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
Name of Fund: BlackRock High Income Fund of BlackRock Bond Fund, Inc.
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock High Income Fund of BlackRock Bond Fund, Inc., 800
Scudders Mill Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box
9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (800) 441-7762
Date of fiscal year end: 09/30/2007
Date of reporting period: 10/01/2006 - 09/30/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES
BLACKROCK SOLUTIONS
BlackRock High Income Fund
OF BLACKROCK BOND FUND, INC.
ANNUAL REPORT SEPTEMBER 30, 2007
(BLACKROCK logo)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
This report is transmitted to shareholders only. It is not authorized for
use as an offer of sale or a solicitation of an offer to buy shares of the
Fund unless accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment returns and principal
value of shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
BlackRock Bond Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
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BlackRock High Income Fund of BlackRock Bond Fund, Inc.
Table of Contents Page
A Letter to Shareholders 3
Annual Report:
Fund Summary 4
About Fund Performance 6
Disclosure of Expenses 6
Financial Statements:
Schedule of Investments 7
Statement of Assets and Liabilities 14
Statement of Operations 15
Statements of Changes in Net Assets 16
Financial Highlights 17
Notes to Financial Statements 21
Report of Independent Registered Public Accounting Firm 26
Important Tax Information 26
Officers and Directors 27
Proxy Results 28
Portfolio Summary 28
BlackRock Fund Information 29
Mutual Fund Family 31
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
A Letter to Shareholders
Dear Shareholder
The September reporting period took financial markets on a wild ride. While
subprime mortgage woes dominated headlines for much of 2007, troubles
intensified in the final months of the period, spawning a widespread "credit
crunch" that crept into other areas of the market. The U.S. Federal Reserve
Board (the "Fed") and other countries' central banks stepped in to inject
liquidity into the markets and bolster investor confidence. The Fed cut the
discount rate, the rate banks pay to borrow money directly from the Fed, from
6.25% to 5.25% in two moves in August and September. The central bankers also
cut the more widely followed federal funds target rate, which had remained
unchanged at 5.25% for over a year, to 4.75% in September. After a tumultuous
summer, the dust began to settle toward period-end amid speculation that the
worst of the credit crunch had passed.
Although heightened volatility and a weakening U.S. economy have been
recurring themes throughout the past year, equity markets have displayed
surprising resilience. Most recently, the credit turmoil dampened corporate
merger-and-acquisition activity, a key source of strength for equity markets.
However, market fundamentals have held firm, dividend payouts and share
buybacks have continued to grow, and valuations remain attractive. These
tailwinds generally have prevailed over the headwinds created by the slowing
U.S. economy and troubled housing market.
In fixed income markets, mixed economic signals and the credit market debacle
resulted in a flight to quality. At the height of the uncertainty, investors
shunned bonds associated with the housing and credit markets in favor of
higher-quality Treasury issues. The yield on 10-year Treasury issues, which
touched 5.30% in June (its highest level in five years), fell to 4.59% by
period-end, while prices correspondingly rose.
Against this backdrop, financial markets posted generally positive results for
the six-month period, and relatively stronger returns for the full year ended
September 30, 2007:
Total Returns as of September 30, 2007 6-month 12-month
U.S. equities (S&P 500 Index) +8.44% +16.44%
Small cap U.S. equities (Russell 2000 Index) +1.19 +12.34
International equities (MSCI Europe, Australasia, Far East Index) +8.72 +24.86
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +2.31 + 5.14
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.15 + 3.10
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) +0.56 + 7.62
Past performance is no guarantee of future results. Index performance shown
for illustrative purposes only. You cannot invest directly in an index.
As you navigate market volatility, we encourage you to review your
investment goals with your financial professional and to make portfolio
changes, as needed. For more market insight, we invite you to view "What's
Ahead in 2007: Third Quarter Update" and "Are You Prepared for Volatility?"
at www.blackrock.com/funds. We thank you for entrusting BlackRock with your
investment assets, and we look forward to continuing to serve you in the
months and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
- -----------------------
Robert C. Doll, Jr.
Vice Chairman, BlackRock, Inc.
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary
Portfolio Management Commentary
How did the Fund perform?
* Fund returns for the year were generally competitive with the benchmark.
What factors influenced performance?
* The first eight months of the fiscal year were relatively uneventful in
comparison to the final four. Bond yields rose sharply (and prices fell)
in early June, with the 10-year Treasury yield touching 5.33%, its highest
level since 2001. This was largely based on stronger-than-expected
economic readings, which led investors to believe that the Federal Reserve
Board (the "Fed") would keep short-term interest rates on hold for some
time. Just weeks later, perceptions changed dramatically amid escalating
troubles in the subprime mortgage market.
* Financial markets were highly volatile as fears spread about which
investments might have exposure to the subprime segment. The liquidity of
mortgage-backed securities began drying up, which led to a wider liquidity
crisis as banks restricted their short-term lending. The Fed and other
countries' central banks stepped in to inject liquidity into the markets
and bolster investor confidence. The Fed cut the discount rate from 6.25%
to 5.25% and the federal funds rate from 5.25% to 4.75% in an effort to
offset deteriorating credit conditions in the housing market and help
prevent any negative spillover in the economy.
* The high yield market posted positive returns for most of the period
before experiencing a downturn in June through August. The flight to
safety that accompanied the market turmoil this summer hurt the high yield
sector, while benefiting Treasury issues. Notably, in September, the high
yield market advanced 2.49% as measured by our benchmark, and spreads
versus
10-year Treasury issues narrowed 40 basis points, making it the best month
for high yield in over four years.
* Solid security selection was seen in the media (non-cable), paper,
packaging, chemicals, housing and industrials sectors. We also saw strong
performance from select special situation names. The Fund benefited
further from its overweightings in B-rated and CCC-rated bonds.
* Detracting from performance were our underweight positions in the health
care, cable and supermarket sectors, as well as an underweight in BB-rated
credits.
Describe recent portfolio activity.
* Changes to the portfolio over the past year included moving to underweight
positions in paper, energy, technology and utilities, while adding to our
overweight positions in wireless, specialty retail, media and select
special situations.
* At period-end, the Fund was overweight in sectors that we believe have
pricing power and may benefit from stronger economic growth overseas.
These included metals, media (non-cable), specialty retailers, wireless
and industrials. Conversely, there were underweights in most consumer-
oriented sectors, including autos, housing, food and supermarkets, as well
as in utilities and technology.
* The Fund had a higher-than-normal cash position at period-end, which
should allow us to take advantage of opportunities presented by the large
new-issue calendar. We believe the market remains attractive given low
default rates and strong corporate balance sheets.
Fund Profile as of September 30, 2007
Percent of
Ten Largest Corporate Bond Holdings Net Assets
Tenet Healthcare Corp.* 2.2%
TL Acquisitions, Inc.* 1.5
Freeport-McMoRan Copper & Gold, Inc.* 1.4
New Page Corp.* 1.3
Qwest Corp.* 1.3
CCH I LLC 1.2
Paxson Communications Corp. 1.2
Realogy Corp.* 1.1
American Tire Distributors, Inc. 1.1
Superior Essex Communications LLC 1.1
* Includes combined holdings.
Percent of
Five Largest Industries Net Assets
Media 14.8 %
Hotels, Restaurants & Leisure 5.5
Metals & Mining 4.9
Diversified Telecommunication Services 4.8
Oil, Gas & Consumable Fuels 4.6
For Fund compliance purposes, the Fund's industry classifications refer
to any one or more of the industry sub-classifications used by one or
more widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes
of this report, which may combine industry sub-classifications for reporting
ease. These industry classifications are unaudited.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Total Return Based on a $10,000 Investment
A line graph illustrating the growth of a $10,000 investment in Institutional
Shares*++ and Investor A Shares*++ compared to a similar investment in Credit
Suisse High Yield Index++++ and Lehman Brothers U.S. Corporate High Yield 2%
Issuer Cap Index++++++. Values illustrated are as follows:
Institutional Shares*++
Date Value
September 1997 $10,000.00
September 1998 $ 9,403.00
September 1999 $ 9,957.00
September 2000 $10,184.00
September 2001 $ 8,973.00
September 2002 $ 8,509.00
September 2003 $11,270.00
September 2004 $12,693.00
September 2005 $13,460.00
September 2006 $14,745.00
September 2007 $15,888.00
Investor A Shares*++
Date Value
September 1997 $ 9,600.00
September 1998 $ 8,993.00
September 1999 $ 9,500.00
September 2000 $ 9,708.00
September 2001 $ 8,536.00
September 2002 $ 8,058.00
September 2003 $10,648.00
September 2004 $11,962.00
September 2005 $12,679.00
September 2006 $13,827.00
September 2007 $14,865.00
Credit Suisse High Yield Index++++
Date Value
September 1997 $10,000.00
September 1998 $ 9,948.00
September 1999 $10,340.00
September 2000 $10,539.00
September 2001 $10,020.00
September 2002 $10,305.00
September 2003 $13,195.00
September 2004 $14,952.00
September 2005 $15,896.00
September 2006 $17,130.00
September 2007 $18,558.00
Lehman Brothers U.S. Corporate High Yield
2% Issuer Cap Index++++++
Date Value
September 1997 $10,000.00
September 1998 $10,174.00
September 1999 $10,468.00
September 2000 $10,568.00
September 2001 $ 9,995.00
September 2002 $ 9,909.00
September 2003 $12,828.00
September 2004 $14,435.00
September 2005 $15,385.00
September 2006 $16,498.00
September 2007 $17,755.00
* Assuming maximum sales charge, if any, transaction costs and other
operating expenses, including advisory fees.
++ The Fund invests principally in fixed income securities which are rated
in the lower rating categories of the established rating services, or
in unrated securities of comparable quality.
++++ This unmanaged market-weighted Index, which mirrors the high-yield debt
market, is comprised of 423 securities rated BBB or below.
++++++ This unmanaged Index is comprised of issues that meet the following
criteria: at least $150 million par value outstanding; maximum credit
rating of Ba1; at least one year to maturity; and no issuer represents
more than 2% of the index. The Fund now uses this Index because it best
reflects the Fund's investment strategies.
Performance Summary for the Period Ended September 30, 2007
Average Annual Total Returns*
1 Year 5 Years 10 Years
6-Month w/o sales w/sales w/o sales w/sales w/o sales w/sales
Total Returns charge charge charge charge charge charge
Institutional -0.07% +7.75% -- +13.30% -- +4.74% --
Investor A -0.18 +7.51 +3.21% +13.03 +12.11% +4.47 +4.04%
Investor B -0.27 +7.14 +3.14 +12.48 +12.23 +3.95 +3.95
Investor C -0.87 +6.55 +5.55 +12.15 +12.15 +3.69 +3.69
Investor C1 -0.30 +7.07 +6.07 +12.42 +12.42 +3.89 +3.89
Credit Suisse High Yield Index +0.69 +8.34 -- +12.49 -- +6.38 --
Lehman Brothers U.S. Corporate
High Yield 2% Issuer Cap Index +0.56 +7.62 -- +12.37 -- +5.91 --
Merrill Lynch High Yield Master Index +0.66 +7.66 -- +12.27 -- +6.20 --
Ten-Year U.S. Treasury Securities +2.76 +4.71 -- + 2.61 -- +5.41 --
* Assuming maximum sales charges. See "About Fund Performance" on page 6 for a detailed description of
share classes, including any related sales charges and fees.
Past performance is not indicative of future results.
Expense Example
Actual Hypothetical**
Beginning Ending Expenses Beginning Ending Expenses
Account Value Account Value Paid During Account Value Account Value Paid During
April 1, 2007 September 30, 2007 the Period* April 1, 2007 September 30, 2007 the Period*
Institutional $1,000 $999.30 $ 3.39 $1,000 $1,021.51 $ 3.43
Investor A $1,000 $998.20 $ 4.48 $1,000 $1,020.41 $ 4.53
Investor B $1,000 $997.30 $ 7.27 $1,000 $1,017.62 $ 7.29
Investor C $1,000 $991.30 $11.57 $1,000 $1,013.28 $11.70
Investor C1 $1,000 $997.00 $ 7.62 $1,000 $1,017.27 $ 7.69
* For each class of the Fund, expenses are equal to the annualized expense ratio for the class (.68% for Institutional,
.90% for Investor A, 1.46% for Investor B, 2.33% for Investor C and 1.53% for Investor C1, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal
half year divided by 365.
