-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BimyuRNwScFq8qjnyx1XL0mU9kGVuyIrweuAlP7ruAlAb5f1kW5buxicPS9RfDoY CZx5P8fSYaaZqUWFDu1wVA== 0001171200-10-001145.txt : 20101207 0001171200-10-001145.hdr.sgml : 20101207 20101207102340 ACCESSION NUMBER: 0001171200-10-001145 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20100930 FILED AS OF DATE: 20101207 DATE AS OF CHANGE: 20101207 EFFECTIVENESS DATE: 20101207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACKROCK BOND FUND, INC. CENTRAL INDEX KEY: 0000276463 IRS NUMBER: 132949519 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02857 FILM NUMBER: 101235844 BUSINESS ADDRESS: STREET 1: 100 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 800-441-7762 MAIL ADDRESS: STREET 1: 100 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH BOND FUND INC DATE OF NAME CHANGE: 20030804 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH CORPORATE BOND FUND INC/NY DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MERRILL LYNCH HIGH INCOME FUND INC - CORRECTED NAME CHANGE DATE OF NAME CHANGE: 19600201 0000276463 S000004071 BlackRock Total Return Fund C000011387 Investor A C000011388 Investor B C000011389 Investor C1 C000011390 Institutional C000011391 Class R C000037618 Investor A1 C000037619 Investor B1 C000037620 Investor C C000037621 Investor C2 C000052629 Investor B2 C000052630 Service C000052631 BlackRock N-CSR 1 i00538_trf-ncsr.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number 811-02857 and 811-21434

 

Name of Fund: BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

 

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

 

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC, 40 East 52nd Street, New York, NY 10022

 

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

 

Date of fiscal year end: 09/30/2010

 

Date of reporting period: 09/30/2010

 

Item 1 – Report to Stockholders

 


 

 

(BLACKROCK LOGO)

September 30, 2010

Annual Report

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

 

Not FDIC Insured § No Bank Guarantee § May Lose Value




 


 

Table of Contents


 

 

 

 





 

 

Page

 





 

 

 

 

Dear Shareholder

 

3

 

Annual Report:

 

 

 

Fund Summary

 

4

 

About Fund Performance

 

6

 

Disclosure of Expenses

 

7

 

The Benefits and Risks of Leveraging

 

8

 

Derivative Financial Instruments

 

8

 

Fund Financial Statements:

 

 

 

Statement of Assets and Liabilities

 

9

 

Statement of Operations

 

10

 

Statements of Changes in Net Assets

 

11

 

Fund Financial Highlights

 

12

 

Fund Notes to Financial Statements

 

21

 

Fund Report of Independent Registered Public Accounting Firm

 

26

 

Important Tax Information

 

26

 

Portfolio Information

 

27

 

Master Portfolio Financial Statements:

 

 

 

Schedule of Investments

 

28

 

Statement of Assets and Liabilities

 

45

 

Statement of Operations

 

46

 

Statements of Changes in Net Assets

 

47

 

Statement of Cash Flows

 

48

 

Master Portfolio Financial Highlights

 

49

 

Master Portfolio Notes to Financial Statements

 

50

 

Master Report of Independent Registered Public Accounting Firm

 

59

 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

 

60

 

Officers and Directors

 

64

 

Additional Information

 

67

 

Mutual Fund Family

 

70

 


 

 

 




2

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 


Dear Shareholder

The global economic recovery that began in 2009 has continued on its choppy course this year, delivering mixed economic data and gradual if uneven improvement of investor sentiment. The risks of a double-dip recession continue to recede, but the economy remains mired in a slow-growth environment. The major short-term ambiguities that kept market participants on the fence — the US financial reform bill, political uncertainty, European bank stress test results, and European sovereign funding — have all abated to some degree, allowing market conditions to regain some degree of normalcy and demonstrate growth. In the United States, the National Bureau of Economic Research declared that the “Great Recession” ended in June 2009. Spanning December 2007 to June 2009, this marked the longest reported recession since the Great Depression. Structural problems of ongoing deleveraging and weak spending among businesses and households weigh heavily on the pace of economic growth. The Federal Reserve Board has made it clear that additional policy action will be needed to combat the slow pace of growth, high unemployment, and deflation risks.

The high levels of volatility experienced in global equity markets throughout 2009 continued into 2010 as uncertainty driven by mixed economic data and lingering credit issues caused stocks to trade in both directions, but by the end of the first quarter, most markets had managed to post gains. The second quarter, in contrast, brought higher levels of volatility and a “flight to quality” as investor sentiment was dominated by fears of a double-dip recession. Global equity markets saw negative quarterly returns — and for many markets, the first significant downturn since the bull market began in March 2009. As the end of the 12-month period drew near, economic data turned less negative and strong corporate earnings reports became increasingly consistent. These factors along with the anticipation of further quantitative easing drove equity markets higher in the third quarter, with most markets recapturing their second quarter losses and moving into positive territory year-to-date. International equities turned positive, posting gains on both a six- and 12-month basis. In the US, both large and small cap equities posted robust gains for the 12-month period; however large cap stocks remain negative on a six-month basis while small caps turned positive.

In fixed income markets, yields fluctuated but generally declined over the past 12 months amid heightened uncertainty. Weak economic data, lingering credit problems and, near the end of the period, the expectation of additional quantitative easing drove interest rates lower and bond prices higher. Treasuries rallied over the period, modestly outperforming the credit spread sectors of the market. Corporate credit spreads benefited from the low interest rate environment and high yield fixed income became increasingly attractive due to declining default rates and better-than-expected results on European bank stress tests. Tax-exempt municipal bonds performed well over the 12-month period, driven primarily by technical factors including favorable supply-and-demand dynamics.

Cash investments, as represented by the 3-month Treasury bill, returned only a fraction over 0% for the 12-month period as short-term interest rates remained low. Yields on money market securities remain near all-time lows.

Against this backdrop, the major market averages posted the following returns:

 

 

 

 

 

 

 

 

Total Returns as of September 30, 2010

 

6-month

 

12-month

 









US large cap equities (S&P 500 Index)

 

(1.42

)%

 

10.16

%

 









US small cap equities (Russell 2000 Index)

 

0.25

 

 

13.35

 

 









International equities (MSCI Europe, Australasia, Far East Index)

 

0.20

 

 

3.27

 

 









3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)

 

0.07

 

 

0.13

 

 









US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index)

 

13.20

 

 

10.23

 

 









US investment grade bonds (Barclays Capital US Aggregate Bond Index)

 

6.05

 

 

8.16

 

 









Tax-exempt municipal bonds (Barclays Capital Municipal Bond Index)

 

5.51

 

 

5.81

 

 









US high yield bonds (Barclays Capital US Corporate High Yield 2% Issuer Capped Index)

 

6.55

 

 

18.24

 

 










 

 

 

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

As global economic conditions continue to improve, investors across the world continue to face uncertainty about the future of economic growth. Through periods of uncertainty, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most recent issue of our award-winning Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives. We thank you for entrusting BlackRock with your investments, and we look forward to your continued partnership 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




 

 


 

Fund Summary as of September 30, 2010

 

 


Portfolio Management Commentary


 

 

 

How did the Fund perform?

 

 

The Fund, through its investment in Master Total Return Portfolio (the “Master Portfolio”), outperformed the benchmark Barclays Capital US Aggregate Bond Index for the 12-month period.

 

 

 

What factors influenced performance?

 

 

The Master Portfolio benefited from overweights relative to the benchmark in non-government spread sectors, including commercial mortgage-backed securities (CMBS), asset-backed securities (ABS) and investment grade credit. The Master Portfolio also benefited from allocations held outside of the benchmark in non-agency mortgage-backed securities (MBS) and high yield credit. These non-government spread sectors outperformed government sectors for the period, as credit spreads compressed due to improving economic fundamentals and accommodative monetary policy support from the Fed. In addition, the Master Portfolio benefited from a longer duration than the benchmark along with a yield-curve-flattening bias, as interest rates fell and the yield curve flattened dramatically during the period.

 

 

Although duration and yield curve positioning benefited performance for the entire 12-month period, these factors did detract from relative returns during the first half of the period. In addition, the Master Portfolio’s underweight in agency MBS during the first half of the period detracted from performance as the sector rallied.

 

 

 

Describe recent portfolio activity.

 

 

Overall, the Master Portfolio moved toward higher-quality securities among non-government spread sectors. In particular, we were able to find good opportunities in higher-quality securitized sectors that were trading at attractive values relative to their historical averages. More recently, the Master Portfolio added exposure to corporate issues at the highest level of the high yield quality range, which were trading at attractive values relative to their investment grade counterparts. In addition, the Master Portfolio tactically managed its agency MBS position as the sector was significantly influenced by government policy over the period, including the termination of the agency MBS purchase program by the Fed.

 

 

 

Describe portfolio positioning at period end.

 

 

At period end, the Master Portfolio was generally underweight in government-owned/government-related sectors in favor of non-government spread sectors. Within the government-related sectors, the Master Portfolio holds underweights in US Treasuries, agency debentures and FDIC-guaranteed debt. The Master Portfolio is overweight in non-government sectors, including CMBS, ABS and investment-grade corporate debt. The Master Portfolio also holds out-of-index allocations to non-agency MBS and high yield credit. The Master Portfolio ended the period with a slightly longer duration relative to the benchmark, with a yield-curve-flattening bias.

 

 

 

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.


 

 

 




4

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 


 


Total Return Based on a $10,000 Investment


(LINE GRAPH)

 

 

1

Assuming maximum sales charge, transaction costs and other operating expenses, including advisory fees, if any. Institutional Shares do not have a sales charge.

 

 

2

Under normal circumstances, the Master Portfolio invests 80% of it assets in bonds primarily in fixed income securities that are rated in the four highest rating categories of the recognized rating agencies (Baa or better by Moody’s Investors Service, Inc. or BBB or better by Standard & Poor’s).

 

 

3

This unmanaged market-weighted index is comprised of investment grade corporate bonds (rated BBB or better), mortgages and U.S. Treasury and government agency issues with at least one year to maturity.

 

 

4

Commencement of operations.


 


Performance Summary for the Period Ended September 30, 2010



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Annual Total Returns5

 

 

 

 

 

 

 



 

 

 

 

 

 

1 Year

 

5 Years

 

Since Inception6

 

 

 

 

 

 

 


 


 



 

 

Standardized
30-Day Yields

 

6-Month
Total Returns

 

w/o sales
charge

 

w/sales
charge

 

w/o sales
charge

 

w/sales
charge

 

w/o sales
charge

 

w/sales
charge

 



















BlackRock

 

4.76

%

 

8.18

%

 

12.73

%

 

N/A

 

 

4.84

%

 

N/A

 

 

5.15

%

 

N/A

 

 

Institutional

 

4.66

 

 

8.03

 

 

12.49

 

 

N/A

 

 

4.67

 

 

N/A

 

 

4.98

 

 

N/A

 

 

Service

 

4.41

 

 

7.99

 

 

12.22

 

 

N/A

 

 

4.41

 

 

N/A

 

 

4.66

 

 

N/A

 

 

Investor A

 

4.17

 

 

7.97

 

 

12.16

 

 

7.67

%

 

4.37

 

 

3.52

%

 

4.68

 

 

4.20

%

 

Investor A1

 

4.72

 

 

8.04

 

 

12.40

 

 

11.27

 

 

4.51

 

 

4.30

 

 

4.83

 

 

4.71

 

 

Investor B

 

3.76

 

 

7.61

 

 

11.51

 

 

7.51

 

 

3.74

 

 

3.40

 

 

4.09

 

 

4.09

 

 

Investor B1

 

4.09

 

 

7.90

 

 

11.97

 

 

10.97

 

 

4.05

 

 

4.05

 

 

4.39

 

 

4.39

 

 

Investor B2

 

4.75

 

 

8.07

 

 

12.14

 

 

7.64

 

 

4.19

 

 

3.86

 

 

4.23

 

 

4.23

 

 

Investor C

 

3.72

 

 

7.52

 

 

11.46

 

 

10.46

 

 

3.70

 

 

3.70

 

 

3.96

 

 

3.96

 

 

Investor C1

 

3.80

 

 

7.72

 

 

11.67

 

 

10.67

 

 

3.79

 

 

3.79

 

 

4.10

 

 

4.10

 

 

Investor C2

 

3.96

 

 

7.83

 

 

11.79

 

 

10.79

 

 

4.02

 

 

4.02

 

 

4.37

 

 

4.37

 

 

Class R

 

4.09

 

 

7.72

 

 

11.86

 

 

N/A

 

 

4.12

 

 

N/A

 

 

4.43

 

 

N/A

 

 

Barclays Capital US Aggregate Bond Index

 

 

 

6.05

 

 

8.16

 

 

N/A

 

 

6.20

 

 

N/A

 

 

5.93

 

 

N/A

 

 




























 

 

 

 

5

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees.

 

 

 

 

6

The Fund commenced operations on December 7, 2001.

 

 

 

 

 

N/A — Not applicable as share class and index do not have a sales charge.


 

 

 

 

Past performance is not indicative of future results.





BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

5




 


 

About Fund Performance


 

 

BlackRock Shares are not subject to any sales charge. BlackRock Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to September 24, 2007, BlackRock Share performance results are those of BlackRock Shares of a predecessor fund with no adjustments.

 

 

Institutional Shares are not subject to any sales charge. Institutional Shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to September 24, 2007, Institutional Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Institutional Share fees.

 

 

Service Shares are not subject to any sales charge. Service Shares are subject to a service fee of 0.25% per year (but no distribution fee) and are available only to eligible investors. Prior to September 24, 2007, Service Share performance results are those of Investor A Shares of a predecessor fund restated to reflect Service Share fees.

 

 

Investor A Shares incur a maximum initial sales charge (front-end load) of 4% and a service fee of 0.25% per year (but no distribution fee). Prior to September 24, 2007, Investor A Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor A Share fees.

 

 

Investor A1 Shares incur a maximum initial sales charge (front-end load) of 1% and a service fee of 0.10% per year (but no distribution fee). Prior to September 24, 2007, Investor A1 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor A1 Share fees.

 

 

Investor B Shares are subject to a maximum contingent deferred sales charge of 4%, declining to 0% after six years. In addition, Investor B Shares are subject to a distribution fee of 0.50% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately ten years. Prior to September 24, 2007, Investor B Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor B Share fees.

 

 

Investor B1 Shares are subject to a maximum contingent deferred sales charge of 1%, declining to 0% after three years. In addition, Investor B1 Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A1 Shares after approximately ten years. Prior to September 24, 2007, Investor B1 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor B1 Share fees.

 

 

Investor B2 Shares are subject to a maximum contingent deferred sales charge of 4.50%, declining to 0% after six years. In addition, Investor B2 Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately seven years. Prior to September 24, 2007, Investor B2 Share performance results are those of Investor B Shares of a predecessor fund with no adjustments.

 

 

Investor C Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. In addition, Investor C Shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. Prior to September 24, 2007, Investor C Share performance results are those of Investor C Shares of a predecessor fund with no adjustments.

 

 

Investor C1 Shares are subject to a distribution fee of 0.55% per year and a service fee of 0.25% per year. In addition, Investor C1 Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to September 24, 2007, Investor C1 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor C1 Share fees.

 

 

Investor C2 Shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. In addition, Investor C2 Shares are subject to a 1% contingent deferred sales charge if redeemed within one year of purchase. Prior to September 24, 2007, Investor C2 Share performance results are those of BlackRock Shares of a predecessor fund restated to reflect Investor C2 Share fees.

 

 

Class R Shares do not incur a maximum initial sales charge (front-end load) or deferred sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. Class R Shares are available only to certain retirement plans. Prior to October 2, 2006, Class R Share performance results are those of the Class R Shares of a predecessor fund. Prior to the predecessor fund Class R Shares inception date, the Class R Share performance is based on the performance of the BlackRock Shares of the predecessor fund restated to reflect Class R Share fees.

 

 

 

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance table on the previous page assume reinvestment of all dividends and capital gain distributions, if any, at net asset value on the payable date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders. The Fund’s Manager waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.


