)
E.ON AG		1.00%		JPMorgan Chase & Co.		12/20/17		A–	EUR	3,250		(22,372	)
Gas Natural SDG SA		1.00%		JPMorgan Chase & Co.		12/20/17		BBB	EUR	1,550		(17,472	)
Stora Enso Oyj		5.00%		JPMorgan Chase & Co.		12/20/17		BB	EUR	1,770		9,155
Total											$	2,153,134

	1	Using S&P’s rating.
	2	The maximum potential amount the Master Portfolio may pay should a negative credit event take place as defined under the terms of the agreement.
•	Credit default swaps on traded indexes — buy protection outstanding as of September 30, 2012 were as follows:

Index	Pay Fixed Rate		Counterparty		Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
iTraxx — Europe Sub Financial Index Series 9		5.00%		JPMorgan Chase & Co.		6/20/15	EUR	5,915	$	(132,154	)
iTraxx — Crossover Index Series 15, Version 1		5.00%		UBS AG		6/20/16	EUR	605		(10,441	)
iTraxx — Crossover Index Series 16, Version 1		5.00%		Barclays Plc		12/20/16	EUR	2,364		(301,288	)
iTraxx — Europe Sub Financial Index Series 17, Version 1		1.00%		Citigroup, Inc.		6/20/17	EUR	3,410		(69,407	)
Dow Jones CDX North America Investment Grade Index Series 18, Version 1		1.00%		Credit Suisse Group AG		6/20/17	USD	103,800		(440,025	)
iTraxx — Europe Sub Financial Index Series 18, Version 1		1.00%		Citigroup, Inc.		12/20/17	EUR	1,240		5,569
iTraxx — Crossover Index Series 18, Version 1		5.00%		Deutsche Bank AG		12/20/17	EUR	8,000		101,494
Total									$	(846,252	)

• Credit default swaps on traded indexes — sold protection outstanding as of September 30, 2012 were as follows:

Index

Receive Fixed Rate

Counterparty

Expiration Date

Issuer Credit Rating3

Notional Amount (000)4

Unrealized Appreciation (Depreciation)

iTraxx — Europe Sub Financial Index Series 9

5.00%

JPMorgan Chase & Co.

6/20/13

A–

EUR

3,020

$

188,436

iTraxx — Europe Sub Financial Index Series 9

5.00%

Morgan Stanley

6/20/13

A–

EUR

1,185

234,286

iTraxx — Cross- over Index Series 16, Version 1

5.00%

JPMorgan Chase & Co.

12/20/16

BB–

EUR

1,970

159,060

iTraxx — Cross- over Index Series 16, Version 1

5.00%

JPMorgan Chase & Co.

12/20/16

BB–

EUR

394

31,577

Dow Jones CDX North America Investment Grade Index Series 18, Version 1

1.00%

Citigroup, Inc.

6/20/17

A–

USD

103,800

341,039

iTraxx — Europe Sub Financial Index Series 17, Version 1

1.00%

Citigroup, Inc.

6/20/17

A

EUR

3,410

63,278

iTraxx — Cross- over Index Series 17, Version 1

5.00%

JPMorgan Chase & Co.

6/20/17

BB–

EUR

3,600

(40,282

)

iTraxx — Cross- over Index Series 18, Version 1

5.00%

Citigroup, Inc.

12/20/17

BB–

EUR

1,930

(29,582

)

Markit CMBX North America AM Index Series 2

0.50%

Deutsche Bank AG

3/15/49

A–

USD

4,830

234,037

Markit CMBX North America AAA Index Series 3

0.08%

Morgan Stanley

12/13/49

A+

USD

5,430

291,966

Markit CMBX North America AAA Index Series 4

0.35%

Morgan Stanley

2/17/51

A

USD

5,430

294,200

Total

$

1,768,015

3	Using S&P’s rating of the underlying securities.
4	The maximum potential amount the Master Portfolio may pay should a negative credit event take place as defined under the terms of the agreement.

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	43

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

• Interest rate swaps outstanding as of September 30, 2012 were as follows:

Fixed  Rate	Floating Rate		Counterparty		Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
0.49%1		3-month LIBOR		Citigroup, Inc.		8/22/14	USD	43,300	$	(96,109	)
0.44%1		3-month LIBOR		Citigroup, Inc.		8/29/14	USD	43,600		(49,840	)
0.42%1		3-month LIBOR		Morgan Stanley		9/04/14	USD	31,275		(28,312	)
0.42%2		3-month LIBOR		Citigroup, Inc.		10/01/14	USD	121,700		114,314
0.82%1		3-month LIBOR		Citigroup, Inc.		7/18/17	USD	6,400		(27,320	)
1.74%2		3-month LIBOR		Deutsche Bank AG		3/30/18	USD	5,100		203,088
1.74%2		3-month LIBOR		Deutsche Bank AG		3/30/18	USD	22,700		903,941
1.20%2		3-month LIBOR		Deutsche Bank AG		8/30/18	USD	12,500		70,059
3.27%1		3-month LIBOR		Deutsche Bank AG		5/16/21	USD	9,510		(1,393,819	)
4.03%1		3-month LIBOR		UBS AG		4/18/22	USD	18,000		(3,258,615	)
1.93%2		3-month LIBOR		Deutsche Bank AG		8/21/22	USD	19,300		424,673
1.76%2		3-month LIBOR		Citigroup, Inc.		9/24/22	USD	6,900		35,494
2.52%1		3-month LIBOR		Deutsche Bank AG		9/04/42	USD	9,300		165,305
2.69%2		3-month LIBOR		Citigroup, Inc.		9/17/42	USD	1,700		32,501
Total									$	(2,904,640	)

	1	Master Portfolio pays the fixed rate and receives the floating rate.
	2	Master Portfolio pays the floating rate and receives the fixed rate.
•	Total return swaps outstanding as of September 30, 2012 were as follows:

Reference Entity	Fixed Rate/ Floating Rate		Counterparty		Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
Change in Return of the Consumer Price Index for All Urban Consumers		2.18%3		Bank of America Corp.		10/06/21	USD	19,240	$	(661,275	)
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR4		Barclays Plc		1/12/40	USD	6,319		27
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR4		Barclays Plc		1/12/40	USD	11,559		(28,995	)
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR5		Goldman Sachs Group, Inc.		1/12/40	USD	11,508		(100,222	)
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR5		JPMorgan Chase & Co.		1/12/40	USD	14,076		(64,061	)
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR5		Barclays Plc		1/12/41	USD	6,344		(32	)
Gross Return on the Markit IOS 4.50%, 30-year, fixed rate Fannie Mae residential mortgage-backed securities pool		1-month LIBOR5		Barclays Plc		1/12/41	USD	11,286		3,600
Total									$	(850,958	)

3	Master Portfolio pays the total return of the reference entity and receives the fixed rate. Net payment made at termination.
4	Master Portfolio pays the total return of the reference entity and receives the floating rate.
5	Master Portfolio pays the floating rate and receives the total return of the reference entity.

See Notes to Consolidated Financial Statements.
44	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Schedule of Investments (continued) Master Total Return Portfolio

•	For Master Portfolio compliance purposes, the Master Portfolio’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Master Portfolio management. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.
•	Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:
	•	Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Master Portfolio has the ability to access
	•	Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)
	•	Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Master Portfolio’s own assumptions used in determining the fair value of investments and derivative financial instruments)
	The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
	Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Master Portfolio’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Master Portfolio’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Consolidated Financial Statements.
	The following tables summarize the Master Portfolio’s investments and derivative financial instruments categorized in the disclosure hierarchy as of September 30, 2012:

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—	$	362,728,226		$	11,209,292	$	373,937,518
Corporate Bonds		—		1,252,626,229			18,466,000		1,271,092,229
Floating Rate Loan Interests		—		77,385,138			29,123,026		106,508,164
Foreign Agency Obligations		—		276,229,708			—		276,229,708
Investment Companies	$	13,884,270		—			—		13,884,270
Non-Agency Mortgage-Backed Securities		—		494,144,899			48,132,409		542,277,308
Preferred Securities		4,310,569		29,486,495			—		33,797,064
Taxable Municipal Bonds		—		11,518,515			—		11,518,515
US Government Sponsored Agency Securities		—		3,709,919,886			—		3,709,919,886
US Treasury Obligations		—		978,885,181			—		978,885,181
Short-Term Securities:
Money Market Funds		9,146,877		—			—		9,146,877
Borrowed Bond Agreements		—		186,551,163			—		186,551,163
Liabilities:
Investments:
Borrowed Bonds		—		(186,953,257	)		—		(186,953,257	)
TBA Sale Commitments		—		(2,568,965,914	)		—		(2,568,965,914	)
Total	$	27,341,716	$	4,623,556,269		$	106,930,727	$	4,757,828,712

	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments1
Assets:
Credit contracts		—		$	6,496,228			—	$	6,496,228
Equity contracts	$	248,914			134,665			—		383,579
Foreign currency exchange contracts		—			3,191,184			—		3,191,184
Interest rate contracts		3,101,456			5,366,964			—		8,468,420
Liabilities:
Credit contracts		—			(7,112,688	)		—		(7,112,688	)
Equity contracts		(54,780	)		—			—		(54,780	)
Foreign currency exchange contracts		—			(15,118,506	)		—		(15,118,506	)
Interest rate contracts		(2,928,687	)		(15,921,211	)		—		(18,849,898	)
Other contracts		—			(661,275	)		—		(661,275	)
Total	$	366,903		$	(23,624,639	)		—	$	(23,257,736	)

¹ Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Swaps, financial futures contracts and foreign currency exchange contracts are valued at the unrealized appreciation/depreciation on the instrument and options are shown at value.