See "Disclosure of Expenses" on page 6 for further information on how expenses were calculated.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
About Fund Performance
Effective October 2, 2006, the Fund's Class A, Class B, Class C and Class
I Shares were redesignated Investor A, Investor B, Investor C1 and
Institutional Shares, respectively. Also effective October 2, 2006,
Investor C Shares commenced operations. As previously communicated to
shareholders, new sales charge schedules came into effect at the same time
for certain of these classes.
* Institutional Shares are not subject to any sales charge. Institutional
Shares bear no ongoing distribution or service fees and are available only
to eligible investors.
* Investor A Shares incur a maximum initial sales charge (front-end load) of
4% and a service fee of 0.25% per year (but no distribution fee).
* Investor B Shares are subject to a maximum contingent deferred sales
charge of 4% declining to 0% after six years. In addition, Investor B
Shares are subject to a distribution fee of 0.50% per year and a service
fee of 0.25% per year. These shares automatically convert to Investor A
Shares after approximately 10 years. (There is no initial sales charge for
automatic share conversions.) All returns for periods greater than 10
years reflect this conversion.
* Investor C Shares are subject to a distribution fee of 0.75% per year and
a service fee of 0.25% per year. In addition, Investor C Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase. Prior to October 2, 2006, Investor C Share performance
results are those of Institutional Shares (which have no distribution or
service fees) restated to reflect Investor C Share fees.
* Investor C1 Shares are subject to a distribution fee of 0.55% per year and
a service fee of 0.25% per year. In addition, Investor C1 Shares are
subject to a 1% contingent deferred sales charge if redeemed within one
year of purchase.
Performance information reflects past performance and does not guarantee
future results. Current performance may be lower or higher than the
performance data quoted. Refer to www.blackrock.com to obtain performance
data current to the most recent month-end. Performance results do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions, if any, or the redemption of fund shares. The Fund may
charge a 2% redemption fee for sales or exchanges of shares within 30 days
of purchase or exchange. Performance data does not reflect this potential
fee. Figures shown in each of the performance tables on page 5 assume
reinvestment of all dividends and capital gain distributions, if any, at
net asset value on the ex-dividend date. Investment return and principal
value of shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class of
shares will vary because of the different levels of service, distribution
and transfer agency fees applicable to each class, which are deducted from
the income available to be paid to shareholders.
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses
related to transactions, including sales charges, redemption fees and exchange
fees; and (b) operating expenses including advisory fees, distribution fees
including 12b-1 fees, and other Fund expenses. The expense example on page 5
(which is based on a hypothetical investment of $1,000 invested on April 1,
2007 and held through September 30, 2007) is intended to assist shareholders
both in calculating expenses based on an investment in the Fund and in
comparing these expenses with similar costs of investing in other mutual funds.
The table provides information about actual account values and actual
expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number corresponding to their share
class under the heading entitled "Expenses Paid During the Period."
The table also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses. In order to assist shareholders
in comparing the ongoing expenses of investing in this Fund and other funds,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders'
ongoing costs only and do not reflect any transactional expenses, such as
sales charges, redemption fees or exchange fees. Therefore, the table on the
right 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.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments as of September 30, 2007 (in U.S. dollars)
Face
Amount Corporate Bonds Value
Aerospace & Defense--0.7%
USD 875,000 DRS Technologies, Inc., 6.625%
due 2/01/2016 $ 864,062
5,365,000 L-3 Communications Corp., 5.875%
due 1/15/2015 5,150,400
1,550,000 TransDigm, Inc., 7.75% due 7/15/2014 1,565,500
2,120,000 Vought Aircraft Industries, Inc., 8%
due 7/15/2011 2,072,300
--------------
9,652,262
Airlines--0.0%
138,820 Continental Airlines, Inc. Series 1998-1-C,
6.541% due 9/15/2009 (n) 137,431
Auto Components--2.1%
3,400,000 ArvinMeritor, Inc., 8.125% due 9/15/2015 3,298,000
The Goodyear Tire & Rubber Co.:
1,090,000 9.135% due 12/01/2009 (a) 1,098,175
1,960,000 7.857% due 8/15/2011 1,989,400
5,862,000 8.625% due 12/01/2011 6,125,790
1,550,000 4% due 6/15/2034 (c) 3,956,375
4,065,000 Lear Corp., 8.75% due 12/01/2016 3,821,100
2,190,000 Metaldyne Corp.,10% due 11/01/2013 2,080,500
6,375,000 Tenneco Automotive, Inc., 8.625%
due 11/15/2014 6,422,813
--------------
28,792,153
Automobiles--0.3%
4,500,000 Ford Motor Co., 8.90% due 1/15/2032 3,712,500
Biotechnology--0.6%
7,770,000 Angiotech Pharmaceuticals, Inc., 9.371%
due 12/01/2013 (a) 7,964,250
Building Products--1.8%
7,925,000 Building Materials Corp. of America, 7.75%
due 8/01/2014 7,172,125
3,975,000 Goodman Global Holding Co., Inc., 7.875%
due 12/15/2012 3,905,437
Momentive Performance Materials, Inc. (e):
300,000 9.75% due 12/01/2014 297,000
14,525,000 11.50% due 12/01/2016 14,379,750
--------------
25,754,312
Chemicals--2.5%
3,100,000 American Pacific Corp., 9% due 2/01/2015 3,177,500
3,457,000 Equistar Chemicals LP,10.625% due 5/01/2011 3,612,565
Hexion U.S. Finance Corp.:
3,785,000 9.75% due 11/15/2014 4,163,500
1,300,000 10.058% due 11/15/2014 (a) 1,339,000
3,750,000 Huntsman International LLC, 7.875%
due 11/15/2014 3,993,750
5,965,000 Ineos Group Holdings Plc, 8.50%
due 2/15/2016 (e) 5,711,487
3,055,000 Innophos, Inc., 8.875% due 8/15/2014 3,024,450
2,325,000 MacDermid, Inc., 9.50% due 4/15/2017 (e) 2,243,625
2,940,000 NOVA Chemicals Corp., 8.484%
due 11/15/2013 (a) 2,881,200
EUR 1,125,000 Rockwood Specialties Group, Inc., 7.625%
due 11/15/2014 1,588,145
USD 3,600,000 Terra Capital, Inc. Series B, 7% due 2/01/2017 3,510,000
--------------
35,245,222
Face
Amount Corporate Bonds Value
Commercial Services & Supplies--3.1%
USD 6,000,000 Ashtead Capital, Inc., 9% due 8/15/2016 (e) $ 5,917,500
2,025,000 Corrections Corp. of America, 6.75%
due 1/31/2014 2,022,469
3,690,000 DI Finance Series B, 9.50% due 2/15/2013 3,819,150
550,000 FTI Consulting, Inc., 7.75% due 10/01/2016 569,250
2,750,000 Mobile Services Group, Inc., 9.75%
due 8/01/2014 (e) 2,750,000
6,225,000 Quebecor World Capital Corp., 8.75%
due 3/15/2016 (e) 5,649,188
2,500,000 Quebecor World, Inc., 9.75% due 1/15/2015 (e) 2,393,750
5,610,000 Sally Holdings LLC,10.50% due 11/15/2016 5,610,000
11,455,000 West Corp.,11% due 10/15/2016 12,027,750
2,625,000 Yankee Acquisition Corp., 9.75% due 2/15/2017 2,480,625
--------------
43,239,682
Communications Equipment--0.9%
5,805,000 Dycom Industries, Inc., 8.125%
due 10/15/2015 5,906,587
7,280,000 Nortel Networks Ltd., 9.493%
due 7/15/2011 (a)(e) 7,280,000
--------------
13,186,587
Construction & Engineering--0.4%
1,500,000 Ahern Rentals, Inc., 9.25% due 8/15/2013 1,443,750
Esco Corp. (e):
2,810,000 8.625% due 12/15/2013 2,767,850
1,110,000 9.569% due 12/15/2013 (a) 1,071,150
--------------
5,282,750
Construction Materials--0.8%
6,675,000 Caue Finance Ltd., 8.875% due 8/01/2015 (e) 7,209,000
4,360,000 Nortek, Inc., 8.50% due 9/01/2014 3,782,300
680,000 Texas Industries, Inc., 7.25% due 7/15/2013 678,300
--------------
11,669,600
Consumer Finance--0.9%
Ford Motor Credit Co. LLC:
5,290,000 5.80% due 1/12/2009 5,109,421
1,540,000 5.70% due 1/15/2010 1,448,221
6,490,000 7.993% due 1/13/2012 (a) 6,132,466
--------------
12,690,108
Containers & Packaging--2.0%
Berry Plastics Holding Corp.:
4,890,000 8.875% due 9/15/2014 5,000,025
4,650,000 9.569% due 9/15/2014 (a) 4,696,500
3,906,000 Graphic Packaging International Corp., 9.50%
due 8/15/2013 4,013,415
1,930,000 Impress Holdings B.V., 8.368%
due 9/15/2013 (a)(e) 1,918,674
625,000 Owens-Illinois, Inc., 7.35% due 5/15/2008 627,344
2,550,000 Packaging Dynamics Finance Corp.,10%
due 5/01/2016 (e) 2,562,750
4,485,000 Pregis Corp.,12.375% due 10/15/2013 4,843,800
3,910,000 Smurfit-Stone Container Enterprises, Inc., 8%
due 3/15/2017 3,841,575
--------------
27,504,083
Distributors--1.2%
15,475,000 American Tire Distributors, Inc.,11.481%
due 4/01/2012 (a) 15,358,937
1,900,000 Buhrmann US, Inc., 8.25% due 7/01/2014 1,795,500
--------------
17,154,437
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Diversified Financial Services--1.4%
GMAC LLC:
USD 4,750,000 6% due 12/15/2011 $ 4,384,150
1,500,000 6.75% due 12/01/2014 1,359,565
2,375,000 8% due 11/01/2031 2,330,070
407,906 iPayment Investors LP,12.75%
due 7/15/2014 (e)(g) 416,064
6,200,000 Leucadia National Corp., 8.125% due 9/15/2015 6,238,750
1,600,000 PNA Intermediate Holding Corp.,12.558%
due 2/15/2013 (a)(e) 1,568,000
4,750,000 Tropicana Entertainment, LLC, 9.625%
due 12/15/2014 (e) 3,681,250
--------------