 

 

 

 





6

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 


 

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses, including advisory fees, service and/or distribution fees including 12b-1 fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on April 1, 2010 and held through September 30, 2010) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The table provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The table also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual

 

Hypothetical2

 

 

 


 


 

 

 

 

 

 

Beginning
Account Value
April 1, 2010

 

Ending
Account Value
September 30, 2010

 

Expenses Paid
During the Period1

 

Beginning
Account Value
April 1, 2010

 

Ending
Account Value
September 30, 2010

 

Expenses Paid
During the Period1

 

Annualized
Expense Ratio

 

















BlackRock

 

$

1,000.00

 

$

1,081.80

 

$

5.06

 

$

1,000.00

 

$

1,020.24

 

$

4.91

 

 

0.97

%

Institutional

 

$

1,000.00

 

$

1,081.30

 

$

5.63

 

$

1,000.00

 

$

1,019.69

 

$

5.47

 

 

1.08

%

Service

 

$

1,000.00

 

$

1,079.90

 

$

7.09

 

$

1,000.00

 

$

1,018.28

 

$

6.88

 

 

1.36

%

Investor A

 

$

1,000.00

 

$

1,079.70

 

$

7.09

 

$

1,000.00

 

$

1,018.28

 

$

6.88

 

 

1.36

%

Investor A1

 

$

1,000.00

 

$

1,080.40

 

$

5.63

 

$

1,000.00

 

$

1,019.69

 

$

5.47

 

 

1.08

%

Investor B

 

$

1,000.00

 

$

1,076.10

 

$

9.78

 

$

1,000.00

 

$

1,015.67

 

$

9.50

 

 

1.88

%

Investor B1

 

$

1,000.00

 

$

1,079.00

 

$

7.92

 

$

1,000.00

 

$

1,017.48

 

$

7.69

 

 

1.52

%

Investor B2

 

$

1,000.00

 

$

1,080.70

 

$

6.36

 

$

1,000.00

 

$

1,018.98

 

$

6.17

 

 

1.22

%

Investor C

 

$

1,000.00

 

$

1,075.20

 

$

10.51

 

$

1,000.00

 

$

1,014.97

 

$

10.20

 

 

2.02

%

Investor C1

 

$

1,000.00

 

$

1,077.20

 

$

9.63

 

$

1,000.00

 

$

1,015.82

 

$

9.35

 

 

1.85

%

Investor C2

 

$

1,000.00

 

$

1,078.30

 

$

8.60

 

$

1,000.00

 

$

1,016.83

 

$

8.34

 

 

1.65

%

Class R

 

$

1,000.00

 

$

1,072.20

 

$

8.70

 

$

1,000.00

 

$

1,016.73

 

$

8.44

 

 

1.67

%

























 

 

1

For each class of the Fund, expenses are equal to the expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period shown). Because the Fund invests significantly in a Master Portfolio, the expense table example reflects the expenses of both the Fund and the Master Portfolio in which it invests.

 

 

 

Currently, Investor B2 does not accrue distribution fees (12b-1 fees) due to regulatory fee limits. If, during the period, the distribution fees were accrued, the actual expense ratio would have been approximately 1.92%, the actual expenses paid would have been approximately $10.01 and the hypothetical expenses paid would have been approximately $9.70.

 

 

2

Hypothetical 5% return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.


 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

7




 


 

The Benefits and Risks of Leveraging

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

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

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

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

 


 

Derivative Financial Instruments

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

 

 

 

 





8

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 



 

Statement of Assets and Liabilities

BlackRock Total Return Fund

 

 

 

 

 

 

September 30, 2010

 

 

 





Assets

 

 

 

 






Investment at value — Master Total Return Portfolio of Master Bond LLC (the “Master Portfolio”) (cost — $2,942,290,965)

 

$

2,987,140,002

 

Capital shares sold receivable

 

 

10,899,462

 

Prepaid expenses

 

 

59,273

 

 

 




Total assets

 

 

2,998,098,737

 

 

 









Liabilities

 

 

 

 






Contributions payable to the Portfolio

 

 

6,719,121

 

Income dividends payable

 

 

5,517,958

 

Capital shares redeemed payable

 

 

4,180,341

 

Investment advisory fees payable

 

 

575,302

 

Service and distribution fees payable

 

 

544,976

 

Other affiliates payable

 

 

7,073

 

Officer’s fees payable

 

 

833

 

Other accrued expenses payable

 

 

639,348

 

 

 




Total liabilities

 

 

18,184,952

 

 

 




Net Assets

 

$

2,979,913,785

 

 

 









Net Assets Consist of

 

 

 

 






Paid-in capital

 

$

3,082,646,910

 

Undistributed net investment income

 

 

5,918,490

 

Accumulated net realized loss

 

 

(153,500,652

)

Net unrealized appreciation/depreciation

 

 

44,849,037

 

 

 




Net Assets

 

$

2,979,913,785

 

 

 









Net Asset Value

 

 

 

 






BlackRock — Based on net assets of $860,675,244 and 76,043,719 shares outstanding, 100 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Institutional — Based on net assets of $522,408,321 and 46,173,294 shares outstanding, 250 million shares authorized, $0.10 par value

 

$

11.31

 

 

 




Service — Based on net assets of $935,927 and 82,682 shares outstanding, 50 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Investor A — Based on net assets of $942,651,998 and 83,267,716 shares outstanding, 100 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Investor A1 — Based on net assets of $64,599,151 and 5,710,294 shares outstanding, 50 million shares authorized, $0.10 par value

 

$

11.31

 

 

 




Investor B — Based on net assets of $77,805,770 and 6,877,475 shares outstanding, 250 million shares authorized, $0.10 par value

 

$

11.31

 

 

 




Investor B1 — Based on net assets of $12,080,114 and 1,067,478 shares outstanding, 50 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Investor B2 — Based on net assets of $75,301 and 6,654 shares outstanding, 50 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Investor C — Based on net assets of $228,348,704 and 20,185,077 shares outstanding, 100 million shares authorized, $0.10 par value

 

$

11.31

 

 

 




Investor C1 — Based on net assets of $215,514,815 and 19,044,695 shares outstanding, 100 million shares authorized, $0.10 par value

 

$

11.32

 

 

 




Investor C2 — Based on net assets of $11,480,688 and 1,015,303 shares outstanding, 50 million shares authorized, $0.10 par value

 

$

11.31

 

 

 




Class R — Based on net assets of $43,337,752 and 3,827,947 shares outstanding, 250 million shares authorized, $0.10 par value

 

$

11.32

 

 

 





 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

9




 

 



 

Statement of Operations

BlackRock Total Return Fund


 

 

 

 

 

Year Ended September 30, 2010

 

 

 





Investment Income

 

 

 

 






Net investment income allocated from the Master Portfolio:

 

 

 

 

Interest

 

$

146,121,583

 

Income — affiliated

 

 

19,515

 

Expenses

 

 

(15,471,668

)

 

 




Total income

 

 

130,669,430

 

 

 









Expenses

 

 

 

 






Investment advisory

 

 

9,712,599

 

Service — Service

 

 

2,597

 

Service — Investor A

 

 

1,562,608

 

Service — Investor A1

 

 

67,579

 

Service and distribution — Investor B

 

 

640,053

 

Service and distribution — Investor B1

 

 

67,888

 

Service — Investor B2

 

 

361

 

Service and distribution — Investor C

 

 

1,996,161

 

Service and distribution — Investor C1

 

 

1,766,944

 

Service and distribution — Investor C2

 

 

60,378

 

Service and distribution — Class R

 

 

225,550

 

Transfer agent — BlackRock

 

 

45,398

 

Transfer agent — Institutional

 

 

737,954

 

Transfer agent — Service

 

 

1,794

 

Transfer agent — Investor A

 

 

1,201,339

 

Transfer agent — Investor A1

 

 

128,134

 

Transfer agent — Investor B

 

 

298,833

 

Transfer agent — Investor B1

 

 

41,084

 

Transfer agent — Investor B2

 

 

515

 

Transfer agent — Investor C

 

 

525,428

 

Transfer agent — Investor C1

 

 

493,881

 

Transfer agent — Investor C2

 

 

39,195

 

Transfer agent — Class R

 

 

139,065

 

Registration

 

 

215,615

 

Printing

 

 

193,646

 

Professional

 

 

75,266

 

Officer

 

 

3,248

 

Miscellaneous

 

 

39,624

 

 

 




Total expenses

 

 

20,282,737

 

Less fees waived by advisor

 

 

(2,576,418

)

Less transfer agent fees waived and/or reimbursed by advisor — class specific

 

 

(1,143,498

)

 

 




Total expenses after fees waived

 

 

16,562,821

 

 

 




Net investment income

 

 

114,106,609

 

 

 









Realized and Unrealized Gain Allocated from the Master Portfolio

 

 

 

 






Net realized gain from investments, financial futures contracts, swaps, options written, foreign currency transactions and borrowed bonds

 

 

66,724,152

 

Net change in unrealized appreciation/depreciation on investments, financial futures contracts, swaps, options written, foreign currency transactions, investments sold short and borrowed bonds

 

 

127,849,770

 

 

 




Total realized and unrealized gain

 

 

194,573,922

 

 

 




Net Increase in Net Assets Resulting from Operations

 

$

308,680,531

 

 

 





 

 

 

 

See Notes to Financial Statements.


10

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 


 

Statements of Changes in Net Assets

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

Year Ended
September 30,

 

 

 



Increase (Decrease) in Net Assets:

 

2010

 

2009

 







Operations

 

 

 

 

 

 

 









Net investment income

 

$

114,106,609

 

$

110,738,026

 

Net realized gain (loss)

 

 

66,724,152

 

 

(156,069,880

)

Net change in unrealized appreciation/depreciation

 

 

127,849,770

 

 

236,671,028

 

 

 







Net increase in net assets resulting from operations

 

 

308,680,531

 

 

191,339,174

 

 

 







 

 

 

 

 

 

 

 









Dividends to Shareholders From

 

 

 

 

 

 

 









Net investment income:

 

 

 

 

 

 

 

BlackRock

 

 

(43,036,407

)

 

(24,975,115

)

Institutional

 

 

(22,784,820

)

 

(27,930,259

)

Service

 

 

(48,750

)

 

(70,094

)

Investor A

 

 

(28,322,324

)

 

(32,416,925

)

Investor A1

 

 

(3,230,679

)

 

(5,122,493

)

Investor B

 

 

(3,392,414

)

 

(5,381,918

)

Investor B1

 

 

(585,719

)

 

(1,033,066

)

Investor B2

 

 

(6,574

)

 

(24,465

)

Investor C

 

 

(7,731,760

)

 

(7,583,750

)

Investor C1

 

 

(8,879,818

)

 

(12,807,142

)

Investor C2

 

 

(509,812

)

 

(697,491

)

Class R

 

 

(1,936,978

)

 

(2,821,961

)

 

 







Decrease in net assets resulting from dividends to shareholders

 

 

(120,466,055

)

 

(120,864,679

)

 

 







 

 

 

 

 

 

 

 









Capital Share Transactions

 

 

 

 

 

 

 









Net increase (decrease) in net assets derived from capital share transactions

 

 

427,381,134

 

 

(131,352,702

)

 

 







 

 

 

 

 

 

 

 









Net Assets

 

 

 

 

 

 

 









Total increase (decrease) in net assets

 

 

615,595,610

 

 

(60,878,207

)

Beginning of year

 

 

2,364,318,175

 

 

2,425,196,382

 

 

 







End of year

 

$

2,979,913,785

 

$

2,364,318,175

 

 

 







Undistributed net investment income

 

$

5,918,490

 

$

10,313,132

 

 

 








 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

11




 

 


 

Financial Highlights

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock

 

 

 



 

 

Year Ended September 30,

 

 

 



 

 

2010

 

2009

 

2008

 

20071

 

2006

 













Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Net asset value, beginning of year

 

$

10.55

 

$

10.16

 

$

11.41

 

$

11.50

 

$

11.65

 

 

 
















Net investment income2

 

 

0.57

 

 

0.54

 

 

0.60

 

 

0.53

 

 

0.51

 

Net realized and unrealized gain (loss)

 

 

0.74

 

 

0.47

 

 

(1.26

)

 

(0.11

)

 

(0.09

)

 

 
















Net increase (decrease) from investment operations

 

 

1.31

 

 

1.01

 

 

(0.66

)

 

0.42

 

 

0.42

 

 

 
















Dividends and distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.54

)

 

(0.62

)

 

(0.59

)

 

(0.51

)

 

(0.51

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.06

)

 

 
















Total dividends and distributions

 

 

(0.54

)

 

(0.62

)

 

(0.59

)

 

(0.51

)

 

(0.57

)

 

 
















Net asset value, end of year

 

$

11.32

 

$

10.55

 

$

10.16

 

$

11.41

 

$

11.50

 

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Based on net asset value

 

 

12.73

%

 

10.64

%

 

(6.11

)%

 

4.24

%

 

3.76

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Ratios to Average Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total expenses

 

 

0.99

%4

 

0.59

%4

 

0.55

%4

 

0.75

%4

 

0.69

%

 

 
















Total expenses after fees waived and/or reimbursed

 

 

0.89

%4

 

0.44

%4

 

0.45

%4

 

0.48

%4

 

0.40

%

 

 
















Net investment income

 

 

4.69

%4

 

5.72

%4

 

5.30

%4

 

5.13

%4

 

4.50

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Net assets, end of year (000)

 

$

860,675

 

$

681,677

 

$

369,607

 

$

490,237

 

$

366,353

 

 

 
















Portfolio turnover of the Fund

 

 

 

 

 

 

 

 

238

%5

 

192

%

 

 
















Portfolio turnover of the Master Portfolio

 

 

1,754

%6

 

708

%7

 

1,081

%8

 

153

%9

 

 

 

 

















 

 

 

 

1

On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns include the reinvestment of dividends and distributions.

 

 

 

 

4

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

5

Represents portfolio turnover for the period October 1, 2006 to September 24, 2007.

 

 

 

 

6

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

8

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

9

Represents portfolio turnover for the year.

 

 

 

 

 

The performance prior to September 24, 2007 set forth in this table is the financial data of BlackRock Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.134182.


 

 

 

See Notes to Financial Statements.

 

 




12

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Institutional

 

 

 



 

 

 

 

 

 

 

 

Period
September 24,
20071 to
September 30,
2007

 

 

 

Year Ended
September 30,

 

 

 

 

 

 

 

 


 

 

 

 

2010

 

2009

 

2008

 

 











Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 















Net asset value, beginning of period

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.38

 

 

 













Net investment income2

 

 

0.50

 

 

0.55

 

 

0.58

 

 

0.01

 

Net realized and unrealized gain (loss)

 

 

0.78

 

 

0.46

 

 

(1.25

)

 

0.03

 

 

 













Net increase (decrease) from investment operations

 

 

1.28

 

 

1.01

 

 

(0.67

)

 

0.04

 

 

 













Dividends from net investment income

 

 

(0.52

)

 

(0.61

)

 

(0.58

)

 

(0.02

)

 

 













Net asset value, end of period

 

$

11.31

 

$

10.55

 

$

10.15

 

$

11.40

 

 

 













 

 

 

 

 

 

 

 

 

 

 

 

 

 















Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 















Based on net asset value

 

 

12.49

%

 

10.60

%

 

(6.26

)%

 

0.27

%4

 

 













 

 

 

 

 

 

 

 

 

 

 

 

 

 















Ratios to Average Net Assets5

 

 

 

 

 

 

 

 

 

 

 

 

 















Total expenses

 

 

1.14

%

 

0.77

%

 

0.68

%

 

0.67

%6

 

 













Total expenses after fees waived and/or reimbursed

 

 

1.00

%

 

0.58

%

 

0.59

%

 

0.55

%6

 

 













Net investment income

 

 

4.58

%

 

5.72

%

 

5.16

%

 

4.54

%6

 

 













 

 

 

 

 

 

 

 

 

 

 

 

 

 















Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 















Net assets, end of period (000)

 

$

522,408

 

$

453,847

 

$

642,177

 

$

837,730

 

 

 













Portfolio turnover of the Master Portfolio

 

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

 














 

 

 

 

1

Commencement of operations.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

6

Annualized.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

9

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

10

Represents portfolio turnover for the period.


