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 811-07634
Name of Fund: BlackRock Corporate High Yield Fund, Inc. (COY)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive
Officer, BlackRock Corporate High Yield Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ,
08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 05/31/2008
Date of reporting period: 06/01/2007 - 05/31/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
- ----------------------------------------------
BlackRock Corporate High Yield BLACKROCK
Fund, Inc. (COY)
ANNUAL REPORT | MAY 31, 2008
- ----------------------------------------------
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
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Table of Contents
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Page
- --------------------------------------------------------------------------------
A Letter to Shareholders ................................................ 3
Annual Report:
Fund Summary ............................................................ 4
The Benefits and Risks of Leveraging .................................... 5
Swap Agreements ......................................................... 5
Financial Statements:
Schedule of Investments .............................................. 6
Statement of Assets and Liabilities .................................. 13
Statement of Operations .............................................. 13
Statements of Changes in Net Assets .................................. 14
Statement of Cash Flows .............................................. 14
Financial Highlights .................................................... 15
Notes to Financial Statements ........................................... 16
Report of Independent Registered Public Accounting Firm ................. 21
Important Tax Information (Unaudited) ................................... 21
Disclosure of Investment Advisory Agreement and Subadvisory Agreement ... 22
Automatic Dividend Reinvestment Plan .................................... 26
Officers and Directors .................................................. 27
Additional Information .................................................. 30
2 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
A Letter to Shareholders
Dear Shareholder
For much of the reporting period, investors grappled with the repercussions of
the credit crisis that surfaced last summer, and with the effects of a weakening
economy and surging energy and food prices. These factors were offset by the
positive impact from robust export activity, strength in the non-financial
corporate sector and monetary and fiscal stimuli.
Amid the market turbulence, the Federal Reserve Board (the "Fed") initiated a
series of moves to restore liquidity and bolster financial market stability.
Since September 2007, the central bank slashed the target federal funds rate 325
basis points (3.25%), bringing the rate to 2.0% as of period-end. Also of
significance were its other policy decisions, which included extending use of
the discount window to broker-dealers and investment banks and backstopping the
rescue of ill-fated Bear Stearns. Notably, on April 30, the Fed dropped previous
references to downside growth risks and added more emphasis on inflationary
pressures, indicating the central bankers have likely concluded the current
cycle of monetary easing.
Nevertheless, the Fed's response to the financial crisis helped to ease credit
turmoil and investor anxiety. Since hitting a low point on March 17, following
the collapse of Bear Stearns, stocks appreciated 10% (through May 30). Most
international markets, which had outperformed U.S. stocks for some time, saw a
reversal in that trend, as the troubled credit situation and downward pressures
on growth fanned recession fears.
In fixed income markets, Treasury securities rallied (yields fell as prices
correspondingly rose), as a broad "flight-to-quality" theme persisted. The yield
on 10-year Treasury issues, which touched 5.30% in June 2007 (its highest level
in five years), fell to a low of 3.34% in March 2008 before rising to 4.06% by
May 31 as investors grew more risk tolerant and shifted out of Treasury issues
in favor of stocks and other high-quality fixed income sectors. Tax-exempt
issues under-performed throughout most of the reporting period, pressured by
problems among municipal bond insurers and the freeze in the market for auction
rate securities. However, the final two months saw a firmer tone in the
municipal market, as investors took advantage of unusually high yields.
On the whole, results for the major benchmark indexes generally reflected
heightened investor risk aversion:
Total Returns as of May 31, 2008 6-month 12-month
- ----------------------------------------------------------------------------------------------------------
U.S. equities (S&P 500 Index) (4.47%) (6.70%)
- ----------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (1.87) (10.53)
- ----------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (5.21) (2.53)
- ----------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Index) 1.49 6.89
- ----------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) 1.44 3.87
- ----------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) 1.81 (1.08)
- ----------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
As you navigate today's volatile markets, we encourage you to review your
investment goals with your financial professional and to make portfolio changes,
as needed. For more up-to-date commentary on the economy and financial markets,
we invite you to visit www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
THIS PAGE NOT PART OF YOUR FUND REPORT
3
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Fund Summary as of May 31, 2008
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Investment Objective
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BlackRock Corporate High Yield Fund, Inc. (COY) (the "Fund") seeks to
provide shareholders with current income with a secondary objective of
providing shareholders with appreciation. The Fund seeks to achieve its
objective by investing primarily in a diversified portfolio of
fixed-income securities that are rated below investment grade by the
established rating services (Ba or lower by Moody's Investors Service,
Inc. or BB or lower by Standard & Poor's Corporation) or are unrated
securities of comparable quality.
- --------------------------------------------------------------------------------
Performance
- --------------------------------------------------------------------------------
For the 12 months ended May 31, 2008, the Fund returned (4.81%) based on
market price and (5.49%) based on net asset value ("NAV"). For the same
period, the closed-end Lipper High Current Yield Funds (Leveraged)
category posted an average return of (15.00%) on a NAV basis. All returns
reflect reinvestment of dividends. In an adverse high yield market, the
Fund was defensively positioned, on average, and maintained less leverage
than many of its Lipper peers. A small allocation to bank loans was added
during the period and detracted from performance, as bank loans
underperformed. The Fund's discount to NAV narrowed to 5.94% by
period-end.
The views expressed reflect the opinions of BlackRock as of the date
of this report and are subject to change based on changes in market,
economic or other conditions. These views are not intended to be a
forecast of future events and are no guarantee of future results.
- --------------------------------------------------------------------------------
Fund Information
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange .............................. COY
Initial Offering Date .......................................... June 25, 1993
Yield on Closing Market Price as of May 31, 2008 ($7.28)(1) .... 10.05%
Current Monthly Distribution per share of Common Stock(2) ...... $0.061
Current Annualized Distribution per share of Common Stock(2) ... $0.732
Leverage as of May 31, 2008(3) ................................. 19%
- --------------------------------------------------------------------------------
(1) Yield on closing market price is calculated by dividing the current
annualized distribution per share by the closing market price. Past
performance does not guarantee future results.
(2) The distribution is not constant and is subject to change.
(3) As a percentage of total managed assets, which is the total assets
of the Fund (including any assets attributable to any borrowing)
minus the sum of accrued liabilities (other than debt representing
financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
- --------------------------------------------------------------------------------
5/31/08 5/31/07 Change High Low
- --------------------------------------------------------------------------------
Market Price ................... $7.28 $8.47 (14.05%) $8.64 $6.15
Net Asset Value ................ $7.74 $9.07 (14.66%) $9.08 $7.25
- --------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Asset Mix 5/31/08 5/31/07
- ----------------------------------------------------
Corporate Bonds ............... 87% 95%
Floating Rate Loan Interests .. 10 2
Common Stocks ................. 1 2
Preferred Stocks .............. 1 1
Capital Trusts ................ 1 --
- ----------------------------------------------------
- --------------------------------------------------------------------------------
Credit Quality Allocations(4)
- --------------------------------------------------------------------------------
Credit Rating 5/31/08 5/31/07
- ----------------------------------------------------
A/A ........................... 1% --
BBB/Baa ....................... 3 1%
BB/Ba ......................... 25 22
B/B ........................... 50 55
CCC/Caa ....................... 14 15
Not Rated ..................... 4 3
Other(5) ...................... 3 4
- ----------------------------------------------------
(4) Using the higher of Standard & Poor's or Moody's Investors Service
ratings.
(5) Includes investments in common stocks, preferred stocks, warrants, other
interests and options.
4 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
The Benefits and Risks of Leveraging
The Fund utilizes leverage through borrowings or issuance of short-term debt
securities. The concept of leveraging is based on the premise that the cost of
assets to be obtained from leverage will be based on short-term interest rates,
which normally will be lower than the income earned by the Fund on its
longer-term portfolio investments. To the extent that the total assets of the
Fund (including the assets obtained from leverage) are invested in
higher-yielding portfolio investments, the Fund's Common Stock shareholders will
benefit from the incremental yield.
Leverage creates risks for Common Stock shareholders including the likelihood of
greater NAV and market price volatility. In addition, there is the risk that
fluctuations in interest rates on borrowings may reduce the Common Stock's yield
and negatively impact its NAV and market price.
If the income derived from securities purchased with assets received from
leverage exceeds the cost of leverage, the Fund's net income will be greater
than if leverage had not been used. Conversely, if the income from the
securities purchased is not sufficient to cover the cost of leverage, the Fund's
net income will be less than if leverage had not been used, and therefore the
amount available for distribution to Common Stock shareholders will be reduced.
Under the Investment Company Act of 1940, the Fund is permitted to borrow
through a credit facility or the issuance of short-term debt securities in an
amount up to 33 1/3% of its total managed assets. As of May 31, 2008, the Fund
had outstanding leverage from credit facility borrowings of 19% of its total
managed assets.
- --------------------------------------------------------------------------------
Swap Agreements
- --------------------------------------------------------------------------------
The Fund may invest in swap agreements, which are over-the-counter contracts in
which one party agrees to make periodic payments based on the change in market
value of a specified bond, basket of bonds, or index in return for periodic
payments based on a fixed or variable interest rate or the change in market
value of a different bond, basket of bonds or index. Swap agreements may be used
to obtain exposure to a bond or market without owning or taking physical custody
of securities. Swap agreements involve the risk that the party with whom the
Fund has entered into the swap will default on its obligation to pay the Fund
and the risk that the Fund will not be able to meet its obligations to pay the
other party to the agreement.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 5
================================================================================
Schedule of Investments May 31, 2008
(Percentages shown are based on Net Assets)
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Aerospace & Defense -- 4.1%
Alliant Techsystems, Inc., 2.75%, 9/15/11 (a)(b) $ 1,817 $ 2,293,963
DRS Technologies, Inc., 6.875%, 11/01/13 1,325 1,354,812
Esterline Technologies Corp., 7.75%, 6/15/13 925 941,187
Hawker Beechcraft Acquisitions Co. LLC, 8.875%,
4/01/15 (c) 395 403,887
L-3 Communications Corp.:
7.625%, 6/15/12 1,350 1,375,312
5.875%, 1/15/15 1,525 1,444,937
3%, 8/01/35 (a) 1,280 1,571,200
Series B, 6.375%, 10/15/15 1,275 1,228,781
TransDigm, Inc., 7.75%, 7/15/14 440 449,900
---------------
11,063,979
- --------------------------------------------------------------------------------
Airlines -- 0.4%
Continental Airlines, Inc.:
Series 1997-4-B, 6.90%, 7/02/18 842 757,927
Series 1998-1-C, 6.541%, 9/15/09 18 18,212
Series 2001-1-C, 7.033%, 12/15/12 307 281,056
---------------
1,057,195
- --------------------------------------------------------------------------------
Auto Components -- 1.4%
Allison Transmission (b):
11%, 11/01/15 270 254,475
11.25%, 11/01/15 (c) 1,780 1,619,800
The Goodyear Tire & Rubber Co.:
7.857%, 8/15/11 260 266,500
8.625%, 12/01/11 577 608,735
Lear Corp., 8.75%, 12/01/16 1,215 1,102,613
---------------
3,852,123
- --------------------------------------------------------------------------------
Automobiles -- 0.4%
Ford Capital BV, 9.50%, 6/01/10 710 685,150