19,977,849
Diversified Telecommunication Services--4.0%
2,600,000 Cincinnati Bell, Inc., 7.25% due 7/15/2013 2,619,500
935,000 Citizens Communications Co., 6.25%
due 1/15/2013 911,625
965,000 Cricket Communications, Inc., 9.375%
due 11/01/2014 979,475
1,030,000 Intelsat Bermuda Ltd., 11.409% due 6/15/2013 (a) 1,076,350
9,475,000 Intelsat Subsidiary Holding Co. Ltd.,
8.625% due 1/15/2015 (a) 9,664,500
Qwest Corp.:
9,300,000 7.50% due 10/01/2014 9,672,000
8,500,000 6.50% due 6/01/2017 (e) 8,330,000
8,750,000 Time Warner Telecom Holdings, Inc., 9.25%
due 2/15/2014 9,078,125
EUR 1,000,000 Wind Acquisition Finance SA, 9.75%
due 12/01/2015 (e) 1,561,408
USD 11,800,000 Windstream Corp., 8.125% due 8/01/2013 12,419,500
--------------
56,312,483
Electric Utilities--2.6%
6,625,000 Aes Dominicana Energia Finance SA, 11%
due 12/13/2015 (e) 6,774,062
Edison Mission Energy:
3,375,000 7.75% due 6/15/2016 3,493,125
9,250,000 7% due 5/15/2017 (e) 9,111,250
5,050,000 Mirant North America LLC, 7.375%
due 12/31/2013 5,125,750
4,000,000 NSG Holdings LLC, 7.75%
due 12/15/2025 (e)(n) 3,960,000
3,900,000 Sierra Pacific Resources, 8.625%
due 3/15/2014 4,128,236
4,433,936 Tenaska Alabama Partners LP, 7%
due 6/30/2021 (e)(n) 4,453,920
--------------
37,046,343
Electrical Equipment--1.1%
910,000 Belden CDT, Inc., 7% due 3/15/2017 (e) 900,900
15,325,000 Superior Essex Communications LLC, 9%
due 4/15/2012 15,133,438
--------------
16,034,338
Electronic Equipment & Instruments--0.7%
NXP BV:
2,915,000 7.993% due 10/15/2013 (a) 2,707,306
5,120,000 9.50% due 10/15/2015 4,774,400
3,440,000 Sanmina-SCI Corp., 8.125% due 3/01/2016 2,975,600
--------------
10,457,306
Face
Amount Corporate Bonds Value
Energy Equipment & Services--1.4%
Compagnie Generale de Geophysique-Veritas:
USD 735,000 7.50% due 5/15/2015 $ 757,050
5,335,000 7.75% due 5/15/2017 5,495,050
3,300,000 North American Energy Partners, Inc., 8.75%
due 12/01/2011 3,333,000
10,700,000 SemGroup LP, 8.75% due 11/15/2015 (e) 10,459,250
--------------
20,044,350
Food & Staples Retailing--0.8%
3,200,000 AmeriQual Group LLC, 9.50% due 4/01/2012 (e) 2,944,000
Rite Aid Corp.:
2,170,000 9.375% due 12/15/2015 (e) 2,018,100
6,175,000 7.50% due 3/01/2017 5,812,219
--------------
10,774,319
Food Products--1.0%
20,000,000 DGS International Finance Co., 10%
due 6/01/2007 (e)(i) 100,000
2,150,000 Del Monte Corp., 8.625% due 12/15/2012 2,182,250
750,000 Smithfield Foods, Inc., 7.75% due 7/01/2017 768,750
11,200,000 Southern States Cooperative, Inc.,10.50%
due 11/01/2010 (e) 11,536,000
--------------
14,587,000
Health Care Equipment & Supplies--0.8%
4,952,000 Accellent, Inc.,10.50% due 12/01/2013 4,580,600
5,000,000 The Cooper Cos., Inc., 7.125% due 2/15/2015 4,925,000
Universal Hospital Services, Inc. (e):
1,000,000 8.50% due 6/01/2015 (g) 990,000
930,000 8.759% due 6/01/2015 (a) 897,517
--------------
11,393,117
Health Care Providers & Services--2.6%
4,130,000 Community Health Systems, Inc., 8.875%
due 7/15/2015 (e) 4,243,575
3,650,000 Omnicare, Inc. Series OCR, 3.25%
due 12/15/2035 (c) 2,951,938
Tenet Healthcare Corp.:
12,790,000 6.50% due 6/01/2012 10,839,525
6,775,000 9.875% due 7/01/2014 6,199,125
1,085,000 9.25% due 2/01/2015 957,513
US Oncology, Inc.:
1,265,000 9% due 8/15/2012 1,274,488
6,175,000 10.75% due 8/15/2014 6,375,688
3,400,000 United Surgical Partners International, Inc.,
8.875% due 5/01/2017 3,434,000
--------------
36,275,852
Hotels, Restaurants & Leisure--5.0%
American Real Estate Partners LP:
4,190,000 7.125% due 2/15/2013 3,990,975
8,290,000 7.125% due 2/15/2013 (e) 7,896,225
6,850,000 Boyd Gaming Corp., 7.125% due 2/01/2016 6,627,375
2,525,000 CCM Merger, Inc., 8% due 8/01/2013 (e) 2,461,875
1,425,000 Caesars Entertainment, Inc., 8.125%
due 5/15/2011 1,453,500
250,000 Fontainebleau Las Vegas Holdings LLC, 10.25%
due 6/15/2015 (e) 234,375
Galaxy Entertainment Finance Co. Ltd.(e):
1,425,000 10.409% due 12/15/2010 (a) 1,453,500
1,800,000 9.875% due 12/15/2012 1,854,000
2,340,000 Great Canadian Gaming Corp., 7.25%
due 2/15/2015 (e) 2,340,000
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Hotels, Restaurants & Leisure (concluded)
USD 4,890,000 Greektown Holdings, LLC,10.75%
due 12/01/2013 (e) $ 4,841,100
Harrah's Operating Co., Inc.:
705,000 5.375% due 12/15/2013 571,050
1,485,000 5.75% due 10/01/2017 1,136,025
5,965,000 Little Traverse Bay Bands of Odawa Indians,
10.25% due 2/15/2014 (e) 6,084,300
4,040,000 Pinnacle Entertainment, Inc., 7.50%
due 6/15/2015 (e) 3,822,850
2,060,000 Shingle Springs Tribal Gaming Authority,
9.375% due 6/15/2015 (e) 2,080,600
1,175,000 Snoqualmie Entertainment Authority, 9.062%
due 2/01/2014 (a)(e) 1,142,688
Station Casinos, Inc.:
4,625,000 7.75% due 8/15/2016 4,578,750
3,600,000 6.625% due 3/15/2018 3,015,000
Travelport LLC:
230,000 9.875% due 9/01/2014 234,600
1,545,000 10.246% due 9/01/2014 (a) 1,545,000
3,100,000 Universal City Florida Holding Co. I, 10.106%
due 5/01/2010 (a) 3,131,000
3,775,000 Waterford Gaming LLC, 8.625%
due 9/15/2014 (e) 3,803,313
6,125,000 Wynn Las Vegas LLC, 6.625% due 12/01/2014 6,002,500
--------------
70,300,601
Household Durables--1.7%
3,365,000 American Greetings Corp., 7.375%
due 6/01/2016 3,264,050
8,115,000 Ashton Woods USA LLC, 9.50%
due 10/01/2015 6,410,850
350,000 Fedders North America, Inc., 9.875%
due 3/01/2014 (i) 56,000
4,025,000 Jarden Corp., 7.50% due 5/01/2017 3,894,187
14,000,000 Stanley-Martin Communities LLC, 9.75%
due 8/15/2015 10,430,000
--------------
24,055,087
IT Services--0.6%
SunGard Data Systems, Inc.:
8,105,000 9.125% due 8/15/2013 8,429,200
400,000 10.25% due 8/15/2015 418,000
--------------
8,847,200
Independent Power Producers & Energy Traders--1.7%
8,320,000 Dynegy Holdings, Inc., 7.75%
due 6/01/2019 (e) 7,956,000
NRG Energy, Inc.:
2,635,000 7.25% due 2/01/2014 2,641,587
12,650,000 7.375% due 2/01/2016 12,681,625
--------------
23,279,212
Insurance--0.1%
1,530,000 USI Holdings Corp., 9.433% due 11/15/2014 (a)(e) 1,453,500
Machinery--1.8%
1,810,000 American Railcar Industries, Inc., 7.50%
due 3/01/2014 1,800,950
4,000,000 Ashtead Holdings Plc, 8.625% due 8/01/2015 (e) 3,890,000
8,158,000 Invensys Plc, 9.875% due 3/15/2011 (e) 8,586,295
Face
Amount Corporate Bonds Value
Machinery (concluded)
RBS Global, Inc.:
USD 1,090,000 9.50% due 8/01/2014 $ 1,128,150
1,505,000 8.875% due 9/01/2016 1,512,525
6,440,000 11.75% due 8/01/2016 6,858,600
2,100,000 Titan International, Inc., 8% due 1/15/2012 2,094,750
--------------
25,871,270
Marine--0.3%
3,750,000 Navios Maritime Holdings, Inc., 9.50%
due 12/15/2014 3,867,187
Media--14.4%
Affinion Group, Inc.:
1,230,000 10.125% due 10/15/2013 1,297,650
2,960,000 11.50% due 10/15/2015 3,108,000
6,255,000 Barrington Broadcasting Group LLC, 10.50%
due 8/15/2014 6,442,650
1,530,000 Bonten Media Acquisition Co., 9%
due 6/01/2015 (e)(g) 1,322,868
1,700,000 CBD Media Holdings LLC, 9.25%
due 7/15/2012 1,834,453
16,950,000 CCH I, LLC, 11% due 10/01/2015 17,161,875
Cablevision Systems Corp. Series B:
2,810,000 9.644% due 4/01/2009 (a) 2,894,300
2,875,000 8% due 4/15/2012 2,788,750
1,945,000 CanWest Media, Inc., 8% due 9/15/2012 1,906,100
13,810,000 Charter Communications Holdings II LLC,
10.25% due 9/15/2010 14,135,775
4,700,000 Dex Media, Inc., 8% due 11/15/2013 4,735,250
4,150,000 Dex Media West LLC, 9.875% due 8/15/2013 4,414,562
1,920,000 DirecTV Holdings LLC, 8.375% due 3/15/2013 1,994,400
9,200,000 Echostar DBS Corp., 7.125% due 2/01/2016 9,453,000
Harland Clarke Holdings Corp.:
1,180,000 9.50% due 5/15/2015 1,053,150
980,000 10.308% due 5/15/2015 (a) 874,650
6,805,000 Idearc, Inc., 8% due 11/15/2016 6,787,987
4,575,000 Intelsat Bermuda Ltd., 8.886%
due 1/15/2015 (a) 4,620,750
5,500,000 Intelsat Corp., 9% due 6/15/2016 5,665,000
10,525,000 Liberty Media Corp., 0.75% due 3/30/2023 (c) 11,616,969
NTL Cable Plc:
355,000 8.75% due 4/15/2014 363,875
11,225,000 9.125% due 8/15/2016 11,645,937
1,350,000 Network Communications, Inc., 10.75%
due 12/01/2013 1,355,062
1,820,000 Nexstar Finance, Inc., 7% due 1/15/2014 1,747,200
Nielsen Finance LLC:
11,300,000 10% due 8/01/2014 11,949,750
1,070,000 11.62% due 8/01/2016 (d) 749,000
4,737,000 PanAmSat Corp., 9% due 8/15/2014 4,879,110
17,175,000 Paxson Communications Corp., 8.493%
due 1/15/2012 (a)(e) 17,089,125
3,674,046 ProtoStar I Ltd.,12.50% due 10/15/2012 (a)(c)(e) 3,821,008
Quebecor Media, Inc.:
2,775,000 7.75% due 3/15/2016 2,646,656
2,650,000 7.75% due 3/15/2016 (e) 2,527,437
RH Donnelley Corp.:
2,050,000 6.875% due 1/15/2013 1,937,250
5,000,000 8.875% due 10/15/2017 (e) 5,062,500
3,900,000 Series A-2, 6.875% due 1/15/2013 3,685,500
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Media (concluded)
USD 2,123,000 Rainbow National Services LLC,10.375%
due 9/01/2014 (e) $ 2,329,993
TL Acquisitions, Inc. (e):
2,020,000 10.92% due 7/15/2009 (d) 1,636,200
19,215,000 10.50% due 1/15/2015 18,974,813
1,125,000 Umbrella Acquisition, 9.75%
due 3/15/2015 (e)(g) 1,096,875
4,885,000 Young Broadcasting, Inc., 10% due 3/01/2011 4,506,413
--------------
202,111,843
Metals & Mining--4.9%
1,945,000 AK Steel Corp., 7.75% due 6/15/2012 1,969,312
7,390,000 Aleris International, Inc., 9% due 12/15/2014 (g) 6,639,046
910,000 Blaze Recycling & Metals LLC,10.875%
due 7/15/2012 (e) 910,000
9,000,000 CSN Islands VIII Corp., 9.75%
due 12/16/2013 (e) 10,260,000
2,410,000 FMG Finance Pty Ltd.,10.625%
due 9/01/2016 (e) 2,837,775
Freeport-McMoRan Copper & Gold, Inc.:
7,200,000 8.394% due 4/01/2015 (a) 7,479,000