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	45

Consolidated Schedule of Investments (concluded) Master Total Return Portfolio

Certain of the Master Portfolio’s assets and liabilities are held at carrying amount or face value, which approximates fair value for financial statement purposes. As of September 30, 2012, such assets and liabilities are categorized within the disclosure hierarchy as follows:

	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	8,416,385		—			—	$	8,416,385
Cash pledged as collateral for financial futures contracts		3,172,000		—			—		3,172,000
Cash pledged as collateral for reverse repurchase agreements		3,646,600		—			—		3,646,600
Cash pledged as collateral for swaps		15,510,000		—			—		15,510,000
Foreign currency at value		745,040		—			—		745,040
Liabilities:
Cash received as collateral for swaps		—	$	(3,549,000	)		—		(3,549,000	)
Reverse repurchase agreements		—		(1,028,794,845	)		—		(1,028,794,845	)
Total	$	31,490,025	$	(1,032,343,845	)		—	$	(1,000,853,820	)

There were no transfers between Level 1 and Level 2 during the year ended September 30, 2012.

Certain of the Master Portfolio’s investments are categorized as Level 3 and were valued utilizing transaction prices or third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in the unobservable inputs could result in a significantly lower or higher value in such Level 3 investments.

A reconciliation of Level 3 investments and derivative financial instruments is presented when the Master Portfolio had a significant amount of Level 3 investments and derivative financial instruments at the beginning and/or end of the year in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Asset-Backed Securities			Corporate Bonds			Floating Rate Loan Interests			Non-Agency Mortgage-Backed Securities			Total
Assets:
Opening balance, as of September 30, 2011	$	43,570,827			—		$	27,890,171		$	11,648,206		$	83,109,204
Transfers into Level 31		—			—			5,674,230			—			5,674,230
Transfers out of Level 31		(35,568,466	)		—			—			(3,892,420	)		(39,460,886	)
Accrued discounts/premiums		—		$	(1,095	)		51,073			44,509			94,487
Net realized gain (loss)		148,283			—			118,859			147,233			414,375
Net change in unrealized appreciation/depreciation2		1,816			(5,334	)		131,564			416,955			545,001
Purchases		11,209,276			18,472,429			6,248,750			42,674,595			78,605,050
Sales		(8,152,444	)		—			(10,991,621	)		(2,906,669	)		(22,050,734	)
Closing Balance, as of September 30, 2012	$	11,209,292		$	18,466,000		$	29,123,026		$	48,132,409		$	106,930,727

1

Transfers into and transfers out of Level 3 represent the values as of the beginning of the reporting period. As of September 30, 2011, the Master Portfolio used significant unobservable inputs in determining the value of certain investments. As of September 30, 2012, the Master Portfolio used observable inputs in determining the value on the same investments. As a result, investments with a beginning of year value of $39,460,886 transferred from Level 3 to Level 2 in the disclosure hierarchy.

2

Included in the related net change in unrealized appreciation/depreciation in the Consolidated Statement of Operations. The change in unrealized appreciation/depreciation on investments still held as of September 30, 2012 was $543,202.

The following table is a reconciliation of Level 3 derivative financial instruments for which significant unobservable inputs were used in determining fair value:

	Credit Contracts
Liabilities:
Opening balance, as of September 30, 2011	$	(440,436	)
Transfers into Level 33		—
Transfers out of Level 33		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation/depreciation4		440,436
Purchases		—
Issues5		—
Sales		—
Settlements6		—
Closing Balance, as of September 30, 2012		—

3	Transfers into and transfers out of Level 3 represent the values as of the beginning of the reporting period.
4	Included in the related net change in unrealized appreciation/depreciation in the Consolidated Statement of Operations. The change in unrealized appreciation/depreciation on derivative financial instruments still held as of September 30, 2012 was $0.
5	Issues represent upfront cash received on certain derivative financial instruments.
6	Settlements represent periodic contractual cash flows and/or cash flows to terminate certain derivative financial instruments.

See Notes to Consolidated Financial Statements.
46	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Consolidated Statement of Assets and Liabilities Master Total Return Portfolio

September 30, 2012
Assets
Investments at value — unaffiliated (cost — $7,356,964,114)	$	7,496,256,798
Investments at value — affiliated (cost — $21,679,045)		23,039,690
Cash		8,416,385
Foreign currency at value (cost — $753,935)		745,040
TBA sale commitments receivable		2,562,157,464
Investments sold receivable		410,736,442
Interest receivable		27,271,983
Cash pledged as collateral for swaps		15,510,000
Swap premiums paid		13,965,685
Unrealized appreciation on swaps		7,966,098
Contributions receivable from investors		4,444,011
Cash pledged as collateral for reverse repurchase agreements		3,646,600
Cash pledged as collateral for financial futures contracts		3,172,000
Unrealized appreciation on foreign currency exchange contracts		2,877,219
Swaps receivable		1,622,768
Principal paydown receivable		633,322
Options written receivable		170,854
Variation margin receivable		52,307
Prepaid expenses		25,611
Other assets		2,129
Total assets		10,582,712,406
Liabilities
Investments purchased payable		3,265,350,825
TBA sale commitments at value (proceeds — $2,562,157,464)		2,568,965,914
Reverse repurchase agreements		1,028,794,845
Borrowed bonds at value (proceeds — $183,304,930)		186,953,257
Unrealized depreciation on foreign currency exchange contracts		14,552,063
Swap premiums received		13,183,034
Options written at value (premiums received — $10,652,756)		12,385,409
Unrealized depreciation on swaps		12,337,177
Cash received as collateral for swaps		3,549,000
Interest expense payable		2,812,120
Swaps payable		2,535,294
Variation margin payable		463,558
Investment advisory fees payable		202,106
Other affiliates payable		32,372
Directors’ fees payable		2,391
Other accrued expenses payable		442,490
Total liabilities		7,112,561,855
Net Assets	$	3,470,150,551
Net Assets Consist of
Investors’ capital	$	3,358,075,696
Net unrealized appreciation		112,074,855
Net Assets	$	3,470,150,551

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	47

Consolidated Statement of Operations Master Total Return Portfolio

Year Ended September 30, 2012
Investment Income
Interest — unaffiliated	$	157,654,528
Dividends — affiliated		633,651
Foreign taxes withheld		(62,887	)
Interest — affiliated		761
Total income		158,226,053
Expenses
Investment advisory		2,512,731
Accounting services		680,973
Custodian		594,596
Professional		250,804
Directors		87,623
Printing		12,972
Miscellaneous		122,354
Total expenses excluding interest expense		4,262,053
Interest expense		5,831,218
Total expenses		10,093,271
Less fees waived by Manager		(19,382	)
Total expenses after fees waived		10,073,889
Net investment income		148,152,164
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		48,620,298
Capital gain distributions received from affiliated investment companies		456
Financial futures contracts		(26,903,809	)
Foreign currency transactions		10,828,180
Options written		26,553,995
Securities sold short		4,447
Borrowed bonds		5,176,606
Swaps		(3,392,783	)
		60,887,390
Net change in unrealized appreciation/depreciation on:
Investments		150,295,790
Financial futures contracts		(1,611,616	)
Foreign currency translations		(19,236,624	)
Options written		17,618,549
Borrowed bonds		(6,679,644	)
Swaps		(17,951,532	)
		122,434,923
Total realized and unrealized gain		183,322,313
Net Increase in Net Assets Resulting from Operations	$	331,474,477

See Notes to Consolidated Financial Statements.
48	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012

Statements of Changes in Net Assets Master Total Return Portfolio

	Year Ended September 30,
Increase (Decrease) in Net Assets:	20121			2011
Operations
Net investment income	$	148,152,164		$	188,832,427
Net realized gain (loss)		60,887,390			(4,253,006	)
Net change in unrealized appreciation/depreciation		122,434,923			(68,039,857	)
Net increase in net assets resulting from operations		331,474,477			116,539,564
Capital Transactions
Proceeds from contributions		890,293,273			1,794,583,835
Value of withdrawals		(1,650,981,268	)		(1,603,649,352	)
Net increase (decrease) in net assets derived from capital transactions		(760,687,995	)		190,934,483
Net Assets
Total increase (decrease) in net assets		(429,213,518	)		307,474,047
Beginning of year		3,899,364,069			3,591,890,022
End of year	$	3,470,150,551		$	3,899,364,069

¹ Consolidated Statements of Changes in Net Assets.