Ford Motor Co., 8.90%, 1/15/32 600 450,000
---------------
1,135,150
- --------------------------------------------------------------------------------
Building Products -- 0.7%
Masonite International Corp., 11%, 4/06/15 500 335,000
Momentive Performance Materials, Inc.,
11.50%, 12/01/16 1,820 1,542,450
---------------
1,877,450
- --------------------------------------------------------------------------------
Capital Markets -- 1.1%
E*Trade Financial Corp., 12.50%, 11/30/17 (b) 1,420 1,547,800
Marsico Parent Co., LLC, 10.625%, 1/15/16 (b)(k) 1,004 903,600
Marsico Parent Holdco, LLC, 12.50%, 7/15/16
(b)(c)(k) 358 317,683
Marsico Parent Superholdco, LLC, 14.50%, 1/15/18
(b)(c)(k) 240 208,715
---------------
2,977,798
- --------------------------------------------------------------------------------
Chemicals -- 2.0%
American Pacific Corp., 9%, 2/01/15 800 788,000
Hexion U.S. Finance Corp.:
7.176%, 11/15/14 (d) 600 570,000
9.75%, 11/15/14 500 550,000
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Chemicals (concluded)
Innophos, Inc., 8.875%, 8/15/14 $ 740 $ 754,800
Key Plastics LLC, 11.75%, 3/15/13 (b) 425 191,250
MacDermid, Inc., 9.50%, 4/15/17 (b) 1,595 1,547,150
Nalco Finance Holdings, Inc., 10.041%, 2/01/14 (e) 780 744,900
Terra Capital, Inc. Series B, 7%, 2/01/17 265 263,344
---------------
5,409,444
- --------------------------------------------------------------------------------
Commercial Services & Supplies -- 4.6%
Aramark Corp., 8.50%, 2/01/15 575 588,656
Ashtead Capital, Inc., 9%, 8/15/16 (b) 195 173,550
Corrections Corp. of America, 7.50%, 5/01/11 2,800 2,821,000
DI Finance Series B, 9.50%, 2/15/13 269 274,380
PNA Intermediate Holding Corp., 9.676%, 2/15/13
(c)(d) 1,295 1,116,938
Sally Holdings LLC:
9.25%, 11/15/14 200 199,000
10.50%, 11/15/16 693 675,675
US Investigations Services, Inc., 10.50%,
11/01/15 (b) 700 633,500
Waste Services, Inc., 9.50%, 4/15/14 2,800 2,807,000
West Corp.:
9.50%, 10/15/14 700 654,500
11%, 10/15/16 2,720 2,407,200
---------------
12,351,399
- --------------------------------------------------------------------------------
Communications Equipment -- 1.0%
Nortel Networks Ltd.:
6.963%, 7/15/11 (d) 2,340 2,199,600
10.75%, 7/15/16 (b) 370 365,375
---------------
2,564,975
- --------------------------------------------------------------------------------
Construction & Engineering -- 0.6%
Dycom Industries, Inc., 8.125%, 10/15/15 1,650 1,584,000
- --------------------------------------------------------------------------------
Construction Materials -- 1.6%
Nortek Holdings, Inc., 10%, 12/01/13 (b) 3,270 3,249,563
Texas Industries, Inc., 7.25%, 7/15/13 925 927,313
---------------
4,176,876
- --------------------------------------------------------------------------------
Containers & Packaging -- 4.2%
Berry Plastics Holding Corp.:
6.675%, 9/15/14 (d) 1,780 1,504,100
8.875%, 9/15/14 1,280 1,171,200
Graphic Packaging International Corp.:
8.50%, 8/15/11 1,000 1,010,000
9.50%, 8/15/13 590 594,425
Impress Holdings BV, 5.838%, 9/15/13 (b)(d) 390 335,887
Owens-Brockway Glass Container, Inc., 8.25%,
5/15/13 925 957,375
Packaging Dynamics Finance Corp., 10%, 5/01/16 (b) 1,255 828,300
Pregis Corp., 12.375%, 10/15/13 1,130 1,098,925
Rock-Tenn Co., 8.20%, 8/15/11 1,875 1,950,000
Smurfit-Stone Container Enterprises, Inc., 8%,
3/15/17 2,220 1,914,750
---------------
11,364,962
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
6 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Diversified Consumer Services -- 1.0%
Service Corp. International, 7%, 6/15/17 $ 2,800 $ 2,716,000
- --------------------------------------------------------------------------------
Diversified Financial Services -- 1.5%
Axcan Intermediate Holdings, Inc., 12.75%,
3/01/16 (b) 490 494,900
Ford Motor Credit Co. LLC:
5.46%, 1/13/12 (d) 385 325,321
7.80%, 6/01/12 200 176,947
GMAC LLC:
7.25%, 3/02/11 550 471,094
6.75%, 12/01/14 675 522,598
8%, 11/01/31 985 754,590
Leucadia National Corp., 8.125%, 9/15/15 1,250 1,279,688
---------------
4,025,138
- --------------------------------------------------------------------------------
Diversified Telecommunication Services -- 2.6%
Qwest Communications International, Inc., 7.50%,
2/15/14 2,240 2,195,200
Qwest Corp.:
6.05%, 6/15/13 (d) 1,350 1,309,500
7.625%, 6/15/15 500 497,500
Windstream Corp., 8.125%, 8/01/13 2,800 2,863,000
---------------
6,865,200
- --------------------------------------------------------------------------------
Electric Utilities -- 1.7%
Edison Mission Energy, 7.50%, 6/15/13 1,775 1,810,500
NSG Holdings LLC, 7.75%, 12/15/25 (b) 965 952,938
Tenaska Alabama Partners LP, 7%, 6/30/21 (b) 1,831 1,696,803
---------------
4,460,241
- --------------------------------------------------------------------------------
Electrical Equipment -- 0.4%
Coleman Cable, Inc., 9.875%, 10/01/12 925 851,000
UCAR Finance, Inc., 10.25%, 2/15/12 187 194,480
---------------
1,045,480
- --------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.9%
NXP BV, 5.463%, 10/15/13 (d) 1,255 1,148,325
Sanmina-SCI Corp.:
6.75%, 3/01/13 160 147,600
8.125%, 3/01/16 1,305 1,226,700
---------------
2,522,625
- --------------------------------------------------------------------------------
Energy Equipment & Services -- 2.0%
Compagnie Generale de Geophysique-Veritas:
7.50%, 5/15/15 195 197,437
7.75%, 5/15/17 300 306,000
North American Energy Partners, Inc., 8.75%,
12/01/11 680 686,800
Ocean RIG ASA, 6.70%, 4/04/11 (d) 1,800 1,800,000
SemGroup LP, 8.75%, 11/15/15 (b) 2,480 2,418,000
---------------
5,408,237
- --------------------------------------------------------------------------------
Food & Staples Retailing -- 1.5%
AmeriQual Group LLC, 9%, 4/01/12 (b) 750 480,000
National Beef Packing Co. LLC, 10.50%, 8/01/11 1,850 1,720,500
Rite Aid Corp., 7.50%, 3/01/17 1,880 1,713,150
---------------
3,913,650
- --------------------------------------------------------------------------------
Food Products -- 1.1%
Del Monte Corp., 8.625%, 12/15/12 2,812 2,882,300
- --------------------------------------------------------------------------------
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Gas Utilities -- 0.5%
El Paso Performance-Linked Trust, 7.75%,
7/15/11 (b) $ 1,250 $ 1,285,850
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies -- 2.6%
Catalent Pharma Solutions, Inc., 9.50%, 4/15/15 900 816,750
Hologic, Inc., 2%, 12/15/37 (a)(e) 815 725,350
LVB Acquisition Merger Sub, Inc. (b):
10.375%, 10/15/17 (c) 260 276,250
11.625%, 10/15/17 260 275,600
ReAble Therapeutics Finance LLC, 10.875%,
11/15/14 (b) 4,900 4,900,000
---------------
6,993,950
- --------------------------------------------------------------------------------
Health Care Providers & Services -- 3.9%
Community Health Systems, Inc. Series WI, 8.875%,
7/15/15 195 201,094
Omnicare, Inc.:
6.75%, 12/15/13 675 632,813
Series OCR, 3.25%, 12/15/35 (a) 760 553,850
Tenet Healthcare Corp.:
6.375%, 12/01/11 260 246,350
6.50%, 6/01/12 4,010 3,729,300
US Oncology, Inc., 9%, 8/15/12 1,580 1,597,775
United Surgical Partners International, Inc.,
8.875%, 5/01/17 1,200 1,176,000
Universal Hospital Services, Inc., 6.303%,
6/01/15 (d) 290 274,775
Vanguard Health Holding Co. II, LLC, 9%, 10/01/14 1,875 1,926,563
---------------
10,338,520
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 7.1%
American Real Estate Partners LP, 7.125%, 2/15/13 1,330 1,216,950
Caesars Entertainment, Inc., 7.875%, 3/15/10 1,275 1,208,063
Galaxy Entertainment Finance Co. Ltd. (b):
9.829%, 12/15/10 (d) 225 221,625
9.875%, 12/15/12 500 505,000
Great Canadian Gaming Corp., 7.25%, 2/15/15 (b) 1,860 1,804,200
Greektown Holdings, LLC, 10.75%, 12/01/13
(b)(f)(g) 522 360,180
Harrah's Operating Co., Inc., 10.75%, 2/01/18
(b)(c) 3,050 2,302,330
Inn of the Mountain Gods Resort & Casino, 12%,
11/15/10 1,425 1,239,750
Landry's Restaurants, Inc., 9.50%, 12/15/14 225 221,625
Little Traverse Bay Bands of Odawa Indians,
10.25%, 2/15/14 (b) 1,175 1,098,625
Penn National Gaming, Inc., 6.875%, 12/01/11 1,875 1,837,500
Pinnacle Entertainment, Inc., 7.50%, 6/15/15 (b) 810 668,250
San Pasqual Casino, 8%, 9/15/13 (b) 925 883,375
Shingle Springs Tribal Gaming Authority, 9.375%,
6/15/15 (b) 300 261,750
Station Casinos, Inc.:
6.50%, 2/01/14 450 283,500
7.75%, 8/15/16 1,525 1,269,563
6.625%, 3/15/18 95 55,575
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 7
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure (concluded)
Travelport LLC, 7.307%, 9/01/14 (d) $ 345 $ 293,250
Tropicana Entertainment LLC Series WI, 9.625%,
12/15/14 (f)(g) 615 344,400
Universal City Florida Holding Co. I, 7.623%,
5/01/10 (d) 1,300 1,277,250
Virgin River Casino Corp., 9%, 1/15/12 805 551,425
Wynn Las Vegas LLC, 6.625%, 12/01/14 1,100 1,061,500
---------------
18,965,686
- --------------------------------------------------------------------------------
Household Durables -- 1.0%
American Greetings Corp., 7.375%, 6/01/16 1,500 1,496,250
Jarden Corp., 7.50%, 5/01/17 900 803,250
The Yankee Candle Co., Inc., 9.75%, 2/15/17 325 253,500
---------------
2,553,000
- --------------------------------------------------------------------------------
IT Services -- 1.2%
First Data Corp., 9.875%, 9/24/15 (b) 1,070 968,350
SunGard Data Systems, Inc., 9.125%, 8/15/13 2,225 2,291,750
---------------
3,260,100
- --------------------------------------------------------------------------------
Independent Power Producers & Energy
Traders -- 3.4%
The AES Corp., 8.75%, 5/15/13 (b) 1,216 1,263,120
Energy Future Holding Corp., 11.25%, 11/01/17
(b)(c) 3,300 3,399,000
NRG Energy, Inc.:
7.25%, 2/01/14 1,525 1,494,500
7.375%, 2/01/16 1,375 1,340,625
Texas Competitive Electric Holdings Co. LLC (b):
10.25%, 11/01/15 705 719,981
10.50%, 11/01/16 (c) 900 913,500
---------------
9,130,726
- --------------------------------------------------------------------------------
Insurance -- 0.7%
Alliant Holdings I, Inc., 11%, 5/01/15 (b) 1,600 1,384,000
USI Holdings Corp., 6.551%, 11/15/14 (b)(d) 630 507,150
---------------
1,891,150
- --------------------------------------------------------------------------------
Leisure Equipment & Products -- 0.5%
Quiksilver, Inc., 6.875%, 4/15/15 1,600 1,312,000
- --------------------------------------------------------------------------------
Machinery -- 1.2%
AGY Holding Corp., 11%, 11/15/14 (b) 1,200 1,104,000
Accuride Corp., 8.50%, 2/01/15 515 424,875
RBS Global, Inc., 8.875%, 9/01/16 525 506,625
Terex Corp., 8%, 11/15/17 1,125 1,150,313
---------------
3,185,813
- --------------------------------------------------------------------------------
Marine -- 0.2%
Navios Maritime Holdings, Inc., 9.50%, 12/15/14 442 455,260
- --------------------------------------------------------------------------------
Media -- 14.7%
Affinion Group, Inc., 11.50%, 10/15/15 1,255 1,275,394
Allbritton Communications Co., 7.75%, 12/15/12 1,700 1,704,250
American Media Operations, Inc. Series B:
10.25%, 5/01/09 225 189,000
10.25%, 5/01/09 (b) 8 6,872
Barrington Broadcasting Group LLC, 10.50%, 8/15/14 1,090 953,750
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Media (concluded)
CMP Susquehanna Corp., 9.875%, 5/15/14 $ 1,875 $ 1,321,875
CSC Holdings, Inc. Series B, 7.625%, 4/01/11 2,125 2,125,000
Cablevision Systems Corp. Series B:
7.133%, 4/01/09 (d) 490 492,450
8%, 4/15/12 425 413,312
Cadmus Communications Corp., 8.375%, 6/15/14 1,475 1,253,750
Charter Communications Holdings I, LLC, 11%,
10/01/15 2,830 2,402,288
Charter Communications Holdings II, LLC, 10.25%,
9/15/10 2,960 2,945,200
Dex Media West LLC, 9.875%, 8/15/13 1,294 1,247,092
DirecTV Holdings LLC, 7.625%, 5/15/16 (b) 2,200 2,191,750
EchoStar DBS Corp., 7.125%, 2/01/16 1,080 1,031,400
Harland Clarke Holdings Corp.:
7.426%, 5/15/15 (d) 330 248,325
9.50%, 5/15/15 390 319,800
Liberty Media Corp., 0.75%, 3/30/23 (a) 1,023 1,099,725
Mediacom LLC, 9.50%, 1/15/13 2,250 2,148,750
Network Communications, Inc., 10.75%, 12/01/13 20 15,300
Nielsen Finance LLC:
10%, 8/01/14 1,750 1,804,688
10%, 8/01/14 (b) 1,760 1,815,000
Paxson Communications Corp., 5.963%, 1/15/12
(b)(d) 2,800 2,338,000
ProtoStar I Ltd., 12.50%, 10/15/12 (a)(b)(d) 786 778,213
R.H. Donnelley Corp.:
8.875%, 10/15/17 (b) 415 278,050
Series A-2, 6.875%, 1/15/13 1,105 740,350
Series A-3, 8.875%, 1/15/16 655 448,675
Rainbow National Services LLC, 10.375%, 9/01/14
(b) 1,166 1,247,620
Salem Communications Corp., 7.75%, 12/15/10 2,425 2,270,406
Sirius Satellite Radio, Inc., 9.625%, 8/01/13 450 385,875
TL Acquisitions, Inc., 10.50%, 1/15/15 (b) 3,750 3,412,500
Windstream Regatta Holdings, Inc., 11%, 12/01/17
(b) 673 450,910
---------------
39,355,570
- --------------------------------------------------------------------------------
Metals & Mining -- 5.0%
Aleris International, Inc.:
9%, 12/15/14 (c) 1,270 1,038,225
10%, 12/15/16 800 574,000
Blaze Recycling & Metals LLC, 10.875%, 7/15/12 (b) 190 180,500
FMG Finance Pty Ltd. (b):
10%, 9/01/13 500 552,500
10.625%, 9/01/16 1,210 1,403,600
Foundation PA Coal Co., 7.25%, 8/01/14 1,850 1,896,250
Freeport-McMoRan Copper & Gold, Inc.:
5.883%, 4/01/15 (d) 1,815 1,814,819
8.375%, 4/01/17 2,160 2,322,000
Indalex Holding Corp. Series B, 11.50%, 2/01/14 982 535,190
Novelis, Inc., 7.25%, 2/15/15 1,875 1,762,500
Ryerson, Inc. (b):
10.248%, 11/01/14 (d) 380 350,550
12%, 11/01/15 535 518,950
Steel Dynamics, Inc., 7.375%, 11/01/12 (b) 490 493,675
---------------
13,442,759
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
8 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
===============================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Multiline Retail -- 0.5%
Neiman Marcus Group, Inc., 9%, 10/15/15 (c) $ 1,375 $ 1,362,047
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 8.8%
Atlas Energy Resources LLC, 10.75%,
2/01/18 (b) 1,190 1,261,400
Berry Petroleum Co., 8.25%, 11/01/16 470 481,750
Chaparral Energy, Inc., 8.50%, 12/01/15 580 513,300
Chesapeake Energy Corp., 7.25%, 12/15/18 2,400 2,382,000
Compton Petroleum Finance Corp.,
7.625%, 12/01/13 1,505 1,473,019
Connacher Oil and Gas Ltd., 10.25%,
12/15/15 (b) 1,245 1,313,475
Copano Energy LLC, 8.125%, 3/01/16 650 667,875
Corral Finans AB, 4.213%, 4/15/10 (b)(c) 2,435 2,201,006
EXCO Resources, Inc., 7.25%, 1/15/11 2,600 2,551,250
Encore Acquisition Co., 6.25%, 4/15/14 1,850 1,785,250
Forest Oil Corp.:
7.25%, 6/15/19 1,140 1,120,050
7.25%, 6/15/19 (b) 995 977,587
OPTI Canada, Inc., 8.25%, 12/15/14 1,600 1,648,000
Petrohawk Energy Corp., 7.875%, 6/01/15 (b) 625 624,219