11,605,000 8.375% due 4/01/2017 12,678,462
4,023,000 Indalex Holding Corp. Series B, 11.50%
due 2/01/2014 3,781,620
7,475,000 Novelis, Inc., 7.25% due 2/15/2015 7,213,375
6,900,000 RathGibson, Inc.,11.25% due 2/15/2014 7,055,250
7,720,000 Southern Copper Corp., 6.375% due 7/27/2015 7,792,792
--------------
68,616,632
Multi-Utilities--0.2%
1,895,000 CenterPoint Energy, Inc. Series B, 3.75%
due 5/15/2023 (c) 2,735,906
Multiline Retail--0.4%
5,175,000 Neiman Marcus Group, Inc., 9%
due 10/15/2015 (g) 5,511,375
Oil, Gas & Consumable Fuels--3.5%
2,625,000 Berry Petroleum Co., 8.25% due 11/01/2016 2,651,250
3,275,000 Chaparral Energy, Inc., 8.50% due 12/01/2015 3,070,312
2,300,000 Cimarex Energy Co., 7.125% due 5/01/2017 2,282,750
4,880,000 Compton Petroleum Finance Corp., 7.625%
due 12/01/2013 4,709,200
2,650,000 Copano Energy LLC, 8.125% due 3/01/2016 2,696,375
3,991,144 Corral Finans AB,10.243% due 4/15/2010 (e)(g) 3,791,587
1,750,000 Denbury Resources, Inc., 7.50% due 12/15/2015 1,793,750
5,500,000 Forest Oil Corp., 7.25% due 6/15/2019 (e) 5,500,000
4,181,000 KCS Energy, Inc., 7.125% due 4/01/2012 4,055,570
5,565,000 OPTI Canada, Inc., 8.25% due 12/15/2014 (e) 5,606,737
5,840,000 Sabine Pass LNG LP, 7.50% due 11/30/2016 5,752,400
3,425,000 Swift Energy Co., 7.125% due 6/01/2017 3,245,188
3,005,000 Transcontinental Gas Pipe Line Corp. Series B,
8.875% due 7/15/2012 3,343,063
--------------
48,498,182
Paper & Forest Products--3.7%
21,000,000 APP Finance II Mauritius Ltd, 12% (i)(m) 105,000
Abitibi-Consolidated, Inc.:
320,000 8.55% due 8/01/2010 264,000
2,255,000 6% due 6/20/2013 1,578,500
435,000 8.85% due 8/01/2030 300,150
11,025,000 Ainsworth Lumber Co. Ltd., 7.25%
due 10/01/2012 7,552,125
Face
Amount Corporate Bonds Value
Paper & Forest Products (concluded)
USD 3,325,000 Boise Cascade LLC, 7.125% due 10/15/2014 $ 3,192,000
4,830,000 Bowater Canada Finance Corp., 7.95%
due 11/15/2011 3,972,675
10,550,000 Domtar, Inc., 7.125% due 8/15/2015 10,128,000
NewPage Corp.:
6,475,000 11.606% due 5/01/2012 (a) 6,960,625
10,525,000 12% due 5/01/2013 11,288,062
3,384,383 PT Pabrik Kertas Tjiwa Kimia Tranche B,
3.783% due 4/28/2018 1,675,270
Verso Paper Holdings LLC Series B:
3,945,000 9.106% due 8/01/2014 (a) 3,964,725
535,000 11.375% due 8/01/2016 563,088
--------------
51,544,220
Pharmaceuticals--0.2%
3,180,000 PTS Acquisition Corp., 9.50%
due 4/15/2015 (e)(g) 3,005,100
Real Estate Investment Trusts (REITs)--0.3%
4,000,000 Ventas Realty, LP, 9% due 5/01/2012 4,350,000
Real Estate Management & Development--1.1%
Realogy Corp.(e):
5,370,000 10.50% due 4/15/2014 4,577,925
8,500,000 11% due 4/15/2014 (g) 7,001,875
5,435,000 12.375% due 4/15/2015 4,103,425
--------------
15,683,225
Road & Rail--0.4%
Avis Budget Car Rental LLC:
2,400,000 7.625% due 5/15/2014 2,358,000
250,000 8.058% due 5/15/2014 (a) 243,750
1,770,000 Britannia Bulk Plc,11% due 12/01/2011 1,796,550
1,440,000 St. Acquisition Corp.,12.50% due 5/15/2017 (e) 964,800
--------------
5,363,100
Semiconductors & Semiconductor Equipment--2.0%
Amkor Technology, Inc.:
1,730,000 7.75% due 5/15/2013 1,669,450
8,725,000 9.25% due 6/01/2016 8,812,250
13,380,000 Freescale Semiconductor, Inc., 9.125%
due 12/15/2014 (g) 12,376,500
2,400,000 Hynix Semiconductor, Inc., 7.875%
due 6/27/2017 (e) 2,328,000
3,425,000 Spansion, Inc., 8.746% due 6/01/2013 (a)(e) 3,262,313
--------------
28,448,513
Software--0.2%
3,665,088 BMS Holdings, Inc.,12.40%
due 2/15/2012 (a)(e)(g) 3,173,055
Specialty Retail--3.6%
Asbury Automotive Group, Inc.:
8,100,000 8% due 3/15/2014 7,816,500
1,660,000 7.625% due 3/15/2017 (e) 1,527,200
5,150,000 Autonation, Inc., 7.243% due 4/15/2013 (a) 4,918,250
3,290,000 Buffets, Inc.,12.50% due 11/01/2014 2,303,000
2,705,000 Claire's Stores, Inc., 9.625%
due 6/01/2015 (e)(g) 2,245,150
General Nutrition Centers, Inc.:
8,340,000 10.009% due 3/15/2014 (a)(g) 8,006,400
6,740,000 10.75% due 3/15/2015 6,504,100
2,040,000 Group 1 Automotive, Inc., 2.25%
due 6/15/2036 (c)(d) 1,532,550
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
Specialty Retail (concluded)
Michaels Stores, Inc.:
USD 950,000 10% due 11/01/2014 $ 973,750
8,940,000 11.375% due 11/01/2016 9,141,150
5,255,000 United Auto Group, Inc., 7.75%
due 12/15/2016 5,031,663
--------------
49,999,713
Textiles, Apparel & Luxury Goods--0.7%
9,275,000 Levi Strauss & Co., 8.875% due 4/01/2016 9,553,250
Tobacco--0.4%
5,500,000 Vector Group Ltd.,11% due 8/15/2015 (e) 5,506,875
Wireless Telecommunication Services--4.2%
1,300,000 American Tower Corp., 7% due 10/15/2017 (e) 1,308,125
EUR 1,420,000 BCM Ireland Finance Ltd., 9.506%
due 8/15/2016 (a) 2,029,902
3,278,121 BCM Ireland Preferred Equity Ltd.,10.597%
due 2/15/2017 (e)(g) 4,580,927
Centennial Communications Corp.:
USD 3,210,000 10.981% due 1/01/2013 (a) 3,306,300
2,260,000 8.125% due 2/01/2014 2,299,550
7,010,000 Cricket Communications, Inc., 9.375%
due 11/01/2014 (e) 7,115,150
Digicel Group Ltd. (e):
2,670,000 8.875% due 1/15/2015 2,509,800
6,818,000 9.125% due 1/15/2015 (g) 6,340,740
3,110,000 FiberTower Corp., 9% due 11/15/2012 (c)(e) 3,284,938
3,310,000 iPCS, Inc., 7.481% due 5/01/2013 (a)(e) 3,210,700
10,390,000 MetroPCS Wireless, Inc., 9.25%
due 11/01/2014 (e) 10,597,800
Orascom Telecom Finance SCA:
920,000 7.875% due 2/08/2014 (d) 870,550
3,100,000 7.875% due 2/08/2014 (e) 2,933,375
7,560,000 Rural Cellular Corp., 8.25% due 3/15/2012 7,843,500
--------------
58,231,357
Total Corporate Bonds
(Cost--$1,249,555,548)--85.1% 1,194,894,737
Shares
Held Common Stocks (h)
Airlines--0.5%
345,536 Northwest Airlines Corp. 6,150,541
Communications Equipment--0.7%
257,872 Loral Space & Communications Ltd. 10,250,412
Diversified Telecommunication Services--0.0%
2 PTV, Inc. 1,000
Electrical Equipment--0.8%
852,625 Medis Technologies Ltd. 11,084,125
Paper & Forest Products--0.2%
1,280,355 Western Forest Products, Inc. 2,677,463
330,542 Western Forest Products, Inc.
Restricted Shares 691,225
--------------
3,368,688
Shares
Held Common Stocks (h) Value
Semiconductors & Semiconductor Equipment--0.3%
149,223 Cypress Semiconductor Corp. $ 4,358,804
Total Common Stocks
(Cost--$75,944,211)--2.5% 35,213,570
Face
Amount Floating Rate Loan Interests (l)
Aerospace & Defense--0.1%
USD 109,472 Hawker Beechcraft Letter of Credit, 5.26%
due 3/31/2014 106,142
1,290,528 Hawker Beechcraft Term Loan B, 7.198%
due 3/31/2014 1,251,274
--------------
1,357,416
Containers & Packaging--0.2%
3,220,000 Berry Plastics Corp. Term Loan B, 11.97%
due 6/15/2014 2,898,000
Diversified Telecommunication Services--0.8%
EUR 6,164,871 Wind Finance SL SA Second Lien Term Loan,
0% due 12/17/2014 8,917,125
USD 2,250,000 Wind Finance SL SA Second Lien Term Loan,
0% due 12/17/2014 2,275,313
--------------
11,192,438
Health Care Providers & Services--0.4%
5,516,194 Community Health Systems, Inc. Term Loan B,
7.755% due 6/18/2014 5,411,386
Hotels, Restaurants & Leisure--0.5%
7,923,465 Travelport, Inc. Term Loan,12.198%
due 3/22/2012 7,514,083
Household Products--0.2%
Spectrum Brands, Inc.:
117,197 Letter of Credit, 5.515% due 4/15/2013 114,707
2,364,967 Term Loan B-1, 9.36% - 9.754%
due 4/15/2013 2,314,711
--------------
2,429,418
Media--0.4%
5,503,027 Easton-Bell Sports Inc. Term Loan B,11.36%
due 5/01/2012 5,262,270
Oil, Gas & Consumable Fuels--0.3%
SandRidge Energy, Inc.:
2,400,000 Term Loan, 8.625% due 3/01/2015 2,364,000
2,250,000 Term Loan B, 8.985% due 3/01/2014 2,227,500
--------------
4,591,500
Paper & Forest Products--0.8%
4,000,000 Cenveo, Inc. Bridge Loan, 9.629%
due 9/17/2015 4,000,000
7,180,000 Verso Paper Holdings LLC, Term Loan B,
11.606% due 2/012013 6,785,100
--------------
10,785,100
Total Floating Rate Loan Interests
(Cost--$51,636,620)--3.7% 51,441,611
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Shares
Held Preferred Stocks Value
Communications Equipment--0.2%
14,884 Loral Spacecom Corp. Series A, 12% (g) $ 2,976,800
Diversified Telecommunication Services--0.0%
130 PTV, Inc. Series A, 10% 130
Oil, Gas & Consumable Fuels--0.8%
201 EXCO Resources, Inc., 7% (c) 2,291,400
831 EXCO Resources, Inc., 11% 9,473,400
--------------
11,764,800
Total Preferred Stocks
(Cost--$13,269,152)--1.0% 14,741,730
Warrants (b)
Health Care Providers & Services--0.0%
201,408 HealthSouth Corp. (expires 1/16/2014) 161,126
Media--0.0%
117,980 Virgin Media, Inc. (expires 1/10/2011) 28,315
Wireless Telecommunication Services--0.2%
3,600 American Tower Corp. (expires 8/01/2008) 2,208,600
Total Warrants
(Cost--$352,197)--0.2% 2,398,041
Beneficial
Interest Other Interests (f) Value
Media--0.0%
USD 25,500,000 Adelphia Escrow $ 2,550
31,980,466 Adelphia Recovery Trust 3,198
--------------
5,748
Total Other Interests
(Cost--$104,550)--0.0% 5,748
Short-Term Securities
USD 115,762,902 BlackRock Liquidity Series, LLC
Cash Sweep Series, 5.22% (j)(k) 115,762,902
Total Short-Term Securities
(Cost--$115,762,902)--8.3% 115,762,902
Total Investments
(Cost--$1,506,625,180*)--100.8% 1,414,458,339
Liabilities in Excess of Other Assets--(0.8%) (11,647,267)
--------------
Net Assets--100.0% $1,402,811,072
==============
* The cost and unrealized appreciation (depreciation) of investments,
as of September 30, 2007, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 1,508,748,603
==================
Gross unrealized appreciation $ 29,567,225
Gross unrealized depreciation (123,857,489)
------------------
Net unrealized depreciation $ (94,290,264)
==================
(a) Floating rate security.