Financial Highlights Master Total Return Portfolio

	Year Ended September 30,
	20121			2011			2010			2009			2008
Total Investment Return
Total investment return		10.04	%		2.82	%		13.05	%		10.95	%		(5.76	)%
Ratios to Average Net Assets
Total expenses		0.29	%		0.56	%		0.58	%		0.17	%		0.15	%
Total expenses after fees waived and paid indirectly		0.29	%		0.56	%		0.58	%		0.17	%		0.15	%
Total expenses after fees waived and paid indirectly and excluding interest expense		0.12	%		0.11	%		0.13	%		0.13	%		0.10	%
Net investment income		4.20	%		4.67	%		4.97	%		6.10	%		5.59	%
Supplemental Data
Net assets, end of year (000)	$	3,470,151		$	3,899,364		$	3,591,890		$	3,123,655		$	3,244,949
Portfolio turnover		1,346	%2		1,771	%3		1,754	%4		708	%5		1,081	%6

1	Consolidated Financial Highlights.
2	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 752%.
3	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,379%.
4	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.
6	Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

See Notes to Consolidated Financial Statements.
	BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.	SEPTEMBER 30, 2012	49

Notes to Consolidated Financial Statements Master Total Return Portfolio

1. Organization and Significant Accounting Policies:

Master Total Return Portfolio (the “Master Portfolio”) is a series of Master Bond LLC (the “Master LLC”) and is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Master LLC is organized as a Delaware limited liability company. The Limited Liability Company Agreement permits the Board of Directors of the Master LLC (the “Board”) to issue nontransferable interests in the Master LLC, subject to certain limitations. The Master Portfolio’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Master Portfolio:

Basis of Consolidation: The accompanying consolidated financial statements include the accounts of BlackRock Cayman Master Total Return Portfolio I, Ltd. (the “Subsidiary”), a wholly owned subsidiary of the Master Portfolio, which primarily invests in commodity-related instruments. The Subsidiary enables the Master Portfolio to hold these commodity-related instruments while allowing its investors to still satisfy Regulated Investment Company (“RIC”) tax requirements. Intercompany accounts and transactions, if any, have been eliminated. During the year ended September 30, 2012, there were no transactions in the Subsidiary. The Subsidiary is subject to the same investment policies and restrictions that apply to the Master Portfolio.

Valuation: US GAAP defines fair value as the price the Master Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Master Portfolio fair values its financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Master Portfolio for all financial instruments.

The Master Portfolio values its bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more brokers or dealers as obtained from a pricing service. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. Swap agreements are valued utilizing quotes received daily by the Master Portfolio’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Investments in open-end registered investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) 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 (long positions) or ask (short positions) price. If no bid or ask 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.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

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 it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options and swaptions are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

In the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the Global Valuation Committee, or its delegate, 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

50 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Notes to Consolidated Financial Statements (continued) Master Total Return Portfolio

available factors that the investment advisor and/or sub-advisor deems relevant consistent with the principles of fair value measurement which include the market approach, income approach and/or cost approach, as appropriate. A market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and adjusted for liquidity as appropriate. These factors include but are not limited to (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Master Portfolio’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof on a quarterly basis.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close 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 volatility or a natural disaster) occur during such periods that are expected to affect the value of such instruments materially, those instruments may be Fair Value Assets and valued at their fair value, as determined in good faith by the Global Valuation Committee using a pricing service and/or policies approved by the Board.

Foreign Currency: The Master Portfolio’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the respective date of such transactions. Generally, when the US dollar rises in value against a foreign currency, the Master Portfolio’s investments denominated in that currency will lose value because that currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Master Portfolio does not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated on the Consolidated Statement of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Master Portfolio reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) 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 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 securities. 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 interest rates in the market may result in increases in the level of prepayments 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 purchased 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 certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed Mortgage Pass-Through Certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States but are supported by the right of the issuer to borrow from the Treasury.

Inflation-Indexed Bonds: The Master Portfolio may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the principal value of inflation-indexed bonds will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of an inflation-indexed bond will be included as interest income on the Consolidated Statement of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of US Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

Multiple Class Pass-Through Securities: The Master Portfolio may invest in multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities. These multiple class securities may be issued by Ginnie Mae, US government

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agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by, and multiple class pass-through securities represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated pre-payments of principal, the Master Portfolio may not fully recoup its initial investment in IOs.

Stripped Mortgage-Backed Securities: The Master Portfolio may invest in stripped mortgage-backed securities issued by the US government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. The Master Portfolio also may invest in stripped mortgage-backed securities that are privately issued.

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.

Capital Trusts: The Master Portfolio may invest in 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, generally 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 generally are rated below that of the issuing company’s senior debt securities.

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 preferred 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.

Floating Rate Loan Interests: The Master Portfolio may invest in floating rate loan interests. The floating rate loan interests the Master Portfolio holds are typically issued to companies (the “borrower”) by banks, other financial institutions, and privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged. The Master Portfolio may invest in obligations of borrowers who are in bankruptcy proceedings. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. The base lending rates are generally the lending rate offered by one or more European banks, such as London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more US banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. The Master Portfolio considers these investments to be investments in debt securities for purposes of its investment policies.

When the Master Portfolio purchases a floating rate loan interest it may receive a facility fee and when it sells a floating rate loan interest it may pay a facility fee. On an ongoing basis, the Master Portfolio may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by the Master Portfolio upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. The Master Portfolio may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.

Floating rate loan interests are usually freely callable at the borrower’s option. The Master Portfolio may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in the Master Portfolio having a contractual relationship only with the lender, not with the borrower. The Master Portfolio will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, the Master Portfolio generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the

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borrower, and the Master Portfolio may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Master Portfolio will assume the credit risk of both the borrower and the lender that is selling the Participation. The Master Portfolio’s investment in loan participation interests involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, the Master Portfolio may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Master Portfolio having a direct contractual relationship with the borrower, and the Master Portfolio may enforce compliance by the borrower with the terms of the loan agreement.

Borrowed Bond Agreements: The Master Portfolio may enter into borrowed bond agreements. In a borrowed bond agreement, the Master Portfolio borrows a bond from a counterparty in exchange for cash collateral with the commitment that the security and the cash will be returned to the counterparty and the Master Portfolio, respectively, at a mutually agreed upon rate and date. Certain agreements have no stated maturity and can be terminated by either party at any time. Borrowed bond agreements are entered into primarily in connection with short sales of bonds. Earnings on cash collateral and compensation to the lender of the bond are based on agreed upon rates between the Master Portfolio and the counterparty. The value of the underlying cash collateral approximates the market value and accrued interest of the borrowed bond. To the extent that a borrowed bond transaction exceeds one business day, the value of the cash collateral in the possession of the counterparty is monitored on a daily basis to ensure the adequacy of the collateral. As the market value of the borrowed bond changes, the cash collateral is periodically increased or decreased with a frequency and in amounts prescribed in the borrowed bond agreement. Full realization of the collateral by the Master Portfolio may be limited if the value of an investment purchased with the cash collateral by the lender decreases. The Master Portfolio may also experience delays in gaining access to the collateral.

Short Sales: The Master Portfolio may enter into short sale transactions in which the Master Portfolio sells a security it does not hold in anticipation of a decline in the market price of that security. When the Master Portfolio makes a short sale, it will borrow the security sold short (borrowed bond) and deliver it to the counterparty to which it sold the security short. An amount equal to the proceeds 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 market value of the short sale. The Master Portfolio is required to repay the counterparty any interest received on the security sold short, which is shown as interest expense in the Consolidated Statement of Operations. The Master Portfolio may pay a fee on the assets borrowed from the counterparty, which is shown as stock loan fees in the Consolidated Statement of Operations. The Master Portfolio maintains a segregated account of securities or deposits cash with the broker-dealer as collateral for the short sales. The Master Portfolio may receive interest on its cash collateral deposited with the broker-dealer. The Master Portfolio is exposed to market risk based on the amount, if any, that the market value of the security increases beyond the market value at which the position was sold. Thus, a short sale of a security involves the risk that instead of declining, the price of the security sold short will rise. The short sale of securities involves the possibility of a theoretically unlimited loss since there is a theoretically unlimited potential for the market price of the security sold short to increase. A gain, limited to the price at which the Master Portfolio sold the security short, or a loss, unlimited as to the dollar amount, will be recognized upon the termination of a short sale if the market price is greater or less than the proceeds originally received. There is no assurance the Master Portfolio will be able to close out a short position at a particular time or at an acceptable price.