Sabine Pass LNG LP, 7.50%, 11/30/16 350 319,813
SandRidge Energy, Inc. (b):
8.625%, 4/01/15 (c) 1,000 1,027,500
8%, 6/01/18 935 946,688
Teekay Shipping Corp., 8.875%, 7/15/11 2,175 2,324,531
---------------
23,618,713
- --------------------------------------------------------------------------------
Paper & Forest Products -- 4.6%
Abitibi-Consolidated, Inc.:
6.30%, 6/15/11 (d) 1,875 843,750
8.85%, 8/01/30 175 68,250
Ainsworth Lumber Co. Ltd., 6.446%,
10/01/10 (d) 665 319,200
Bowater Canada Finance Corp.,
7.95%, 11/15/11 785 549,500
Bowater, Inc., 5.80%, 3/15/10 (d) 2,625 2,073,750
Domtar Corp., 7.125%, 8/15/15 2,575 2,459,125
NewPage Corp.:
10%, 5/01/12 (b) 2,020 2,151,300
12%, 5/01/13 1,105 1,168,538
Norske Skog Canada Ltd. Series D,
8.625%, 6/15/11 825 713,625
Verso Paper Holdings LLC Series B:
6.623%, 8/01/14 (d) 260 241,800
9.125%, 8/01/14 1,695 1,741,613
---------------
12,330,451
- --------------------------------------------------------------------------------
Personal Products -- 0.5%
Chattem, Inc., 7%, 3/01/14 1,375 1,368,125
- --------------------------------------------------------------------------------
Pharmaceuticals -- 1.1%
Angiotech Pharmaceuticals, Inc., 6.432%,
12/01/13 (d) 1,310 1,133,150
Elan Finance Plc, 6.676%, 11/15/11 (d) 1,875 1,762,500
---------------
2,895,650
- --------------------------------------------------------------------------------
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Real Estate Investment Trusts (REITs) -- 0.4%
FelCor Lodging LP, 8.50%, 6/01/11 $ 1,075 $ 1,093,812
- --------------------------------------------------------------------------------
Real Estate Management &
Development -- 2.0%
Forest City Enterprises, Inc., 7.625%, 6/01/15 2,825 2,634,312
Realogy Corp.:
10.50%, 4/15/14 1,200 900,000
11%, 4/15/14 (c) 1,505 978,250
12.375%, 4/15/15 1,490 812,050
---------------
5,324,612
- --------------------------------------------------------------------------------
Road & Rail -- 1.0%
Avis Budget Car Rental LLC:
5.176%, 5/15/14 (d) 2,600 2,229,500
7.625%, 5/15/14 575 517,500
---------------
2,747,000
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 1.1%
Amkor Technology, Inc.:
7.75%, 5/15/13 260 249,600
9.25%, 6/01/16 760 754,300
Freescale Semiconductor, Inc.:
6.675%, 12/15/14 (c) 770 660,275
8.875%, 12/15/14 560 495,600
Spansion, Inc., 5.807%, 6/01/13 (b)(d) 1,135 828,550
---------------
2,988,325
- --------------------------------------------------------------------------------
Software -- 0.1%
BMS Holdings, Inc., 9.954%, 2/15/12 (b)(c)(d) 632 379,078
- --------------------------------------------------------------------------------
Specialty Retail -- 3.6%
Asbury Automotive Group, Inc.,
7.625%, 3/15/17 330 277,200
AutoNation, Inc.:
4.713%, 4/15/13 (d) 2,675 2,364,031
7%, 4/15/14 725 686,031
General Nutrition Centers, Inc.:
7.199%, 3/15/14 (c)(d) 1,640 1,418,391
10.75%, 3/15/15 1,330 1,190,350
Group 1 Automotive, Inc., 2.25%, 6/15/36 (a)(e) 840 558,600
Michaels Stores, Inc.:
10%, 11/01/14 1,410 1,304,250
11.375%, 11/01/16 890 765,400
United Auto Group, Inc., 7.75%, 12/15/16 1,030 957,900
---------------
9,522,153
- --------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods -- 0.7%
Levi Strauss & Co., 8.875%, 4/01/16 1,875 1,898,438
- --------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- 0.1%
Residential Capital Corp., 7.625%, 11/21/08 260 239,200
- --------------------------------------------------------------------------------
Wireless Telecommunication Services -- 5.6%
Centennial Cellular Operating Co. LLC,
10.125%, 6/15/13 1,525 1,586,000
Centennial Communications Corp., 8.448%,
1/01/13 (d) 1,280 1,219,200
Cricket Communications, Inc., 10.875%,
11/01/14 (b)(e) 1,285 1,240,025
Digicel Group Ltd. (b):
8.875%, 1/15/15 1,085 995,487
9.125%, 1/15/15 (c) 1,911 1,603,348
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 9
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Par
Corporate Bonds (000) Value
- --------------------------------------------------------------------------------
Wireless Telecommunication
Services (concluded)
FiberTower Corp., 9%, 11/15/12 (a) $ 600 $ 459,000
iPCS, Inc., 4.998%, 5/01/13 (d) 580 498,800
MetroPCS Wireless, Inc., 9.25%, 11/01/14 2,380 2,287,775
Nordic Telephone Co. Holdings ApS, 8.875%,
5/01/16 (b) 2,250 2,216,250
Orascom Telecom Finance SCA, 7.875%,
2/08/14 (b) 265 253,738
Rural Cellular Corp., 8.25%, 3/15/12 850 879,750
Sprint Capital Corp., 7.625%, 1/30/11 1,730 1,673,774
---------------
14,913,147
- --------------------------------------------------------------------------------
Total Corporate Bonds -- 106.9% 286,105,357
================================================================================
================================================================================
Floating Rate Loan Interests
- --------------------------------------------------------------------------------
Auto Components -- 0.1%
Allison Transmission Term Loan B,
5.34% - 5.74%, 8/07/14 249 228,371
- --------------------------------------------------------------------------------
Building Products -- 0.8%
Building Material Corp. of America First Lien Term
Loan, 5.688%, 2/22/14 500 446,875
Masonite International:
Term Loan, 4.63% - 5.046%, 4/06/13 923 874,508
Term Loan B, 4.63% - 5.046%, 4/06/13 927 878,096
---------------
2,199,479
- --------------------------------------------------------------------------------
Capital Markets -- 0.2%
Marsico Parent Company, LLC Term Loan B,
5.625% - 7.25%, 11/14/14 499 443,888
- --------------------------------------------------------------------------------
Chemicals -- 1.5%
PQ Corp.:
First Lien Term Loan, 8.203%, 5/29/15 750 703,125
Second Lien Term Loan, 12.442%, 5/29/16 3,250 2,860,000
Wellman, Inc. Second Lien Term Loan, 9.989%,
2/10/10 (f)(g) 2,650 609,500
---------------
4,172,625
- --------------------------------------------------------------------------------
Communications Equipment -- 0.6%
Alltel Corp. Term Loan B1, 5.248%, 5/16/15 1,750 1,616,563
- --------------------------------------------------------------------------------
Containers & Packaging -- 0.2%
Berry Plastics Corp. Term Loan Assignment,
9.728%, 6/15/14 858 601,222
- --------------------------------------------------------------------------------
Diversified Telecommunication Services -- 0.9%
Wind Telecomunicazione SpA Second Lien Term
Loan, 10.92%, 12/17/14 EUR 1,500 2,344,220
- --------------------------------------------------------------------------------
Health Care Providers & Services -- 0.5%
Rotech Healthcare, Inc. Term Loan Assignment,
8.899%, 9/26/11 $ 1,512 1,315,681
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure -- 0.7%
Travelport, LLC PIK Term Loan Assignment,
9.913%, 3/22/12 (c) 2,554 1,992,286
- --------------------------------------------------------------------------------
Par
Floating Rate Loan Interests (000) Value
- --------------------------------------------------------------------------------
Household Products -- 0.2%
Spectrum Brands, Inc.:
Letter of Credit Assignment, 2.678%, 4/15/13 $ 23 $ 22,210
Dollar Term B Loan Assignment,
6.59% - 6.734%, 4/15/13 464 440,948
---------------
463,158
- --------------------------------------------------------------------------------
Independent Power Producers & Energy
Traders -- 1.5%
TXU Corp.:
Term Loan B-1, 6.234% - 6.49%, 10/10/14 210 196,875
Term Loan B-2, 6.121% - 6.478%, 10/10/14 498 468,159
Term Loan B-3, 6.234% - 6.478%, 10/10/14 3,483 3,272,679
---------------
3,937,713
- --------------------------------------------------------------------------------
Machinery -- 0.1%
Rexnord Holdings Inc. -- Loan Assignment,
10.058%, 3/02/13 374 293,349
- --------------------------------------------------------------------------------
Media -- 3.8%
Affinion Group, Inc. Term Loan, 9.267%, 3/01/12 400 334,000
Catalina Marketing Corporation -- Senior
Unsecured Interim Loan -- Participation,
6.938%, 10/01/15 2,500 2,250,000
HMH Publishing Company Ltd.:
Tranche A Term Loan, 6.901%, 11/14/14 2,417 2,211,250
Mezzanine -- Assignment, 12.401%, 11/14/14 5,563 4,616,927
New Vision Television First Lien Term Loan,
9.19%, 10/26/14 1,000 790,000
---------------
10,202,177
- --------------------------------------------------------------------------------
Paper & Forest Products -- 0.6%
NewPage Corp. Term Loan B, 6.313%, 12/07/14 499 496,817
Verso Paper Finance Holdings LLC Term Loan
Assignment, 9.078%, 2/01/13 1,076 1,012,794
---------------
1,509,611
- --------------------------------------------------------------------------------
Total Floating Rate Loan Interests -- 11.7% 31,320,343
================================================================================
================================================================================
Common Stocks Shares
- --------------------------------------------------------------------------------
Capital Markets -- 0.1%
E*Trade Financial Corp. (g) 68,734 281,809
- --------------------------------------------------------------------------------
Communications Equipment -- 0.6%
Loral Space & Communications Ltd. (g) 77,483 1,502,395
- --------------------------------------------------------------------------------
Containers & Packaging -- 0.0%
Smurfit Kappa Plc (g) 3,634 37,031
- --------------------------------------------------------------------------------
Electrical Equipment -- 0.1%
Medis Technologies Ltd. (g) 67,974 420,759
- --------------------------------------------------------------------------------
Multi-Utilities -- 0.7%
CenterPoint Energy, Inc. 111,819 1,894,214
- --------------------------------------------------------------------------------
Paper & Forest Products -- 0.1%
Western Forest Products, Inc. (g) 189,496 228,860
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment -- 0.3%
Cypress Semiconductor Corp. (g) 29,541 823,603
- --------------------------------------------------------------------------------
Total Common Stocks -- 1.9% 5,188,671
================================================================================
See Notes to Financial Statements.
10 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
- --------------------------------------------------------------------------------
Preferred Securities
- --------------------------------------------------------------------------------
Par
Capital Trusts (000) Value
- --------------------------------------------------------------------------------
Diversified Financial Services -- 0.8%
Citigroup, Inc., 8.40% (d)(h) $ 2,000 $ 1,982,580
- --------------------------------------------------------------------------------
Total Capital Trusts -- 0.8% 1,982,580
================================================================================
================================================================================
Preferred Stocks Shares
- --------------------------------------------------------------------------------
Capital Markets -- 0.0%
Marsico Parent Superholdco, LLC, 16.75% (b)(k) 67 58,960
- --------------------------------------------------------------------------------
Insurance -- 0.3%
American International Group, Inc., 8.50% (a) 10,000 739,900
- --------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 0.9%
EXCO Resources, Inc., 7% (a) 40 480,000
EXCO Resources, Inc., 11% 163 1,956,000
---------------
2,436,000
- --------------------------------------------------------------------------------
Total Preferred Stocks -- 1.2% 3,234,860
================================================================================
Total Preferred Securities -- 2.0% 5,217,440
================================================================================
================================================================================
Warrants (i)
- --------------------------------------------------------------------------------
Health Care Providers & Services -- 0.0%
HealthSouth Corp. (expires 1/16/14) 29,930 7,483
- --------------------------------------------------------------------------------
Warrants (i) Shares Value
- --------------------------------------------------------------------------------
Wireless Telecommunication Services -- 0.2%
American Tower Corp. (expires 8/01/08) 800 $ 514,700
- --------------------------------------------------------------------------------
Total Warrants -- 0.2% 522,183
================================================================================
================================================================================
Beneficial
Interest
Other Interests (j) (000)
- --------------------------------------------------------------------------------
Media -- 0.0%
Adelphia Escrow (l) $ 700 70
Adelphia Recovery Trust (l) 878 3,512
- --------------------------------------------------------------------------------
Total Other Interests -- 0.0% 3,582
================================================================================
Total Long-Term Investments
(Cost -- $352,720,494) -- 122.7% 328,357,576
================================================================================
================================================================================
Options Purchased Contracts
- --------------------------------------------------------------------------------
Call Options Purchased
Marsico Parent Superholdco, LLC, expiring
December 2019 at $942.86 17 29,325
- --------------------------------------------------------------------------------
Total Options Purchased
(Cost -- $16,622) -- 0.0% 29,325
================================================================================
Total Investments (Cost -- $352,737,116*) -- 122.7% 328,386,901
Liabilities in Excess of Other Assets -- (22.7%) (60,688,671)
---------------
Net Assets -- 100.0% $ 267,698,230
===============
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 11
================================================================================
Schedule of Investments (concluded)
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 353,200,506
===============
Gross unrealized appreciation .......................... $ 5,428,462
Gross unrealized depreciation .......................... (30,242,067)
---------------
Net unrealized depreciation ............................ $ (24,813,605)
===============
(a) Convertible security.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration to qualified institutional investors. Unless otherwise
indicated, these securities are not considered to be illiquid.