(b) Warrants entitle the Fund to purchase a predetermined number of shares
of common stock and are non-income producing. The purchase price and
number of shares are subject to adjustment under certain conditions
until the expiration date.
(c) Convertible security.
(d) Represents a step bond; the interest rate shown reflects the effective
yield at the time of purchase.
(e) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(f) Other interests represent beneficial interest in liquidation trusts and
other reorganization entities and are non-income producing.
(g) Represents a pay-in-kind security which may pay interest/dividends
in additional face/shares.
(h) Non-income producing security.
(i) Non-income producing security; issuer filed for bankruptcy or is in
default of interest payments.
(j) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Interest
Affiliate Activity Income
BlackRock Liquidity Series, LLC
Cash Sweep Series $7,166,956 $3,458,030
BlackRock Liquidity Series, LLC
Money Market Series -- $ 7,964
(k) Represents the current yield as of September 30, 2007.
(l) Floating rate loan interests in which the Fund invests 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
(i) the lending rate offered by one or more European banks, such as LIBOR
(London InterBank Offered Rate), (ii) the prime rate offered by one or
more U.S. banks or (iii) the certificates of deposit rate.
(m) Security is a perpetual bond and has no definite maturity date.
(n) Subject to principal paydowns.
o For Fund compliance purposes, the Fund's industry classifications refer
to any one or more of the industry sub-classifications used by one or
more widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes
of this report, which may combine industry sub-classifications for
reporting ease. Industries are shown as a percent of net assets. These
industry classifications are unaudited.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Schedule of Investments (concluded) (in U.S. dollars)
o Swaps outstanding as of September 30, 2007 were as follows:
Unrealized
Notional Appreciation
Amount (Depreciation)
Sold credit default protection on
Novelis Inc. and receive 1.40%
Broker, JPMorgan Chase
Expires January 2008 $ 3,750,000 $ 7,567
Sold credit default protection on
Ford Motor Company and receive 3.80%
Broker, JPMorgan Chase
Expires March 2010 $ 6,000,000 (114,618)
Sold credit default protection on
Ford Motor Company and receive 4.20%
Broker, Deutsche Bank AG London
Expires March 2010 $ 6,000,000 (62,304)
Sold credit default protection on
Ford Motor Company and receive 4.70%
Broker, Deutsche Bank AG London
Expires June 2010 $ 7,000,000 (13,692)
----------
Total $(183,047)
==========
o Currency Abbreviations:
EUR Euro
USD U.S. Dollar
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Statement of Assets and Liabilities
As of September 30, 2007
Assets
Investments in unaffiliated securities, at value (identified cost--$1,390,862,278) $ 1,298,695,437
Investments in affiliated securities, at value (identified cost--$115,762,902) 115,762,902
Cash 142,155
Unrealized appreciation on swaps 7,567
Receivables:
Interest $ 28,403,663
Securities sold 6,642,272
Capital shares sold 7,066,711
Paydowns 471,715
Swaps 31,890 42,616,251
---------------
Prepaid expenses and other assets 38,324
---------------
Total assets 1,457,262,636
---------------
Liabilities
Unrealized depreciation on swaps 190,614
Payables:
Securities purchased 41,478,742
Dividends to shareholders 8,134,537
Capital shares redeemed 2,977,132
Other affiliates 498,743
Investment adviser 471,777
Distributor 450,742 54,011,673
---------------
Accrued expenses and other liabilities 249,277
---------------
Total liabilities 54,451,564
---------------
Net Assets
Net assets $ 1,402,811,072
===============
Net Assets Consist of
Institutional Common Stock, $.10 par value, 500,000,000 shares authorized $ 6,485,427
Investor A Common Stock, $.10 par value, 500,000,000 shares authorized 11,864,599
Investor B Common Stock, $.10 par value, 1,500,000,000 shares authorized 2,976,690
Investor C Common Stock, $.10 par value, 200,000,000 shares authorized 1,366,825
Investor C1 Common Stock, $.10 par value, 200,000,000 shares authorized 4,687,754
Paid-in capital in excess of par 3,385,115,586
Undistributed investment income--net $ 20,539,431
Accumulated realized capital losses--net (1,937,524,925)
Unrealized depreciation--net (92,700,315)
---------------
Total accumulated losses--net (2,009,685,809)
---------------
Net Assets $ 1,402,811,072
===============
Net Asset Value
Institutional--Based on net assets of $331,998,411 and 64,854,269 shares outstanding $ 5.12
===============
Investor A--Based on net assets of $607,912,646 and 118,645,992 shares outstanding $ 5.12
===============
Investor B--Based on net assets of $152,559,294 and 29,766,897 shares outstanding $ 5.13
===============
Investor C--Based on net assets of $70,070,481 and 13,668,247 shares outstanding $ 5.13
===============
Investor C1--Based on net assets of $240,270,240 and 46,877,542 shares outstanding $ 5.13
===============
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Statement of Operations
For the Year Ended September 30, 2007
Investment Income
Interest (including $3,458,030 from affiliates) $ 118,006,470
Dividends 809,891
Securities lending--net 7,964
Other 233,376
---------------
Total income 119,057,701
---------------
Expenses
Investment advisory fees $ 6,064,997
Service and distribution fees--Investor C1 2,112,372
Service and distribution fees--Investor B 1,652,754
Service fees--Investor A 1,494,672
Transfer agent fees--Investor A 1,036,359
Transfer agent fees--Institutional 640,557
Transfer agent fees--Investor C1 592,049
Transfer agent fees--Investor B 448,765
Service and distribution fees--Investor C 357,174
Accounting services 293,867
Transfer agent fees--Investor C 252,192
Printing and shareholder reports 192,220
Professional fees 90,689
Registration fees 73,959
Custodian fees 42,868
Pricing fees 30,150
Directors' fees and expenses 16,984
Other 56,632
---------------
Total expenses 15,449,260
---------------
Investment income--net 103,608,441
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain on:
Investments--net 827,548
Swaps--net 645,484
Foreign currency transactions--net 28,884 1,501,916
---------------
Change in unrealized appreciation/depreciation on:
Investments--net 40,249
Swaps--net (183,047)
Foreign currency transactions--net (350,605) (493,403)
--------------- ---------------
Total realized and unrealized gain--net 1,008,513
---------------
Net Increase in Net Assets Resulting from Operations $ 104,616,954
===============
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Statements of Changes in Net Assets
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 2007 2006
Operations
Investment income--net $ 103,608,441 $ 102,310,089
Realized gain (loss)--net 1,501,916 (88,341,102)
Change in unrealized appreciation/depreciation--net (493,403) 108,656,816
--------------- ---------------
Net increase in net assets resulting from operations 104,616,954 122,625,803
--------------- ---------------
Dividends to Shareholders
Investment income--net:
Institutional (25,539,846) (24,990,275)
Investor A (43,344,779) (37,287,226)
Investor B (14,730,490) (23,723,534)
Investor C (2,166,360) --
Investor C1 (17,528,927) (16,536,098)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (103,310,402) (102,537,133)
--------------- ---------------
Capital Share Transactions
Net decrease in net assets derived from capital share transactions (43,366,332) (53,634,271)
--------------- ---------------
Redemption Fees
Redemption fees 23,019 10,741
--------------- ---------------
Net Assets
Total decrease in net assets (42,036,761) (33,534,860)
Beginning of year 1,444,847,833 1,478,382,693
--------------- ---------------
End of year* $ 1,402,811,072 $ 1,444,847,833
=============== ===============
* Undistributed investment income--net $ 20,539,431 $ 19,422,482
=============== ===============
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Financial Highlights
The following per
share data and ratios
have been derived from Institutional Investor A
information provided
in the financial For the Year Ended September 30, For the Year Ended September 30,
statements. 2007 2006 2005 2004 2003 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value,
beginning of year $ 5.12 $ 5.04 $ 5.15 $ 4.92 $ 4.05 $ 5.12 $ 5.05 $ 5.15 $ 4.92 $ 4.05
--------------------------------------------------- ---------------------------------------------------
Investment income--net++ .39 .38 .40 .37 .39 .38 .37 .39 .36 .38
Realized and unrealized
gain (loss)--net (.01)** .08** (.09)** .24** .89 --** .06** (.09)** .23** .89
--------------------------------------------------- ---------------------------------------------------
Total from investment
operations .38 .46 .31 .61 1.28 .38 .43 .30 .59 1.27
--------------------------------------------------- ---------------------------------------------------
Less dividends from
investment income--net (.38) (.38) (.42) (.38) (.41) (.38) (.36) (.40) (.36) (.40)
--------------------------------------------------- ---------------------------------------------------
Net asset value,
end of year $ 5.12 $ 5.12 $ 5.04 $ 5.15 $ 4.92 $ 5.12 $ 5.12 $ 5.05 $ 5.15 $ 4.92
=================================================== ===================================================
Total Investment Return*
Based on net asset
value per share 7.75% 9.54% 6.05% 12.63%+++ 32.42% 7.51% 9.06% 5.99% 12.35%+++ 32.13%
=================================================== ===================================================
Ratios Based on Average Net Assets
Expenses .66% .64% .60% .64% .61% .89% .89% .85% .89% .86%
=================================================== ===================================================
Investment income--net 7.50% 7.55% 7.75% 7.33% 8.69% 7.27% 7.29% 7.58% 7.09% 8.39%
=================================================== ===================================================
Supplemental Data
Net assets, end of
year (in thousands) $ 331,998 $ 333,995 $ 341,122 $ 539,484 $ 471,771 $ 607,913 $ 551,649 $ 488,006 $ 471,585 $ 411,467
=================================================== ===================================================
Portfolio turnover 80% 77% 67% 103% 107% 80% 77% 67% 103% 107%
=================================================== ===================================================
* Total investment returns exclude the effects of any sales charges.
** Includes a redemption fee, which is less than $.01 per share.
++ Based on average shares outstanding.
+++ Fund Asset Management, L.P. (an affiliate) reimbursed the Fund in connection with the write-off of an
uncollectible interest receivable amount. The reimbursement had no impact on total investment return.
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Financial Highlights (continued)
Investor B
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of year $ 5.12 $ 5.05 $ 5.15 $ 4.92 $ 4.05
----------- ----------- ----------- ----------- -----------
Investment income--net++ .35 .34 .36 .34 .36
Realized and unrealized gain (loss)--net .01** .07** (.08)** .23** .88
----------- ----------- ----------- ----------- -----------
Total from investment operations .36 .41 .28 .57 1.24
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.35) (.34) (.38) (.34) (.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 5.13 $ 5.12 $ 5.05 $ 5.15 $ 4.92
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 7.14% 8.49% 5.44% 11.77%+++ 31.45%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.43% 1.42% 1.37% 1.40% 1.39%
=========== =========== =========== =========== ===========
Investment income--net 6.72% 6.78% 6.99% 6.57% 8.00%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 152,559 $ 284,787 $ 428,812 $ 648,270 $ 852,371
=========== =========== =========== =========== ===========
Portfolio turnover 80% 77% 67% 103% 107%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
** Includes a redemption fee, which is less than $.01 per share.
++ Based on average shares outstanding.
+++ Fund Asset Management, L.P. (an affiliate) reimbursed the Fund in connection with the write-off of an
uncollectible interest receivable amount. The reimbursement had no impact on total investment return.
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Financial Highlights (continued)
Investor C
For the Period
October 2,
2006++++ to
The following per share data and ratios have been derived September 30,
from information provided in the financial statements. 2007
Per Share Operating Performance
Net asset value, beginning of period $ 5.13
------------
Investment income--net++ .29
Realized and unrealized gain--net*** .03
------------
Total from investment operations .32
------------
Less dividends from investment
income--net (.32)
------------
Net asset value, end of period $ 5.13
============
Total Investment Return**
Based on net asset value per share 6.30%+++
============
Ratios Based on Average Net Assets
Expenses 2.16%*
============
Investment income--net 6.05%*
============
Supplemental Data
Net assets, end of period (in thousands) $ 70,070
============
Portfolio turnover 80%
============
* Annualized.
** Total investment returns exclude the effects of sales charges.
*** Includes a redemption fee, which is less than $.01 per share.
++ Based on average shares outstanding.