Forward Commitments and When-Issued Delayed Delivery Securities: The Master Portfolio may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Master Portfolio may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Master Portfolio may be required to pay more at settlement than the security is worth. In addition, the Master Portfolio is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Master Portfolio assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Master Portfolio’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions, which is shown in the Consolidated Schedule of Investments.

TBA Commitments: The Master Portfolio may enter into TBA commitments. TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. The Master Portfolio generally enters into TBA commitments with the intent to take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

Mortgage Dollar Roll Transactions: The Master Portfolio may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, the Master Portfolio will not be entitled to receive interest and principal payments on the securities sold. The Master Portfolio accounts for mortgage dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions may increase the Master Portfolio’s portfolio turnover rate. Mortgage dollar rolls involve the risk that 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.

Treasury Roll Transactions: The Master Portfolio may enter into treasury roll transactions. In a treasury roll transaction, the Master Portfolio sells a Treasury security to a counterparty with a simultaneous agreement to repurchase the same security at an agreed upon price and future settlement date. The Master Portfolio receives cash from the sale of the Treasury security to use for other investment purposes. The difference between the sale price and

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repurchase price represents net interest income or net interest expense reflective of an agreed upon rate between the Master Portfolio and the counterparty over the term of the borrowing. For US GAAP purposes, a treasury roll transaction is accounted for as a secured borrowing and not as a purchase or sale. During the term of the borrowing, interest income from the Treasury security and the related interest expense on the secured borrowing is recorded by the Master Portfolio on an accrual basis. The Master Portfolio will benefit from the transaction if the income earned on the investment purchased with the cash received in the treasury roll transaction exceeds the interest expense incurred by the Master Portfolio. If the interest expense exceeds the income earned, the Master Portfolio’s net investment income and dividends to shareholders may be adversely impacted. Treasury roll transactions involve the risk that the market value of the securities that the Master Portfolio is required to repurchase may decline below the agreed upon repurchase price of those securities.

Reverse Repurchase Agreements: The Master Portfolio may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Master Portfolio sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. Securities sold under reverse repurchase agreements are recorded as a liability in the Consolidated Statement of Assets and Liabilities at face value including accrued interest. Due to the short term nature of the reverse repurchase agreements, face value approximates fair value. During the term of the reverse repurchase agreement, the Master Portfolio continues to receive the principal and interest payments on these securities. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. 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. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Master Portfolio is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Master Portfolio’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Master Portfolio’s obligation to repurchase the securities.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Master Portfolio either deliver collateral or segregate assets in connection with certain investments (e.g., dollar rolls, TBA sale commitments, financial futures contracts, foreign currency exchange contracts, swaps, short sales and options written), or certain borrowings (e.g., reverse repurchase agreements and treasury roll transactions), the Master Portfolio will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, a Master Portfolio engaging in such transactions may have requirements to deliver/deposit securities to/with an exchange or broker-dealer as collateral for certain investments.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis. Consent fees are compensation for agreeing to changes in the terms of debt instruments and are included in interest income in the Consolidated Statement of Operations.

Income Taxes: The Master Portfolio is classified as a partnership for federal income tax purposes. As such, each investor in the Master Portfolio LLC is treated as the owner of its proportionate share of net assets, income, expenses and realized and unrealized gains and losses of the Master LLC. Therefore, no federal income tax provision is required. It is intended that the Master Portfolio LLC’s assets will be managed so an investor in the Master LLC can satisfy the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended.

The Master Portfolio files US federal and various state and local tax returns. In May 2011, the Internal Revenue Service commenced an examination of Master Total Return’s US federal tax return for the year ended September 30, 2009. The examination was completed in February 2012 and did not result in any adjustments to the tax return. No income tax returns are currently under examination. The statute of limitations on the Master Portfolio’s US federal tax returns remains open for each of the four years ended September 30, 2012. The statutes of limitations on the Master Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Recent Accounting Standard: In December 2011, the Financial Accounting Standards Board issued guidance that will expand current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures will be required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the Statements of Assets and Liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. The guidance is effective for financial statements with fiscal years beginning on or after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Master Portfolio’s financial statement disclosures.

Other: Expenses directly related to the Master Portfolio are charged to the Master Portfolio. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods.

The Master Portfolio has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Consolidated Statement of Operations. The custodian imposes fees on overdrawn cash balances,

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which can be offset by accumulated credits earned or may result in additional custody charges.

2. Derivative Financial Instruments:

The Master Portfolio engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Master Portfolio and/or to economically hedge, or protect, its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk or other risk (commodity price risk and inflation risk). These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Master Portfolio’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Master Portfolio bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Master Portfolio do not give rise to counterparty credit risk, as options written obligate the Master Portfolio to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options and centrally cleared swaps is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Master Portfolio may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. master agreement (“ISDA Master Agreement”) implemented between the Master Portfolio and each of its respective counterparties. An ISDA Master Agreement allows the Master Portfolio to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Master Portfolio from its counterparties are not fully collateralized, contractually or otherwise, the Master Portfolio bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Master Portfolio manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Master Portfolio’s net assets decline by a stated percentage or the Master Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Master Portfolio to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Master Portfolio purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are agreements between the Master Portfolio and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. 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 variation margin and are recorded by the Master Portfolio as unrealized appreciation or depreciation. 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. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest or foreign currency exchange rates and the underlying assets.

Foreign Currency Exchange Contracts: The Master Portfolio enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Master Portfolio, help to manage the overall exposure to the currencies in which some of the investments held by the Master Portfolio are denominated. 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 difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that the counterparty to the contract does not perform its obligations under the agreement.

Options: The Master Portfolio purchases and writes call and put options to increase or decrease its exposure to underlying instruments (including credit risk, equity risk, interest rate risk and/or foreign currency exchange rate risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike 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 instrument at the exercise or strike price at any time or at a specified time during the option period. When the Master Portfolio purchases (writes) an option, an amount equal to the premium paid (received) by the Master Portfolio is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument 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 instrument acquired or deducted from (or added to) the proceeds of the instrument 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

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transaction exceeds the premiums received or paid). When the Master Portfolio writes a call option, such option is “covered,” meaning that the Master Portfolio holds the underlying instrument subject to being called by the option counterparty. When the Master Portfolio writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (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 granting or buying the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

The Master Portfolio also purchases or sells listed or OTC 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 or to gain exposure to foreign currencies (foreign currency exchange rate risk). 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 instruments owned by the Master Portfolio but not yet delivered, or committed or anticipated to be purchased by the Master Portfolio.

The Master Portfolio may also purchase and write a variety of options with non-standard payout structures or other features (“barrier options”). Barrier options are generally traded OTC. The types of barrier options the Master Portfolio may invest in include down-and-out options, double no-touch options and one-touch options. Down-and-out options are similar to standard options, except that the option expires worthless to the purchaser of the option if the price of the underlying security reaches a specific barrier price level prior to the option’s expiration date. Double no-touch options provide the purchaser of the option an agreed-upon payout if the price of the underlying asset does not reach or surpass predetermined barrier price levels prior to the option’s expiration date. One-touch options provide the purchaser of the option an agreed-upon payout if the price of the underlying asset reaches or surpasses predetermined barrier price levels prior to the option’s expiration date.

In purchasing and writing options, the Master Portfolio bears the risk of an unfavorable change in the value of the underlying instrument or the risk that the Master Portfolio may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Master Portfolio purchasing or selling a security at a price different from the current market value.

Swaps: The Master Portfolio enters into swap agreements, in which the Master Portfolio and a counterparty agree to either make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be executed on a registered financial and commodities exchange (“centrally cleared swaps”). In a centrally cleared swap, the Master Portfolio typically enters into an agreement with a counterparty; however, performance is guaranteed by the central clearinghouse reducing or eliminating the Master Portfolio’s exposure to the credit risk of the counterparty. These payments received or made by the Master Portfolio are recorded in the Consolidated Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and are shown as swap premiums paid and swap premiums received, respectively, on the Consolidated Statement of Asset and Liabilities and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swaps, if any, is recorded as a receivable or payable for variation margin in the Consolidated Statement of Assets and Liabilities. 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. Generally, the basis of the contracts is the premium received or paid. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

• Credit default swaps — The Master Portfolio enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Master Portfolio enters into credit default swap agreements to provide a measure of protection against the default of an issuer (as buyer of protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). The Master Portfolio may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Master Portfolio will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Master Portfolio will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

56 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Notes to Consolidated Financial Statements (continued) Master Total Return Portfolio

• Total return swaps — The Master Portfolio enters into total return swaps to obtain exposure to a security or market without owning such security or investing directly in that market or to transfer the risk/return of one market (e.g., fixed income) to another market (e.g., equity) (equity risk and/or interest rate risk). Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (coupons plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. To the extent the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Master Portfolio will receive a payment from or make a payment to the counterparty.