(c) Represents a pay-in-kind security, which may pay interest/dividends in
additional face/shares.
(d) Variable rate security. Rate shown is as of report date.
(e) Represents a step bond. Rate shown reflects the effective yield at the
time of purchase.
(f) Issuer filed for bankruptcy or is in default of interest payments.
(g) Non-income producing security.
(h) Security is perpetual in nature and has no stated maturity date.
(i) 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.
(j) "Other interests" represent beneficial interest in liquidation trusts and
other reorganization entities and are non-income producing.
(k) Security is illiquid.
(l) Security is fair valued.
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. These industry classifications are unaudited.
o 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
Activity Interest
Affiliate (000) Income
--------------------------------------------------------------------------
BlackRock Liquidity Series, LLC
Cash Sweep Series $ (1,429) $150,123
--------------------------------------------------------------------------
o Forward foreign currency contracts as of May 31, 2008 were as follows:
--------------------------------------------------------------------------
Currency Currency Settlement Unrealized
Purchased Sold Date Appreciation
--------------------------------------------------------------------------
$2,317,718 EUR 1,474,000 7/23/08 $ 30,651
--------------------------------------------------------------------------
o Swaps outstanding as of May 31,2008 were as follows:
- --------------------------------------------------------------------------------
Notional
Amount Unrealized
(000) Depreciation
- --------------------------------------------------------------------------------
Sold credit default protection on Ford Motor
Co. and receive 3.80%
Broker, JPMorgan Chase
Expires March 2010 $ 3,000 $ (288,513)
Sold credit default protection on Ford Motor
Co. and receive 3.80%
Broker, UBS Warburg
Expires March 2010 $ 930 (89,439)
Sold credit default protection on Ford Motor
Co. and receive 5.00%
Broker, Goldman Sachs & Co.
Expires June 2010 $ 3,750 (336,596)
- --------------------------------------------------------------------------------
Total $ (714,548)
==============
o Currency Abbreviation:
EUR Euro
See Notes to Financial Statements.
12 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Statement of Assets and Liabilities
May 31, 2008
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investments, at value -- unaffiliated (cost -- $352,737,116) .. $ 328,386,901
Cash .......................................................... 2,548,353
Foreign currency, at value (cost -- $2,478,379) ............... 2,482,312
Interest receivable ........................................... 6,892,554
Investments sold receivable ................................... 1,716,777
Swaps receivable .............................................. 65,497
Unrealized appreciation on forward foreign currency
contracts .................................................. 30,651
Prepaid expenses .............................................. 21,845
Principal paydowns receivable ................................. 1,763
Dividends receivable .......................................... 181
Other assets .................................................. 23,134
--------------
Total assets .................................................. 342,169,968
--------------
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Loan payable .................................................. 64,700,000
Investments purchased payable ................................. 8,665,566
Unrealized depreciation on swaps .............................. 714,548
Investment advisory fees payable .............................. 142,791
Income dividends payable ...................................... 134,076
Interest payable .............................................. 47,714
Other affiliates payable ...................................... 1,875
Officer's and Directors' fees payable ......................... 405
Other accrued expenses payable ................................ 64,763
--------------
Total liabilities ............................................. 74,471,738
--------------
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
Net assets .................................................... $ 267,698,230
==============
================================================================================
Net Assets Consist of
- --------------------------------------------------------------------------------
Par value $0.10 per share (34,580,960 shares issued
and outstanding) ........................................... $ 3,458,096
Paid-in capital in excess of par .............................. 436,386,510
Undistributed net investment income ........................... 5,504,375
Accumulated net realized loss ................................. (152,568,116)
Net unrealized appreciation/depreciation ...................... (25,082,635)
--------------
Net Assets, $7.74 net asset value per share ................... $ 267,698,230
==============
Statement of Operations
Year Ended May 31, 2008
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Interest (including $150,123 from affiliates) ................. $ 32,077,671
Dividends ..................................................... 277,481
Other ......................................................... 27,605
Facility and other fees ....................................... 27,388
--------------
Total income .................................................. 32,410,145
--------------
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment advisory ........................................... 1,817,498
Borrowing costs ............................................... 161,538
Professional .................................................. 133,387
Accounting services ........................................... 95,686
Printing ...................................................... 48,753
Custodian ..................................................... 34,238
Transfer agent ................................................ 24,168
Officer and Directors ......................................... 22,505
Registration .................................................. 11,392
Miscellaneous ................................................. 22,133
--------------
Total expenses excluding interest expense ..................... 2,371,298
Interest expense .............................................. 4,211,936
--------------
Total expenses ................................................ 6,583,234
Less fees paid indirectly ..................................... (15,174)
--------------
Total expenses after fees paid indirectly ..................... 6,568,060
--------------
Net investment income ......................................... 25,842,085
--------------
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) from:
Investments ................................................ (9,483,558)
Swaps ...................................................... 354,630
Foreign currency ........................................... (978)
--------------
(9,129,906)
--------------
Net change in unrealized appreciation/depreciation on:
Investments ................................................ (35,752,973)
Swaps ...................................................... (929,630)
Foreign currency ........................................... (39,462)
--------------
(36,722,065)
--------------
Total realized and unrealized loss ............................ (45,851,971)
--------------
Net Decrease in Net Assets Resulting from Operations .......... $ (20,009,886)
==============
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 13
================================================================================
Statements of Changes in Net Assets
Year Ended May 31,
------------------------------
Increase (Decrease) in Net Assets: 2008 2007
- --------------------------------------------------------------------------------------------------------------------------------
Operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income ......................................................................... $ 25,842,085 $ 25,185,992
Net realized gain (loss) ...................................................................... (9,129,906) 4,210,914
Net change in unrealized appreciation/depreciation ............................................ (36,722,065) 12,903,751
------------------------------
Net increase (decrease) in net assets resulting from operations ............................... (20,009,886) 42,300,657
------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Dividends to Shareholders From
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income ......................................................................... (26,113,293) (23,238,405)
------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ....................................................... (46,123,179) 19,062,252
Beginning of year ............................................................................. 313,821,409 294,759,157
------------------------------
End of year ................................................................................... $ 267,698,230 $ 313,821,409
==============================
End of year undistributed net investment income ............................................... $ 5,504,375 $ 5,713,430
==============================
================================================================================================================================
Statement of Cash Flows
Year Ended May 31, 2008
- --------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Operating Activities
- --------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations .......................................................... $ (20,009,886)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating
activities:
Decrease in receivables ................................................................................. 2,034,283
Increase in prepaid expenses and other assets ........................................................... (42,467)
Decrease in other liabilities ........................................................................... (222,259)
Net realized and unrealized loss ........................................................................ 46,668,807
Amortization of premium and discount on investments ..................................................... (156,871)
Paid-in-kind income ..................................................................................... (526,454)
Unrealized loss on foreign currency ..................................................................... (39,462)
Proceeds from sales and paydowns of long-term securities ...................................................... 190,268,817
Purchases of long-term securities ............................................................................. (132,716,283)
Net proceeds from sales of short-term investments ............................................................. 6,428,611
--------------
Net cash provided by operating activities ..................................................................... 91,686,836
--------------
- --------------------------------------------------------------------------------------------------------------------------------
Cash Used for Financing Activities
- --------------------------------------------------------------------------------------------------------------------------------
Cash receipts from loan ....................................................................................... 74,500,000
Cash payments on loan ......................................................................................... (136,000,000)
Cash dividends paid ........................................................................................... (26,103,776)
--------------
Net cash used for financing activities ........................................................................ (87,603,776)
--------------
- --------------------------------------------------------------------------------------------------------------------------------
Cash Impact from Foreign Currency Fluctuations
- --------------------------------------------------------------------------------------------------------------------------------
Cash impact from foreign currency fluctuations ................................................................ (17,657)
--------------
- --------------------------------------------------------------------------------------------------------------------------------
Cash
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in cash .......................................................................................... 4,065,403
Cash at beginning of year ..................................................................................... 965,262
--------------
Net cash and foreign currency at end of year .................................................................. $ 5,030,665
==============
- --------------------------------------------------------------------------------------------------------------------------------
Cash Flow Information
- --------------------------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest ........................................................................ $ 4,295,816
==============
See Notes to Financial Statements.
14 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Financial Highlights
Year Ended May 31,
-------------------------------------------------------
2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................................... $ 9.07 $ 8.52 $ 8.53 $ 8.48 $ 8.01
-------------------------------------------------------
Net investment income(1) ................................................. 0.75 0.73 0.74 0.87 0.91
Net realized and unrealized gain (loss) .................................. (1.32) 0.49 0.02 0.07 0.56
-------------------------------------------------------
Net increase (decrease) from investment operations ....................... (0.57) 1.22 0.76 0.94 1.47
-------------------------------------------------------
Dividends from net investment income ..................................... (0.76) (0.67) (0.77) (0.89) (1.00)
-------------------------------------------------------
Net asset value, end of year ............................................. $ 7.74 $ 9.07 $ 8.52 $ 8.53 $ 8.48
=======================================================
Market price, end of year ................................................ $ 7.28 $ 8.47 $ 7.42 $ 8.46 $ 8.23
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Return(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ................................................. (5.49%) 15.60% 9.75% 11.31% 18.65%
=======================================================
Based on market price .................................................... (4.81%) 23.96% (3.63%) 13.75% 6.75%
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses after fees paid indirectly and excluding
interest expense ...................................................... 0.83% 0.91% 0.90% 0.87% 0.91%
=======================================================
Total expenses after fees paid indirectly ................................ 2.33% 3.25% 2.39% 1.69% 1.39%
=======================================================
Total expenses ........................................................... 2.33% 3.25% 2.39% 1.69% 1.39%
=======================================================
Net investment income .................................................... 9.15% 8.36% 8.55% 9.85% 10.72%
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000) ............................................ $267,698 $313,821 $294,759 $294,218 $291,654
=======================================================
Portfolio turnover ....................................................... 38% 62% 57% 57% 83%
=======================================================
Amount of loan outstanding, end of year (000) ............................ $ 64,700 $126,200 $127,700 $100,600 $100,400
=======================================================
Average amount of loan outstanding during the year (000) ................. $ 81,598 $125,974 $101,539 $104,938 $101,764
=======================================================
Asset coverage, end of year, per $1,000 of loan outstanding .............. $ 5,138 $ 3,487 $ 3,308 $ 3,925 $ 3,905
=======================================================
(1) Based on average shares outstanding.
(2) Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns.
Total investment returns exclude the effects of sales charges.
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 15
================================================================================
Notes to Financial Statements
1. Significant Accounting Policies:
BlackRock Corporate High Yield Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
closed-end management investment company. The Fund's financial statements are
prepared in conformity with accounting principles generally accepted in the
United States of America, which may require the use of management accruals and
estimates. Actual results may differ from these estimates. The Fund determines
and makes available for publication the net asset value of its Common Stock on a
daily basis.
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of Investments: The Fund values its corporate bond investments on the
basis of last available bid price or current market quotations provided by
dealers or pricing services selected under the supervision of the Fund's Board
of Directors (the "Board"). 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 a pricing service. In determining the value of a particular
investment, pricing services may use certain information with respect to
transactions in such investments, quotations from dealers, pricing matrixes,
market transactions in comparable investments, various relationships observed in
the market between investments, and calculated yield measures based on valuation
technology commonly employed in the market for such investments. Swap agreements
are valued by quoted fair values received daily by the Fund's pricing service.
Short-term securities are valued at amortized cost. Investments in open-end
investment companies are valued at net asset value each business day.
Equity investments traded on a recognized securities exchange or on the NASDAQ
Global Market System are valued at the last reported sale price that day or the
NASDAQ official closing price, if applicable. Equity investments traded on a
recognized securities exchange for which there were no sales on that day are
valued at the last available bid price.
Exchange-traded options are valued at the mean between the last bid and ask
prices at the close of the options market in which the options trade.
Over-the-counter ("OTC") options are valued by an independent pricing service
using a mathematical model that incorporates a number of market data factors.
In the event that application of these methods of valuation results in a price
for an investment which is deemed not to be representative of the market value
of such investment, the investment will be valued by a method approved by the
Board as reflecting fair value ("Fair Value Assets"). When determining the price
for Fair Value Assets, the investment advisor and/or sub-advisor seeks to
determine the price that the Fund might reasonably expect to receive from the
current sale of that asset in an arm's-length transaction. Fair value
determinations shall be based upon all available factors that the investment
advisor and/or subadvisor deems relevant. The pricing of all Fair Value Assets
is subsequently reported to the Board or a committee thereof.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of business on the New York Stock Exchange
("NYSE"). The values of such securities used in computing the net assets of the
Fund are determined as of such times. Foreign currency exchange rates will be
determined as of the close of business on the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of business on the
NYSE that may not be reflected in the computation of the Fund's net assets. 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 may be valued at their fair value as
determined in good faith by the Board or by the investment advisor using a
pricing service and/or procedures approved by the Board.
Derivative Financial Instruments: The Fund may engage in various portfolio
investment strategies to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise if the value of the contract decreases due to an
unfavorable change in the price of the underlying security or if the
counterparty does not perform under the contract.
o Forward foreign currency contracts -- The Fund may enter into forward
foreign currency contracts as a hedge against either specific transactions
or portfolio positions. Forward currency contracts, when used by the Fund,
help to manage the overall exposure to the foreign currency backing some
of the investments held by the Fund. The contract is marked-to-market
daily and the change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed.
o 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
gain or loss to the extent the cost of the closing transaction exceeds the
premium received or paid).