 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

13



 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

 

 



 

 

Year Ended September 30,

 

 

 



 

 

2010

 

2009

 

2008

 

20071

 

2006

 













Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Net asset value, beginning of year

 

$

10.56

 

$

10.16

 

$

11.41

 

$

11.50

 

$

11.64

 

 

 
















Net investment income2

 

 

0.42

 

 

0.54

 

 

0.55

 

 

0.50

 

 

0.45

 

Net realized and unrealized gain (loss)

 

 

0.84

 

 

0.45

 

 

(1.25

)

 

(0.12

)

 

(0.07

)

 

 
















Net increase (decrease) from investment operations

 

 

1.26

 

 

0.99

 

 

(0.70

)

 

0.38

 

 

0.38

 

 

 
















Dividends and distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.50

)

 

(0.59

)

 

(0.55

)

 

(0.47

)

 

(0.46

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.06

)

 

 
















Total dividends and distributions

 

 

(0.50

)

 

(0.59

)

 

(0.55

)

 

(0.47

)

 

(0.52

)

 

 
















Net asset value, end of year

 

$

11.32

 

$

10.56

 

$

10.16

 

$

11.41

 

$

11.50

 

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Based on net asset value

 

 

12.22

%

 

10.37

%

 

(6.47

)%

 

3.88

%

 

3.38

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Ratios to Average Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total expenses

 

 

1.40

%4

 

0.98

%4

 

0.96

%4

 

1.25

%4

 

31.07

%

 

 
















Total expenses after fees waived and/or reimbursed

 

 

1.23

%4

 

0.78

%4

 

0.81

%4

 

0.91

%4

 

0.88

%

 

 
















Net investment income

 

 

4.44

%4

 

5.48

%4

 

4.92

%4

 

4.80

%4

 

3.93

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Net assets, end of year (000)

 

$

936

 

$

1,323

 

$

1,324

 

$

1,769

 

 

5

 

 
















Portfolio turnover of the Fund

 

 

 

 

 

 

 

 

238

%6

 

192

%

 

 
















Portfolio turnover of the Master Portfolio

 

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

 

 

 

















 

 

 

 

1

On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns include the reinvestment of dividends and distributions.

 

 

 

 

4

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

5

Amount is less than $500.

 

 

 

 

6

Represents portfolio turnover for the period October 1, 2006 to September 24, 2007.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

9

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

10

Represents portfolio turnover for the year.

 

 

 

 

The performance prior to September 24, 2007 set forth in this table is the financial data of Service Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.126588.


 

 

 

See Notes to Financial Statements.

 

 




14

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor A

 

Investor A1

 

 


 


 

 


Year Ended
September 30,

 


Period
September 24,
20071 to
September 30,

 

Year Ended
September 30,

 

Period
September 24,
20071 to
September 30,

 

 


 

 


 

 

 

2010

 

2009

 

2008

 

2007

 

2010

 

2009

 

2008

 

2007


Per Share Operating Performance


Net asset value, beginning of period

 

$

10.56

 

$

10.16

 

$

11.41

 

$

11.38

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.38

 

 

 

























Net investment income2

 

 

0.44

 

 

0.53

 

 

0.55

 

 

0.01

 

 

0.49

 

 

0.54

 

 

0.56

 

 

0.01

 

Net realized and unrealized gain (loss)

 

 

0.81

 

 

0.45

 

 

(1.26

)

 

0.03

 

 

0.78

 

 

0.45

 

 

(1.26

)

 

0.03

 

 

 

























Net increase (decrease) from investment operations

 

 

1.25

 

 

0.98

 

 

(0.71

)

 

0.04

 

 

1.27

 

 

0.99

 

 

(0.70

)

 

0.04

 

 

 

























Dividends from net investment income

 

 

(0.49

)

 

(0.58

)

 

(0.54

)

 

(0.01

)

 

(0.51

)

 

(0.59

)

 

(0.55

)

 

(0.02

)

 

 

























Net asset value, end of period

 

$

11.32

 

$

10.56

 

$

10.16

 

$

11.41

 

$

11.31

 

$

10.55

 

$

10.15

 

$

11.40

 

 

 

























 


Total Investment Return3


Based on net asset value

 

 

12.16

%

 

10.25

%

 

(6.56

)%

 

0.35

%4

 

12.40

%

 

10.36

%

 

(6.46

)%

 

0.27

%4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

























 


Ratios to Average Net Assets5


Total expenses

 

 

1.42

%

 

1.04

%

 

1.00

%

 

1.02

%6

 

1.27

%

 

0.93

%

 

0.88

%

 

0.72

%6

 

 

























Total expenses after fees waived and/or reimbursed

 

 

1.30

%

 

0.89

%

 

0.92

%

 

0.90

%6

 

1.09

%

 

0.80

%

 

0.81

%

 

0.64

%6

 

 

























Net investment income

 

 

4.22

%

 

5.42

%

 

4.84

%

 

4.17

%6

 

4.55

%

 

5.55

%

 

4.95

%

 

4.43

%6

 

 

























 


Supplemental Data


Net assets, end of period (000)

 

$

942,652

 

$

588,731

 

$

618,346

 

$

690,100

 

$

64,599

 

$

72,851

 

$

109,125

 

$

147,533

 

 

 

























Portfolio turnover of the Master Portfolio

 

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

 


























 

 

 

 

1

Commencement of operations.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

6

Annualized.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

9

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

10

Represents portfolio turnover for the period.


 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

15




 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor B

 

Investor B1

 

 


 


 

 


Year Ended
September 30,

 


Period
September 24,
20071 to
September 30,

 

Year Ended
September 30,

 

Period
September 24,
20071 to
September 30,

 

 


 

 


 

 

 

2010

 

2009

 

2008

 

2007

 

2010

 

2009

 

2008

 

2007


Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net asset value, beginning of period

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.38

 

$

10.55

 

$

10.16

 

$

11.41

 

$

11.38

 

 

 

























Net Investment income2

 

 

0.41

 

 

0.46

 

 

0.47

 

 

0.01

 

 

0.41

 

 

0.49

 

 

0.50

 

 

0.01

 

Net realized and unrealized gain (loss)

 

 

0.78

 

 

0.45

 

 

(1.25

)

 

0.02

 

 

0.82

 

 

0.44

 

 

(1.25

)

 

0.03

 

 

 

























Net increase (decrease) from investment operations

 

 

1.19

 

 

0.91

 

 

(0.78

)

 

0.03

 

 

1.23

 

 

0.93

 

 

(0.75

)

 

0.04

 

 

 

























Dividends from net investment income

 

 

(0.43

)

 

(0.51

)

 

(0.47

)

 

(0.01

)

 

(0.46

)

 

(0.54

)

 

(0.50

)

 

(0.01

)

 

 

























Net asset value, end of period

 

$

11.31

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.32

 

$

10.55

 

$

10.16

 

$

11.41

 

 

 

























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Based on net asset value

 

 

11.51

%

 

9.50

%

 

(7.18

)%

 

0.26

%4

 

11.97

%

 

9.71

%

 

(6.91

)%

 

0.35

%4

 

 

























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Ratios to Average Net Assets5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total expenses

 

 

2.08

%

 

1.72

%

 

1.64

%

 

1.51

%6

 

1.78

%

 

1.44

%

 

1.36

%

 

1.20

%6

 

 

























Total expenses after fees waived and/or reimbursed

 

 

1.90

%

 

1.58

%

 

1.57

%

 

1.43

%6

 

1.58

%

 

1.30

%

 

1.30

%

 

1.12

%6

 

 

























Net investment income

 

 

3.75

%

 

4.76

%

 

4.18

%

 

3.64

%6

 

4.09

%

 

5.05

%

 

4.46

%

 

3.96

%6

 

 

























 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net assets, end of period (000)

 

$

77,806

 

$

93,722

 

$

131,142

 

$

193,973

 

$

12,080

 

$

15,886

 

$

24,912

 

$

42,961

 

 

 

























Portfolio turnover of the Master Portfolio

 

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

 


























 

 

 

 

1

Commencement of operations.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

6

Annualized.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

9

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

10

Represents portfolio turnover for the period.


 

 

 

See Notes to Financial Statements.

 

 




16

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor B2

 

 


 

 

Year Ended September 30,

 

 


 

 

2010

 

2009

 

2008

 

20071

 

2006


Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net asset value, beginning of year

 

$

10.56

 

$

10.16

 

$

11.40

 

$

11.49

 

$

11.63

 

 

 
















Net investment income2

 

 

0.48

 

 

0.54

 

 

0.54

 

 

0.49

 

 

0.38

 

Net realized and unrealized gain (loss)

 

 

0.77

 

 

0.44

 

 

(1.24

)

 

(0.12

)

 

(0.09

)

 

 
















Net increase (decrease) from investment operations

 

 

1.25

 

 

0.98

 

 

(0.70

)

 

0.37

 

 

0.29

 

 

 
















Dividends and distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.49

)

 

(0.58

)

 

(0.54

)

 

(0.46

)

 

(0.37

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.06

)

 

 
















Total dividends and distributions

 

 

(0.49

)

 

(0.58

)

 

(0.54

)

 

(0.46

)

 

(0.43

)

 

 
















Net asset value, end of year

 

$

11.32

 

$

10.56

 

$

10.16

 

$

11.40

 

$

11.49

 

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Based on net asset value

 

 

12.14

%

 

10.28

%

 

(6.50

)%

 

3.59

%

 

2.50

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Ratios to Average Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total expenses

 

 

1.58

%4

 

1.01

%4

 

1.02

%4

 

1.28

%4

 

3.30

%

 

 
















Total expenses after fees waived and/or reimbursed

 

 

1.34

%4

 

0.88

%4

 

0.95

%4

 

1.03

%4

 

1.62

%

 

 
















Net investment income

 

 

4.38

%4

 

5.53

%4

 

4.78

%4

 

4.73

%4

 

3.29

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net assets, end of year (000)

 

$

75

 

$

223

 

$

612

 

$

1,027

 

$

226

 

 

 
















Portfolio turnover of the Fund

 

 

 

 

 

 

 

 

238

%5

 

192

%

 

 
















Portfolio turnover of the Master Portfolio

 

 

1,754

%6

 

708

%7

 

1,081

%8

 

153

%9

 

 

 

 

















 

 

 

 

1

On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

5

Represents portfolio turnover for the period October 1, 2006 to September 24, 2007.

 

 

 

 

6

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

8

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

9

Represents portfolio turnover for the year.

 

 

 

 

 

The performance prior to September 24, 2007 set forth in this table is the financial data of Investor B Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.132883.


 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

17




 

 


 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor C

 

 


 

 

Year Ended September 30,

 

 


 

 

2010

 

2009

 

2008

 

20071

 

2006


Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net asset value, beginning of year

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.49

 

$

11.63

 

 

 
















Net investment income2

 

 

0.39

 

 

0.47

 

 

0.48

 

 

0.16

 

 

0.38

 

Net realized and unrealized gain (loss)

 

 

0.79

 

 

0.45

 

 

(1.26

)

 

0.16

 

 

(0.09

)

 

 
















Net increase (decrease) from investment operations

 

 

1.18

 

 

0.92

 

 

(0.78

)

 

0.32

 

 

0.29

 

 

 
















Dividends and distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(0.42

)

 

(0.52

)

 

(0.47

)

 

(0.41

)

 

(0.37

)

Net realized gain

 

 

 

 

 

 

 

 

 

 

(0.06

)

 

 
















Total dividends and distributions

 

 

(0.42

)

 

(0.52

)

 

(0.47

)

 

(0.41

)

 

(0.43

)

 

 
















Net asset value, end of year

 

$

11.31

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.49

 

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Based on net asset value

 

 

11.46

%

 

9.61

%

 

(7.12

)%

 

3.12

%

 

2.50

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Ratios to Average Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Total expenses

 

 

2.24

%4

 

1.90

%4

 

1.95

%4

 

2.08

%4

 

10.03

%

 

 
















Total expenses after fees waived and/or reimbursed

 

 

1.93

%4

 

1.48

%4

 

1.50

%4

 

1.53

%4

 

1.62

%

 

 
















Net investment income

 

 

3.64

%4

 

4.81

%4

 

4.24

%4

 

3.85

%4

 

3.27

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Net assets, end of year (000)

 

$

228,349

 

$

167,345

 

$

157,147

 

$

137,586

 

$

102

 

 

 
















Portfolio turnover of the Fund

 

 

 

 

 

 

 

 

238

%5

 

192

%

 

 
















Portfolio turnover of the Master Portfolio

 

 

1,754

%6

 

708

%7

 

1,081

%8

 

153

%9

 

 

 

 

















 

 

 

 

1

On September 24, 2007, the Fund converted from a stand-alone investment company to a “feeder” fund that seeks to achieve its investment objective by investing all of its assets in the Master Portfolio, which has the same investment objective as the Fund. All investments will be made at the Master Portfolio level. This structure is sometimes called a “master/feeder” structure.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

5

Represents portfolio turnover for the period October 1, 2006 to September 24, 2007.

 

 

 

 

6

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

8

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

9

Represents portfolio turnover for the year.

 

 

 

 

 

The performance prior to September 24, 2007 set forth in this table is the financial data of Investor C Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.133781.


 

 

 

See Notes to Financial Statements.

 

 




18

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

Financial Highlights (continued)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor C1

 

Investor C2

 

 

 


 


 

 

 

 

 

Period
September 24,
20071 to
September 30,
2007

 

 

 

 

 

 

 

Period
September 24,
20071 to
September 30,
2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
September 30,

 

 

Year Ended
September 30,

 

 

 

 


 

 


 

 

 

 

2010

 

2009

 

2008

 

 

2010

 

2009

 

2008

 

 



















Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



























Net asset value, beginning of period

 

$

10.55

 

$

10.16

 

$

11.41

 

$

11.38

 

$

10.55

 

$

10.15

 

$

11.40

 

$

11.37

 

 

 

























Net investment income2

 

 

0.41

 

 

0.47

 

 

0.48

 

 

0.01

 

 

0.43

 

 

0.49

 

 

0.50

 

 

0.01

 

Net realized and unrealized gain (loss)

 

 

0.79

 

 

0.44

 

 

(1.25

)

 

0.03

 

 

0.78

 

 

0.44

 

 

(1.26

)

 

0.03

 

 

 

























Net increase (decrease) from
investment operations

 

 

1.20

 

 

0.91

 

 

(0.77

)

 

0.04

 

 

1.21

 

 

0.93

 

 

(0.76

)

 

0.04

 

 

 

























Dividends from net investment income

 

 

(0.43

)

 

(0.52

)

 

(0.48

)

 

(0.01

)

 

(0.45

)

 

(0.53

)

 

(0.49

)

 

(0.01

)

 

 

























Net asset value, end of period

 

$

11.32

 

$

10.55

 

$

10.16

 

$

11.41

 

$

11.31

 

$

10.55

 

$

10.15

 

$

11.40

 

 

 



















































Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



























Based on net asset value

 

 

11.67

%

 

9.50

%

 

(7.09

)%

 

0.35

%4

 

11.79

%

 

9.74

%

 

(6.95

)%

 

0.35

%4

 

 



















































Ratios to Average Net Assets5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



























Total expenses

 

 

2.00

%

 

1.62

%

 

1.55

%

 

1.45

%6

 

1.80

%

 

1.46

%

 

1.40

%

 

1.29

%6

 

 

























Total expenses after fees waived
and/or reimbursed

 

 

1.83

%

 

1.48

%

 

1.49

%

 

1.37

%6

 

1.64

%

 

1.33

%

 

1.33

%

 

1.21

%6

 

 

























Net investment income

 

 

3.79

%

 

4.85

%

 

4.27

%

 

3.70

%6

 

3.99

%

 

4.99

%

 

4.42

%

 

3.87

%6

 

 



















































Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



























Net assets, end of period (000)

 

$

215,515

 

$

229,174

 

$

297,811

 

$

393,738

 

$

11,481

 

$

12,881

 

$

15,099

 

$

20,654

 

 

 

























Portfolio turnover of the Master Portfolio

 

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

1,754

%7

 

708

%8

 

1,081

%9

 

153

%10

 

 


























 

 

 

 

1

Commencement of operations.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

6

Annualized.

 

 

 

 

7

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

9

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

10

Represents portfolio turnover for the period.