++++ Commencement of operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Financial Highlights (concluded)
Investor C1
The following per share data and ratios have been derived For the Year Ended September 30,
from information provided in the financial statements. 2007 2006 2005 2004 2003
Per Share Operating Performance
Net asset value, beginning of year $ 5.12 $ 5.05 $ 5.15 $ 4.92 $ 4.05
----------- ----------- ----------- ----------- -----------
Investment income--net++ .35 .34 .36 .33 .35
Realized and unrealized gain (loss)--net .01** .08** (.09)** .23** .89
----------- ----------- ----------- ----------- -----------
Total from investment operations .36 .42 .27 .56 1.24
----------- ----------- ----------- ----------- -----------
Less dividends from investment income--net (.35) (.35) (.37) (.33) (.37)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year $ 5.13 $ 5.12 $ 5.05 $ 5.15 $ 4.92
=========== =========== =========== =========== ===========
Total Investment Return*
Based on net asset value per share 7.07% 8.42% 5.38% 11.72%+++ 31.38%
=========== =========== =========== =========== ===========
Ratios to Average Net Assets
Expenses 1.50% 1.48% 1.43% 1.46% 1.44%
=========== =========== =========== =========== ===========
Investment income--net 6.66% 6.70% 7.00% 6.53% 7.88%
=========== =========== =========== =========== ===========
Supplemental Data
Net assets, end of year (in thousands) $ 240,270 $ 274,416 $ 220,443 $ 191,203 $ 177,568
=========== =========== =========== =========== ===========
Portfolio turnover 80% 77% 67% 103% 107%
=========== =========== =========== =========== ===========
* Total investment returns exclude the effects of sales charges.
** Includes a redemption fee, which is less than $.01 per share.
++ Based on average shares outstanding.
+++ Fund Asset Management, L.P. (an affiliate) reimbursed the Fund in connection with the write-off of an
uncollectible interest receivable amount. The reimbursement had no impact on total investment return.
See Notes to Financial Statements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock High Income Fund (the "Fund"), a series of BlackRock Bond Fund, Inc.
(the "Bond Fund"), is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Fund's
financial statements are prepared in conformity with U.S. generally accepted
accounting principles, which may require the use of management accruals and
estimates. Actual results may differ from these estimates. The Fund offers
multiple classes of shares. Investor A Shares are sold with a front-end sales
charge. Shares of Investor B, Investor C and Investor C1 may be subject to a
contingent deferred sales charge. Institutional Shares are sold only to
certain eligible investors. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions,
except that Investor A, Investor B, Investor C and Investor C1 Shares bear
certain expenses related to the shareholder servicing of such shares, and
Investor B, Investor C and Investor C1 Shares also bear certain expenses
related to the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its shareholder servicing and
distribution expenditures (except that Investor B shareholders may vote on
certain changes to the Investor A distribution plan). Income, expenses (other
than expenses attributable to a specific class) and realized and unrealized
gains and losses are allocated daily to each class based on its relative net
assets. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Debt securities are traded primarily in the over-
the-counter ("OTC") markets and are valued at the last available bid price in
the OTC market or on the basis of values obtained by a pricing service. As of
October 2, 2006, floating rate loan interests are valued at the mean between
the last available bid prices from one or more brokers or dealers as obtained
from Loan Pricing Corporation. Previously, floating rate loan interests were
valued at the mean between the last available bid and asked prices as obtained
from the same pricing source. This change had no significant effect on the
valuation of these loans. Pricing services use valuation matrixes that
incorporate both dealer-supplied valuations and valuation models. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Bond Fund under the general direction of the Board of
Directors. Such valuations and procedures will be reviewed periodically by the
Board of Directors of the Bond Fund. Financial futures contracts and options
thereon, which are traded on exchanges, are valued at their closing prices as
of the close of such exchanges. Options written or purchased are valued at the
last sale price in the case of exchange-traded options. Options traded in the
OTC market are valued at the last asked price (options written) or the last
bid price (options purchased). Swap agreements are based upon quoted fair
valuations received daily by the Fund from a pricing service or counterparty.
Valuation of short-term investment vehicles is generally based on the net
asset value of the underlying investment vehicle or amortized cost. Repurchase
agreements are valued at cost plus accrued interest. Investments in open-end
investment companies are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Bond Fund.
Equity securities that are held by the Fund, which are traded on stock
exchanges or the NASDAQ Global Market, are valued at the last sale price or
official close price on the exchange, as of the close of business on the day
the securities are being valued or, lacking any sales, at the last available
bid price for long positions, and at the last available asked price for short
positions. In cases where equity securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by or under the authority of the Board of Directors of the Bond Fund.
Long positions traded in the OTC market, NASDAQ Capital Market or Bulletin
Board are valued at the last available bid price obtained from one or more
dealers or pricing services approved by the Board of Directors of the Bond
Fund. Short positions traded in the OTC market are valued at the last
available asked price. Portfolio securities that are traded both in the OTC
market and on a stock exchange are valued according to the broadest and most
representative market.
Generally, trading in foreign securities, as well as U.S. government
securities, money market instruments and certain fixed income securities, is
substantially completed each day at various times prior to the close of
business on the New York Stock Exchange ("NYSE"). The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates will generally be
determined prior to the close of business on the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of business on
the NYSE that may not be reflected in the computation of the Fund's net asset
value. If events (for example, a company announcement, market volatility or a
natural disaster) occur during such periods that are expected to materially
affect the value of such securities, those securities will be valued at their
fair value as determined in good faith by the Bond Fund's Board of Directors
or by BlackRock Advisors, LLC (the "Manager"), an indirect, wholly owned
subsidiary of BlackRock, Inc., using a pricing service and/or procedures
approved by the Bond Fund's Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the
securities markets. Losses may arise due to changes in the value of the
contract due to an unfavorable change in the price of the underlying security
or index, or if the counterparty does not perform under the contract. The
counterparty for certain securities may pledge cash or securities as
collateral.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
* Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such financial futures contracts. Financial futures
contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract,
the Fund deposits, and maintains as collateral, such initial margin as
required by the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
* Options--The Fund may purchase and write call and put options. When the Fund
writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or deducted from)
the basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or loss or gain to the extent the
cost of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
* Swaps--The Fund may enter into swap agreements, which are OTC contracts in
which the Fund and a counterparty agree to make periodic net payments on a
specified notional amount. The net payments can be made for a set period of
time or may be triggered by a predetermined credit event. The net periodic
payments may be based on a fixed or variable interest rate; the change in
market value of a specified security, basket of securities, or index; or the
return gene-rated by a security. These periodic payments received or made by
the Fund are recorded in the accompanying Statement of Operations as realized
gains or losses, respectively. Gains or losses are realized upon termination
of the swap agreements. Swaps are marked-to-market daily and changes in value
are recorded as unrealized appreciation (depreciation). Risks include changes
in the returns of the underlying instruments, failure of the counterparties to
perform under the contracts' terms and the possible lack of liquidity with
respect to the swap agreements.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are the
result of settling (realized) or valuing (unrealized) assets and liabilities
expressed in foreign currencies into U.S. dollars. Realized and unrealized
gains or losses from investments include the effects of foreign exchange rates
on investments. The Fund invests in foreign securities, which may involve a
number of risk factors and special considerations not present with investments
in securities of U.S. corporations.
(d) Income taxes--It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income--Security trans-actions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities. The Fund earns facility and other
fees on loan participation interests. Other fees earned include amendment,
consent and prepayment fees.
(f) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(g) 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.
(h) Expenses--Certain expenses have been allocated to the individual funds in
the Bond Fund on a pro rata basis based upon the respective aggregate net
asset value of each fund included in the Bond Fund.
(i) Securities lending--The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The market
value of the loaned securities is determined at the close of business of the
Fund and any additional required collateral is delivered to the Fund on the
next business day. Where the Fund receives securities as collateral for the
loaned securities, it collects a fee from the borrower. The Fund typically
receives the income on the loaned securities but does not receive the income
on the collateral. Where the Fund receives cash collateral, it may invest such
collateral and retain the amount earned on such investment, net of any amount
rebated to the borrower. Loans of securities are terminable at any time and
the borrower, after notice, is required to return borrowed securities within
five business days. The Fund may pay reasonable finder's, lending agent,
administrative and custodial fees in connection with its loans. In the event
that the borrower defaults on its obligation to return borrowed securities
because of insolvency or for any other reason, the Fund could experience
delays and costs in gaining access to the collateral. The Fund also could
suffer a loss where the value of the collateral falls below the market value
of the borrowed securities, in the event of borrower default or in the event
of losses on investments made with cash collateral.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
(j) Short sales--When the Fund engages in a short sale, an amount equal to the
proceeds received by the Fund 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 Fund maintains a segregated
account of securities as collateral for the short sales. The Fund is exposed
to market risk based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated account. The Fund
is required to repay the counterparty any dividends or interest received on
the security sold short.
(k) Reclassifications--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $74,968,568 has been reclassified between paid-in capital in
excess of par and accumulated net realized capital losses, and $818,910 has
been reclassified between accumulated net realized capital losses and
undistributed net investment income as a result of permanent differences
attributable to the expiration of capital loss carryforwards, foreign currency
transactions, and amortization methods on fixed income securities. These
reclassifications have no effect on net assets or net asset values per share.
(l) Recent accounting pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109." FIN 48 prescribes the minimum recognition threshold a tax position must
meet in connection with accounting for uncertainties in income tax positions
taken or expected to be taken by an entity, including mutual funds, before
being measured and recognized in the financial statements. Adoption of FIN 48
is required for the last net asset value calculation in the first required
financial statement reporting period for fiscal years beginning after December
15, 2006. The impact on each of the Fund's financial statements, if any, is
currently being assessed.
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS
157 and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, FASB Statement of Financial Accounting
Standards No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" ("FAS 159"), was issued and is effective for fiscal years
beginning after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provisions of FAS 157. FAS 159
permits entities to choose to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at
fair value. FAS 159 also establishes presentation and disclosure requirements
designed to facilitate comparisons between entities that choose different
measurement attributes for similar types of assets and liabilities. At this
time, management is evaluating the implications of FAS 159 and its impact on
the Fund's financial statements, if any, has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
Bond Fund, on behalf of the Fund, has entered into an Investment Advisory
Agreement with the Manager. Merrill Lynch & Co., Inc. ("Merrill Lynch") and
The PNC Financial Services Group, Inc. ("PNC") are the principal owners of
BlackRock, Inc. The Fund has also entered into separate Distribution
Agreements and Distribution Plans with FAM Distributors, Inc. ("FAMD") and
BlackRock Distributors, Inc. ("BDI") (collectively, the "Distributor"). FAMD
is a wholly owned subsidiary of Merrill Lynch Group, Inc., and BDI is an
affiliate of BlackRock, Inc.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee with respect to the Fund based upon the aggregate average
daily value of the net assets of the Fund and Master Total Return Portfolio of
Master Bond LLC ("Master Portfolio") at the following annual rates: .55% of
the Fund's average daily net assets not exceeding $250 million; .50% of average
daily net assets in excess of $250 million but not exceeding $500 million; .45%
of average daily net assets in excess of $500 million but not exceeding
$750 million; and .40% of average daily net assets in excess of $750 million.
For the year ended September 30, 2007, the aggregate average daily net assets
of the Fund and Master Bond Portfolio, was approximately $4,786,830,000.
In addition, the Manager has entered into a sub-advisory agreement with
BlackRock Financial Management, Inc., an affiliate of the Manager, under which
the Manager pays the sub-adviser for services it provides a monthly fee at an
annual rate that is a percentage of the management fee paid by the Fund to the
Manager.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
Pursuant to the Distribution Plans adopted by the Bond Fund in accordance with
Rule 12b-1 under the Investment Company Act of 1940, the Bond Fund pays the
Distributor ongoing service and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of
the shares of the Fund as follows:
Service Distribution
Fee Fee
Investor A .25% --
Investor B .25% .50%
Investor C .25% .75%
Investor C1 .25% .55%
Pursuant to sub-agreements with each Distributor, broker dealers, including
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a wholly owned
subsidiary of Merrill Lynch, and each Distributor provide shareholder
servicing and distribution services to the Fund. The ongoing service fee
compensates the Distributor and each broker-dealer (including MLPF&S) for
providing shareholder services to Investor A, Investor B, Investor C and
Investor C1 shareholders. The ongoing distribution fee compensates the
Distributor and the broker-dealer for providing shareholder servicing and
distribution-related services to Investor B, Investor C and Investor C1
shareholders.