16 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Notes to Financial Statements (continued)
A call option gives the purchaser of the option the right (but not the
obligation) to buy, and obligates the seller to sell (when the option is
exercised), the underlying position at the exercise price at any time or
at a specified time during the option period. A put option gives the
holder the right to sell and obligates the writer to buy the underlying
position at the exercise price at any time or at a specified time during
the option period.
o Credit default swaps -- The Fund may invest in credit default swaps, which
are agreements in which one party pays fixed periodic payments to a
counterparty in consideration for a guarantee from the counter-party to
make a specific payment should a negative credit event take place. 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). When the swap is
terminated, the Fund will record a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contract, if any.
Foreign Currency Transactions: Foreign currency amounts are translated into
United States dollars on the following basis: (i) market value of investment
securities, assets and liabilities at the current rate of exchange; and (ii)
purchases and sales of investment securities, income and expenses at the rates
of exchange prevailing on the respective dates of such transactions.
The Fund reports foreign currency related transactions as components of realized
gains for financial reporting purposes, whereas such components are treated as
ordinary income for federal income tax purposes.
Floating Rate Loans: The Fund invests in floating rate loans, which are
generally non-investment grade, made by banks, other financial institutions and
privately and publicly offered corporations. Floating rate loans generally pay
interest at rates that are periodically predetermined 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 certificate of deposit rate. The Fund considers these investments
to be investments in debt securities for purposes of its investment policies.
The Fund earns and/or pays facility and other fees on floating rate loans. Other
fees earned/paid include commitment, amendment, consent, commissions and
prepayment penalty fees. Facility, amendment and consent fees are typically
amortized as premium and/or accreted as discount over the term of the loan.
Commitment, commission and various other fees are recorded as income or expense.
Prepayment penalty fees are recorded as gains or losses. When the Fund buys a
floating rate loan it may receive a facility fee and when it sells a floating
rate loan it may pay a facility fee. On an ongoing basis, a Fund may receive a
commitment fee based on the undrawn portion of the underlying line of credit
portion of a floating rate loan. In certain circumstances, a Fund may receive a
prepayment penalty fee upon the prepayment of a floating rate loan by a
borrower. Other fees received by a Fund may include covenant waiver fees and
covenant modification fees.
The Fund may invest in multiple series or tranches of a loan. A different series
or tranche may have varying terms and carry different associated risks.
Floating rate loans are usually freely callable at the issuer's option. The Fund
may invest in such loans in the form of participations in loans
("Participations") and assignments of all or a portion of loans from third
parties. Participations typically will result in the Fund having a contractual
relationship only with the lender, not with the borrower.
The Fund will have the right to receive payments of principal, interest and any
fees to which it is entitled only from the lender selling the Participation and
only upon receipt by the lender of the payments from the borrower. In connection
with purchasing Participations, the Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
loans, nor any rights of offset against the borrower, and the Fund may not
benefit directly from any collateral supporting the loan in which it has
purchased the Participation.
As a result, the Fund will assume the credit risk of both the borrower and the
lender that is selling the Participation. The Fund's investments in loan
participation interests involve the risk of insolvency of the financial
intermediaries who are parties to the transactions. In the event of the
insolvency of the lender selling the Participation, the Fund may be treated as a
general creditor of the lender and may not benefit from any offset between the
lender and the borrower.
Capital Trusts: These securities are typically issued by corporations, generally
in the form of interest-bearing notes with preferred securities characteristics,
or by an affiliated business trust of a corporation, generally in the form of
beneficial interests in subordinated debentures or similarly structured
securities. The securities can be structured as either fixed or adjustable
coupon securities that can have either a perpetual or stated maturity date.
Dividends can be deferred without creating an event of default or acceleration,
although maturity cannot take place unless all cumulative payment obligations
have been met. The deferral of payments does not affect the purchase or sale of
these securities in the open market. Payments on these securities are treated as
interest rather than dividends for Federal income tax purposes. These securities
can have a rating that is slightly below that of the issuing company's senior
debt securities.
Preferred Stock: The Fund may invest in preferred stocks. Preferred stock has a
preference over common stock in liquidation (and generally in receiving
dividends as well) but is subordinated to the liabilities of the issuer in all
respects. As a general rule, the market value of preferred stock
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 17
================================================================================
Notes to Financial Statements(continued)
with a fixed dividend rate and no conversion element varies inversely with
interest rates and perceived credit risk, while the market price of convertible
preferred stock generally also reflects some element of conversion value.
Because preferred stock is junior to debt securities and other obligations of
the issuer, deterioration in the credit quality of the issuer will cause greater
changes in the value of a preferred stock than in a more senior debt security
with similar stated yield characteristics. Unlike interest payments on debt
securities, preferred stock dividends are payable only if declared by the
issuer's board of directors. Preferred stock also may be subject to optional or
mandatory redemption provisions.
Segregation: In cases in which the 1940 Act and the interpretive positions of
the Securities and Exchange Commission ("SEC") require that the Fund segregate
assets in connection with certain investments (e.g., futures) and certain
borrowings, the Fund will, consistent with certain interpretive letters issued
by the SEC, designate on its books and records cash or other liquid debt
securities having a market value at least equal to the amount that would
otherwise be required to be physically segregated.
Investment Transactions and Investment Income: Investment transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Dividends from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Fund has determined the ex-dividend date.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
Dividends and Distributions: Dividends from net investment income are declared
and paid monthly. Distributions of capital gains are recorded on the ex-dividend
dates.
Income Taxes: It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Under the applicable
foreign tax laws, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
Effective November 30, 2007, the Fund implemented Financial Accounting Standards
Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including investment companies, before being
measured and recognized in the financial statements. The investment advisor has
evaluated the application of FIN 48 to the Fund, and has determined that the
adoption of FIN 48 does not have a material impact on the Fund's financial
statements. The Fund files U.S. federal and various state and local tax returns.
No income tax returns are currently under examination. The statute of
limitations on the Fund's U.S. federal tax returns remain open for the years
ended May 31, 2005 through May 31, 2007. The statutes of limitations on the
Fund's state and local tax returns may remain open for an additional year
depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. FAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. FAS 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities. The impact on the Fund's financial statement disclosures, if any,
is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued and is effective for fiscal years
beginning after November 15, 2008. FAS 161 is intended to improve financial
reporting for derivative instruments by requiring enhanced disclosure that
enables investors to understand how and why an entity uses derivatives, how
derivatives are accounted for, and how derivative instruments affect an entity's
results of operations and financial position. The impact on the Fund's financial
statement disclosures, if any, is currently being assessed.
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan:
Under the deferred compensation plan approved by the Fund's Board,
non-interested Directors ("Independent Directors") may defer a portion of their
annual complex-wide compensation. Deferred amounts earn an approximate return as
though equivalent dollar amounts have been invested in common shares of other
certain BlackRock Closed-End Funds selected by the Independent Directors. This
has approximately the same economic effect for the Independent Directors as if
the Independent Directors had invested the deferred amounts directly in other
certain BlackRock Closed-End Funds.
18 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Notes to Financial Statements (continued)
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Fund. The
Fund may, however, elect to invest in common stock of other certain BlackRock
Closed-End Funds selected by the Independent Directors in order to match its
deferred compensation obligations.
Other: Expenses directly related to the Fund are charged to that Fund. Other
operating expenses shared by several funds are pro-rated among those funds on
the basis of relative net assets or other appropriate methods.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Fund entered into an Investment Advisory Agreement with BlackRock Advisors,
LLC (the "Advisor"), an indirect, wholly owned subsidiary of BlackRock, Inc. to
provide investment advisory and administration services. Merrill Lynch & Co.,
Inc. and The PNC Financial Services Group, Inc. are principal owners of
BlackRock, Inc.
The Advisor is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays the Advisor a monthly fee at an annual rate of 0.50% of the average daily
value of the Fund's net assets plus the proceeds of any outstanding borrowings
used for leverage.
The Advisor has entered into a separate sub-advisory agreement with BlackRock
Financial Management, Inc. ("BFM"), an affiliate of the Advisor, under which the
Advisor pays BFM, for services it provides, a monthly fee that is an annual
percentage of the investment advisory fee paid by the Fund to the Advisor.
For the year ended May 31, 2008, the Fund reimbursed the Advisor $5,078, for
certain accounting services, which is included in accounting services expenses
in the Statement of Operations.
Pursuant to the terms of the custody agreement, custodian fees may be reduced by
amounts calculated on uninvested cash balances, which are shown on the Statement
of Operations as fees paid indirectly.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the year ended May 31, 2008 were $136,377,041 and $188,662,485,
respectively.
4. Capital Share Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, par value
$0.10, all of which were initially classified as Common Stock. The Board is
authorized, however, to classify and reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.
Shares issued and outstanding during the years ended May 31, 2008 and May 31,
2007 remained constant.
5. Short-Term Borrowings:
On May 16, 2008, the Fund renewed its revolving credit and security agreement
funded by a commercial paper asset securitization program with Citicorp North
America, Inc. ("Citicorp") as agent, certain secondary backstop lenders, and
certain asset securitization conduits as lenders (the "Lenders"). The agreement
was renewed for one year and has a maximum limit of $135,000,000. Under the
Citicorp program, the conduits will fund advances to the Fund through the
issuance of highly rated commercial paper. As security for its obligations to
the Lenders under the revolving securitization facility, the Fund has granted a
security interest in substantially all of its assets to and in favor of the
Lenders. The interest rate on the Fund's borrowings is based on the interest
rate carried by the commercial paper plus a program fee. The Fund pays
additional borrowing costs including a backstop commitment fee. These amounts
are shown on the Statement of Operations as borrowing costs.
For the year ended May 31, 2008, the daily weighted average interest rate was
5.16%.
6.Income Tax Information:
Reclassification: Accounting principles generally accepted in the United States
of America require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting. Accordingly, during
the current year, $10,953,804 has been reclassified between paid-in capital in
excess of par and accumulated net realized losses and $62,153 has been
reclassified between accumulated net realized losses and undistributed net
investment income as a result of permanent differences attributable to
expiration of capital loss carry-forwards, amortization methods on fixed income
securities, and foreign currency transactions. These reclassifications have no
effect on net assets or net asset values per share.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 19
================================================================================
Notes to Financial Statements (concluded)
The tax character of distributions paid during the fiscal years ended May 31,
2008 and May 31, 2007 was as follows:
- -----------------------------------------------------------------------------
5/31/2008 5/31/2007
- -----------------------------------------------------------------------------
Distributions paid from:
Ordinary income .............................. $26,113,293 $23,238,405
-------------------------
Total taxable distributions ..................... $26,113,293 $23,238,405
=========================
As of May 31, 2008, the components of accumulated losses on a tax basis were as
follows:
- --------------------------------------------------------------------------------
Undistributed ordinary net income .......................... $ 5,942,988
Undistributed long-term net capital gains .................. --
--------------
Total undistributed net earnings ........................... 5,942,988
Capital loss carryforward .................................. (143,979,525)*
Net unrealized losses ...................................... (34,109,839)**
--------------
Total accumulated net losses ............................... $ (172,146,376)
==============
* As of May 31, 2008, the Fund had a capital loss carryforward of
$143,979,525, of which $25,513,921 expires in 2009, $33,478,307 expires in
2010, $77,885,783 expires in 2011, $6,647,369 expires in 2012 and $454,145
expires in 2016. This amount will be available to offset future realized
capital 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, the accounting
for swap agreements and other book/tax temporary differences.
7. Subsequent Event:
The Fund paid a net investment income dividend in the amount of $0.061000 per
share on June 30, 2008 to shareholders of record on June 16, 2008.
20 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock Corporate High Yield
Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BlackRock Corporate High Yield Fund, Inc. (the
"Fund") as of May 31, 2008, and the related statements of operations and cash
flows 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 May
31, 2008, by correspondence with the custodian and financial intermediaries;
where replies were not received from financial intermediaries, 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 Corporate High Yield Fund, Inc. as of May 31, 2008, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 28, 2008
- --------------------------------------------------------------------------------
Important Tax Information (Unaudited)
- --------------------------------------------------------------------------------
The following information is provided with respect to the ordinary income
distributions paid monthly by BlackRock Corporate High Yield Fund, Inc. for the
fiscal year ended May 31, 2008:
- --------------------------------------------------------------------------------
Interest-Related Dividends for Non-U.S. Residents
- --------------------------------------------------------------------------------
Month(s) Paid: June 2007 - July 2007 ............................... 86.37%*
August 2007 ......................................... 86.31%*
September 2007 - January 2008 ....................... 85.24%*
February 2008 - May 2008 ............................ 87.39%*
- --------------------------------------------------------------------------------
* Represents the portion of the taxable ordinary income dividends eligible
for exemption from U.S. withholding tax for nonresident aliens and foreign
corporations.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 21
================================================================================
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
The Board of Directors (the "Board," the members of which are referred to as
"Directors") of the BlackRock Corporate High Yield Fund, Inc. (the "Fund") met
in April and May 2008 to consider approving the continuation of the Fund's
investment advisory agreement (the "Advisory Agreement") with BlackRock
Advisors, LLC (the "Advisor"), the Fund's investment adviser. The Board also
considered the approval of the Fund's subadvisory agreement (the "Subadvisory
Agreement" and, together with the "Advisory Agreement," the "Agreements")
between the Advisor and BlackRock Financial Management Inc. (the "Subadvisor").
The Advisor and the Subadvisor are collectively referred to herein as the
"Advisors" and, together with BlackRock, Inc., "BlackRock."
Activities and Composition of the Board
The Board of Directors of the Fund consists of thirteen individuals, eleven of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act of 1940 (the "1940 Act") (the "Independent Directors"). The
Directors are responsible for the oversight of the operations of the Fund and
perform the various duties imposed on the directors of investment companies by
the 1940 Act. The Independent Directors have retained independent legal counsel
to assist them in connection with their duties. The Chairman of the Board is an
Independent Director. The Board has established four standing committees: an
Audit Committee, a Governance and Nominating Committee, a Compliance Committee
and a Performance Oversight Committee.