 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

19




 

 



 

Financial Highlights (concluded)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class R

 

 


 

 

 

 

Period
October 2,
20061 to
September 30,
2007

 

 

 

 

 

 

 

 

Year Ended
September 30,

 

 

 

 


 

 

 

 

2010

 

2009

 

2008

 

 











Per Share Operating Performance

 

 

 

 

 

 

 

 

 

 

 

 

 















Net asset value, beginning of period

 

$

10.56

 

$

10.16

 

$

11.41

 

$

11.50

 

 

 













Net investment income2

 

 

0.44

 

 

0.51

 

 

0.52

 

 

0.11

 

Net realized and unrealized gain (loss)

 

 

0.78

 

 

0.45

 

 

(1.25

)

 

0.26

 

 

 













Net increase (decrease) from investment operations

 

 

1.22

 

 

0.96

 

 

(0.73

)

 

0.37

 

 

 













Dividends from net investment income

 

 

(0.46

)

 

(0.56

)

 

(0.52

)

 

(0.46

)

 

 













Net asset value, end of period

 

$

11.32

 

$

10.56

 

$

10.16

 

$

11.41

 

 

 



























Total Investment Return3

 

 

 

 

 

 

 

 

 

 

 

 

 















Based on net asset value

 

 

11.86

%

 

10.01

%

 

(6.76

)%

 

3.48

%4

 

 



























Ratios to Average Net Assets5

 

 

 

 

 

 

 

 

 

 

 

 

 















Total expenses

 

 

1.78

%

 

1.45

%

 

1.37

%

 

1.37

%6

 

 













Total expenses after fees waived and/or reimbursed

 

 

1.56

%

 

1.11

%

 

1.13

%

 

1.10

%6

 

 













Net investment income

 

 

4.07

%

 

5.23

%

 

4.62

%

 

4.01

%6

 

 



























Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 















Net assets, end of period (000)

 

$

43,338

 

$

46,658

 

$

57,895

 

$

62,836

 

 

 













Portfolio turnover of the Fund

 

 

 

 

 

 

 

 

238

%7

 

 













Portfolio turnover of the Master Portfolio

 

 

1,754

%8

 

708

%9

 

1,081

%10

 

153

%11

 

 














 

 

 

 

1

Commencement of operations.

 

 

 

 

2

Based on average shares outstanding.

 

 

 

 

3

Where applicable, total investment returns include the reinvestment of dividends and distributions.

 

 

 

 

4

Aggregate total investment return.

 

 

 

 

5

Includes the Fund’s share of the Master Portfolio’s allocated expenses and/or net investment income.

 

 

 

 

6

Annualized.

 

 

 

 

7

Represents portfolio turnover for the period.

 

 

 

 

8

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

9

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

10

Includes TBA transactions. Excluding these transactions, the portfolio turnover would have been 418%.

 

 

 

 

11

Represents portfolio turnover for the period.

 

 

 

 

 

The performance prior to September 24, 2007 set forth in this table is the financial data of Class R Shares of the BlackRock Total Return Portfolio. BlackRock Total Return Fund acquired all of the assets and certain stated liabilities of the BlackRock Total Return Portfolio on September 24, 2007. The net asset values and other per share information listed have been restated to reflect the conversion ratio of 1.133286.


 

 

 

 

See Notes to Financial Statements.


20

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 


 

 

Notes to Financial Statements

BlackRock Total Return Fund

1. Organization and Significant Accounting Policies:

BlackRock Total Return Fund (the “Fund”) is a series of BlackRock Bond Fund, Inc. (the ‘‘Bond Fund’’) and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. The Fund seeks to achieve its investment objective by investing all of its assets in Master Total Return Portfolio (the “Master Portfolio”) of Master Bond LLC (the “Master LLC”), which has the same investment objective and strategies as the Fund. The Master LLC is organized as a Delaware limited liability company. The value of the Fund’s investment in the Master Portfolio reflects the Fund’s proportionate interest in the net assets of the Master Portfolio. The percentage of the Master Portfolio owned by the Fund at September 30, 2010 was 83.2%. The performance of the Fund is directly affected by the performance of the Master Portfolio. The financial statements of the Master Portfolio, including the Schedule of Investments, are included elsewhere in this report and should be read in conjunction with the Fund’s financial statements. The Fund’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Fund offers multiple classes of shares. BlackRock, Institutional and Service Shares are sold without a sales charge and only to certain eligible investors. Investor A and Investor A1 Shares are generally sold with a front-end sales charge. Investor B, Investor B1, Investor B2, Investor C, Investor C1 and Investor C2 Shares may be subject to a contingent deferred sales charge. In addition, Investor A1, Investor B, Investor B1, Investor B2, Investor C1 and Investor C2 Shares are sold only to certain eligible investors. Investor B and Class R Shares are sold only to certain retirement or similar plans.

All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Service, Investor A, Investor A1, Investor B, Investor B1, Investor B2, Investor C, Investor C1, Investor C2 and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor B1, Investor B2, Investor C, Investor C1, Investor C2 and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B and Investor B1 Shares automatically convert to Investor A and Investor A1 Shares, respectively, after approximately ten years. Investor B2 Shares automatically convert to Investor A Shares after approximately seven years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B, Investor B1 and Investor B2 shareholders may vote on material changes to the Investor A and Investor A1 distribution plans as applicable).

Valuation: The Fund’s policy is to fair value its financial instruments at market value. The Fund records its investment in the Master Portfolio at fair value based on the Fund’s proportionate interest in the net assets of the Master Portfolio. Valuation of securities held by the Master Portfolio, including categorization of fair value measurements, is discussed in Note 1 of the Master Portfolio’s Notes to Financial Statements, which are included elsewhere in this report.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions in the Master Portfolio are accounted for on a trade date basis. The Fund records daily its proportionate share of the Master Portfolio’s income, expenses and realized and unrealized gains and losses. In addition, the Fund accrues its own expenses. Income and realized and unrealized gains and losses on investments are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

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

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four periods ended September 30, 2010. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Bond Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays the Manager a monthly fee with respect to the Fund based upon the aggregate average daily value of the

 

 

 


BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

21




 

 


 

 

Notes to Financial Statements (continued)

BlackRock Total Return Fund

net assets of the Fund and BlackRock High Income Fund of the Bond Fund (the “High Income Fund”) at the following annual rates:

 

 

 

 





Not exceeding $250 million

 

0.50

%

In excess of $250 million, but not exceeding $500 million

 

0.45

%

In excess of $500 million, but not exceeding $750 million

 

0.40

%

In excess of $750 million

 

0.35

%





For the year September 30, 2010, the aggregate average daily net assets of the Fund and High Income Fund were approximately $3,681,161,000.

The Manager contractually agreed to waive the Fund’s investment advisor’s fee in the amount of the Fund’s share of the investment advisor’s fee paid to the Master Portfolio. For the year ended September 30, 2010, the Manager waived $1,761,500, which is included in fees waived by advisor in the Statement of Operations.

The Manager contractually agreed to waive or reimburse fees or expenses, excluding interest expense, acquired fund fees and expenses and certain other fund expenses, in order to limit expenses as a percentage of average daily net assets allocated to each class of the Fund as follows: 0.40% (for BlackRock Shares), 0.55% (for Institutional Shares), 0.85% (for Service Shares), 0.90% (for Investor A Shares), 1.65% (for Investor B2 Shares), 1.65% (for Investor C Shares) and 1.10% (for Class R Shares) until February 1, 2011. The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement unless approved by the Board, including a majority of the non-interested Directors. In addition to the contractual waivers described above, the Manager has voluntarily agreed to waive or reimburse fees or expenses in order to limit expenses (excluding interest expense, acquired fund fees and expenses and certain other Fund expenses) as a percentage of average daily net assets allocated to each class of the Fund as follows: 0.76% (for Service Shares), 1.53% (for Investor B2 Shares), 1.45% (for Investor C Shares) and 1.08% (for Class R Shares). These voluntary waivers may be reduced or discontinued at any time. As a result, the Manager waived the following amounts, which are included in transfer agent fees waived or reimbursed — class specific in the Statement of Operations:

 

 

 

 

 






BlackRock

 

$

40,051

 

Institutional

 

 

157,667

 

Service

 

 

677

 

Investor A

 

 

163,529

 

Investor A1

 

 

52,081

 

Investor B

 

 

70,590

 

Investor B1

 

 

14,353

 

Investor B2

 

 

204

 

Investor C

 

 

424,422

 

Investor C1

 

 

154,427

 

Investor C2

 

 

7,815

 

Class R

 

 

57,682

 

 

 




Total

 

$

1,143,498

 

 

 




In addition, the Manager waived $814,918 which is included in fees waived by advisor in the Statement of Operations.

The Manager entered into a separate sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Bond Fund entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of the Fund as follows:

 

 

 

 

 

 






 

 

Service Fee

 

Distribution
Fee






Service

 

0.25%

 

 

Investor A

 

0.25%

 

 

Investor A1

 

0.10%

 

 

Investor B

 

0.25%

 

0.50

%

Investor B1

 

0.25%

 

0.25

%

Investor B2

 

0.25%

 

0.75

%

Investor C

 

0.25%

 

0.75

%

Investor C1

 

0.25%

 

0.55

%

Investor C2

 

0.25%

 

0.25

%

Class R

 

0.25%

 

0.25

%







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

For the year ended September 30, 2010, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares, which totaled $69,215. Affiliates received the following contingent deferred sales charges:

 

 

 

 

 






Investor A

 

$

392

 

Investor B

 

$

31,084

 

Investor B1

 

$

6,644

 

Investor B2

 

$

369

 

Investor C

 

$

44,612

 

Investor C1

 

$

5,469

 

Investor C2

 

$

97

 







 

 

 


22

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

 

Notes to Financial Statements (continued)

BlackRock Total Return Fund

BNY Mellon Investment Servicing (US) Inc. (formerly PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”)), serves as transfer agent and dividend disbursing agent. On July 1, 2010, the Bank of New York Mellon Corporation purchased PNCGIS, which prior to this date was an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services. Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to sub-accounts they service. For these services, these entities receive a fee that could vary depending on, among other things, shareholder accounts, share class and net assets. For the year ended Sep-tember 30, 2010, the Fund paid $99,069 to affiliates in return for these services, which is included in transfer agent in the Statement of Operations.

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended September 30, 2010, the Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations:

 

 

 

 

 






 

 

Call
Center
Fees

 





BlackRock

 

$

3,263

 

Institutional

 

$

5,845

 

Service

 

$

65

 

Investor A

 

$

7,199

 

Investor A1

 

$

736

 

Investor B

 

$

1,370

 

Investor B1

 

$

132

 

Investor B2

 

$

23

 

Investor C

 

$

3,239

 

Investor C1

 

$

3,186

 

Investor C2

 

$

153

 

Class R

 

$

371

 






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

3. Income Tax Information:

Reclassifications: US GAAP require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of September 30, 2010 attributable to the accounting for swap agreements, amortization methods on fixed income securities, the classification of investments, foreign currency transactions, and net paydown losses were reclassified to the following accounts:

 

 

 

 

 






Undistributed net investment income

 

$

1,964,804

 

Accumulated net realized loss

 

$

(1,964,804

)






The tax character of distributions paid during the fiscal years ended September 30, 2010 and September 30, 2009 was as follows:

 

 

 

 

 

 

 

 







 

 

9/30/10

 

9/30/09

 







Ordinary income

 

$

120,466,055

 

$

120,864,679

 

 

 







Total

 

$

120,466,055

 

$

120,864,679

 

 

 







As of September 30, 2010, the tax components of accumulated net losses were as follows:

 

 

 

 

 






Undistributed ordinary income

 

$

6,342,350

 

Capital loss carryforwards

 

 

(151,023,701

)

Net unrealized gains*

 

 

41,948,226

 

 

 




Total

 

$

(102,733,125

)

 

 





 

 

*

The difference between book-basis and tax-basis net unrealized gains is attributable primarily to the tax deferral of losses on wash sales, amortization methods for premiums and discounts on fixed income securities, the realization for tax purposes of unrealized gains/losses on certain futures, options, and foreign currency contracts, the timing and recognition of partnership income, the accounting for swap agreements, and the classification of investments.

As of September 30, 2010, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

 

 

 

 

 






Expires September 30,

 

 

 

 






2013

 

$

71,451

 

2014

 

 

8,093,306

 

2015

 

 

23,885,656

 

2016

 

 

10,255,556

 

2017

 

 

20,109,159

 

2018

 

 

88,608,573

 

 

 




Total

 

$

151,023,701

 

 

 





 

 

 


BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

23




 

 


 

Notes to Financial Statements (continued)

BlackRock Total Return Fund

4. Capital Share Transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
September 30, 2010

 

Year Ended
September 30, 2009

 

 

 


 



 

 

Shares

 

Amount

 

Shares

 

Amount

 











BlackRock

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold

 

 

51,692,663

 

$

564,461,720

 

 

40,546,242

 

$

409,857,288

 

Shares issued to shareholders in reinvestment of dividends

 

 

3,682,350

 

 

40,081,344

 

 

2,270,665

 

 

22,368,136

 

 

 






 







Total issued

 

 

55,375,013

 

 

604,543,064

 

 

42,816,907

 

 

432,225,424

 

Shares redeemed

 

 

(43,924,746

)

 

(490,016,379

)

 

(14,606,891

)

 

(144,178,757

)

 

 






 







Net increase

 

 

11,450,267

 

$

114,526,685

 

 

28,210,016

 

$

288,046,667

 

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Institutional

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

15,592,783

 

$

170,091,419

 

 

9,853,802

 

$

96,181,307

 

Shares issued to shareholders in reinvestment of dividends

 

 

1,757,925

 

 

19,073,840

 

 

2,512,112

 

 

24,501,041

 

 

 






 







Total issued

 

 

17,350,708

 

 

189,165,259

 

 

12,365,914

 

 

120,682,348

 

Shares redeemed

 

 

(14,192,120

)

 

(154,015,662

)

 

(32,593,943

)

 

(321,518,144

)

 

 






 







Net increase (decrease)

 

 

3,158,588

 

$

35,149,597

 

 

(20,228,029

)

$

(200,835,796

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Service

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

30,278

 

$

333,402

 

 

70,643

 

$

701,066

 

Shares issued to shareholders in reinvestment of dividends

 

 

4,095

 

 

44,284

 

 

6,498

 

 

63,639

 

 

 






 







Total issued

 

 

34,373

 

 

377,686

 

 

77,141

 

 

764,705

 

Shares redeemed

 

 

(77,005

)

 

(831,871

)

 

(82,163

)

 

(812,224

)

 

 






 







Net decrease

 

 

(42,632

)

$

(454,185

)

 

(5,022

)

$

(47,519

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor A

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

38,247,840

 

$

425,419,760

 

 

14,264,403

 

$

139,637,174

 

Shares issued to shareholders in reinvestment of dividends

 

 

2,339,126

 

 

25,401,465

 

 

2,979,970

 

 

29,118,922

 

 

 






 







Total issued

 

 

40,586,966

 

 

450,821,225

 

 

17,244,373

 

 

168,756,096

 

Shares redeemed

 

 

(13,088,212

)

 

(142,108,064

)

 

(22,339,818

)

 

(217,010,448

)

 

 






 







Net increase (decrease)

 

 

27,498,754

 

$

308,713,161

 

 

(5,095,445

)

$

(48,254,352

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor A1

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

1,050,541

 

$

11,360,862

 

 

1,997,717

 

$

19,542,209

 

Shares issued to shareholders in reinvestment of dividends

 

 

257,795

 

 

2,794,147

 

 

470,023

 

 

4,574,802

 

 

 






 







Total issued

 

 

1,308,336

 

 

14,155,009

 

 

2,467,740

 

 

24,117,011

 

Shares redeemed

 

 

(2,503,693

)

 

(27,033,398

)

 

(6,310,454

)

 

(61,744,068

)

 

 






 







Net decrease

 

 

(1,195,357

)

$

(12,878,389

)

 

(3,842,714

)

$

(37,627,057

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor B

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold

 

 

849,455

 

$

9,195,014

 

 

1,236,054

 

$

12,073,495

 

Shares issued to shareholders in reinvestment of dividends

 

 

252,558

 

 

2,736,145

 

 

448,121

 

 

4,361,353

 

 

 






 







Total issued

 

 

1,102,013

 

 

11,931,159

 

 

1,684,175

 

 

16,434,848

 

Shares redeemed and automatic conversion of shares

 

 

(3,107,882

)

 

(33,620,814

)

 

(5,716,821

)

 

(55,507,765

)

 

 






 







Net decrease

 

 

(2,005,869

)

$

(21,689,655

)

 

(4,032,646

)

$

(39,072,917

)

 

 






 








 

 

 




24

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Notes to Financial Statements (concluded)

BlackRock Total Return Fund


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended
September 30, 2010

 

Year Ended
September 30, 2009

 

 

 


 



 

 

Shares

 

Amount

 

Shares

 

Amount

 











Investor B1

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

175,399

 