• Interest rate swaps — The Master Portfolio enters into interest rate swaps to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate risk by economically hedging the value of the fixed rate bonds which may decrease when interest rates rise (interest rate risk). Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating, for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. Interest rate floors, which are a type of interest rate swap, are agreements in which one party agrees to make payments to the other party to the extent that interest rates fall below a specified rate or floor in return for a premium. In more complex swaps, the notional principal amount may decline (or amortize) over time.

Derivative Financial Instruments Categorized by Risk Exposure:

Fair Values of Derivative Financial Instruments as of September 30, 2012
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Assets and Liabilities Location	Value		Consolidated Statement of Assets and Liabilities Location		Value
	Net unrealized appreciation/depreciation1;				Net unrealized appreciation/depreciation1;
	Unrealized appreciation on swaps1;				Unrealized depreciation on swaps1;
Interest rate contracts	Investments at value — unaffiliated2	$	8,468,420		Options written at value2	$	(18,849,898	)
	Unrealized appreciation on foreign				Unrealized depreciation on foreign
	currency exchange contracts;				currency exchange contracts;
	Unrealized depreciation on swaps1;				Unrealized depreciation on swaps1;
Foreign currency exchange contracts	Investments at value — unaffiliated2		3,191,184		Options written at value2		(15,118,506	)
	Unrealized appreciation on swaps1;				Unrealized depreciation on swaps1;
	Investments at value — unaffiliated2;				Options written at value2;
Credit contracts	Swap premiums paid		20,461,913		Swap premiums received		(20,295,722	)
	Net unrealized appreciation/ depreciation1;
Equity contracts	Investments at value — unaffiliated2		383,579		Net unrealized appreciation/depreciation1		(54,780	)
Other contracts	—		—		Unrealized depreciation on swaps1		(661,275	)
Total		$	32,505,096			$	(54,980,181	)

1	Includes cumulative appreciation/depreciation on financial futures contracts and centrally cleared swaps as reported in the Consolidated Schedule of Investments. Only current day’s variation margin is reported within the Consolidated Statement of Assets and Liabilities.
2	Includes options purchased at value as reported in the Consolidated Schedule of Investments.

The Effect of Derivative Financial Instruments in the Consolidated Statement of Operations Year Ended September 30, 2012
	Net Realized Gain (Loss) From
	Financial Futures Contracts			Swaps			Options3			Foreign Currency Transactions
Interest rate contracts	$	(23,953,448	)	$	(6,822,796	)	$	(3,590,871	)		—
Foreign currency exchange contracts		(457,496	)		—			(4,096,702	)	$	16,395,357
Credit contracts		—			2,302,409			455,670			—
Equity contracts		(2,492,865	)		—			(3,985,524	)		—
Other contracts		—			1,127,604			—			—
Total	$	(26,903,809	)	$	(3,392,783	)	$	(11,217,427	)	$	16,395,357
	Net Change in Unrealized Appreciation/Depreciation on
	Financial Futures Contracts			Swaps			Options3			Foreign Currency Translations
Interest rate contracts	$	(858,478	)	$	(9,120,628	)	$	13,522,798			—
Foreign currency exchange contracts		(54,868	)		—			(4,612,345	)	$	(19,313,208	)
Credit contracts		—			(7,095,865	)		(33,774	)		—
Equity contracts		(698,270	)		—			(1,026,089	)		—
Other contracts		—			(1,735,039	)		—			—
Total	$	(1,611,616	)	$	(17,951,532	)	$	7,850,590		$	(19,313,208	)

³ Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 57

Notes to Consolidated Financial Statements (continued) Master Total Return Portfolio

For the year ended September 30, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:

Financial futures contracts:
Average number of contracts purchased		3,209
Average number of contracts sold		6,139
Average notional value of contracts purchased	$	671,717,502
Average notional value of contracts sold	$	1,104,209,823
Foreign currency exchange contracts:
Average number of contracts — US dollars purchased		35
Average number of contracts — US dollars sold		15
Average US dollar amounts purchased	$	446,257,597
Average US dollar amounts sold	$	171,436,380
Options:
Average number of option contracts purchased		328,937
Average number of option contracts written		246,918
Average notional value of option contracts purchased	$	413,583,201
Average notional value of option contracts written	$	288,055,529
Average number of swaption contracts purchased		10
Average number of swaption contracts written		16
Average notional value of swaption contracts purchased	$	379,038,886
Average notional value of swaption contracts written	$	630,043,204
Credit default swaps:
Average number of contracts — buy protection		66
Average number of contracts — sell protection		58
Average notional value — buy protection	$	577,475,838
Average notional value — sell protection	$	396,159,119
Interest rate swaps:
Average number of contracts — pays fixed rate		16
Average number of contracts — receives fixed rate		16
Average notional value — pays fixed rate	$	597,814,801
Average notional value — receives fixed rate	$	446,988,153
Total return swaps:
Average number of contracts		6
Average notional value	$	74,446,111

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).

The Master LLC, on behalf of the Master Portfolio, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Master LLC’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Master Portfolio’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Master Portfolio. For such services, the Master Portfolio pays the Manager a monthly fee based on a percentage of the Master Portfolio’s average daily net assets at the following annual rates:

Average Daily Net Assets	Investment Advisory Fee
First $250 Million		0.20	%
$250 Million – $500 Million		0.15	%
$500 Million – $750 Million		0.10	%
Greater than $750 Million		0.05	%

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Master Portfolio pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with the Master Portfolio’s investment in other affiliated investment companies, if any. This amount is shown as fees waived by Manager in the Consolidated Statement of Operations.

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, the Master Portfolio pays the Manager based on the Master Portfolio’s net assets which includes the assets of the Subsidiary.

The Manager entered into sub-advisory agreements with BlackRock Financial Management, Inc. (“BFM”), BlackRock International Limited (“BIL”) and BlackRock (Singapore) Limited (“BRS”), each an affiliate of the Manager. The Manager pays BFM, BIL and BRS for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Master Portfolio to the Manager.

For the year ended September 30, 2012, the Master LLC reimbursed the Manager $19,382 for certain accounting services, which is included in accounting services in the Consolidated Statement of Operations.

Certain officers and/or directors of the Master LLC are officers and/or directors of BlackRock or its affiliates. The Master Portfolio reimburses the Manager for compensation paid to the Master LLC’s Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns, mortgage dollar rolls and TBA transactions and excluding short-term securities and US government securities for the year ended September 30, 2012, were $41,013,760,144 and $41,315,011,206, respectively.

Purchases and sales of US government securities for the year ended September 30, 2012, were $20,146,008,265 and $20,205,610,919, respectively.

For the year ended September 30, 2012, purchases and sales of mortgage dollar rolls were $27,009,425,760 and $27,012,706,960, respectively.

58 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Notes to Consolidated Financial Statements (concluded) Master Total Return Portfolio

Transactions in options written for the year ended September 30, 2012, were as follows:

	Calls									Puts
	Option Contracts			Notional Amount (000)			Premiums Received			Option Contracts			Notional Amount (000)			Premiums Received
Outstanding options, beginning of year		1,328		$	1,401,122		$	9,048,993			—		$	663,265		$	10,586,781
Options written		7,598			1,776,613			28,255,627			10,971			2,477,754			39,849,255
Options exercised		(140	)		(518,598	)		(5,007,231	)		—			(254,184	)		(6,669,199	)
Options expired		(3,823	)		(1,502,917	)		(6,257,319	)		(4,278	)		(1,623,591	)		(20,736,117	)
Options closed		(2,728	)		(898,370	)		(21,652,799	)		(6,693	)		(860,114	)		(16,765,235	)
Outstanding options, end of year		2,235		$	257,850		$	4,387,271			—		$	403,130		$	6,265,485

5. Borrowings:

The Master LLC, on behalf of the Master Portfolio, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2012 and was subsequently renewed until November 2013. The Master Portfolio may borrow under the credit agreement to fund shareholder redemptions. Effective November 2010 to November 2011, the credit agreement had the following terms: a commitment fee of 0.08% per annum based on the Master Portfolio’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.00% per annum or (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Master Portfolio paid administration and arrangement fees which were allocated to the Master Portfolio based on its net assets as of October 31, 2010. The credit agreement, which expired in November 2011, was renewed until November 2012. Effective November 2011 to November 2012, the credit agreement has the following terms: a commitment fee of 0.065% per annum based on the Master Portfolio’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 0.80% per annum or (b) the Fed Funds rate plus 0.80% per annum on amounts borrowed. In addition, the Master Portfolio paid administration and arrangement fees which were allocated to the Master Portfolio based on its net assets as of October 31, 2011. The Master Portfolio did not borrow under the credit agreement during the year ended September 30, 2012.

For the year ended September 30, 2012, the average amount of transactions considered as borrowings and the daily weighted average interest rate from reverse repurchase agreements and treasury roll transactions were $888,522,503 and 0.17%, respectively.