Advisory Agreement and Subadvisory Agreement
Upon the consummation of the combination of BlackRock, Inc.'s investment
management business with Merrill Lynch & Co., Inc.'s investment management
business, including Merrill Lynch Investment Managers, L.P., and certain
affiliates, the Fund entered into the Advisory Agreement and the Subadvisory
Agreement, each with an initial two-year term. Consistent with the 1940 Act,
after the Advisory and Subadvisory Agreement's respective initial two-year term,
the Board is required to consider the continuation of the Fund's Advisory
Agreement and Subadvisory Agreement on an annual basis. In connection with this
process, the Board assessed, among other things, the nature, scope and quality
of the services provided to the Fund by the personnel of BlackRock and its
affiliates, including investment management, administrative services, secondary
market support services, oversight of fund accounting, and assistance in meeting
legal and regulatory requirements. The Board also received and assessed
information regarding the services provided to the Fund by certain unaffiliated
service providers.
Throughout the year, the Board also considered a range of information in
connection with its oversight of the services provided by BlackRock and its
affiliates. Among the matters the Board considered were: (a) investment
performance for one, three and five years, as applicable, against peer funds, as
well as senior management and portfolio managers' analysis of the reasons for
underperformance, if applicable; (b) fees, including advisory and other fees
paid to BlackRock and its affiliates by the Fund, such as transfer agency fees
and fees for marketing and distribution; (c) Fund operating expenses paid to
third parties; (d) the resources devoted to and compliance reports relating to
the Fund's investment objective, policies and restrictions; (e) the Fund's
compliance with its Code of Ethics and compliance policies and procedures; (f)
the nature, cost and character of non-investment management services provided by
BlackRock and its affiliates; (g) BlackRock's and other service providers'
internal controls; (h) BlackRock's implementation of the proxy voting guidelines
approved by the Board; (i) the use of equity brokerage commissions and execution
quality; (j) valuation and liquidity procedures; and (k) reviews of BlackRock's
business, including BlackRock's response to the increasing scale of its
business.
Board Considerations in Approving the Advisory Agreement and Subadvisory
Agreement
To assist the Board in its evaluation of the Agreements, the Directors received
information from BlackRock in advance of the April 22, 2008 meeting which
detailed, among other things, the organization, business lines and capabilities
of the Advisors, including: (a) the responsibilities of various departments and
key personnel and biographical information relating to key personnel; (b)
financial statements for BlackRock; (c) the advisory and/or administrative fees
paid by the Fund to the Advisors, including comparisons, compiled by Lipper, an
independent third party, with the management fees of funds with similar
investment objectives ("Peers"); (d) the profitability of BlackRock and certain
industry profitability analyses for advisers to registered investment companies;
(e) the expenses of BlackRock in providing various services; (f) non-investment
advisory reimbursements, if applicable, and "fallout" benefits to BlackRock; (g)
economies of scale, if any, generated through the Advisors' management of all of
the BlackRock closed-end funds (the "Fund Complex"); (h) the expenses of the
Fund, including comparisons of the Fund's expense ratios (both before and after
any fee waivers) with the expense ratios of its Peers; and (i) the Fund's
performance for the past one-, three- and five-year periods, when applicable, as
well as the Fund's performance compared to its Peers.
The Board also considered other matters it deemed important to the approval
process, where applicable, such as payments made to BlackRock or its affiliates
relating to the distribution of Fund shares, services related to the valuation
and pricing of Fund portfolio holdings, allocation of fund brokerage fees
(including the related benefits to BlackRock of "soft dollars") and direct and
indirect benefits to BlackRock and its affiliates from their relationship with
the Fund.
In addition to the foregoing materials, independent legal counsel to the
Independent Directors provided a legal memorandum outlining, among other things,
the duties of the Board under the 1940 Act, as well as the general principles of
relevant law in reviewing and approving advisory
22 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
contracts, the requirements of the 1940 Act in such matters, an adviser's
fiduciary duty with respect to advisory agreements and compensation, and the
standards used by courts in determining whether investment company boards of
directors have fulfilled their duties and the factors to be considered by boards
in voting on advisory agreements.
The Independent Directors reviewed this information and discussed it with
independent legal counsel prior to the meeting on April 22, 2008. At the Board
meeting on April 22, 2008, BlackRock made a presentation to and responded to
questions from the Board. Following the meeting on April 22, 2008, the Board
presented BlackRock with questions and requests for additional information.
BlackRock responded to these requests with additional written materials provided
to the Directors prior to the meetings on May 29 and 30, 2008. At the Board
meeting on May 29 and 30, 2008, BlackRock responded to further questions from
the Board. In connection with BlackRock's presentations, the Board considered
each Agreement and, in consultation with independent legal counsel, reviewed the
factors set out in judicial decisions and Securities and Exchange Commission
("SEC") statements relating to the renewal of the Agreements.
I. Matters Considered by the Board
In connection with its deliberations with respect to the Agreements, the Board
considered all factors it believed relevant with respect to the Fund, including
the following: the nature, extent and quality of the services provided by the
Advisors; the investment performance of the Fund; the costs of the services to
be provided and profits to be realized by the Advisors and their affiliates from
their relationship with the Fund; the extent to which economies of scale would
be realized as the Fund Complex grows; and whether BlackRock realizes other
benefits from its relationship with the Fund.
A. Nature, Extent and Quality of the Services: In evaluating the nature, extent
and quality of the Advisors' services, the Board reviewed information concerning
the types of services that the Advisors provide and are expected to provide to
the Fund, narrative and statistical information concerning the Fund's
performance record and how such performance compares to the Fund's Peers,
information describing BlackRock's organization and its various departments, the
experience and responsibilities of key personnel and available resources. The
Board noted the willingness of the personnel of BlackRock to engage in open,
candid discussions with the Board. The Board further considered the quality of
the Advisors' investment process in making portfolio management decisions.
In addition to advisory services, the Directors considered the quality of the
administrative or non-investment advisory services provided to the Fund. In this
regard, the Advisors and their affiliates provided the Fund with such
administrative, transfer agency, shareholder and other services, as applicable
(exclusive of, and in addition to, any such services provided by others for the
Fund), and officers and other personnel as are necessary for the operations of
the Fund. In addition to investment management services, the Advisors and their
affiliates provided the Fund with services such as: preparing shareholder
reports and communications, including annual and semi-annual financial
statements and Fund websites; communications with analysts to support secondary
market trading; assisting with daily accounting and pricing; preparing periodic
filings with regulators and stock exchanges; overseeing and coordinating the
activities of other service providers; administering and organizing Board
meetings and preparing the Board materials for such meetings; providing legal
and compliance support (such as helping to prepare proxy statements and
responding to regulatory inquiries); and performing other Fund administrative
tasks necessary for the operation of the Fund (such as tax reporting and
fulfilling regulatory filing requirements). The Board considered the Advisors'
policies and procedures for assuring compliance with applicable laws and
regulations.
B. The Investment Performance of the Fund and BlackRock: As previously noted,
the Board received performance information regarding the Fund and its Peers.
Among other things, the Board received materials reflecting the Fund's historic
performance and the Fund's performance compared to its Peers. More specifically,
the Fund's one-, three- and five-year total returns (when applicable) were
evaluated relative to its respective Peers (including the Peers' median
performance).
The Board reviewed a narrative analysis of the Peer rankings prepared by Lipper
and summarized by BlackRock at the Board's request. The summary placed the Peer
rankings into context by analyzing various factors that affect these
comparisons.
The Board noted that in general the Fund performed better than its Peers in that
its performance was at or above the median in at least two for the one-, three-
and five-year periods reported.
After considering this information, the Boards concluded that the performance of
the Fund, in light of and after considering the other facts and circumstances
applicable to the Fund, supports a conclusion that the Fund's Agreements should
be renewed.
C. Consideration of the Advisory Fees and the Cost of the Services and Profits
to be Realized by BlackRock and its Affiliates from the Relationship with the
Fund: In evaluating the management fees and expenses that a Fund is expected to
bear, the Board considered the Fund's current management fee structure and the
Fund's expense ratios in absolute terms as well as relative to the fees and
expense ratios of its applicable Peers. The Board, among other things, reviewed
comparisons of the Fund's gross management fees before and after any applicable
reimbursements and fee waivers and total expense ratios before and after any
applicable waivers with those of its applicable Peers. The Board also reviewed a
narrative analysis of the Peer rankings prepared by Lipper and summarized by
BlackRock at the request of the Board. This summary placed the Peer rankings
into context by analyzing various factors that affect these comparisons.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 23
================================================================================
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
The Board noted that the Fund paid contractual management fees lower than or
equal to the median contractual fees paid by its Peers. This comparison was made
without giving effect to any expense reimbursements or fee waivers.
The Board also compared the management fees charged and services provided to the
closed-end investment companies managed by the Advisors to the management fees
charged by the Advisors to other types of clients (such as open-end investment
companies and separately managed institutional accounts) in similar investment
categories. The Board noted certain differences in services provided and costs
incurred by the Advisors with respect to closed-end funds compared to separately
managed accounts and open-end funds in general and the reasons for such
differences.
In connection with the Board's consideration of the fee and expense information,
the Board reviewed the considerable investment management experience of the
Advisors and considered the high level of investment management, administrative
and other services provided by the Advisors. In light of these factors and the
other facts and circumstances applicable to the Fund, the Board concluded that
the fees paid and level of expenses incurred by the Fund under its Agreements
support a conclusion that the Fund's Agreements should be renewed.
D. Profitability of BlackRock: The Board also considered BlackRock's
profitability in conjunction with its review of fees. The Board reviewed
BlackRock's profitability with respect to the Fund Complex and other fund
complexes managed by the Advisors. In reviewing profitability, the Board
recognized that one of the most difficult issues in determining profitability is
establishing a method of allocating expenses. The Board also reviewed
BlackRock's assumptions and methodology of allocating expenses, noting the
inherent limitations in allocating costs among various advisory products. The
Board also recognized that individual fund or product line profitability of
other advisors is generally not publicly available.
The Board recognized that profitability may be affected by numerous factors
including, among other things, the types of funds managed, expense allocations
and business mix, and therefore comparability of profitability is somewhat
limited. Nevertheless, to the extent available, the Board considered BlackRock's
operating margin compared to the operating margin estimated by BlackRock for a
leading investment management firm whose operations consist primarily of
advising closed-end funds. The comparison indicated that BlackRock's operating
margin was approximately the same as the operating margin of such firm.
In evaluating the reasonableness of the Advisors' compensation, the Board also
considered any other revenues paid to the Advisors, including partial
reimbursements paid to the Advisors for certain non-investment advisory
services, if applicable. The Board noted that these payments were less than the
Advisors' costs for providing these services. The Board also considered indirect
benefits (such as soft dollar arrangements) that the Advisors and their
affiliates are expected to receive that are attributable to their management of
the Fund.
The Board concluded that BlackRock's profitability, in light of all the other
facts and circumstances applicable to the Fund, supports a conclusion that the
Fund's Agreements should be renewed.
E. Economies of Scale: In reviewing the Fund's fees and expenses, the Board
examined the potential benefits of economies of scale, and whether any economies
of scale should be reflected in the Fund's fee structures, for example through
the use of breakpoints for the Fund or the Fund Complex. In this regard, the
Board reviewed information provided by BlackRock, noting that most closed-end
fund complexes do not have fund-level breakpoints because closed-end funds
generally do not experience substantial growth after their initial public
offering and each fund is managed independently consistent with its own
investment objectives. The Board noted that only three closed-end funds in the
Fund Complex have breakpoints in their respective fee structures. Information
provided by Lipper also revealed that only one closed-end fund complex used a
complex-level breakpoint structure.
24 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(concluded)
F. Other Factors: In evaluating fees, the Board also considered indirect
benefits or profits the Advisors or their affiliates may receive as a result of
their relationships with the Fund ("fall-out benefits"). The Directors,
including the Independent Directors, considered the intangible benefits that
accrue to the Advisors and their affiliates by virtue of their relationships
with the Fund, including potential benefits accruing to the Advisors and their
affiliates as a result of participating in offerings of the Fund's shares,
potentially stronger relationships with members of the broker-dealer community,
increased name recognition of the Advisors and their affiliates, enhanced sales
of other investment funds and products sponsored by the Advisors and their
affiliates and increased assets under management which may increase the benefits
realized by the Advisors from soft dollar arrangements with broker-dealers. The
Board also considered the unquantifiable nature of these potential benefits.
II. Conclusion with Respect to the Agreements
In reviewing the Agreements, the Directors did not identify any single factor
discussed above as all-important or controlling and different Directors may have
attributed different weights to the various factors considered. The Directors,
including the Independent Directors, unanimously determined that each of the
factors described above, in light of all the other factors and all of the facts
and circumstances applicable to the Fund, was acceptable for the Fund and
supported the Directors' conclusion that the terms of each Agreement were fair
and reasonable, that the Fund's fees are reasonable in light of the services
provided to the Fund and that each Agreement should be approved.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 25
================================================================================
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by Computershare Trust
Company, N.A. (the "Plan Agent"). Under the Plan, whenever the Fund declares a
dividend, participants in the Plan will receive the equivalent in shares of
Common Stock of the Fund. The Plan Agent will acquire the shares for the
participant's account either (i) through receipt of additional unissued but
authorized shares of the Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agent will invest the dividend amount in newly issued
shares. If the Fund's net asset value per share is greater than the market price
per share (a condition often referred to as a "market discount"), the Plan Agent
will invest the dividend amount by purchasing on the open market additional
shares. If the Plan Agent is unable to invest the full dividend amount in open
market purchases, or if the market discount shifts to a market premium during
the purchase period, the Plan Agent will invest any uninvested portion in newly
issued shares. The shares acquired are credited to each shareholder's account.
The amount credited is determined by dividing the dollar amount of the dividend
by either (i) when the shares are newly issued, the net asset value per share on
the date the shares are issued or (ii) when shares are purchased in the open
market, the average purchase price per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Fund's shares are trading at a
market premium, the Fund issues shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at Computershare
Trust Company, N.A., P.O. Box 43010, Providence, RI 02940-3010, Telephone: (800)
426-5523.
26 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Officers and Directors
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director(2) During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Cavanagh Chairman of Since 2007 Trustee, Aircraft Finance Trust 113 Funds Arch Chemical
40 East 52nd Street the Board since 1999; Director, The Guardian 110 Portfolios (chemical and
New York, NY 10022 and Director Life Insurance Company of America allied products)
1946 since 1998; Chairman and Trustee,
Educational Testing Service since
1997; Director, The Fremont Group
since 1996; Formerly President and
Chief Executive Officer of The
Conference Board, Inc. (global
business research organization)
from 1995 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Karen P. Robards Vice Chair of Since 2007 Partner of Robards & Company, LLC 112 Funds AtriCure, Inc.