$

1,897,416

 

 

289,439

 

$

2,823,586

 

Shares issued to shareholders in reinvestment of dividends

 

 

45,104

 

 

488,506

 

 

90,096

 

 

876,987

 

 

 






 







Total issued

 

 

220,503

 

 

2,385,922

 

 

379,535

 

 

3,700,573

 

Shares redeemed

 

 

(658,312

)

 

(7,094,737

)

 

(1,327,088

)

 

(12,935,631

)

 

 






 







Net decrease

 

 

(437,809

)

$

(4,708,815

)

 

(947,553

)

$

(9,235,058

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor B2

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

2,401

 

$

25,596

 

 

 

 

 

Shares issued to shareholders in reinvestment of dividends

 

 

377

 

 

4,088

 

 

1,883

 

$

18,258

 

 

 






 







Total issued

 

 

2,778

 

 

29,684

 

 

1,883

 

 

18,258

 

Shares redeemed

 

 

(17,261

)

 

(186,966

)

 

(40,970

)

 

(401,397

)

 

 






 







Net decrease

 

 

(14,483

)

$

(157,282

)

 

(39,087

)

$

(383,139

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor C

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold

 

 

8,570,033

 

$

92,681,173

 

 

7,033,222

 

$

69,048,493

 

Shares issued to shareholders in reinvestment of dividends

 

 

616,043

 

 

6,686,464

 

 

677,122

 

 

6,614,725

 

 

 






 







Total issued

 

 

9,186,076

 

 

99,367,637

 

 

7,710,344

 

 

75,663,218

 

Shares redeemed

 

 

(4,863,092

)

 

(52,885,738

)

 

(7,325,659

)

 

(71,117,668

)

 

 






 







Net increase

 

 

4,322,984

 

$

46,481,899

 

 

384,685

 

$

4,545,550

 

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor C1

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

837,912

 

$

9,057,851

 

 

883,582

 

$

8,631,216

 

Shares issued to shareholders in reinvestment of dividends

 

 

700,548

 

 

7,594,136

 

 

1,129,940

 

 

11,009,289

 

 

 






 







Total issued

 

 

1,538,460

 

 

16,651,987

 

 

2,013,522

 

 

19,640,505

 

Shares redeemed

 

 

(4,209,935

)

 

(45,596,188

)

 

(9,619,589

)

 

(93,211,998

)

 

 






 







Net decrease

 

 

(2,671,475

)

$

(28,944,201

)

 

(7,606,067

)

$

(73,571,493

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Investor C2

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold and automatic conversion of shares

 

 

134,720

 

$

1,452,965

 

 

189,077

 

$

1,851,653

 

Shares issued to shareholders in reinvestment of dividends

 

 

38,082

 

 

412,439

 

 

56,946

 

 

555,211

 

 

 






 







Total issued

 

 

172,802

 

 

1,865,404

 

 

246,023

 

 

2,406,864

 

Shares redeemed

 

 

(378,980

)

 

(4,093,677

)

 

(512,336

)

 

(4,963,574

)

 

 






 







Net decrease

 

 

(206,178

)

$

(2,228,273

)

 

(266,313

)

$

(2,556,710

)

 

 






 







 

 

 

 

 

 

 

 

 

 

 

 

 

 















Class R

 

 

 

 

 

 

 

 

 

 

 

 

 















Shares sold

 

 

1,384,316

 

$

15,017,437

 

 

1,933,855

 

$

18,915,768

 

Shares issued to shareholders in reinvestment of dividends

 

 

177,836

 

 

1,928,463

 

 

288,405

 

 

2,811,204

 

 

 






 







Total issued

 

 

1,562,152

 

 

16,945,900

 

 

2,222,260

 

 

21,726,972

 

Shares redeemed

 

 

(2,153,410

)

 

(23,375,308

)

 

(3,500,657

)

 

(34,087,850

)

 

 






 







Net decrease

 

 

(591,258

)

$

(6,429,408

)

 

(1,278,397

)

$

(12,360,878

)

 

 






 







5. Subsequent Events:

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

 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

25




 

 


 

Report of Independent Registered Public Accounting Firm

BlackRock Total Return Fund

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

We have audited the accompanying statement of assets and liabilities of BlackRock Total Return Fund, one of the funds constituting BlackRock Bond Fund, Inc. (the “Fund”) as of September 30, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

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

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. as of September 30, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
November 29, 2010

 


Important Tax Information (Unaudited)


The following information is provided with respect to the ordinary income distributions paid by BlackRock Total Return Fund of BlackRock Bond Fund, Inc. during the fiscal year ended September 30, 2010:

 

 

 

 

 





Federal Obligation Interest*

 

12.85

%






 





Interest Related Dividends for Non-U.S. Residents**

 

 

 






Month(s) Paid:

October 2009 – December 2009

 

87.57

%

 

January 2010 – September 2010

 

97.30

%







 

 

 

 

  *

The law varies in each state as to whether and what percentage of dividend income attributable to Federal Obligations is exempt from state income tax. We recommend that you consult your tax advisor to determine if any portion of the dividends you received is exempt from state income taxes.

 

 

 

 

**

Represents the portion of the taxable ordinary income dividends eligible for exemption from US withholding tax for nonresident aliens and foreign corporations.


 

 

 




26

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

 

Portfolio Information

Master Total Return Portfolio

 

 



As of September 30, 2010



 

 

 

 

 

Portfolio Composition

 

 

Percent of
Long-Term Investments





U.S. Government Sponsored Agency Securities

 

 

75

%

Corporate Bonds

 

 

8

 

U.S. Treasury Obligations

 

 

7

 

Non-Agency Mortgage-Backed Securities

 

 

6

 

Asset-Backed Securities

 

 

2

 

Taxable Municipal Bonds

 

 

1

 

Foreign Agency Obligations

 

 

1

 






 

 

 

 

 

Credit Quality Allocation1

 

 

Percent of
Long-Term Investments





AAA/Aaa2

 

 

92

%

AA/Aa

 

 

2

 

A

 

 

2

 

BBB/Baa

 

 

2

 

BB/Ba

 

 

1

 

B

 

 

1

 







 

 

 

 

1

Using the higher of Standard & Poor’s Corporation (“S&P’s”) or Moody’s Investors Service Inc. (“Moody’s”).

 

 

 

 

2

Includes US Government Sponsored Agency Securities that are deemed AAA/Aaa by the investment advisor.


 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

27




 

 



 

Schedule of Investments September 30, 2010

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Asset-Backed Securities

 

Par
(000)

 

Value

 







321 Henderson Receivables I LLC, Class A (a):

 

 

 

 

 

 

 

Series 2010-1A, 5.56%, 7/15/59

 

USD

9,704

 

$

10,564,573

 

Series 2010-2A, 4.07%, 1/15/28

 

 

4,947

 

 

5,036,668

 

ACE Securities Corp. (b):

 

 

 

 

 

 

 

Series 2003-OP1, Class A2, 0.62%,
12/25/33

 

 

581

 

 

458,504

 

Series 2005-ASP1, Class M1, 0.94%,
9/25/35

 

 

11,203

 

 

2,703,553

 

Series 2006-CW1, Class A2C, 0.40%,
7/25/36

 

 

1,680

 

 

792,402

 

Accredited Mortgage Loan Trust, Series 2007-1 (b):

 

 

 

 

 

 

 

Class A1, 0.31%, 2/25/37

 

 

50

 

 

50,193

 

Class A3, 0.39%, 2/25/37

 

 

2,000

 

 

1,364,422

 

Aegis Asset-Backed Securities Trust,
Series 2006-1, Class A1, 0.34%, 1/25/37 (b)

 

 

10

 

 

9,516

 

Ameriquest Mortgage Securities, Inc.,
Series 2004-R11, Class A1, 0.56%,
11/25/34 (b)

 

 

387

 

 

355,889

 

Bank of America Auto Trust, Series 2009-2A (a):

 

 

 

 

 

 

 

Class A2, 1.16%, 2/15/12

 

 

6,990

 

 

6,995,642

 

Class A3, 2.13%, 9/15/13

 

 

305

 

 

308,772

 

Bear Stearns Asset-Backed Securities Trust (b):

 

 

 

 

 

 

 

Series 2005-4, Class A, 0.59%, 1/25/36

 

 

601

 

 

596,792

 

Series 2005-SD1, Class 1A2, 0.56%,
7/25/27

 

 

488

 

 

486,144

 

Series 2006-HE8, Class 1A1, 0.33%,
10/25/36

 

 

556

 

 

554,727

 

Series 2006-HE10, Class 21A1, 0.33%,
12/25/36

 

 

4,484

 

 

4,121,667

 

Capital One Multi-Asset Execution Trust (b):

 

 

 

 

 

 

 

Series 2004-A8, Class A8, 0.39%, 8/15/14

 

 

4,585

 

 

4,580,271

 

Series 2006-A5, Class A5, 0.32%, 1/15/16

 

 

3,310

 

 

3,278,810

 

Carrington Mortgage Loan Trust, Class A1 (b):

 

 

 

 

 

 

 

Series 2006-NC4, 0.31%, 10/25/36

 

 

27

 

 

26,585

 

Series 2006-NC5, 0.31%, 1/25/37

 

 

115

 

 

110,119

 

Series 2007-RFC1, 0.31%, 12/25/36

 

 

97

 

 

89,334

 

Citibank Omni Master Trust, Series 2009-A8,
Class A8, 2.36%, 5/16/16 (a)(b)

 

 

9,640

 

 

9,749,576

 

Citigroup Mortgage Loan Trust, Inc., Series
2006-HE2, Class A2C, 0.41%, 8/25/36 (b)

 

 

1,975

 

 

1,605,304

 

Countrywide Asset-Backed Certificates (b):

 

 

 

 

 

 

 

Series 2003-BC3, Class A2, 0.57%, 9/25/33

 

 

909

 

 

757,436

 

Series 2004-5, Class A, 0.71%, 10/25/34

 

 

1,373

 

 

1,137,671

 

Series 2004-13, Class AF4, 4.58%, 1/25/33

 

 

6,245

 

 

6,309,584

 

Series 2006-13, Class 3AV2, 0.41%, 1/25/37

 

 

2,062

 

 

1,438,291

 

Series 2006-17, Class 2A2, 0.41%, 3/25/47

 

 

1,251

 

 

843,754

 

Series 2006-21, Class 2A1, 0.31%, 5/25/37

 

 

845

 

 

843,434

 

Series 2006-22, Class 2A1, 0.31%, 5/25/47

 

 

35

 

 

34,643

 

Series 2006-25, Class 2A1, 0.33%, 6/25/47

 

 

216

 

 

210,523

 

Series 2007-1, Class 2A1, 0.31%, 7/25/37

 

 

239

 

 

231,144

 

Series 2007-11, Class 2A1, 0.32%, 6/25/47

 

 

69

 

 

66,785

 

Series 2007-12, Class 2A1, 0.61%, 8/25/47

 

 

105

 

 

96,928

 


 

 

 

 

 

 

 

 

Asset-Backed Securities

 

Par
(000)

 

Value

 







DT Auto Owner Trust, Series 2007-A, Class A3,
5.60%, 3/15/13 (a)(b)

 

USD

48

 

$

48,280

 

Fannie Mae Mortgage-Backed Securities,
Series 2003-W5, Class A, 0.48%, 4/25/33 (b)

 

 

18

 

 

16,655

 

Ford Credit Auto Owner Trust, Series 2009-A,
Class A3B, 2.76%, 5/15/13 (b)

 

 

44,720

 

 

45,341,648

 

GMAC 93, 7.43%, 12/01/22

 

 

12,374

 

 

12,311,784

 

GMAC Mortgage Servicer Advance Funding Co.
Ltd., Series 2010-1A, Class A, 4.25%,
1/15/22 (a)

 

 

3,000

 

 

3,019,888

 

GSAA Home Equity Trust, Series 2006-5,
Class 2A1, 0.33%, 3/25/36 (b)

 

 

54

 

 

42,286

 

GSAMP Trust, Series 2007-NC1, Class A2B,
0.36%, 12/25/46 (b)

 

 

1,150

 

 

497,268

 

Globaldrive BV, Series 2008-2, Class A,
4.00%, 10/20/16

 

EUR

5,476

 

 

7,571,923

 

Harley-Davidson Motorcycle Trust, Series
2006-2, Class A2, 5.35%, 3/15/13

 

USD

2,501

 

 

2,540,677

 

Home Equity Asset Trust, Series 2007-2,
Class 2A1, 0.37%, 7/25/37 (b)

 

 

164

 

 

161,141

 

Honda Auto Receivables Owner Trust, Series
2010-1, Class A2, 0.62%, 2/21/12

 

 

200

 

 

200,144

 

IndyMac Residential Asset-Backed Trust, Series
2007-B, Class 2A1, 0.34%, 7/25/37 (b)

 

 

16

 

 

15,962

 

Lehman XS Trust, Series 2005-5N, Class 3A2,
0.62%, 11/25/35 (b)

 

 

9,256

 

 

2,753,785

 

Maryland Insurance Backed Securities Trust,
Series 2006-1A, Class A, 5.55%, 12/10/65

 

 

2,500

 

 

1,500,000

 

Mercedes-Benz Auto Receivables Trust, Series
2009-1, Class A2, 0.83%, 3/15/12

 

 

173

 

 

172,736

 

Morgan Stanley ABS Capital I (b):

 

 

 

 

 

 

 

Series 2005-HE1, Class A2MZ, 0.56%,
12/25/34

 

 

820

 

 

753,801

 

Series 2007-NC1, Class A2A, 0.31%,
11/25/36

 

 

106

 

 

106,134

 

New Century Home Equity Loan Trust, Series
2005-2, Class A2MZ, 0.52%, 6/25/35 (b)

 

 

2,543

 

 

2,433,162

 

Nicholas-Applegate CBO I Ltd., Series 2A,
Class B, 1.83%, 4/26/13 (a)(b)

 

 

4,201

 

 

3,571,074

 

Nissan Auto Receivables Owner Trust, Series
2009-A, Class A2, 2.94%, 7/15/11

 

 

2

 

 

1,525

 

Option One Mortgage Loan Trust, Series 2003-4,
Class A2, 0.58%, 7/25/33 (b)

 

 

2,223

 

 

1,780,810

 

Popular ABS Mortgage Pass-Through Trust, Series
2006-D, Class A1, 0.32%, 11/25/46 (b)

 

 

7

 

 

6,713

 

RAAC, Series 2005-SP2, Class 2A, 0.56%,
6/25/44 (b)

 

 

7,738

 

 

5,896,017

 

Residential Asset Securities Corp., Series
2003-KS5, Class AIIB, 0.55%, 7/25/33 (b)

 

 

927

 

 

511,017

 

SLC Student Loan Trust, Series 2006-A,
Class A4, 0.42%, 1/15/19 (b)

 

 

4,430

 

 

4,008,742

 


 


Portfolio Abbreviations


To simplify the listing of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

 

 

CAD

Canadian Dollar

CHF

Swiss Franc

CNY

China Renminlbi

CZK

Czech Republic Koruna

EUR

Euro

EURIBOR

Euro InterBank Offer Rate

GBP

British Pound

GO

General Obligation Bonds

HUF

Hungarian Forint

IDR

Indonesian Rupiah

JPY

Japanese Yen

KRW

South Korean Won

LIBOR

London InterBank Offered Rate

MBS

Mortgage-Backed Security

MXN

Mexican New Peso

NOK

Norwegian Krone

NZD

New Zealand Dollar

PLN

Poland Zloty

RB

Revenue Bonds

SEK

Swedish Krona

UAH

Ukrainian Hryvna

USD

U.S. Dollar

ZAR

South African Rand


 

 

 

 

See Notes to Financial Statements.