For the year ended September 30, 2007, FAMD and BDI earned underwriting
discounts and direct commissions and MLPF&S and BDI earned dealer concessions
on sales of the Fund's Investor A Shares which totaled $563,073.
For the year ended September 30, 2007, affiliates received contingent deferred
sales charges of $126,297, $23,294 and $24,748 relating to transactions in
Investor B, Investor C and Investor C1 Shares respectively. Furthermore,
affiliates received contingent deferred sales charges of $1,692 relating to
transactions subject to front-end sales charge waivers on Investor A Shares.
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.
During the year ended September 30, 2007, the following amounts have been
accrued by the Fund to reimburse BlackRock for costs incurred running the call
center, which are a component of the transfer agent fees in the accompanying
Statement of Operations.
Call Center
Fees
Institutional $ 6,828
Investor A $19,374
Investor B $ 9,209
Investor C $ 957
Investor C1 $ 6,962
The Bond Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S, or its
affiliates. Pursuant to that order, the Bond Fund has retained BlackRock
Investment Management, LLC ("BIM"), an affiliate of the Manager, as the
securities lending agent for a fee based on a share of the returns on
investment of cash collateral. BIM may, on behalf of the Fund, invest cash
collateral received by the Fund for such loans, among other things, in a
private investment company managed by the Manager or in registered money
market funds advised by the Manager or its affiliates. For the year ended
September 30, 2007, BIM received $3,413 in security lending agent fees.
For the year ended September 30, 2007, the Fund reimbursed the Manager $27,390
for certain accounting services.
PFPC Inc., an indirect, wholly owned subsidiary of PNC and an affiliate of the
Manager, is the Fund's transfer agent.
Certain officers and/or directors of the Bond Fund are officers and/or
directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments (including paydowns), excluding short-term
securities, for the year ended September 30, 2007 were $1,100,167,206 and
$1,111,326,336, respectively.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions was
$43,366,332 and $53,634,271 for the years ended September 30, 2007 and
September 30, 2006, respectively.
Transactions in capital shares for each class were as follows:
Institutional Shares for the Year Dollar
Ended September 30, 2007 Shares Amount
Shares sold 8,673,091 $ 45,519,325
Shares issued to shareholders in
reinvestment of dividends. 3,803,831 19,832,811
--------------- ---------------
Total issued 12,476,922 65,352,136
Shares redeemed (12,893,307) (67,326,087)
--------------- ---------------
Net decrease (416,385) $ (1,973,951)
=============== ===============
Institutional Shares for the Year Dollar
Ended September 30, 2006 Shares Amount
Shares sold 8,233,396 $ 41,762,077
Shares issued to shareholders in
reinvestment of dividends 2,367,622 11,981,647
--------------- ---------------
Total issued 10,601,018 53,743,724
Shares redeemed (12,951,824) (65,497,951)
--------------- ---------------
Net decrease (2,350,806) $ (11,754,227)
=============== ===============
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (continued)
Investor A Shares for the Year Dollar
Ended September 30, 2007 Shares Amount
Shares sold 31,571,507 $ 164,860,544
Shares issued to shareholders in
reinvestment of dividends. 5,420,701 28,266,616
--------------- ---------------
Total issued 36,992,208 193,127,160
Shares redeemed (26,049,504) (136,317,588)
--------------- ---------------
Net increase 10,942,704 $ 56,809,572
=============== ===============
Investor A Shares for the Year Dollar
Ended September 30, 2006 Shares Amount
Shares sold 15,602,097 $ 79,184,831
Automatic conversion of shares 15,228,380 77,117,870
Shares issued to shareholders in
reinvestment of dividends 4,316,720 21,864,061
--------------- ---------------
Total issued 35,147,197 178,166,762
Shares redeemed (24,093,934) (122,019,251)
--------------- ---------------
Net increase 11,053,263 $ 56,147,511
=============== ===============
Investor B Shares for the Year Dollar
Ended September 30, 2007 Shares Amount
Shares sold 1,639,853 $ 8,588,561
Shares issued to shareholders in
reinvestment of dividends 1,474,310 7,703,215
--------------- ---------------
Total issued 3,114,163 16,291,776
Shares redeemed (28,939,840) (151,179,206)
--------------- ---------------
Net decrease (25,825,677) $ (134,887,430)
=============== ===============
Investor B Shares for the Year Dollar
Ended September 30, 2006 Shares Amount
Shares sold 3,863,778 $ 19,599,779
Shares issued to shareholders in
reinvestment of dividends 2,213,073 11,196,952
--------------- ---------------
Total issued 6,076,851 30,796,731
--------------- ---------------
Automatic conversion of shares (15,228,380) (77,117,870)
Shares redeemed (20,167,524) (102,089,045)
--------------- ---------------
Total redeemed (35,395,904) (179,206,915)
--------------- ---------------
Net decrease (29,319,053) $ (148,410,184)
=============== ===============
Investor C Shares for the
Period October 2, 2006++ to Dollar
September 30, 2007 Shares Amount
Shares sold 14,341,441 $ 75,017,650
Shares issued to shareholders in
reinvestment of dividends. 372,240 1,935,309
--------------- ---------------
Total issued 14,713,681 76,952,959
Shares redeemed (1,045,434) (5,447,255)
--------------- ---------------
Net increase 13,668,247 $ 71,505,704
=============== ===============
++ Commencement of operations.
Investor C1 Shares for the Year Dollar
Ended September 30, 2007 Shares Amount
Shares sold 145,562 $ 763,059
Shares issued to shareholders in
reinvestment of dividends 2,561,511 13,375,919
--------------- ---------------
Total issued 2,707,073 14,138,978
Shares redeemed (9,390,114) (48,959,205)
--------------- ---------------
Net decrease (6,683,041) $ (34,820,227)
=============== ===============
Investor C1 Shares for the Year Dollar
Ended September 30, 2006 Shares Amount
Shares sold 17,598,060 $ 89,312,546
Shares issued to shareholders in
reinvestment of dividends 2,277,466 11,541,584
--------------- ---------------
Total issued 19,875,526 100,854,130
Shares redeemed (9,960,233) (50,471,501)
--------------- ---------------
Net increase 9,915,293 $ 50,382,629
=============== ===============
The Fund charges a 2% redemption fee on the proceeds (calculated at market
value) of a redemption (either by sale or exchange) of Fund shares made within
30 days of purchase or exchange. The redemption fee is paid to the Fund and is
intended to offset the trading costs, market impact and other costs associated
with short-term trading into and out of the Fund.
5. Short-Term Borrowings:
The Fund, along with certain other funds managed by the Manager and its
affiliates, is party to a $500,000,000 credit agreement with a group of
lenders, which expires November 2007. The Fund may borrow under the credit
agreement to fund shareholder redemptions and for other lawful purposes other
than for leverage. The Fund may borrow up to the maximum amount allowable
under the Fund's current prospectus and statement of additional information,
subject to various other legal, regulatory or contractual limits. The Fund
pays a commitment fee of .06% per annum based on the Fund's pro rata share of
the unused portion of the credit agreement. Amounts borrowed under the credit
agreement bear interest at a rate equal to, at each fund's election, the
federal funds rate plus .35% or a base rate as defined in the credit
agreement. The Fund did not borrow under the credit agreement during the year
ended September 30, 2007.
6. Commitments:
At September 30, 2007, the Fund had entered into a foreign exchange
contract, under which it had agreed to purchase foreign currency with
an approximate value of $1,619,000.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Notes to Financial Statements (concluded)
7. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years ended
September 30, 2007 and September 30, 2006 was as follows:
9/30/2007 9/30/2006
Distributions paid from:
Ordinary income $ 103,310,402 $ 102,537,133
--------------- ---------------
Total taxable distributions $ 103,310,402 $ 102,537,133
=============== ===============
As of September 30, 2007, the components of accumulated losses on a
tax basis were as follows:
Undistributed ordinary income - net $ 23,042,782
Undistributed long-term capital gains-net --
-----------------
Total undistributed earnings - net 23,042,782
Capital loss carryforward (1,929,534,429)*
Unrealized losses-net (103,194,162)**
-----------------
Total accumulated losses - net $ (2,009,685,809)
=================
* On September 30, 2007, the Fund had a net capital loss carryforward of
$1,929,534,429 of which $60,400,417 expires in 2008, $387,766,347 expires
in 2009, $187,386,138 expires in 2010, $684,131,730 expires in 2011,
$458,613,508 expires in 2012, $8,631,903 expires in 2013, $59,615,799
expires in 2014 and $82,988,587 expires in 2015. This amount will be
available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax basis net unrealized losses is
attributable primarily to the tax deferral of losses on wash sales, the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities, the realization for tax purposes
of unrealized gains (losses) on certain foreign currency contracts, the
deferral of post-October capital losses for tax purposes and the accounting
for swap agreements.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of BlackRock High Income Fund, one of
the portfolios constituting BlackRock Bond Fund, Inc. (the "Fund"), as of
September 30, 2007, 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 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
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. Our
procedures included confirmation of securities owned as of September 30, 2007,
by correspondence with the custodian and brokers; where replies were not
received from brokers, 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 financial position of
BlackRock High Income Fund of BlackRock Bond Fund, Inc. as of September 30,
2007, 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 its
financial highlights for each of the five years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
November 28, 2007
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Proxy Results
During the six-month period ended September 30, 2007, the shareholders of
BlackRock High Income Fund of BlackRock Bond Fund, Inc. voted on the following
proposal, which was approved at a special shareholders' meeting on September
7, 2007. This proposal was part of the reorganization of the Fund's Board of
Directors to take effect on or about November 1, 2007. A description of the
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
To elect the Fund's Board of Directors: James H. Bodurtha 240,657,818 8,627,220
Bruce R. Bond 240,623,790 8,661,248
Donald W. Burton 240,622,603 8,662,434
Richard S. Davis 240,602,892 8,682,146
Stuart E. Eizenstat 240,473,708 8,811,329
Laurence D. Fink 240,627,599 8,657,439
Kenneth A. Froot 240,620,371 8,664,667
Henry Gabbay 240,573,808 8,711,230
Robert M. Hernandez 240,561,375 8,723,663
John F. O'Brien 240,521,912 8,763,125
Roberta Cooper Ramo 240,573,319 8,711,719
Jean Margo Reid 240,646,408 8,638,630
David H. Walsh 240,550,136 8,734,901
Fred G. Weiss 240,588,549 8,696,489
Richard R. West 240,567,088 8,717,950
Portfolio Summary as of September 30, 2007
Percent of
Quality Ratings by Long-Term
S&P/Moody's* Investments
BBB/Baa 2.1%
BB/Ba 20.5
B/B 45.3
CCC/Caa 17.2
NR (Not Rated) 3.0
Other** 11.9
* Using the higher of S&P's or Moody's ratings.
** Includes portfolio holdings in common stocks, preferred stocks,
warrants and other interests.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Important Tax Information
The following information is provided with respect to the ordinary income
distributions paid by BlackRock High Income Fund of BlackRock Bond Fund, Inc.
for the fiscal year ended September 30, 2007:
Interest-Related Dividends for Non-U.S. Residents
Month Paid: October 2006 - November 2006 73.21%*
December 2006 77.03%*
January 2007 - September 2007 82.24%*
* Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Officers and Directors as of September 30, 2007
Number of
Funds and
Portfolios in
Position(s) Length of Fund Complex Other Public
Name, Address Held with Time Overseen by Directorships
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years Director Held by Director
Interested Director
Robert C. Doll, Jr.* Fund 2005 to Vice Chairman and Director of BlackRock, Inc., 121 Funds None
P.O. Box 9011 President 2007 Global Chief Investment Officer for Equities, 161 Portfolios
Princeton, NJ and Chairman of the BlackRock Retail Operating
08543-9011 Director Committee, and member of the BlackRock Executive
1954 Committee since 2006; President of the funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006 and Chief Investment
Officer thereof from 2001 to 2006; President of
MLIM and Fund Asset Management, L.P. ("FAM") from
2001 to 2006; Co-Head (Americas Region) thereof
from 2000 to 2001 and Senior Vice President from
1999 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") and President
of Princeton Administrators, L.P. ("Princeton
Administrators") from 2001 to 2006; Chief Investment
Officer of OppenheimerFunds, Inc. in 1999 and Executive
Vice President thereof from 1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain other
investment companies for which BlackRock Advisors, LLC and its affiliates act as
investment adviser. Mr. Doll is an "interested person," as defined in the
Investment Company Act, of the Fund based on his positions with BlackRock, Inc.
and its affiliates. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
Independent Directors*
Ronald W. Forbes** Director 1981 to Professor Emeritus of Finance, School of 46 Funds None
P.O. Box 9095 2007 Business, State University of New York at 48 Portfolios
Princeton, NJ Albany since 2000 and Professor thereof
08543-9095 from 1989 to 2000; International Consultant,
1940 Urban Institute, Washington, D.C. from 1995
to 1999.