40 East 52nd Street the Board, (financial advisory firm) since 109 Portfolios (medical
New York, NY 10022 Chair of 1987; Co-founder and Director of devices); Care
1950 the Audit the Cooke Center for Learning and Investment Trust,
Committee Development (a not-for-profit Inc.(health
and Director organization) since 1987; Formerly care REIT)
Director of Enable Medical Corp.
from 1996 to 2005; Formerly an
investment banker at Morgan Stanley
from 1976 to 1987.
- ------------------------------------------------------------------------------------------------------------------------------------
G. Nicholas Beckwith, III Director Since 2007 Chairman and Chief Executive 112 Funds None
40 East 52nd Street Officer, Arch Street Management, 109 Portfolios
New York, NY 10022 LLC (Beckwith Family Foundation)
1945 and various Beckwith property
companies since 2005; Chairman of
the Board of Directors, University
of Pittsburgh Medical Center since
2002; Board of Directors, Shady
Side Hospital Foundation since
1977; Board of Directors, Beckwith
Institute for Innovation In Patient
Care since 1991; Member, Advisory
Council on Biology and Medicine,
Brown University since 2002;
Trustee, Claude Worthington Benedum
Foundation (charitable foundation)
since 1989; Board of Trustees,
Chatham College since 1981; Board
of Trustees, University of
Pittsburgh since 2002; Emeritus
Trustee, Shady Side Academy since
1977; Formerly Chairman and
Manager, Penn West Industrial
Trucks LLC (sales, rental and
servicing of material handling
equipment) from 2005 to 2007;
Formerly Chairman, President and
Chief Executive Officer, Beckwith
Machinery Company (sales, rental
and servicing of construction and
equipment) from 1985 to 2005;
Formerly Board of Directors,
National Retail Properties (REIT)
from 2006 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Kent Dixon Director and Since 2007 Consultant/Investor since 1988. 113 Funds None
40 East 52nd Street Member of 110 Portfolios
New York, NY 10022 the Audit
1937 Committee
- ------------------------------------------------------------------------------------------------------------------------------------
Frank J. Fabozzi Director and Since 2007 Consultant/Editor of The Journal of 113 Funds None
40 East 52nd Street Member of Portfolio Management since 2006; 110 Portfolios
New York, NY 10022 the Audit Professor in the Practice of
1948 Committee Finance and Becton Fellow, Yale
University, School of Management,
since 2006; Formerly Adjunct
Professor of Finance and Becton
Fellow, Yale University from 1994
to 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Kathleen F. Feldstein Director Since 2007 President of Economics Studies, 113 Funds The McClatchy
40 East 52nd Street Inc. (private economic consulting 110 Portfolios Company
New York, NY 10022 firm) since 1987; Chair, Board of (publishing)
1941 Trustees, McLean Hospital since
2000; Member of the Corporation of
Partners Community Healthcare, Inc.
since 2005; Member of the
Corporation of Partners HealthCare
since 1995; Member of the
Corporation of Sherrill House
(healthcare) since 1990; Trustee,
Museum of Fine Arts, Boston since
1992; Member of the Visiting
Committee to the Harvard University
Art Museum since 2003; Trustee, The
Committee for Economic Development
(research organization) since
1990; Member of the Advisory Board
to the International School of
Business, Brandeis University since
2002; Formerly Director of Bell
South (communications) from 1998 to
2006; Formerly Director of Ionics
(water purification) from 1992 to
2005; Formerly Director of John
Hancock Financial Services from
1994 to 2003; Formerly Director of
Knight Ridder (media) from 1998 to
2006.
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 27
================================================================================
Officers and Directors (continued)
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director(2) During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Interested Directors(1) (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Flynn Director and Since 2007 Formerly Chief Financial Officer of 112 Funds None
40 East 52nd Street Member of JPMorgan & Co., Inc. from 1990 to 109 Portfolios
New York, NY 10022 the Audit 1995.
1939 Committee
- ------------------------------------------------------------------------------------------------------------------------------------
Jerrold B. Harris Director Since 2007 Trustee, Ursinus College since 112 Funds BlackRock-Kelso
40 East 52nd Street 2000; Director, Troemner LLC 109 Portfolios Capital Corp.
New York, NY 10022 (scientific equipment) since 2000.
1942
- ------------------------------------------------------------------------------------------------------------------------------------
R. Glenn Hubbard Director Since 2007 Dean of Columbia Business School 113 Funds ADP (data and
40 East 52nd Street since 2004; Columbia faculty member 110 Portfolios information
New York, NY 10022 since 1988; Formerly Co-Director of services);
1958 Columbia Business School's KKR Financial
Entrepreneurship Program from 1997 Corporation
to 2004; Visiting Professor at the (finance); Duke
John F. Kennedy School of Realty (real
Government at Harvard University estate);
and the Harvard Business School Metropolitan Life
since 1985 and at the University of Insurance Company
Chicago since 1994; Formerly (insurance);
Chairman of the U.S. Council of Information
Economic Advisers under the Services Group
President of the United States from (media/technology)
2001 to 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
W. Carl Kester Director and Since 2007 Mizuho Financial Group Professor of 112 Funds None
40 East 52nd Street Member of Finance, Harvard Business School; 109 Portfolios
New York, NY 10022 the Audit Deputy Dean for Academic Affairs
1951 Committee since 2006; Unit Head, Finance,
Harvard Business School from 2005
to 2006; Senior Associate Dean and
Chairman of the MBA Program of
Harvard Business School from 1999
to 2005; Member of the faculty of
Harvard Business School since 1981;
Independent Consultant since 1978.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. Salomon, Jr. Director and Since 1998 Formerly Principal of STI 112 Funds None
40 East 52nd Street Member of Management LLC (investment adviser) 109 Portfolios
New York, NY 10022 the Audit from 1994 to 2005.
1936 Committee
---------------------------------------------------------------------------------------------------------
(1) Directors serve until their resignation, removal or death, or until December 31 of the year in
which they turn 72.
(2) Following the combination of Merrill Lynch Investment Managers, L.P. ("MLIM") and BlackRock, Inc.
("BlackRock") in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were
realigned and consolidated into three new Fund boards in 2007. As a result, although the chart
shows certain directors as joining the Fund's board in 2007, each director first became a member of
the board of directors of other legacy MLIM or legacy BlackRock Funds as follows: G. Nicholas
Beckwith, III since 1999; Richard E. Cavanagh since 1994; Kent Dixon since 1988; Frank J. Fabozzi
since 1988; Kathleen F. Feldstein since 2005; James T. Flynn since 1996; Jerrold B. Harris since
1999; R. Glenn Hubbard since 2004; W. Carl Kester since 1998; Karen P. Robards since 1998 and
Robert S. Salomon, Jr. since 1996.
28 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Officers and Directors (concluded)
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director During Past Five Years Overseen Public Directorships
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Directors(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard S. Davis Director Since 2007 Managing Director, BlackRock, Inc. 185 Funds None
40 East 52nd Street since 2005; Formerly Chief 295 Portfolios
New York, NY 10022 Executive Officer, State Street
1945 Research & Management Company from
2000 to 2005; Formerly Chairman of
the Board of Trustees, State Street
Research Mutual Funds from 2000 to
2005; Formerly Chairman, SSR Realty
from 2000 to 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Henry Gabbay Director Since 2007 Consultant, BlackRock, Inc. since 184 Funds None
40 East 52nd Street 2007; Formerly Managing Director, 294 Portfolios
New York, NY 10022 BlackRock, Inc. from 1989 to 2007;
1947 Formerly Chief Administrative
Officer, BlackRock Advisors, LLC
from 1998 to 2007; Formerly
President of BlackRock Funds and
BlackRock Bond Allocation Target
Shares from 2005 to 2007; Formerly
Treasurer of certain closed-end
Funds in the BlackRock fund complex
from 1989 to 2006.
---------------------------------------------------------------------------------------------------------
(1) Messrs. Davis and Gabbay are both "interested persons," as defined in the Investment Company Act
of 1940, of the Fund based on their positions with BlackRock, Inc. and its affiliates. Directors
serve until their resignation, removal or death, or until December 31 of the year in which they
turn 72.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Name, Address Held with Time
and Year of Birth Fund Served Principal Occupation(s) During Past Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Officers(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Fund Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing
40 East 52nd Street President Director of Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund
New York, NY 10022 and Chief Asset Management, L.P. ("FAM") in 2006; First Vice President thereof from
1960 Executive 1997 to 2005; Treasurer thereof from 1999 to 2006 and Vice President
Officer thereof from 1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Anne F. Ackerley Vice Since 2007 Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer
40 East 52nd Street President of BlackRock's U.S. Retail Group since 2006; Head of BlackRock's Mutual
New York, NY 10022 Fund Group from 2000 to 2006; Merrill Lynch & Co., Inc. from 1984 to 1986
1962 and from 1988 to 2000, most recently as First Vice President and
Operating Officer of the Mergers and Acquisitions Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Neal J. Andrews Chief Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice
40 East 52nd Street Financial President and Line of Business Head of Fund Accounting and Administration
New York, NY 10022 Officer at PFPC Inc. from 1992 to 2006.
1966
- ------------------------------------------------------------------------------------------------------------------------------------
Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006;
40 East 52nd Street Formerly Assistant Treasurer of the MLIM/FAM-advised Funds from 2005 to
New York, NY 10022 2006; Director of MLIM Fund Services Group from 2001 to 2006.
1970
- ------------------------------------------------------------------------------------------------------------------------------------
Brian P. Kindelan Chief Since 2007 Chief Compliance Officer of the BlackRock-advised Funds since 2007;
40 East 52nd Street Compliance Anti-Money Laundering Officer of the Funds since 2007; Managing Director
New York, NY 10022 Officer of and Senior Counsel of BlackRock, Inc. since 2005; Director and Senior
1959 the Fund Counsel of BlackRock Advisors, Inc. from 2001 to 2004 and Vice President
and Senior Counsel thereof from 1998 to 2000; Formerly Senior Counsel of
The PNC Bank Corp. from 1995 to 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at
40 East 52nd Street BlackRock, Inc. since 2006; Formerly General Counsel (U.S.) of Goldman
New York, NY 10022 Sachs Asset Management, L.P. from 1993 to 2006.
1965
---------------------------------------------------------------------------------------------------------
(2) Officers of the Fund serve at the pleasure of the Board of Directors.
- --------------------------------------------------------------------------------
Custodian
JPMorgan Chase Bank, N.A.
Brooklyn, NY 11245
Transfer Agent
Computershare Trust
Company N.A.
Providence, RI 09240
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate,
Meagher & Flom LLP
New York, NY 10036
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 29
================================================================================
Additional Information
- --------------------------------------------------------------------------------
Fund Certification
- --------------------------------------------------------------------------------
The Fund listed for trading on the New York Stock Exchange ("NYSE") has filed
with the NYSE its annual chief executive officer certification regarding
compliance with the NYSE's listing standards. The Fund filed with the Securities
and Exchange Commission ("SEC") the certification of its chief executive officer
and chief financial officer required by section 302 of the Sarbanes-Oxley Act.
- --------------------------------------------------------------------------------
Availability of Quarterly Schedule of Investments
- --------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330. The Fund's Forms N-Q may also be obtained upon request
and without charge by calling (800) 441-7762.
- --------------------------------------------------------------------------------
Electronic Delivery
- --------------------------------------------------------------------------------
Electronic copies of most financial reports are available on the Fund's website
or shareholders can sign up for e-mail notifications of quarterly statements,
annual and semi-annual reports by enrolling in the Fund's electronic delivery
program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or
Brokerages:
Please contact your financial advisor to enroll. Please note that
not all investment advisors, banks or brokerages may offer this service.
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
The Fund does not make available copies of its Statements of Additional
Information because the Fund's shares are not continuously offered, which means
that the Statement of Additional Information of the Fund has not been updated
after completion of the Fund's offering and the information contained in the
Fund's Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Fund's investment
objective or policies or to the Fund's charter or by-laws that were not approved
by the shareholders or in the principal risk factors associated with investment
in the Fund. There have been no changes in the persons who are primarily
responsible for the day-to-day management of the Fund's portfolio.
The Fund will mail only one copy of shareholder documents, including 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.
Quarterly performance, semi-annual and annual reports and other information
regarding the Fund may be found on BlackRock's website, which can be accessed at
http://www.blackrock.com. This reference to BlackRock's website is intended to
allow investors public access to information regarding the Fund and does not,
and is not intended to, incorporate BlackRock's website into this report.
30 BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008
================================================================================
Additional Information (concluded)
- --------------------------------------------------------------------------------
BlackRock Privacy Principles
- --------------------------------------------------------------------------------
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
- --------------------------------------------------------------------------------
Proxy Voting Policy
- --------------------------------------------------------------------------------
The Board of Directors of the Fund has delegated the voting of proxies for Fund
securities to the Investment Adviser pursuant to the Investment Adviser's proxy
voting guidelines. Under these guidelines, the Investment Adviser will vote
proxies related to Fund securities in the best interests of the Fund and its
stockholders. From time to time, a vote may present a conflict between the
interests of the Fund's stockholders, on the one hand, and those of the
Investment Adviser, or any affiliated person of the Fund or the Investment
Adviser, on the other. In such event, provided that the Investment Adviser's
Equity Investment Policy Oversight Committee, or a sub-committee thereof (the
"Committee") is aware of the real or potential conflict or material non-routine
matter and if the Committee does not reasonably believe it is able to follow its
general voting guidelines (or if the particular proxy matter is not addressed in
the guidelines) and vote impartially, the Committee may retain an independent
fiduciary to advise the Committee on how to vote or to cast votes on behalf of
the Investment Adviser's clients. If the Investment Adviser determines not to
retain an independent fiduciary, or does not desire to follow the advice of such
independent fiduciary, the Committee shall determine how to vote the proxy after
consulting with the Investment Adviser's Portfolio Management Group and/or the
Investment Adviser's Legal and Compliance Department and concluding that the
vote cast is in its client's best interest notwithstanding the conflict.