6. Concentration, Market and Credit Risk:

In the normal course of business, the Master Portfolio invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Master Portfolio may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Master Portfolio; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Master Portfolio may be exposed to counterparty credit risk, or the risk that an entity with which the Master Portfolio has unsettled or open transactions may fail to or be unable to perform on its commitments. The Master Portfolio manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Master Portfolio to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Master Portfolio’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Consolidated Statement of Assets and Liabilities, less any collateral held by the Master Portfolio.

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 Consolidated Schedule of Investments for these securities. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

7. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Master Portfolio through the date the consolidated financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the consolidated financial statements.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 59

Report of Independent Registered Public Accounting Firm Master Total Return Portfolio

To the Investors of Master Total Return Portfolio and Board of Directors of Master Bond LLC:

We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Master Total Return Portfolio (the “Master Portfolio”), of Master Bond LLC, as of September 30, 2012, and the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, and the consolidated 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 Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Master Portfolio is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Master Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2012, by correspondence with the custodian, brokers and agent banks; where replies were not received from brokers or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the consolidated financial position of Master Total Return Portfolio of Master Bond LLC as of September 30, 2012, the consolidated results of its operations for the year then ended, the consolidated changes in its net assets for each of the two years in the period then ended, and the consolidated 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
Boston, Massachusetts
November 28, 2012

60 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors of Master Total Return Portfolio (the “Master Portfolio”), a series of Master Bond LLC (the “Master LLC”), and the Board of Directors of BlackRock Total Return Fund (the “Feeder Fund”), a series of the BlackRock Bond Fund, Inc. (the “Corporation”) met on April 10, 2012 and May 8–9, 2012 to consider the approval of the investment advisory agreements (collectively, the “Advisory Agreements”) for the Master LLC, on behalf of the Master Portfolio, and the Corporation, on behalf of the Feeder Fund, with BlackRock Advisors, LLC (the “Manager”), the Master Portfolio’s and the Feeder Fund’s investment advisor. The Board of Directors of each of the Master LLC and the Corporation also considered the approval of the sub-advisory agreements (collectively, the “Sub-Advisory Agreements”) between the Manager and each of (a) BlackRock Financial Management, Inc.; and (b) BlackRock International Limited (collectively, the “Sub-Advisors”), with respect to each of the Master Portfolio and the Feeder Fund. The Feeder Fund is a “feeder” fund that invests all of its investable assets in the Master Portfolio. Accordingly, the Board of Directors of the Corporation also considered the approval of the Advisory Agreement and the Sub-Advisory Agreements with respect to the Master LLC. The Manager and the Sub-Advisors are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.” For simplicity, the Board of Directors of the Master LLC and the Board of Directors of the Corporation are referred to herein collectively as the “Board,” and the members are referred to herein as “Board Members.”

Activities and Composition of the Board

The Board consists of thirteen individuals, ten of whom are not “interested persons” of the Master LLC or the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Master Portfolio or the Feeder Fund, as pertinent, and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. The Board has four quarterly meetings per year, each extending over two days, and a fifth meeting to consider specific information surrounding the consideration of renewing the Agreements. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Master Portfolio and the Feeder Fund by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance and assistance in meeting applicable legal and regulatory requirements.

The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Master Portfolio, the Feeder Fund and their shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Master Portfolio and/or the Feeder Fund for services, such as marketing and distribution, call center and fund accounting; (c) the Master Portfolio’s and/or the Feeder Fund’s operating expenses and how BlackRock allocates expenses to the Master Portfolio and the Feeder Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Master Portfolio’s and the Feeder Fund’s investment objective, policies and restrictions; (e) the Master Portfolio’s and the Feeder Fund’s compliance with each of their respective Code of Ethics and other 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 and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Master Portfolio’s and/or the Feeder Fund’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, exchange traded fund (“ETF”), closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

The Board has engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. In addition, the Board requested, to the extent reasonably possible, an analysis of the risk and return relative to selected funds in peer groups. BlackRock provides information to the Board in response to specific questions. These questions covered issues such as profitability, investment performance and management fee levels. The Board considered the importance of: (i) managing fixed income assets with a view toward preservation of capital; (ii) portfolio managers’ investments in the funds they manage; (iii) BlackRock’s controls surrounding the coding of quantitative investment models; and (iv) BlackRock’s oversight of relationships with third party service providers.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 10, 2012 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in a process with its independent legal counsel and BlackRock to review periodically the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on fees and expenses of the Master Portfolio and the Feeder Fund, as applicable, and the investment

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 61

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

performance of the Feeder Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional clients, ETFs and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the existence, impact and sharing of potential economies of scale; (e) a summary of aggregate amounts paid by the Master Portfolio and/or the Feeder Fund to BlackRock; (f) sales and redemption data regarding the Feeder Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.

At an in-person meeting held on April 10, 2012, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 10, 2012 meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 8–9, 2012 Board meeting.

At an in-person meeting held on May 8–9, 2012, the Board of the Master LLC and the Corporation, including all the Independent Board Members, approved the continuation of the Advisory Agreements between the Manager and each of the Master LLC, on behalf of the Master Portfolio and the Corporation, on behalf of the Feeder Fund, and the Sub-Advisory Agreements between the Manager and the Sub-Advisors with respect to each of the Master Portfolio and the Feeder Fund, each for a one-year term ending June 30, 2013. The Board of the Corporation, including the Independent Board Members, also considered the continuation of the Agreements with respect to the Master LLC and found the Agreements to be satisfactory. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Master Portfolio, the Feeder Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Master Portfolio and the Feeder Fund; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with the Master Portfolio and the Feeder Fund; and (f) other factors deemed relevant by the Board Members.

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 Feeder Fund shares and securities lending, services related to the valuation and pricing of portfolio holdings of the Master Portfolio, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Master Portfolio and the Feeder Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Feeder Fund. Throughout the year, the Board compared the Feeder Fund’s performance to the performance of a comparable group of mutual funds and/or the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by the Master Portfolio’s portfolio management team discussing Master Portfolio performance and the Master Portfolio’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and the Master Portfolio’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis and oversight capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review of BlackRock’s compensation structure with respect to the Master Portfolio’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Master Portfolio and the Feeder Fund. BlackRock and its affiliates provide the Master Portfolio and the Feeder Fund with certain administrative, shareholder and other services (in addition to any such services provided to the Master Portfolio and the Feeder Fund by third parties) and officers and other personnel as are necessary for the operations of the Master Portfolio and the Feeder Fund. In particular, BlackRock and its affiliates provide the Master Portfolio and the Feeder Fund with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic 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 compliance support; and (vi) performing other administrative functions necessary for the operation of the Master Portfolio and the Feeder Fund, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Master Portfolio, the Feeder Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of the Master Portfolio and the Feeder Fund, as applicable. The Board noted that the Master Portfolio’s investment results correspond directly to the investment results of the Feeder Fund. In preparation for the April 10, 2012 meeting, the Board worked with its independent legal counsel, BlackRock and Lipper to develop a template

62 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

for, and was provided with, reports independently prepared by Lipper, which included a comprehensive analysis of the Feeder Fund’s performance. 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 Feeder Fund as compared to funds in the Feeder Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review their methodology. The Board and the Board’s Performance Oversight Committee regularly review, and meet with Master Portfolio management to discuss, the performance of the Master Portfolio and the Feeder Fund, as applicable, throughout the year.

The Board noted that the Feeder Fund ranked in the fourth, second and fourth quartiles against its Lipper Performance Universe for the one-, three-and five-year periods reported, respectively. The Board and BlackRock reviewed and discussed the reasons for the Feeder Fund’s underperformance during the one- and five-year periods compared with its Peers. The Board was informed that, among other things, the Master Portfolio maintained a shorter duration bias and underweight Treasuries relative to its peer universe throughout most of the one-year period. While this duration stance was beneficial in the earlier half of the period, the overall impact on performance for the one-year period was negative as interest rates declined to historically low levels in the latter half due to fears of a global economic slowdown and persistent sovereign debt problems in Europe. For the five-year period the Feeder Fund’s underperformance was primarily due to the significant exposure to non-government debt during the financial crisis in 2008. Most notably the Master Portfolio’s allocation to non-agency mortgages, commercial mortgage-backed securities and asset-backed securities which all dramatically underperformed Treasuries that year.