28

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 



 

Schedule of Investments (continued)

Master Total Return Portfolio
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Asset-Backed Securities

 

Par
(000)

 

Value

 







SLM Student Loan Trust (b):

 

 

 

 

 

 

 

Series 2005-4, Class A2, 0.58%, 4/26/21

 

USD

6,246

 

$

6,229,773

 

Series 2008-5, Class A1, 1.30%, 10/25/13

 

 

38

 

 

38,162

 

Series 2008-5, Class A2, 1.60%, 10/25/16

 

 

33,420

 

 

33,958,319

 

Series 2008-5, Class A3, 1.80%, 1/25/18

 

 

9,520

 

 

9,809,205

 

Series 2008-5, Class A4, 2.20%, 7/25/23

 

 

25,020

 

 

26,211,172

 

Series 2009-B, Class A1, 6.26%,
7/15/42 (a)

 

 

10,121

 

 

9,918,667

 

Series 2010-C, Class A1, 1.91%,
12/15/17 (a)

 

 

8,485

 

 

8,487,469

 

Santander Drive Auto Receivables Trust:

 

 

 

 

 

 

 

Series 2010-2, Class B, 2.24%, 12/15/14

 

 

8,280

 

 

8,297,695

 

Series 2010-2, Class C, 3.89%, 7/17/17

 

 

9,765

 

 

9,801,227

 

Series 2010-A-A2, 1.37%, 8/15/13 (a)

 

 

7,945

 

 

7,968,486

 

Series 2010-A-A3, 1.83%, 11/17/14 (a)

 

 

5,980

 

 

6,044,662

 

Series 2010-A-A4, 2.39%, 6/15/17 (a)

 

 

2,980

 

 

3,037,107

 

Small Business Administration, Class 1:

 

 

 

 

 

 

 

Series 2002-P10, 5.20%, 8/10/12

 

 

68

 

 

71,378

 

Series 2003-P10A, 4.52%, 2/10/13

 

 

11

 

 

11,404

 

Series 2004-P10, 4.50%, 2/10/14

 

 

330

 

 

346,628

 

Soundview Home Equity Loan Trust, Series
2006-EQ1, Class A2, 0.37%, 10/25/36 (b)

 

 

424

 

 

415,262

 

Structured Asset Securities Corp.:

 

 

 

 

 

 

 

Series 2003-Al2, Class A, 3.36%,
1/25/31 (a)

 

 

400

 

 

360,739

 

Series 2004-23XS, Class 2A1, 0.56%,
1/25/35 (b)

 

 

2,626

 

 

1,589,850

 

Series 2006-BC2, Class A3, 0.41%,
9/25/36 (b)

 

 

3,455

 

 

2,118,675

 

Series 2006-BC6, Class A2, 0.34%,
1/25/37 (b)

 

 

4,038

 

 

3,925,750

 

Series 2007-BC1, Class A2, 0.31%,
2/25/37 (b)

 

 

739

 

 

711,066

 

USAA Auto Owner Trust, Series 2006-4,
Class A4, 4.98%, 10/15/12

 

 

10,166

 

 

10,185,364

 









Total Asset-Backed Securities — 8.6%

 

 

 

 

 

310,610,888

 










 

 

 

 

 

 

 

 









 

Corporate Bonds

 

 

 

 

 

 

 









Aerospace & Defense — 0.1%

 

 

 

 

 

 

 

L-3 Communications Corp.:

 

 

 

 

 

 

 

5.88%, 1/15/15

 

 

1,360

 

 

1,390,600

 

Series B, 6.38%, 10/15/15

 

 

697

 

 

718,781

 

 

 

 

 

 




 

 

 

 

 

 

2,109,381

 









Airlines — 0.1%

 

 

 

 

 

 

 

Continental Airlines, Inc., Series 2002-1,
6.56%, 8/15/13

 

 

2,555

 

 

2,644,425

 









Beverages — 1.0%

 

 

 

 

 

 

 

Anheuser-Busch InBev Worldwide, Inc.:

 

 

 

 

 

 

 

3.00%, 10/15/12

 

 

25,510

 

 

26,486,625

 

5.38%, 1/15/20

 

 

8,165

 

 

9,216,578

 

 

 

 

 

 




 

 

 

 

 

 

35,703,203

 









Capital Markets — 3.2%

 

 

 

 

 

 

 

CDP Financial, Inc. (a):

 

 

 

 

 

 

 

3.00%, 11/25/14

 

 

17,845

 

 

18,530,730

 

4.40%, 11/25/19

 

 

10,000

 

 

10,652,440

 

The Goldman Sachs Group, Inc.:

 

 

 

 

 

 

 

5.25%, 10/15/13

 

 

7,770

 

 

8,445,151

 

3.70%, 8/01/15

 

 

8,880

 

 

9,085,225

 

5.38%, 3/15/20

 

 

11,400

 

 

12,015,737

 

6.00%, 6/15/20

 

 

16,550

 

 

18,203,130

 

Lehman Brothers Holdings, Inc., 6.75%,
12/28/17 (c)(d)

 

 

7,280

 

 

728

 


 

 

 

 

 

 

 

 

Corporate Bonds

 

Par
(000)

 

Value

 







Capital Markets (concluded)

 

 

 

 

 

 

 

Morgan Stanley:

 

 

 

 

 

 

 

2.88%, 5/14/13 (b)

 

USD

17,250

 

$

17,579,337

 

4.20%, 11/20/14

 

 

12,280

 

 

12,730,934

 

4.00%, 7/24/15

 

 

4,450

 

 

4,535,177

 

5.63%, 9/23/19

 

 

4,230

 

 

4,404,069

 

 

 

 

 

 




 

 

 

 

 

 

116,182,658

 









Chemicals — 0.3%

 

 

 

 

 

 

 

CF Industries, Inc., 7.13%, 5/01/20

 

 

8,030

 

 

8,782,813

 

NOVA Chemicals Corp.:

 

 

 

 

 

 

 

6.50%, 1/15/12

 

 

1,005

 

 

1,045,200

 

3.65%, 11/15/13 (b)

 

 

2,292

 

 

2,191,725

 

 

 

 

 

 




 

 

 

 

 

 

12,019,738

 









Commercial Banks — 3.9%

 

 

 

 

 

 

 

Bank Nederlandse Gemeenten, 1.75%,
10/06/15 (a)(e)

 

 

23,950

 

 

23,848,691

 

Bank of Scotland Plc, 5.00%, 11/21/11 (a)

 

 

250

 

 

258,534

 

Corporacion Andina de Fomento, 6.88%, 3/15/12

 

 

5,125

 

 

5,530,639

 

Dexia Credit Local SA (a):

 

 

 

 

 

 

 

2.38%, 9/23/11

 

 

450

 

 

455,248

 

2.00%, 3/05/13

 

 

9,890

 

 

9,964,590

 

Eksportfinans ASA:

 

 

 

 

 

 

 

1.88%, 4/02/13

 

 

26,475

 

 

27,044,980

 

3.00%, 11/17/14

 

 

13,620

 

 

14,360,996

 

2.00%, 9/15/15

 

 

23,620

 

 

23,678,625

 

5.50%, 5/25/16

 

 

8,025

 

 

9,372,341

 

5.50%, 6/26/17

 

 

75

 

 

88,601

 

HSBC Bank Plc, 3.50%, 6/28/15 (a)

 

 

8,710

 

 

9,136,459

 

Royal Bank of Scotland Group Plc, 2.63%,
5/11/12 (a)

 

 

2,650

 

 

2,721,842

 

The Toronto-Dominion Bank, 2.20%, 7/29/15 (a)

 

 

12,615

 

 

12,784,180

 

 

 

 

 

 




 

 

 

 

 

 

139,245,726

 









Consumer Finance — 0.3%

 

 

 

 

 

 

 

Ford Motor Credit Co. LLC, 6.63%, 8/15/17

 

 

3,680

 

 

3,920,804

 

SLM Corp.:

 

 

 

 

 

 

 

5.40%, 10/25/11

 

 

6,000

 

 

6,062,040

 

Series A, 0.80%, 1/27/14 (b)

 

 

35

 

 

30,233

 

Series CPI, 3.17%, 1/31/14 (b)

 

 

1,300

 

 

1,125,514

 

 

 

 

 

 




 

 

 

 

 

 

11,138,591

 









Containers & Packaging — 0.6%

 

 

 

 

 

 

 

Ball Corp.:

 

 

 

 

 

 

 

7.13%, 9/01/16

 

 

2,440

 

 

2,635,200

 

7.38%, 9/01/19

 

 

2,440

 

 

2,653,500

 

Crown Americas LLC, 7.63%, 5/15/17

 

 

5,629

 

 

6,079,320

 

Owens-Brockway Glass Container, Inc.,
7.38%, 5/15/16

 

 

7,920

 

 

8,523,900

 

 

 

 

 

 




 

 

 

 

 

 

19,891,920

 









Diversified Financial Services — 3.0%

 

 

 

 

 

 

 

Bank of America Corp., 5.63%, 7/01/20

 

 

6,290

 

 

6,646,637

 

Citigroup, Inc.:

 

 

 

 

 

 

 

4.75%, 5/19/15

 

 

5,680

 

 

5,975,888

 

5.38%, 8/09/20

 

 

14,320

 

 

14,815,930

 

FCE Bank Plc:

 

 

 

 

 

 

 

7.88%, 2/15/11

 

GBP

4,950

 

 

7,863,796

 

7.13%, 1/15/13

 

EUR

1,300

 

 

1,843,117

 

GMAC, Inc., 8.00%, 3/15/20 (a)

 

USD

7,490

 

 

8,182,825

 

General Electric Capital Corp.:

 

 

 

 

 

 

 

5.50%, 1/08/20

 

 

10,675

 

 

11,677,468

 

4.38%, 9/16/20

 

 

9,090

 

 

9,123,660

 

6.15%, 8/07/37

 

 

5

 

 

5,236

 

JPMorgan Chase & Co.:

 

 

 

 

 

 

 

4.50%, 11/15/10

 

 

10

 

 

10,046

 

0.90%, 2/26/13 (b)

 

 

5,410

 

 

5,430,888

 


 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

29




 

 


 

 

Schedule of Investments (continued)

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Corporate Bonds

 

 

Par
(000)

 

Value

 









Diversified Financial Services (concluded)

 

 

 

 

 

 

 

JPMorgan Chase Bank NA:

 

 

 

 

 

 

 

6.00%, 7/05/17

 

USD

13,805

 

$

15,625,990

 

Series BKNT, 6.00%, 10/01/17

 

 

10,900

 

 

12,372,677

 

Reynolds Group DL Escrow, Inc., 7.75%,
10/15/16 (a)

 

 

8,050

 

 

8,190,875

 

 

 

 

 

 




 

 

 

 

 

 

107,765,033

 









Diversified Telecommunication Services — 1.4%

 

 

 

 

 

 

 

AT&T Inc., 6.50%, 9/01/37

 

 

6,975

 

 

8,069,747

 

Frontier Communications Corp., 8.25%, 4/15/17

 

 

4,920

 

 

5,381,250

 

GTE Corp., 6.84%, 4/15/18

 

 

8,030

 

 

9,518,585

 

Qwest Communications International, Inc.:

 

 

 

 

 

 

 

7.50%, 2/15/14

 

 

1,150

 

 

1,173,000

 

Series B, 7.50%, 2/15/14

 

 

810

 

 

826,200

 

Qwest Corp., 8.38%, 5/01/16

 

 

2,625

 

 

3,104,062

 

TELUS Corp., 8.00%, 6/01/11

 

 

233

 

 

243,983

 

Telefonica Emisiones SAU:

 

 

 

 

 

 

 

5.98%, 6/20/11

 

 

1,070

 

 

1,109,757

 

4.95%, 1/15/15

 

 

9,325

 

 

10,203,247

 

Verizon Communications, Inc., 8.75%, 11/01/18

 

 

7,832

 

 

10,657,167

 

Verizon New Jersey, Inc., 7.85%, 11/15/29

 

 

35

 

 

40,812

 

Windstream Corp.:

 

 

 

 

 

 

 

8.13%, 8/01/13

 

 

180

 

 

195,300

 

8.63%, 8/01/16

 

 

255

 

 

269,663

 

 

 

 

 

 




 

 

 

 

 

 

50,792,773

 









Education — 0.1%

 

 

 

 

 

 

 

Leland Stanford Junior University, 4.75%, 5/01/19

 

 

2,450

 

 

2,797,778

 









Electric Utilities — 0.5%

 

 

 

 

 

 

 

Florida Power & Light Co.:

 

 

 

 

 

 

 

5.63%, 4/01/34

 

 

150

 

 

168,732

 

4.95%, 6/01/35

 

 

25

 

 

25,765

 

5.95%, 2/01/38

 

 

3,595

 

 

4,227,680

 

Florida Power Corp., 6.40%, 6/15/38

 

 

2,550

 

 

3,153,990

 

Progress Energy, Inc.:

 

 

 

 

 

 

 

7.10%, 3/01/11

 

 

885

 

 

907,098

 

5.63%, 1/15/16

 

 

6,760

 

 

7,741,647

 

Southern California Edison Co., Series 08-A,
5.95%, 2/01/38

 

 

2,825

 

 

3,346,385

 

 

 

 

 

 




 

 

 

 

 

 

19,571,297

 









Energy Equipment & Services — 0.2%

 

 

 

 

 

 

 

Pride International, Inc., 6.88%, 8/15/20

 

 

7,505

 

 

8,171,069

 









Food Products — 0.4%

 

 

 

 

 

 

 

Kraft Foods, Inc.:

 

 

 

 

 

 

 

6.50%, 8/11/17

 

 

120

 

 

143,767

 

5.38%, 2/10/20

 

 

9,525

 

 

10,639,892

 

6.50%, 2/09/40

 

 

3,055

 

 

3,576,996

 

 

 

 

 

 




 

 

 

 

 

 

14,360,655

 









Health Care Equipment & Supplies — 0.2%

 

 

 

 

 

 

 

CareFusion Corp., 6.38%, 8/01/19

 

 

3,478

 

 

4,138,010

 

Covidien International Finance SA, 2.80%,
6/15/15

 

 

2,480

 

 

2,569,905

 

DJO Finance LLC, 10.88%, 11/15/14

 

 

360

 

 

391,500

 

 

 

 

 

 




 

 

 

 

 

 

7,099,415

 









Health Care Providers & Services — 0.7%

 

 

 

 

 

 

 

HCA, Inc.:

 

 

 

 

 

 

 

8.50%, 4/15/19

 

 

7,810

 

 

8,708,150

 

7.25%, 9/15/20

 

 

7,975

 

 

8,533,250

 

Tenet Healthcare Corp.:

 

 

 

 

 

 

 

9.00%, 5/01/15

 

 

2,475

 

 

2,691,562

 

10.00%, 5/01/18

 

 

147

 

 

167,948

 

8.88%, 7/01/19

 

 

5,255

 

 

5,800,206

 

 

 

 

 

 




 

 

 

 

 

 

25,901,116

 









 

 

 

 

 

 

 

 

Corporate Bonds

 

 

Par
(000)

 

Value

 









Hotels, Restaurants & Leisure — 0.1%

 

 

 

 

 

 

 

MGM Mirage, 13.00%, 11/15/13

 

USD

2,902

 

$

3,409,850

 









Household Durables — 0.0%

 

 

 

 

 

 

 

American Greetings Corp., 7.38%, 6/01/16

 

 

570

 

 

579,975

 

Belvoir Land LLC, Series A-1, 5.27%,
12/15/47 (a)

 

 

20

 

 

16,869

 

Irwin Land LLC (a):

 

 

 

 

 

 

 

Series A-1, 5.03%, 12/15/25

 

 

25

 

 

23,806

 

Series A-2, 5.40%, 12/15/47

 

 

600

 

 

496,332

 

Ohana Military Communities LLC, Series 04I,
6.19%, 4/01/49 (a)

 

 

25

 

 

25,019

 

 

 

 

 

 




 

 

 

 

 

 

1,142,001

 









IT Services — 0.3%

 

 

 

 

 

 

 

iPayment Investors LP, 12.75%, 7/15/14 (a)(f)

 

 

550

 

 

475,730

 

Sabre Holdings Corp., 8.35%, 3/15/16

 

 

10,080

 

 

10,281,600

 

 

 

 

 

 




 

 

 

 

 

 

10,757,330

 









Independent Power Producers & Energy Traders — 0.0%

 

 

 

 

 

 

 

AES Ironwood LLC, 8.86%, 11/30/25

 

 

79

 

 

81,127

 

AES Red Oak LLC, Series B, 9.20%, 11/30/29

 

 

50

 

 

50,125

 

NRG Energy, Inc.:

 

 

 

 

 

 

 

7.25%, 2/01/14

 

 

575

 

 

590,093

 

7.38%, 2/01/16

 

 

165

 

 

169,744

 

 

 

 

 

 




 

 

 

 

 

 

891,089

 









Insurance — 2.6%

 

 

 

 

 

 

 

Hartford Life Global Funding Trusts, 0.47%,
6/16/14 (b)

 

 

13,275

 