Cynthia A. Montgomery Director 1994 to Professor, Harvard Business School since 1989; 46 Funds Newell
P.O. Box 9095 2007 Associate Professor, J.L. Kellogg Graduate 48 Portfolios Rubbermaid, Inc.
Princeton, NJ School of Management, Northwestern University (manufacturing)
08543-9095 from 1985 to 1989; Associate Professor, Graduate
1952 School of Business Administration, University
of Michigan from 1979 to 1985; Director, Harvard
Business School Publishing since 2005; Director,
McLean Hospital since 2005.
Jean Margo Reid Director 2004 to Self-employed consultant since 2001; Counsel 46 Funds None
P.O. Box 9095 present of Alliance Capital Management (investment 48 Portfolios
Princeton, NJ adviser) in 2000; General Counsel, Director
08543-9095 and Secretary of Sanford C. Bernstein & Co.,
1945 Inc. (investment adviser/broker-dealer) from
1997 to 2000; Secretary, Sanford C. Bernstein
Fund, Inc. from 1994 to 2000; Director and
Secretary of SCB, Inc. since 1998; Director
and Secretary of SCB Partners, Inc. since 2000;
and Director of Covenant House from 2001 to 2004.
Roscoe S. Suddarth Director 2000 to President, Middle East Institute, from 1995 46 Funds None
P.O. Box 9095 2007 to 2001; Foreign Service Officer, United States 48 Portfolios
Princeton, NJ Foreign Service, from 1961 to 1995 and Career
08543-9095 Minister from 1989 to 1995; Deputy Inspector
1935 General, U.S. Department of State, from 1991
to 1994; U.S. Ambassador to the Hashemite
Kingdom of Jordan from 1987 to 1990.
Richard R. West Director 1980 to Professor of Finance from 1984 to 1995, Dean 46 Funds Bowne & Co., Inc.
P.O. Box 9095 present from 1984 to 1993 and since 1995 Dean Emeritus 48 Portfolios (financial
Princeton, NJ of New York University's Leonard N. Stern printers);
08543-9095 School of Business Administration. Vornado Realty
1938 Trust (real
estate company );
Alexander's, Inc.
(real estate
company)
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board of Directors and the Audit Committee.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Officers and Directors (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill
P.O. Box 9011 President 2007 and Lynch Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P.
Princeton, NJ and 1999 to ("FAM") in 2006; First Vice President of MLIM and FAM from 1997 to 2005 and
08543-9011 Treasurer 2007 Treasurer thereof from 1999 to 2006; Vice President of MLIM and FAM from 1990
1960 to 1997.
Karen Clark Chief 2007 Managing Director of BlackRock, Inc. and Chief Compliance Officer of certain
P.O. Box 9011 Compliance BlackRock-advised funds since 2007; Director of BlackRock, Inc. from 2005 to
Princeton, NJ Officer 2007; Principal and Senior Compliance Officer, State Street Global Advisors,
08543-9011 from 2001 to 2005; Principal Consultant, PricewaterhouseCoopers, LLP from 1998
1965 to 2001; and Branch Chief, Division of Investment Management and Office of
Compliance Inspections and Examinations, U.S. Securities and Exchange
Commission, from 1993 to 1998.
Howard Surloff Secretary 2007 to Managing Director of BlackRock Inc. and General Counsel of U.S. Funds at
P.O. Box 9011 present BlackRock, Inc since 2006. General Counsel (U.S.) of Goldman Sachs Asset
Princeton, NJ Management from 1993 to 2006.
08543-9011
1965
* Officers of the Fund serve at the pleasure of the Board of Directors.
Further information about the Fund's Officers and Directors is available in
the Fund's Statement of Additional Information, which can be obtained without
charge by calling 1-800-441-7762.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
PFPC Inc.
Wilmington, DE 19809
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
BlackRock Fund Information
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former
fund investors and individual clients (collectively, "Clients") and to
safeguarding their nonpublic personal information. The following information
is provided to help you understand what personal information BlackRock
collects, how we protect that information and why in certain cases we share
such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and about
you from different sources, including the following: (i) information we
receive from you or, if applicable, your financial intermediary, on
applications, forms or other documents; (ii) information about your
transactions with us, our affiliates, or others; (iii) information we receive
from a consumer reporting agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any
nonpublic personal information about its Clients, except as permitted by law
or as is necessary to service Client accounts. These nonaffiliated third
parties are required to protect the confidentiality and security of this
information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that
may be of interest to you. In addition, BlackRock restricts access to
nonpublic personal information about its Clients to those BlackRock employees
with a legitimate business need for the information. BlackRock maintains
physical, electronic and procedural safeguards that are designed to protect
the nonpublic personal information of its Clients, including procedures
relating to the proper storage and disposal of such information.
Availability of Additional Information
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site or shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor. Please note that not all investment
advisers, banks or brokerages may offer this service.
Shareholders Who Hold Accounts Directly with BlackRock:
1) Access the BlackRock Web site at
http://www.blackrock.com/edelivery
2) Select "eDelivery" under the "More Information" section
3) Log into your account
The Fund will mail only one copy of shareholder documents, including
prospectuses, annual and semi-annual reports and proxy statements, to
shareholders with multiple accounts at the same address. This practice is
commonly called "householding" and it is intended to reduce expenses and
eliminate duplicate mailings of shareholder documents. Mailings of your
shareholder documents may be householded indefinitely unless you instruct us
otherwise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please contact the Fund at
(800) 441-7762.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Availability of Additional Information (concluded)
Availability of Proxy Voting Policies and Procedures
The Fund has delegated proxy voting responsibilities to BlackRock and its
affiliates, subject to the general oversight of the Fund's Board of Directors.
A description of the policies and procedures that BlackRock and its affiliates
use to determine how to vote proxies relating to portfolio securities is
available without charge, upon request, on our Web site at www.blackrock.com,
by calling (800) 441-7762, or on the Web site of the Securities and Exchange
Commission (the "Commission") at http://www.sec.gov.
Availability of Proxy Voting Record
Information on how proxies relating to the Fund's voting securities were voted
(if any) by the Fund's previous manager during the most recent 12-month period
ended June 30 is available, upon request and without charge, on our Web site
at www.blackrock.com, by calling (800) 441-7762 or on the Web site of the
Commission at http://www.sec.gov.
Availability of Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings for the first and
third quarters of its fiscal year with the Commission on Form N-Q. The Fund's
Forms N-Q are available on the Commission's Web site at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information regarding the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. The Fund's Forms N-Q may also
be obtained upon request, without charge, by calling (800) 441-7762.
Shareholder Privileges
Account Information
Call us at (800) 441-7762 8:00 AM - 6:00 PM EST to get information about your
account balances, recent transactions and share prices. You can also reach us
on the Web at www.blackrock.com/funds.
Automatic Investment Plans
Investor Class shareholders who want to invest regularly can arrange to have
$50 or more automatically deducted from their checking or savings account and
invested in any of the BlackRock funds.
Systematic Withdrawal Plans
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments of $50 or more from their BlackRock funds, as long
as their account is at least $10,000.
Retirement Plans
Shareholders may make investments in conjunction with Traditional, Rollover,
Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
A World-Class Mutual Fund Family
BlackRock offers a diverse lineup of open-end mutual funds crossing all
investment styles and managed by experts in equity, fixed income and
tax-exempt investing.
Equity Funds
BlackRock All-Cap Global Resources Portfolio
BlackRock Aurora Portfolio
BlackRock Asset Allocation Portfolio++
BlackRock Balanced Capital Fund++
BlackRock Basic Value Fund
BlackRock Capital Appreciation Portfolio
BlackRock Developing Capital Markets Fund
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Twenty Fund
BlackRock Focus Value Fund
BlackRock Fundamental Growth Fund
BlackRock Global Allocation Fund++
BlackRock Global Dynamic Equity Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global Resources Portfolio
BlackRock Global Science & Technology
Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Healthcare Fund
BlackRock Health Sciences Opportunities Portfolio*
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio*
BlackRock International Value Fund
BlackRock Large Cap Core Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small Cap Value Equity Portfolio*
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock Technology Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
Fixed Income Funds
BlackRock Commodity Strategies Fund
BlackRock Enhanced Income Portfolio
BlackRock GNMA Portfolio
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Bond Portfolio II
BlackRock Intermediate Government
Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Short-Term Bond Fund
BlackRock Total Return Fund
BlackRock Total Return Portfolio II
BlackRock World Income Fund
Municipal Bond Funds
BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Insured Municipal Bond Fund
BlackRock Delaware Municipal Bond Portfolio
BlackRock Florida Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund
Target Risk & Target Date Funds
BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio
BlackRock Lifecycle Prepared Portfolios
Prepared Portfolio 2010
Prepared Portfolio 2015
Prepared Portfolio 2020
Prepared Portfolio 2025
Prepared Portfolio 2030
Prepared Portfolio 2035
Prepared Portfolio 2040
Prepared Portfolio 2045
Prepared Portfolio 2050
* See the prospectus for information on specific limitations on investments
in the fund.
++ Mixed asset fund.
BlackRock mutual funds are distributed by BlackRock Distributors, Inc. and
certain funds are also distributed by FAM Distributors, Inc. You should
consider the investment objectives, risks, charges and expenses of the funds
under consideration carefully before investing. Each fund's prospectus
contains this and other information and is available at www.blackrock.com or
by calling 800-882-0052 or from your financial advisor. The prospectus should
be read carefully before investing.
BLACKROCK HIGH INCOME FUND OF BLACKROCK BOND FUND, INC. SEPTEMBER 30, 2007
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or
persons performing similar functions. During the period covered by
this report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Ronald W. Forbes (term ended, effective November 1, 2007)
Robert M. Hernandez (term began, effective November 1, 2007)
Fred G. Weiss (term began, effective November 1, 2007)
Richard R. West
Edward D. Zinbarg (retired as of December 31, 2006)
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees (b) Audit-Related Fees (1) (c) Tax Fees (2) (d) All Other Fees (3)
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
Entity Name End End End End End End End End
BlackRock High
Income Fund of $41,200 $41,200 $0 $0 $6,100 $6,000 $1,042 $0
BlackRock Bond
Fund, Inc.
(1) The nature of the services include assurance and related services reasonably
related to the performance of the audit of financial statements not included
in Audit Fees.
(2) The nature of the services include tax compliance, tax advice and tax planning.
(3) The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general pre-
approval"). However, such services will only be deemed pre-approved
provided that any individual project does not exceed $5,000
attributable to the registrant or $50,000 for all of the registrants
the Committee oversees. 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.
(e)(2) None of the services described in each of Items 4(b)
through (d) were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C)of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
Current Previous
Fiscal Year Fiscal Year
Entity Name End End
BlackRock High Income
Fund of BlackRock
Bond Fund, Inc. $291,642 $3,056,250
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $284,500, 0%
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating Committee will consider nominees to the
Board recommended by shareholders when a vacancy becomes available.
Shareholders who wish to recommend a nominee should send nominations
which include biographical information and set forth the
qualifications of the proposed nominee to the registrant's
Secretary. There have been no material changes to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock High Income Fund of BlackRock Bond Fund, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock High Income Fund of BlackRock Bond Fund, Inc.
Date: November 20, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock High Income Fund of BlackRock Bond Fund, Inc.
Date: November 20, 2007
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews,
Chief Financial Officer (principal financial officer) of
BlackRock High Income Fund of BlackRock Bond Fund, Inc.
Date: November 20, 2007