The Board and BlackRock discussed BlackRock’s strategy for improving the Feeder Fund’s/Master Portfolio’s performance and BlackRock’s commitment to providing the resources necessary to assist the Master Portfolio’s portfolio managers and to improve the Feeder Fund’s/Master Portfolio’s performance.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Master Portfolio and the Feeder Fund: The Board, including the Independent Board Members, reviewed the Master Portfolio’s/Feeder Fund’s contractual management fee rate compared with the other funds in the Feeder Fund’s Lipper category. It also compared the Feeder Fund’s total expense ratio, as well as the Master Portfolio’s/Feeder Fund’s actual management fee rate, to those of other funds in the Feeder Fund’s Lipper category. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Master Portfolio and the Feeder Fund. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Master Portfolio and the Feeder Fund. The Board reviewed BlackRock’s profitability with respect to the Master Portfolio and the Feeder Fund, as applicable, and other funds the Board currently oversees for the year ended December 31, 2011 compared to available aggregate profitability data provided for the years ended December 31, 2010, and December 31, 2009. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the cost of the services provided to the Master Portfolio and the Feeder Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Master Portfolio and the Feeder 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 management of the Master Portfolio and the Feeder Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that the Master Portfolio’s and/or Feeder Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Feeder Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Manager has contractually agreed to waive the Feeder Fund’s advisory fee in the amount of the Feeder Fund’s share of the advisory fee paid by the Master Portfolio. The Board also noted that the Feeder Fund has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the size of the Feeder Fund increases above certain contractually specified levels. The Board further noted that the Master Portfolio has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the size of the Master Portfolio increases above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually and/or voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Feeder Fund’s total net expenses on a class-by-class basis, as applicable.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 63

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Master Portfolio and the Feeder Fund increase, as well as the existence of expense caps. The Board also considered the extent to which the Master Portfolio and the Feeder Fund benefit from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Master Portfolio and the Feeder Fund to participate in these economies of scale, for example through the use of revised breakpoints in the advisory fee based upon the asset level of the Master Portfolio and the Feeder Fund. In its consideration, the Board Members took into account the existence of expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with the Master Portfolio and the Feeder Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Master Portfolio and the Feeder Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Feeder Fund shares if they believe that the Feeder Fund’s and/or the Master Portfolio’s fees and expenses are too high or if they are dissatisfied with the performance of the Feeder Fund.

Conclusion

The Board of each of the Master LLC and the Corporation, including all the Independent Board Members, approved the continuation of the Advisory Agreements between the Manager and each of the Master LLC, on behalf of the Master Portfolio, and the Corporation, on behalf of the Feeder Fund, for a one-year term ending June 30, 2013, and the Sub-Advisory Agreements between the Manager and the Sub-Advisors with respect to each of the Master Portfolio and the Feeder Fund for a one-year term ending June 30, 2013. Based upon its evaluation of all of the aforementioned factors in their totality, the Board of the Master LLC and the Corporation, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Master Portfolio and the Feeder Fund, as applicable, and their shareholders. The Board of the Corporation, including the Independent Board Members, also considered the continuation of the Agreements with respect to the Master Portfolio and found the Agreements to be satisfactory. In arriving at its 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, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Master Portfolio and the Feeder Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

64 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Officers and Directors

Name, Address and Year of Birth	Position(s) Held with Fund/ Master LLC	Length of Time Served as a Director2	Principal Occupation(s) During Past Five Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Independent Directors1
Robert M. Hernandez 55 East 52nd Street New York, NY 10055 1944	Chairman of the Board and Director	Since 2007	Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001; Director, TE Connectivity (electronics) from 2006 to 2012.	29 RICs consisting of 82 Portfolios	ACE Limited (insurance company); Eastman Chemical Company (chemicals); RTI International Metals, Inc. (metals)
Fred G. Weiss 55 East 52nd Street New York, NY 10055 1941	Vice Chairman of the Board and Director	Since 2007	Managing Director, FGW Associates (consulting and investment company) since 1997; Director and Treasurer, Michael J. Fox Foundation for Parkinson’s Research since 2000; Director, BTG International Plc (medical technology commercialization company) from 2001 to 2007.	29 RICs consisting of 82 Portfolios	Watson Pharmaceuticals, Inc.
James H. Bodurtha 55 East 52nd Street New York, NY 10055 1944	Director	Since 2007	Director, The China Business Group, Inc. (consulting firm) since 1996 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980.	29 RICs consisting of 82 Portfolios	None
Bruce R. Bond 55 East 52nd Street New York, NY 10055 1946	Director	Since 2007	Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.	29 RICs consisting of 82 Portfolios	None
Donald W. Burton 55 East 52nd Street New York, NY 10055 1944	Director	Since 2007	Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Director, Lifestyle Family Fitness (fitness industry) since 2006; Director, IDology, Inc. (technology solutions) since 2006; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007.	29 RICs consisting of 82 Portfolios	Knology, Inc. (telecommunications); Capital Southwest (financial)
Honorable Stuart E. Eizenstat 55 East 52nd Street New York, NY 10055 1943	Director	Since 2007	Partner and Head of International Practice, Covington and Burling LLP (law firm) since 2001; International Advisory Board Member, The Coca-Cola Company from 2002 to 2011; Advisory Board Member, Veracity Worldwide, LLC (risk management) since 2007; Member of the International Advisory Board GML (energy) since 2003; Advisory Board Member, BT Americas (telecommunications) from 2004 to 2010.	29 RICs consisting of 82 Portfolios	Alcatel-Lucent (telecommunications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service)
Kenneth A. Froot 55 East 52nd Street New York, NY 10055 1957	Director	Since 2007	Professor, Harvard University since 1992.	29 RICs consisting of 82 Portfolios	None
John F. O’Brien 55 East 52nd Street New York, NY 10055 1943	Director	Since 2007	Chairman and Director, Woods Hole Oceanographic Institute since 2009 and Trustee thereof from 2003 to 2009; Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007.	29 RICs consisting of 82 Portfolios	Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer)
Roberta Cooper Ramo 55 East 52nd Street New York, NY 10055 1942	Director	Since 2007	Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s Inc. (retail) since 2000; Director, ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; President, American Bar Association from 1995 to 1996.	29 RICs consisting of 82 Portfolios	None

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 65

Officers and Directors (continued)

Name, Address and Year of Birth	Position(s) Held with Fund/ Master LLC	Length of Time Served as a Director2	Principal Occupation(s) During Past Five Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Independent Directors1 (concluded)
David H. Walsh 55 East 52nd Street New York, NY 10055 1941	Director	Since 2007	Director, National Museum of Wildlife Art since 2007; Trustee, University of Wyoming Foundation since 2008; Director, Ruckelshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Director, The American Museum of Fly Fishing since 1997; Director, The National Audubon Society from 1998 to 2005.	29 RICs consisting of 82 Portfolios	None

1

Each Independent Director holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation or removal as provided by the Fund’s/Master LLC’s by-laws or charter or statute. In no event may an Independent Director hold office beyond December 31 of the year in which he or she turns 74.

2

Date shown is the earliest date a person has served for the Fund/Master LLC covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows Directors as joining the Fund/Master LLC Board in 2007, each Director first became a member of the board of other legacy MLIM or legacy BlackRock Funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Honorable Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 2000; David H. Walsh, 2003; and Fred G. Weiss, 1998.

Interested Directors3
Paul L. Audet 55 East 52nd Street New York, NY 10055 1953	Director	Since 2011	Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Chair of the U.S. Mutual Funds Committee reporting to the Global Executive Committee since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees and of the BlackRock Alternative Investors Executive Committee and Investment Committee for the Private Equity Fund of Funds business since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.	160 RICs consisting of 278 Portfolios	None
Laurence D. Fink 55 East 52nd Street New York, NY 10055 1952	Director	Since 2007	Chairman and Chief Executive Officer of BlackRock since its formation in 1998 and of BlackRock’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Formerly Managing Director, The First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; Chairman of the Board of several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; Member of the Board of Trustees of New York University, Chair of the Financial Affairs Committee and a member of the Executive Committee, the Ad Hoc Committee on Board Governance, and the Committee on Trustees; Co-Chairman of the NYU Hospitals Center Board of Trustees, Chairman of the Development/Trustee Stewardship Committee and Chairman of the Finance Committee; Trustee, The Boys’ Club of New York.	29 RICs consisting of 82 Portfolios	BlackRock
Henry Gabbay 55 East 52nd Street New York, NY 10055 1947	Director	Since 2007	Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	160 RICs consisting of 278 Portfolios	None

³ Messrs. Audet and Fink are both “interested persons,” as defined in the 1940 Act, of the Fund/Master LLC based on their positions with BlackRock and its affiliates. Mr. Gabbay is an “interested person” of the Fund/Master LLC based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of the BlackRock registered closed-end funds and Directors of other BlackRock registered open-end funds. Interested Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

66 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Officers and Directors (concluded)

Name, Address and Year of Birth	Position(s) Held with Fund/ Master LLC	Length of Time Served	Principal Occupation(s) During Past Five Years
Officers1
John M. Perlowski 55 East 52nd Street New York, NY 10055 1964	President and Chief Executive Officer	Since 2010	Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.
Brendan Kyne 55 East 52nd Street New York, NY 10055 1977	Vice President	Since 2009	Managing Director of BlackRock since 2010; Director of BlackRock from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009 and Co-head thereof from 2007 to 2009; Vice President of BlackRock from 2005 to 2008.
Neal Andrews 55 East 52nd Street New York, NY 10055 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.
Jay Fife 55 East 52nd Street New York, NY 10055 1970	Treasurer	Since 2007	Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.
Brian Kindelan 55 East 52nd Street New York, NY 10055 1959	Chief Compliance Officer and Anti-Money Laundering Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised funds since 2007; Managing Director and Senior Counsel of BlackRock since 2005.
Benjamin Archibald 55 East 52nd Street New York, NY 10055 1975	Secretary	Since 2012	Director of BlackRock since 2010; Assistant Secretary to the Funds from 2010 to 2012; General Counsel and Chief Operating Officer of Uhuru Capital Management from 2009 to 2010; Executive Director and Counsel of Goldman Sachs Asset Management from 2005 to 2009.