 

12,466,327

 

Lincoln National Corp., 7.00%, 6/15/40

 

 

2,860

 

 

3,258,321

 

Manulife Financial Corp., 3.40%, 9/17/15

 

 

7,600

 

 

7,672,458

 

MetLife, Inc., 5.88%, 2/06/41

 

 

2,425

 

 

2,637,699

 

Metropolitan Life Global Funding I (a):

 

 

 

 

 

 

 

2.88%, 9/17/12

 

 

8,375

 

 

8,637,305

 

2.50%, 1/11/13

 

 

24,245

 

 

24,825,668

 

5.13%, 4/10/13

 

 

11,825

 

 

12,870,271

 

5.13%, 6/10/14

 

 

1,500

 

 

1,664,082

 

Prudential Financial, Inc., 4.75%, 9/17/15

 

 

10,790

 

 

11,669,040

 

Teachers Insurance & Annuity Association of
America, 6.85%, 12/16/39 (a)

 

 

4,665

 

 

5,740,651

 

 

 

 

 

 




 

 

 

 

 

 

91,441,822

 









Leisure Equipment & Products — 0.1%

 

 

 

 

 

 

 

Brunswick Corp., 11.25%, 11/01/16 (a)

 

 

2,500

 

 

2,881,250

 









Machinery — 0.1%

 

 

 

 

 

 

 

Navistar International Corp., 3.00%,
10/15/14 (g)

 

 

1,920

 

 

2,157,600

 









Media — 3.0%

 

 

 

 

 

 

 

Belo Corp., 6.75%, 5/30/13

 

 

1,805

 

 

1,877,200

 

CCH II LLC, 13.50%, 11/30/16

 

 

12,600

 

 

14,962,500

 

Clear Channel Worldwide Holdings, Inc.:

 

 

 

 

 

 

 

9.25%, 12/15/17

 

 

1,843

 

 

1,953,580

 

Series B, 9.25%, 12/15/17

 

 

7,372

 

 

7,869,610

 

Comcast Cable Communications Holdings, Inc.,
9.46%, 11/15/22

 

 

2,225

 

 

3,138,031

 

Comcast Corp.:

 

 

 

 

 

 

 

5.50%, 3/15/11

 

 

610

 

 

623,122

 

6.45%, 3/15/37

 

 

3,686

 

 

4,094,682

 

6.40%, 3/01/40

 

 

3,400

 

 

3,780,236

 

Cox Communications, Inc.:

 

 

 

 

 

 

 

7.13%, 10/01/12

 

 

3,895

 

 

4,312,127

 

8.38%, 3/01/39 (a)

 

 

6,180

 

 

8,296,174

 

DIRECTV Holdings LLC, 6.00%, 8/15/40

 

 

2,260

 

 

2,334,069

 

Discovery Communications LLC, 3.70%, 6/01/15

 

 

4,410

 

 

4,672,999

 

Gannett Co., Inc., 6.38%, 9/01/15 (a)

 

 

10,000

 

 

9,887,500

 

The Interpublic Group of Cos., Inc., 6.25%,
11/15/14

 

 

4,417

 

 

4,693,062

 


 

 

 

See Notes to Financial Statements.




30

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010



 

 


 

 

Schedule of Investments (continued)

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Corporate Bonds

 

 

Par
(000)

 

Value

 









Media (concluded)

 

 

 

 

 

 

 

NBC Universal, Inc. (a):

 

 

 

 

 

 

 

5.15%, 4/30/20

 

USD

6,285

 

$

6,787,335

 

4.38%, 4/01/21 (e)

 

 

9,450

 

 

9,565,139

 

News America Holdings, Inc., 7.75%, 1/20/24

 

 

10

 

 

12,523

 

News America, Inc.:

 

 

 

 

 

 

 

7.13%, 4/08/28

 

 

125

 

 

142,555

 

7.63%, 11/30/28

 

 

140

 

 

167,697

 

6.40%, 12/15/35

 

 

5,210

 

 

5,777,739

 

6.75%, 1/09/38

 

 

5,060

 

 

5,715,887

 

Time Warner Cable, Inc., 5.00%, 2/01/20

 

 

3,470

 

 

3,716,131

 

Time Warner Cos., Inc., 6.63%, 5/15/29

 

 

20

 

 

22,654

 

Time Warner, Inc.:

 

 

 

 

 

 

 

4.70%, 1/15/21

 

 

2,080

 

 

2,203,939

 

6.10%, 7/15/40

 

 

1,370

 

 

1,475,247

 

 

 

 

 

 




 

 

 

 

 

 

108,081,738

 









Metals & Mining — 0.4%

 

 

 

 

 

 

 

Aleris International, Inc., 9.00%, 12/15/14 (c)(d)

 

 

140

 

 

350

 

AngloGold Ashanti Holdings Plc, 5.38%, 4/15/20

 

 

2,440

 

 

2,581,237

 

Arch Western Finance LLC, 6.75%, 7/01/13

 

 

296

 

 

299,330

 

Teck Resources Ltd., 10.75%, 5/15/19

 

 

7,570

 

 

9,532,901

 

 

 

 

 

 




 

 

 

 

 

 

12,413,818

 









Multiline Retail — 0.2%

 

 

 

 

 

 

 

Dollar General Corp., 11.88%, 7/15/17 (f)

 

 

6,895

 

 

8,032,675

 









Oil, Gas & Consumable Fuels — 3.9%

 

 

 

 

 

 

 

Arch Coal, Inc., 7.25%, 10/01/20

 

 

8,770

 

 

9,263,312

 

BP Capital Markets Plc, 3.13%, 3/10/12

 

 

11,530

 

 

11,755,792

 

Canadian Natural Resources, Ltd.:

 

 

 

 

 

 

 

5.90%, 2/01/18

 

 

2,625

 

 

3,060,582

 

6.50%, 2/15/37

 

 

4,420

 

 

5,212,046

 

Cenovus Energy, Inc., 6.75%, 11/15/39

 

 

5,145

 

 

6,211,908

 

Chesapeake Energy Corp., 6.63%, 8/15/20

 

 

12,410

 

 

12,968,450

 

ConocoPhillips, 7.00%, 3/30/29

 

 

80

 

 

96,222

 

Consol Energy, Inc. (a):

 

 

 

 

 

 

 

8.00%, 4/01/17

 

 

5,101

 

 

5,521,833

 

8.25%, 4/01/20

 

 

2,849

 

 

3,112,533

 

Enterprise Products Operating LLC, 6.13%,
10/15/39

 

 

4,600

 

 

4,951,297

 

Kinder Morgan Energy Partners LP, 5.30%, 9/15/20

 

 

4,710

 

 

5,075,873

 

MidAmerican Energy Holdings Co.:

 

 

 

 

 

 

 

5.95%, 5/15/37

 

 

7,150

 

 

8,042,749

 

6.50%, 9/15/37

 

 

25

 

 

30,020

 

Nexen, Inc., 6.40%, 5/15/37

 

 

7,000

 

 

7,627,830

 

Peabody Energy Corp., 6.50%, 9/15/20

 

 

11,850

 

 

12,753,562

 

Pemex Finance Ltd., 9.03%, 2/15/11

 

 

7

 

 

7,123

 

Petrobras International Finance Co.:

 

 

 

 

 

 

 

5.88%, 3/01/18

 

 

3,760

 

 

4,178,089

 

5.75%, 1/20/20

 

 

15,650

 

 

17,325,254

 

Petrohawk Energy Corp., 7.25%, 8/15/18 (a)

 

 

8,853

 

 

9,030,060

 

Rockies Express Pipeline LLC, 3.90%, 4/15/15 (a)

 

 

6,400

 

 

6,402,554

 

Tennessee Gas Pipeline Co., 7.00%, 10/15/28

 

 

920

 

 

1,005,732

 

Valero Energy Corp., 6.63%, 6/15/37

 

 

6,050

 

 

6,075,670

 

 

 

 

 

 




 

 

 

 

 

 

139,708,491

 









Paper & Forest Products — 0.3%

 

 

 

 

 

 

 

Georgia-Pacific LLC, 8.25%, 5/01/16 (a)

 

 

7,550

 

 

8,389,937

 

International Paper Co., 7.30%, 11/15/39

 

 

3,305

 

 

3,699,918

 

 

 

 

 

 




 

 

 

 

 

 

12,089,855

 









Pharmaceuticals — 0.3%

 

 

 

 

 

 

 

Bristol-Myers Squibb Co., 6.88%, 8/01/97

 

 

75

 

 

91,283

 

Merck & Co., Inc., 4.00%, 6/30/15

 

 

4,890

 

 

5,410,174

 

Teva Pharmaceutical Finance LLC:

 

 

 

 

 

 

 

3.00%, 6/15/15

 

 

4,610

 

 

4,822,466

 

6.15%, 2/01/36

 

 

50

 

 

60,093

 

 

 

 

 

 




 

 

 

 

 

 

10,384,016

 









 

 

 

 

 

 

 

 

Corporate Bonds

 

 

Par
(000)

 

Value

 









Road & Rail — 0.4%

 

 

 

 

 

 

 

Burlington Northern Santa Fe LLC, 5.75%,
5/01/40

 

USD

8,660

 

$

9,556,959

 

Kazakhstan Temir Zholy Finance BV, 6.38%,
10/06/20 (a)(e)

 

 

3,450

 

 

3,570,750

 

 

 

 

 

 




 

 

 

 

 

 

13,127,709

 









Software — 0.1%

 

 

 

 

 

 

 

Oracle Corp., 3.88%, 7/15/20 (a)

 

 

4,150

 

 

4,344,357

 









Thrifts & Mortgage Finance — 2.3%

 

 

 

 

 

 

 

Achmea Hypotheekbank NV, 3.20%,
11/03/14 (a)

 

 

13,180

 

 

14,010,762

 

Cie de Financement Foncier, 2.50%, 9/16/15 (a)

 

 

13,100

 

 

13,174,696

 

MGIC Investment Corp., 5.38%

 

 

8,010

 

 

7,249,050

 

The PMI Group Inc., 6.00%, 9/15/16

 

 

13,350

 

 

10,607,148

 

Radian Group, Inc.:

 

 

 

 

 

 

 

5.63%, 2/15/13

 

 

13,350

 

 

12,348,750

 

5.38%, 6/15/15

 

 

13,350

 

 

11,314,125

 

Stadshypotek AB, 1.45%, 9/30/13 (a)

 

 

15,420

 

 

15,470,377

 

 

 

 

 

 




 

 

 

 

 

 

84,174,908

 









Tobacco — 0.3%

 

 

 

 

 

 

 

Philip Morris International, Inc., 4.50%, 3/26/20

 

 

10,400

 

 

11,346,390

 









Wireless Telecommunication Services — 1.0%

 

 

 

 

 

 

 

Cricket Communications, Inc., 7.75%, 5/15/16

 

 

7,367

 

 

7,818,229

 

Crown Castle Towers LLC, 6.11%, 1/15/40 (a)

 

 

13,550

 

 

14,969,092

 

Vodafone Group Plc, 4.15%, 6/10/14

 

 

13,325

 

 

14,392,039

 

 

 

 

 

 




 

 

 

 

 

 

37,179,360

 









Total Corporate Bonds — 31.4%

 

 

 

 

 

1,128,959,037

 









 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Foreign Agency Obligations

 

 

 

 

 

 

 









Kreditanstalt fuer Wiederaufbau, 2.75%, 9/08/20

 

 

4,525

 

 

4,553,571

 

Landwirtschaftliche Rentenbank:

 

 

 

 

 

 

 

4.13%, 7/15/13

 

 

1,015

 

 

1,101,435

 

Series E, 5.25%, 7/02/12

 

 

3,515

 

 

3,787,251

 

Series E, 4.38%, 1/15/13

 

 

2,860

 

 

3,089,249

 

Series E, 4.00%, 2/02/15

 

 

2,235

 

 

2,469,921

 

Mexico Government International Bond:

 

 

 

 

 

 

 

6.38%, 1/16/13

 

 

2,818

 

 

3,137,843

 

5.63%, 1/15/17

 

 

3,840

 

 

4,392,960

 

Province of Ontario Canada:

 

 

 

 

 

 

 

4.10%, 6/16/14

 

 

14,185

 

 

15,582,676

 

Series 1, 1.88%, 11/19/12

 

 

10,810

 

 

11,073,840

 

Qatari Diar Finance QSC, 3.50%, 7/21/15 (a)

 

 

3,635

 

 

3,710,757

 

Russian Foreign Bond Eurobond, 7.50%, 3/31/30

 

 

12,333

 

 

14,739,815

 

United Mexican States, Series A, 5.13%, 1/15/20

 

 

1,595

 

 

1,782,412

 









Total Foreign Agency Obligations — 1.9%

 

 

 

 

 

69,421,730

 









 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Investment Companies

 

 

Shares

 

 

 

 









iShares JPMorgan USD Emerging Markets Bond
Fund (h)

 

 

145,000

 

 

16,145,750

 









Total Investment Companies — 0.5%

 

 

 

 

 

16,145,750

 










 

 

 

See Notes to Financial Statements.

 

 


BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

31




 

 


 

 

Schedule of Investments (continued)

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Non-Agency Mortgage-Backed Securities

 

 

Par
(000)

 

Value

 









Collateralized Mortgage Obligations — 8.9%

 

 

 

 

 

 

 

Arkle Master Issuer Plc, Series 2010-1A,
Class 2A, 1.53%, 5/17/60 (a)(b)

 

USD

13,200

 

$

13,088,625

 

Banc of America Alternative Loan Trust,
Series 2004-7, Class 4A1, 5.00%, 8/25/19

 

 

1,154

 

 

1,174,955

 

Bear Stearns Adjustable Rate Mortgage Trust,
Series 2006-2, Class 2A1, 5.65%, 7/25/36 (b)

 

 

1,971

 

 

1,463,581

 

BlackRock Capital Finance LP, Series 1997-R2,
Class AP, 1.21%, 12/25/35 (a)(b)(h)

 

 

9

 

 

9,158

 

CitiMortgage Alternative Loan Trust, Series
2007-A8, Class A1, 6.00%, 10/25/37

 

 

21,502

 

 

17,194,735

 

Citigroup Mortgage Loan Trust, Inc., Series
2007-2, Class 2A, 6.00%, 11/25/36

 

 

668

 

 

626,449

 

Collateralized Mortgage Obligation Trust,
Series 57, Class D, 9.90%, 2/01/19

 

 

14

 

 

15,896

 

Countrywide Alternative Loan Trust:

 

 

 

 

 

 

 

Series 2005-21B, Class A17, 6.00%,
6/25/35

 

 

18,814

 

 

16,958,211

 

Series 2006-01A0, Class 1A1, 1.27%,
8/25/46 (b)

 

 

73

 

 

39,752

 

Series 2006-0A21, Class A1, 0.45%,
3/20/47 (b)

 

 

10,336

 

 

5,643,434

 

Series 2006-43CB, Class 1A10, 6.00%,
2/25/37

 

 

8,276

 

 

5,535,887

 

Series 2006-J4, Class 2A8, 6.00%, 7/25/36

 

 

17,236

 

 

12,466,947

 

Series 2006-OC9, Class A1, 0.33%,
12/25/46 (b)

 

 

543

 

 

538,104

 

Series 2006-OC10, Class 2A1, 0.35%,
11/25/36 (b)

 

 

470

 

 

466,929

 

Countrywide Home Loan Mortgage
Pass-Through Trust (b):

 

 

 

 

 

 

 

Series 2004-29, Class1A1, 0.53%, 2/25/35

 

 

504

 

 

421,038

 

Series 2006-0A5, Class 2A1, 0.46%,
4/25/46

 

 

4,469

 

 

2,584,480

 

Series 2006-0A5, Class 3A1, 0.46%,
4/25/46

 

 

7,461

 

 

4,595,342

 

Credit Suisse Mortgage Capital Certificates,
Series 2006-8, Class 3A1, 6.00%, 10/25/21

 

 

3,845

 

 

3,154,613

 

Deutsche ALT-A Securities, Inc. Alternate
Loan Trust (b):

 

 

 

 

 

 

 

Series 2005-2, Class 1A1, 0.66%, 4/25/35

 

 

1,776

 

 

1,346,946

 

Series 2006-0A1, Class A1, 0.46%, 2/25/47

 

 

8,913

 

 

5,664,762

 

First Horizon Asset Securities, Inc., Series
2005-AR3, Class 3A1, 5.52%, 8/25/35 (b)