Information on how the Fund voted proxies relating to portfolio securities
during the most recent 12-month period ended June 30 is available without
charge, (i) at www.blackrock.com and (ii) on the SEC's website at
http://www.sec.gov.
BLACKROCK CORPORATE HIGH YIELD FUND, INC. MAY 31, 2008 31
GO
[PAPERLESS LOGO]
It's Fast, Convenient, & Timely!
This report is transmitted to shareholders only. It is not a prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. The Fund leverages its Common Stock, which
creates risk for Common Stock shareholders, including the likelihood of greater
volatility of net asset value and market price of Common Stock shares, and the
risk that fluctuations in short-term interest rates may reduce the Common
Stock's yield. Statements and other information herein are as dated and are
subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's website
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available upon request and without charge (1) at
www.blackrock.com or by calling (800) 441-7762 and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov.
BlackRock Corporate High Yield Fund, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#16718-5/08
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a
code of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. During the period covered by this
report, there have been no amendments to or waivers granted under the
code of ethics. A copy of the code of ethics is available without
charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Joe Grills (term ended effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
Robert S. Salomon, Jr.
The registrant's board of directors has determined that W. Carl
Kester and Karen P. Robards qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control over
financial reporting as well as audit committee functions. Prof.
Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester's
financial consulting services present a breadth and level of
complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to
be raised by the registrant's financial statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control over
financial reporting as well as audit committee functions. Ms. Robards
has been President of Robards & Company, a financial advisory firm,
since 1987. Ms. Robards was formerly an investment banker for more
than 10 years where she was responsible for evaluating and assessing
the performance of companies based on their financial results. Ms.
Robards has over 30 years of experience analyzing financial
statements. She also is a member of the audit committee of one
publicly held company and a non-profit organization.
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)
- --------------------------------------------------------------------------------------------------------------------
Entity Name Current Previous Current Previous Current Previous Current Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Year End Year End Year End Year End Year End Year End Year End Year End
- --------------------------------------------------------------------------------------------------------------------
BlackRock Corporate
High Yield Fund, $41,000 $38,850 $0 $8,000 $6,100 $6,100 $1,049 $0
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"). The term of any general pre-approval is 12 months
from the date of the pre-approval, unless the Committee provides for
a different period. Tax or other non-audit services provided to the
registrant which have a direct impact on the operation or financial
reporting of the registrant will only be deemed pre-approved provided
that any individual project does not exceed $10,000 attributable to
the registrant or $50,000 for all of the registrants the Committee
oversees. For this purpose, multiple projects will be aggregated to
determine if they exceed the previously mentioned cost levels.
Any proposed services exceeding the pre-approved cost levels
will require specific pre-approval by the Committee, as will any
other services not subject to general pre-approval (e.g.,
unanticipated but permissible services). The Committee is informed of
each service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting. At this meeting, an
analysis of such services is presented to the Committee for
ratification. The Committee may delegate to one or more of its
members the authority to approve the provision of and fees for any
specific engagement of permitted non-audit services, including
services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
-------------------------------------------------------------------
Entity Name Current Fiscal Previous Fiscal
Year End Year End
-------------------------------------------------------------------
-------------------------------------------------------------------
BlackRock Corporate High $294,649 $2,993,417
Yield Fund, Inc.
-------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to
the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $287,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha (term ended effective November 1, 2007)
Kent Dixon (term began effective November 1, 2007)
Frank J. Fabozzi (term began effective November 1, 2007)
James T. Flynn (term began effective November 1, 2007)
Kenneth A. Froot (term ended effective November 1, 2007)
Joe Grills (term ended effective November 1, 2007)
W. Carl Kester (term began effective November 1, 2007)
Herbert I. London (term ended effective November 1, 2007)
Roberta Cooper Ramo (term ended effective November 1, 2007)
Karen P. Robards (term began effective November 1, 2007)
Robert S. Salomon, Jr.
Item 6 - Investments
(a) The registrant's Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual
period covered since the previous Form N-CSR filing.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The registrant has delegated the
voting of proxies relating to Fund portfolio securities to its
investment adviser, BlackRock Advisors, LLC and its sub-adviser, as
applicable. The Proxy Voting Policies of the Fund are attached hereto
as Exhibit 99.PROXYPOL.
Information about how the Fund voted proxies relating to securities
held in the Fund's portfolio during the most recent 12 month period
ended June 30 is available without charge (1) at www.blackrock.com
and (2) on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of May 31, 2008.
(a)(1) BlackRock Corporate High Yield Fund, Inc. is managed by a team
of investment professionals comprised of Jeff Gary, CPA, Managing
Director at BlackRock, Kevin J. Booth, CFA, Managing Director at
BlackRock and James E. Keenan, CFA, Director at BlackRock. Each is a
member of BlackRock's fixed income portfolio management group.
Messrs.
Booth and Keenan are the Fund's co-portfolio managers and are
responsible for the day-to-day management of the Fund's portfolio and
the selection of its investments. Mr. Gary is also a member of the
Fund's management team. Mr. Gary has been a member of the Fund's
management team since 2006 and Mr. Keenan has been the Fund's
portfolio manager since 2006 and Mr. Booth has been the Fund's
portfolio manager since 2007.
Jeff Gary is the head of BlackRock's high yield team within the Fixed
Income Portfolio Management Group. Prior to joining BlackRock in
2003, Mr. Gary was a Managing Director and portfolio manager with AIG
(American General) Investment Group.
Kevin Booth is co-head of the high yield team within BlackRock's
Fixed Income Portfolio Management Group. His primary responsibilities
are managing portfolios and directing investment strategy. He
specializes in hybrid high yield portfolios, consisting of leveraged
bank loans, high yield bonds, and distressed obligations. Prior to
joining BlackRock, Mr. Booth was a Managing Director (Global Fixed
Income) of Merrill Lynch Investment Managers ("MLIM") in 2006, a
Director from 1998 to 2006 and was a Vice President of MLIM from 1991
to 1998. He has been a portfolio manager with BlackRock or MLIM since
1992, and was a member of MLIM's bank loan group from 2000 to 2006.
James Keenan is a high yield portfolio manager and trader within
BlackRock's Fixed Income Portfolio Management Group. His primary
responsibilities are managing client portfolios, executing trades and
ensuring consistency across high yield portfolios. Mr. Keenan has
been with BlackRock since 2004. Prior to joining BlackRock, he was a
senior high yield trader at Columbia Management Group. Mr. Keenan
began his investment career at UBS Global Asset Management where he
held roles as a trader, research analyst and a portfolio analyst from
1998 through 2003.
(a)(2)As of May 31, 2008:
-----------------------------------------------------------------------------------------------------------------------
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
-----------------------------------------------------------------------------------------------------------------------
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Jeff Gary 14 8 14 0 4 6
-----------------------------------------------------------------------------------------------------------------------
$6.99 Billion $2.77 Billion $6.45 Billion $0 $1.75 Billion $847.9 Million
-----------------------------------------------------------------------------------------------------------------------
Kevin Booth 24 10 8 0 4 3
-----------------------------------------------------------------------------------------------------------------------
$10.6 Billion $4.6 Billion $2.04 Billion $0 $2.5 Billion $433 Million
-----------------------------------------------------------------------------------------------------------------------
James Keenan 18 9 50 0 4 5
-----------------------------------------------------------------------------------------------------------------------
$8.11 Billion $4.13 Billion $8.01 Billion $0 $2.98 Billion $659.7 Million
-----------------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
BlackRock, Inc. and its affiliates (collectively, herein "BlackRock")
has built a professional working environment, firm-wide compliance
culture and compliance procedures and systems designed to protect
against potential incentives that may favor one account over another.
BlackRock has adopted policies and procedures that address the
allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees), which
may be the same as or different from those made to the Fund. In
addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
or employees of any of them has any substantial economic interest or
possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for the Fund. In this regard, it
should be noted that each portfolio manager currently manages certain
accounts that are subject to performance fees. In addition, Mr.
Keenan assists in managing certain hedge funds and may be entitled to
receive a portion of any incentive fees earned on such funds and a
portion of such incentive fees may be voluntarily or involuntarily
deferred. Additional portfolio managers may in the future manage
other such accounts or funds and may be entitled to receive incentive
fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated in
a manner consistent with its fiduciary duties. BlackRock attempts to
allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of May 31, 2008:
Portfolio Manager Compensation Overview
BlackRock's financial arrangements with its portfolio managers, its
competitive compensation and its career path emphasis at all levels
reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from
year to year based on a number of factors. The principal components
of compensation include a base salary, a performance-based
discretionary bonus, participation in various benefits programs and
one or more of the incentive compensation programs established by
BlackRock such as its Long-Term Retention and Incentive Plan and
Restricted Stock Program.
Base compensation. Generally, portfolio managers receive base
compensation based on their seniority and/or their position with the
firm. Senior portfolio managers who perform additional management
functions within the portfolio management group or within BlackRock
may receive additional compensation for serving in these other
capacities.
Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several
components: the performance of BlackRock, Inc., the performance of
the portfolio manager's group within BlackRock, the investment
performance, including risk-adjusted returns, of the firm's assets
under management or supervision by that portfolio manager relative to
predetermined benchmarks, and the individual's seniority, role within
the portfolio management team, teamwork and contribution to the
overall performance of these portfolios and BlackRock. In most cases,
including for the portfolio managers of the Fund, these benchmarks
are the same as the benchmark or benchmarks against which the
performance of the Fund or other accounts managed by the portfolio
managers are measured. BlackRock's Chief Investment Officers
determine the benchmarks against which the performance of funds and
other accounts managed by each portfolio manager is compared and the
period of time over which performance is evaluated. With respect to
the portfolio managers, such benchmarks for the Fund include the
following:
-------------------------------------------------------------------------------------------------------------------
Portfolio Manager Benchmarks Applicable to Each Manager
-------------------------------------------------------------------------------------------------------------------
Kevin Booth A combination of market-based indices (e.g., The Lehman Brothers U.S. Corporate High
Yield 2% Issuer Cap Index), certain customized indices and certain fund industry peer
groups.
-------------------------------------------------------------------------------------------------------------------
Jeffrey Gary A combination of market-based indices (e.g., The Lehman Brothers U.S. Corporate High
Yield 2% Issuer Cap Index), certain customized indices and certain fund industry peer
groups.
-------------------------------------------------------------------------------------------------------------------
James Keenan A combination of market-based indices (e.g., The Lehman Brothers U.S. Corporate High
Yield 2% Issuer Cap Index), certain customized indices and certain fund industry peer
groups.
-------------------------------------------------------------------------------------------------------------------
BlackRock's Chief Investment Officers make a subjective determination
with respect to the portfolio managers' compensation based on the
performance of the funds and other accounts managed by each portfolio
manager relative to the various benchmarks noted above. Performance
is measured on both a pre-tax and after-tax basis over various time
periods including 1, 3, 5 and 10-year periods, as applicable.
Distribution of Discretionary Incentive Compensation
Discretionary incentive compensation is distributed to portfolio
managers in a combination of cash and BlackRock, Inc. restricted
stock units which vest ratably over a number of years. The BlackRock,
Inc. restricted stock units, if properly vested, will be settled in
BlackRock, Inc. common stock. Typically, the cash bonus, when
combined with base salary, represents more than 60% of total
compensation for the portfolio managers. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio
manager for a given year "at risk" based on the BlackRock's ability
to sustain and improve its performance over future periods.
Long-Term Retention and Incentive Plan ("LTIP") --The LTIP
is a long-term incentive plan that seeks to reward certain key
employees. Prior to 2006, the plan provided for the grant of awards
that were expressed as an amount of cash that, if properly vested and
subject to the attainment of certain performance goals, will be
settled in cash and/or in BlackRock, Inc. common stock. Beginning in
2006, awards are granted under the LTIP in the form of BlackRock,
Inc. restricted stock units that, if properly vested and subject to
the attainment of certain performance goals, will be settled in
BlackRock, Inc. common stock. Each portfolio manager has received
awards under the LTIP.
Deferred Compensation Program --A portion of the
compensation paid to eligible BlackRock employees may be voluntarily
deferred into an account that tracks the performance of certain of
the firm's investment products. Each participant in the deferred
compensation program is permitted to allocate his deferred amounts
among the various investment options. Each portfolio manager has
participated in the deferred compensation program.
Other compensation benefits. In addition to base compensation and
discretionary incentive compensation, portfolio managers may be
eligible to receive or participate in one or more of the following:
Incentive Savings Plans -- BlackRock, Inc. has created a
variety of incentive savings plans in which BlackRock employees are
eligible to participate, including a 401(k) plan, the BlackRock
Retirement Savings Plan (RSP), and the BlackRock Employee Stock
Purchase Plan (ESPP). The employer contribution components of the RSP
include a company match equal to 50% of the first 6% of eligible pay
contributed to the plan capped at $4,000 per year, and a company
retirement contribution equal to 3% of eligible compensation, plus an
additional contribution of 2% for any year in which BlackRock has
positive net operating income. The RSP offers a range of investment
options, including registered investment companies managed by the
firm. BlackRock contributions follow the investment direction set by
participants for their own contributions or, absent employee
investment direction, are invested into a balanced portfolio. The
ESPP allows for investment in BlackRock common stock at a 5% discount
on the fair market value of the stock on the purchase date. Annual
participation in the ESPP is limited to the purchase of 1,000 shares
or a dollar value of $25,000. Each portfolio manager is eligible to
participate in these plans.
(a)(4) Beneficial Ownership of Securities. As of May 31, 2008,
neither of Messrs. Gary or Keenan beneficially owned any stock
issued by the Fund. As of May 31, 2008, Mr. Booth beneficially
owned stock issued by the Fund in the range of
$50,001-$100,000.
Item 9 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable due to
no such purchases during the period covered by this report.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the board of directors recommended by shareholders when a
vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations which include biographical
information and set forth the qualifications of the proposed nominee
to the registrant's Secretary. There have been no material changes to
these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - 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 Corporate High Yield Fund, Inc.
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer of
BlackRock Corporate High Yield Fund, Inc.
Date: July 18, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock Corporate High Yield Fund, Inc.
Date: July 18, 2008
By: /s/ Neal J. Andrews
-------------------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Corporate High Yield Fund, Inc.
Date: July 18, 2008