1	Officers of the Fund/Master LLC serve at the pleasure of the Board.
Further information about the Fund/Master LLC’s Officers and Directors is available in the Fund’s/Master LLC’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisors

BlackRock Financial

Management, Inc.

New York, NY 10055

BlackRock International Limited
Edinburgh, EH3 8JB
United Kingdom

BlackRock (Singapore) Limited
079912 Singapore

Custodian and

Accounting Agent

State Street Bank and

Trust Company

Boston, MA 02110

Transfer Agent

BNY Mellon Investment

Servicing (US) Inc.

Wilmington, DE 19809

Distributor

BlackRock Investments, LLC

New York, NY 10022

Independent Registered

Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

Address of the Fund

100 Bellevue Parkway

Wilmington, DE 19809

Effective May 8, 2012, Ira P. Shapiro resigned as Secretary of the Fund and Master LLC and Benjamin Archibald became Secretary of the Fund and Master LLC.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 67

Additional Information

General Information

Electronic Delivery

Electronic copies of most financial reports and prospectuses are available on the Fund’s website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund’s electronic delivery program.

To enroll:

Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:

Please contact your financial advisor. Please note that not all investment advisors, banks or brokerages may offer this service.

Shareholders Who Hold Accounts Directly with BlackRock:

1) Access the BlackRock website at

 http://www.blackrock.com/edelivery

2) Select “eDelivery” under the “More Information” section

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 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 call the Fund at (800) 441-7762.

Availability of Quarterly Schedule of Investments

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’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Fund’s/Master LLC’s Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Fund/Master LLC uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Fund/Master LLC voted 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 http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

68 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

Additional Information (continued)

Shareholder Privileges

Account Information

Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http://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 balance is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 69

Additional Information (concluded)

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

70 BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012

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 ACWI ex-US Index Fund

BlackRock All-Cap Energy & Resources Portfolio

BlackRock Balanced Capital Fund†

BlackRock Basic Value Fund

BlackRock Capital Appreciation Fund

BlackRock China Fund

BlackRock Commodity Strategies Fund

BlackRock Emerging Markets Fund

BlackRock Emerging Markets Long/Short Equity Fund

BlackRock Energy & Resources Portfolio

BlackRock Equity Dividend Fund

BlackRock EuroFund

BlackRock Flexible Equity Fund

BlackRock Focus Growth Fund

BlackRock Global Allocation Fund†

BlackRock Global Dividend Income Portfolio

BlackRock Global Opportunities Portfolio

BlackRock Global SmallCap Fund

BlackRock Health Sciences Opportunities Portfolio

BlackRock Index Equity Portfolio

BlackRock India Fund

BlackRock International Fund

BlackRock International Index Fund

BlackRock International Opportunities Portfolio

BlackRock Large Cap Core Fund

BlackRock Large Cap Core Plus Fund

BlackRock Large Cap Growth Fund

BlackRock Large Cap Value Fund

BlackRock Latin America Fund

BlackRock Long-Horizon Equity Fund

BlackRock Managed Volatility Portfolio†

BlackRock Mid-Cap Growth Equity Portfolio

BlackRock Mid Cap Value Opportunities Fund

BlackRock Natural Resources Trust

BlackRock Pacific Fund

BlackRock Real Estate Securities Fund

BlackRock Russell 1000 Index Fund

BlackRock Science & Technology Opportunities Portfolio

BlackRock Small Cap Growth Equity Portfolio

BlackRock Small Cap Growth Fund II

BlackRock Small Cap Index Fund

BlackRock S&P 500 Index Fund

BlackRock S&P 500 Stock Fund

BlackRock U.S. Opportunities Portfolio

BlackRock Value Opportunities Fund

BlackRock World Gold Fund

Taxable Fixed Income Funds

BlackRock Bond Index Fund

BlackRock Core Bond Portfolio

BlackRock CoreAlpha Bond Fund

BlackRock Emerging Market Local Debt Portfolio

BlackRock Floating Rate Income Portfolio

BlackRock Global Long/Short Credit Fund

BlackRock GNMA Portfolio

BlackRock High Yield Bond Portfolio

BlackRock Inflation Protected Bond Portfolio

BlackRock International Bond Portfolio

BlackRock Long Duration Bond Portfolio

BlackRock Low Duration Bond Portfolio

BlackRock Multi-Asset Income Portfolio†

BlackRock Secured Credit Portfolio

BlackRock Strategic Income Opportunities Portfolio

BlackRock Total Return Fund

BlackRock US Government Bond Portfolio

BlackRock US Mortgage Portfolio

BlackRock World Income Fund

Municipal Fixed Income Funds

BlackRock California Municipal Bond Fund

BlackRock High Yield Municipal Fund

BlackRock Intermediate Municipal Fund

BlackRock National Municipal Fund

BlackRock New Jersey Municipal Bond Fund

BlackRock New York Municipal Bond Fund

BlackRock Pennsylvania Municipal Bond Fund

BlackRock Short-Term Municipal Fund

Target Risk & Target Date Funds†

BlackRock Prepared Portfolios

Conservative Prepared Portfolio

Moderate Prepared Portfolio

Growth Prepared Portfolio

Aggressive Growth Prepared Portfolio

LifePath Active Portfolios

2015

2020

2025

2030

2035

2040

2045

2050

LifePath Portfolios

Retirement

2020

2025

2030

2035

2040

2045

2050

2055

LifePath Index Portfolios

Retirement

2020

2025

2030

2035

2040

2045

2050

2055

† Mixed asset fund.

BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. 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) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2012 71

This report is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.

#10251-1-9/12-AR

Item 2 –	Code of Ethics – Each registrant (or “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrants’ principal executive officer, principal financial officer, principal accounting officer or controller, 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 registrants’ boards of directors (the “board of directors”), has determined that (i) the registrants has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:
	Robert M. Hernandez
	Fred G. Weiss
	Stuart E. Eizenstat
	Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person 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
	The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Funds:

	(a) Audit Fees		(b) Audit-Related Fees1		(c) Tax Fees2		(d) All Other Fees3
Entity Name	Current Fiscal Year End	Previous Fiscal Year End	Current Fiscal Year End	Previous Fiscal Year End	Current Fiscal Year End	Previous Fiscal Year End	Current Fiscal Year End	Previous Fiscal Year End
BlackRock Total Return Fund of BlackRock Bond Fund, Inc.	$7,100	$7,000	$2,500	$0	$14,600	$14,100	$0	$0
Master Total Return Portfolio of Master Bond LLC	$80,000	$68,000	$2,500	$0	$13,500	$13,000	$0	$0

The following table presents fees billed by D&T that were required to be approved by the registrants’ audit committees (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):

	Current Fiscal Year End	Previous Fiscal Year End
(b) Audit-Related Fees1	$0	$0
(c) Tax Fees2	$0	$0
(d) All Other Fees3	$2,970,000	$3,030,000

¹ The nature of the services includes 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 includes tax compliance, tax advice and tax planning.

³ Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

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 registrants on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrants and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrants. 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 registrants which have a direct impact on the operations or financial reporting of the registrants will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrants or $50,000 per project. 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 the Committee Chairman 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 Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrants, the Investment Adviser and the Fund Service Providers were:

Entity Name	Current Fiscal Year End	Previous Fiscal Year End
BlackRock Total Return Fund of BlackRock Bond Fund, Inc.	$17,100	$14,100
Master Total Return Portfolio of Master Bond LLC	$16,000	$13,000

	Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,970,000 and $3,030,000, respectively, were billed by D&T to the Investment Adviser.
	(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser and the Fund Service Providers 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.
Item 5 –	Audit Committee of Listed Registrants – Not Applicable
Item 6 –	Investments
	(a) The registrants’ Schedules of Investments are 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 – There have been no material changes to these procedures.
Item 11 –	Controls and Procedures
(a) –	The registrants’ principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants’ 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.
(b) –	There were no changes in the registrants’ 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 registrants’ internal control over financial reporting.

Item 12 –	Exhibits attached hereto
(a)(1) –	Code of Ethics – See Item 2
(a)(2) –	Certifications – Attached hereto
(a)(3) –	Not Applicable
(b) –	Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, each 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/ John M. Perlowski
	John M. Perlowski
	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: December 4, 2012
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 each registrant and in the capacities and on the dates indicated.
By:	/s/ John M. Perlowski
	John M. Perlowski
	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: December 4, 2012
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: December 4, 2012