 

 

3,055

 

 

2,910,995

 

GSR Mortgage Loan Trust:

 

 

 

 

 

 

 

Series 2004-9, Class 4A1, 2.91%,
8/25/34 (b)

 

 

110

 

 

104,219

 

Series 2005-AR4, Class 6A1, 5.25%,
7/25/35 (b)

 

 

10,211

 

 

9,959,188

 

Series 2006-2F, Class 2A2, 5.75%, 2/25/36

 

 

2,132

 

 

1,957,562

 

Harborview Mortgage Loan Trust (b):

 

 

 

 

 

 

 

Series 2005-8, Class 1A2A, 0.59%, 9/19/35

 

 

1,449

 

 

904,060

 

Series 2005-10, Class 2A1A, 0.57%,
11/19/35

 

 

9,552

 

 

6,306,314

 

Series 2006-9, Class 2A1A, 0.47%, 11/19/36

 

 

422

 

 

268,235

 

Series 2006-11, Class A1A, 0.43%, 12/19/36

 

 

936

 

 

596,205

 

Homebanc Mortgage Trust, Class A1 (b):

 

 

 

 

 

 

 

Series 2005-4, 0.53%, 10/25/35

 

 

27,605

 

 

20,406,316

 

Series 2006-2, 0.44%, 12/25/36

 

 

8,790

 

 

6,374,655

 

Impac CMB Trust, Series 2005-6, Class 1A2,
0.40%, 10/25/35 (b)

 

 

532

 

 

303,312

 

Impac Secured Assets CMN Owner Trust,
Series 2004-3 (b):

 

 

 

 

 

 

 

Class 1A4, 1.06%, 11/25/34

 

 

1,422

 

 

1,295,327

 

Class M1, 1.16%, 11/25/34

 

 

11,950

 

 

4,845,653

 

 

 

 

 

 

 

 

 

Non-Agency Mortgage-Backed Securities

 

 

Par
(000)

 

Value

 









Collateralized Mortgage Obligations (concluded)

 

 

 

 

 

 

 

IndyMac INDX Mortgage Loan Trust, Series
2006-AR41, Class A3, 0.44%, 2/25/37 (b)

 

USD

13,391

 

$

6,702,712

 

JPMorgan Mortgage Trust:

 

 

 

 

 

 

 

Series 2006-S2, Class 2A2, 5.88%,
7/25/36

 

 

8,530

 

 

8,102,509

 

Series 2007-S1, Class 1A2, 5.50%,
3/25/22

 

 

2,509

 

 

2,356,187

 

Luminent Mortgage Trust, Series 2006-7,
Class 1A1, 0.44%, 12/25/36 (b)

 

 

17,448

 

 

10,034,494

 

Ocwen Residential MBS Corp., Series 1998-R2,
Class AP, 12.10%, 11/25/34 (a)(b)

 

 

21

 

 

3,843

 

Residential Accredit Loans, Inc.:

 

 

 

 

 

 

 

Series 2006-QS4, Class A9, 6.00%, 4/25/36

 

 

7,190

 

 

5,002,938

 

Series 2007-QS1, Class 2A10, 6.00%,
1/25/37

 

 

4,691

 

 

3,087,492

 

Series 2007-QS5, Class A1, 5.50%, 3/25/37

 

 

6,859

 

 

4,280,045

 

Station Place Securitization Trust, Series 2009-1,
Class A, 1.76%, 1/25/40 (a)(b)

 

 

15,295

 

 

15,295,000

 

Structured Adjustable Rate Mortgage Loan Trust (b):

 

 

 

 

 

 

 

Series 2005-19XS, Class 1A1, 0.58%,
10/25/35

 

 

8,929

 

 

5,959,755

 

Series 2007-3, Class 2A1, 5.58%, 4/25/37

 

 

23,027

 

 

17,400,104

 

Structured Asset Securities Corp., Series
2005-GEL2, Class A, 0.54%, 4/25/35 (b)

 

 

941

 

 

826,166

 

Thornburg Mortgage Securities Trust, Series
2006-5, Class A1, 0.38%, 10/25/46 (b)

 

 

16,407

 

 

16,270,575

 

WaMu Mortgage Pass-Through Certificates (b):

 

 

 

 

 

 

 

Series 2000-1, Class B1, 0.66%, 1/25/40 (a)

 

 

1

 

 

239

 

Series 2006-AR11, Class 1A, 1.37%,
9/25/46

 

 

1,213

 

 

758,828

 

Series 2006-AR18, Class 1A1, 5.19%,
1/25/37

 

 

23,149

 

 

17,892,057

 

Series 2007-0A4, Class 1A, 1.18%, 5/25/47

 

 

4,683

 

 

2,994,693

 

Wells Fargo Mortgage-Backed Securities Trust (b):

 

 

 

 

 

 

 

Series 2006-AR2, Class 2A5, 4.57%,
3/25/36

 

 

25,252

 

 

21,481,266

 

Series 2006-AR3, Class A4, 5.56%, 3/25/36

 

 

25,156

 

 

22,159,758

 

Series 2006-AR12, Class 2A1, 5.98%,
9/25/36

 

 

5,309

 

 

4,902,093

 

Series 2006-AR15, Class A1, 5.47%,
10/25/36

 

 

5,255

 

 

4,533,534

 

 

 

 

 

 




 

 

 

 

 

 

319,266,173

 









Commercial Mortgage-Backed Securities — 14.6%

 

 

 

 

 

 

 

Banc of America Commercial Mortgage, Inc.:

 

 

 

 

 

 

 

Series 2004-4, Class A6, 4.88%, 7/10/42 (b)

 

 

2,840

 

 

3,034,031

 

Series 2004-7, Class 4A1, 6.50%, 4/15/36

 

 

1,184

 

 

1,198,390

 

Series 2005-3, Class A3A, 4.62%, 7/10/43

 

 

850

 

 

876,648

 

Series 2006-2, Class A4, 5.93%, 5/10/45 (b)

 

 

5,460

 

 

5,988,879

 

Series 2006-4, Class A4, 5.63%, 7/10/46

 

 

9,100

 

 

9,850,739

 

Series 2006-5, Class AM, 5.45%, 9/10/47

 

 

1,110

 

 

1,012,973

 

Series 2007-3, Class A2, 5.84%, 6/10/49 (b)

 

 

22,000

 

 

23,103,098

 

Series 2007-3, Class A4, 5.66%, 5/10/17 (b)

 

 

7,000

 

 

7,223,722

 

Bear Stearns Commercial Mortgage Securities:

 

 

 

 

 

 

 

Series 1998-C1, Class A2, 6.44%, 6/16/30

 

 

23

 

 

23,055

 

Series 2002-TOP6, Class A2, 6.46%,
10/15/36

 

 

202

 

 

213,022

 

Series 2004-PWR6, Class A6, 4.83%,
11/11/41

 

 

440

 

 

476,378

 

Series 2005-PW10, Class AM, 5.45%,
12/11/40 (b)

 

 

1,350

 

 

1,353,245

 

Series 2006-PW11, Class A4, 5.62%,
3/11/39 (b)

 

 

175

 

 

193,150

 

Series 2007-PW15, Class A4, 5.33%,
2/11/44

 

 

20,950

 

 

21,556,848

 


 

 

 

See Notes to Financial Statements.


32

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

Schedule of Investments (continued)

Master Total Return Portfolio
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Non-Agency Mortgage-Backed Securities

 

Par
(000)

 

Value

 







Commercial Mortgage-Backed Securities
(continued)

 

 

 

 

 

 

 

CS First Boston Mortgage Securities Corp.:

 

 

 

 

 

 

 

Series 2001-CK6, Class A3, 6.39%,
8/15/36

 

USD

500

 

$

521,141

 

Series 2002-CKN2, Class A3, 6.13%,
4/15/37

 

 

235

 

 

247,245

 

Series 2002-CKS4, Class A2, 5.18%,
11/15/36

 

 

3,605

 

 

3,814,065

 

Series 2002-CP5, Class A1, 4.11%,
12/15/35

 

 

5,003

 

 

5,126,584

 

Series 2003-C3, Class A5, 3.94%, 5/15/38

 

 

3,550

 

 

3,729,064

 

Series 2003-CPN1, Class A2, 4.60%,
3/15/35

 

 

1,000

 

 

1,057,299

 

Citigroup Commercial Mortgage Trust, Series
2005-C3, Class A4, 4.86%, 5/15/43

 

 

860

 

 

915,237

 

Citigroup/Deutsche Bank Commercial
Mortgage Trust:

 

 

 

 

 

 

 

Series 2006-CD3, Class A5, 5.62%,
10/15/48

 

 

6,109

 

 

6,648,939

 

Series 2007-CD4, Class A2B, 5.21%,
12/11/49

 

 

14,800

 

 

15,433,061

 

Series 2007-CD5, Class A4, 5.89%,
11/15/44 (b)

 

 

446

 

 

482,562

 

Commercial Mortgage Pass-Through Certificates:

 

 

 

 

 

 

 

Series 2004-LB3A, Class A3, 5.09%,
7/10/37 (b)

 

 

9,900

 

 

10,120,112

 

Series 2006-C8, Class A4, 5.31%, 12/10/16

 

 

6,000

 

 

6,237,856

 

Series 2007-C9, Class A4, 5.82%,
12/10/49 (b)

 

 

5,384

 

 

5,860,796

 

Series 2007-C9, Class AAB, 6.01%,
12/10/49 (b)

 

 

175

 

 

192,745

 

First Union National Bank Commercial Mortgage:

 

 

 

 

 

 

 

Series 2001-C2, Class A2, 6.66%, 1/12/43

 

 

2,020

 

 

2,045,822

 

Series 2001-C3, Class A3, 6.42%, 8/15/33

 

 

1,106

 

 

1,131,638

 

GE Capital Commercial Mortgage Corp.:

 

 

 

 

 

 

 

Series 2001-1, Class B, 6.72%, 5/15/33

 

 

225

 

 

229,213

 

Series 2001-3, Class A2, 6.07%, 6/10/38

 

 

1,670

 

 

1,737,130

 

Series 2002-1A, Class A3, 6.27%, 12/10/35

 

 

1,726

 

 

1,822,011

 

Series 2007-C1, Class A2, 5.42%, 12/10/49

 

 

38,422

 

 

39,777,132

 

GMAC Commercial Mortgage Securities, Inc.:

 

 

 

 

 

 

 

Series 2000-C2, Class A2, 5.66%,
5/10/40 (b)

 

 

2,465

 

 

2,705,777

 

Series 2001-C1, Class B, 6.67%, 4/15/34 (b)

 

 

15,000

 

 

15,261,671

 

Series 2003-C3, Class A4, 5.02%, 4/10/40

 

 

2,325

 

 

2,524,356

 

Series 2004-C3, Class AAB, 4.70%, 12/10/41

 

 

620

 

 

659,486

 

Series 2006-C1, Class AM, 5.29%,
11/10/45 (b)

 

 

1,980

 

 

1,940,631

 

GS Mortgage Securities Corp. II:

 

 

 

 

 

 

 

Series 2004-GG2, Class A4, 4.96%, 8/10/38

 

 

1,625

 

 

1,700,532

 

Series 2005-GG4, Class A4, 4.76%, 7/10/39

 

 

12,800

 

 

13,444,966

 

Series 2006-GG8, Class A4, 5.56%,
11/10/39

 

 

5,000

 

 

5,325,548

 

Greenwich Capital Commercial Funding Corp.:

 

 

 

 

 

 

 

Series 2004-GG1, Class A4, 4.76%, 6/10/36

 

 

8,646

 

 

8,689,962

 

Series 2005-GG3, Class A3, 4.57%, 8/10/42

 

 

2,445

 

 

2,515,787

 

Series 2005-GG3, Class AAB, 4.62%,
8/10/42

 

 

814

 

 

850,453

 

Series 2006-GG7, Class A4, 5.89%,
7/10/38 (b)

 

 

467

 

 

511,255

 

Series 2007-GG9, Class A4, 5.44%, 3/10/39

 

 

5,000

 

 

5,270,529

 


 

 

 

 

 

 

 

 

Non-Agency Mortgage-Backed Securities

 

Par
(000)

 

Value

 







Commercial Mortgage-Backed Securities
(concluded)

 

 

 

 

 

 

 

JPMorgan Chase Commercial Mortgage
Securities Corp.:

 

 

 

 

 

 

 

Series 2001-C1, Class A3, 5.86%,
10/12/35

 

USD

943

 

$

975,396

 

Series 2001-CIB2, Class A3, 6.43%,
4/15/35

 

 

19,585

 

 

20,034,617

 

Series 2001-CIB3, Class A3, 6.47%,
11/15/35

 

 

3,150

 

 

3,276,353

 

Series 2001-CIBC, Class A3, 6.26%,
3/15/33

 

 

485

 

 

486,698

 

Series 2004-CBX, Class A5, 4.65%, 1/12/37

 

 

900

 

 

935,941

 

Series 2006-LDP8, Class A2, 5.29%,
5/15/45

 

 

24,473

 

 

25,715,099

 

Series 2007-LD1, Class A2, 5.99%,
6/15/49 (b)

 

 

37,000

 

 

38,653,286

 

LB-UBS Commercial Mortgage Trust:

 

 

 

 

 

 

 

Series 2003-C7, Class A3, 4.56%,
9/15/27 (b)

 

 

195

 

 

196,835

 

Series 2005-C1, Class AAB, 4.57%, 2/15/30

 

 

962

 

 

1,006,783

 

Series 2005-C2, Class A5, 5.15%,
4/15/30 (b)

 

 

7,000

 

 

7,483,372

 

Series 2006-C4, Class AM, 6.10%,
6/15/38 (b)

 

 

1,402

 

 

1,399,850

 

Series 2006-C7, Class AM, 5.38%, 11/15/38

 

 

1,410

 

 

1,392,848

 

Series 2007-C1, Class A4, 5.42%, 2/15/40

 

 

1,500

 

 

1,580,249

 

Series 2007-C2, Class A3, 5.43%, 2/15/40

 

 

175

 

 

183,055

 

Merrill Lynch Mortgage Trust, Series 2006-C1,
Class A2, 5.79%, 5/12/39 (b)

 

 

40,000

 

 

42,587,944

 

Merrill Lynch/Countrywide Commercial
Mortgage Trust:

 

 

 

 

 

 

 

Series 2006-2, Class A2, 5.88%,
6/12/46 (b)

 

 

14,159

 

 

14,334,468

 

Series 2007-9, Class ASB, 5.64%, 9/12/49

 

 

25,000

 

 

27,333,985

 

Morgan Stanley Capital I:

 

 

 

 

 

 

 

Series 1998-WF2, Class G, 6.34%,
7/15/30 (a)(b)

 

 

5,026

 

 

5,406,505

 

Series 2004-HQ4, Class A7, 4.97%,
4/14/40

 

 

8,900

 

 

9,362,302

 

Series 2007-HQ11, Class A2, 5.36%,
2/12/44

 

 

13,000

 

 

13,485,870

 

Series 2007-HQ13, Class A1, 5.36%,
12/15/44

 

 

103

 

 

105,677

 

Morgan Stanley Dean Witter Capital I, Series
2001-TOP3, Class A4, 6.39%, 7/15/33

 

 

1,162

 

 

1,193,886

 

Prudential Mortgage Capital Funding, LLC,
Series 2001-Rock, Class A2, 6.61%, 5/10/34

 

 

1,435

 

 

1,455,642

 

RBSCF Trust, Series 2010-RR3, Class WBTA,
5.90%, 4/16/17 (a)(b)

 

 

14,233

 

 

15,629,613

 

Salomon Brothers Mortgage Securities VII, Inc.:

 

 

 

 

 

 

 

Series 2000-C3, Class A2, 6.59%, 12/18/33

 

 

203

 

 

202,401

 

Series 2001-C2, Class A3, 6.50%, 11/13/36

 

 

4,404

 

 

4,561,988

 

Wachovia Bank Commercial Mortgage Trust:

 

 

 

 

 

 

 

Series 2005-C21, Class A3, 5.37%,
10/15/44 (b)

 

 

2,688

 

 

2,686,185

 

Series 2006-C28, Class A2, 5.50%,
10/15/48

 

 

14,095

 

 

14,448,224

 

Series 2006-C29, Class A4, 5.31%,
11/15/48

 

 

7,040

 

 

7,581,510

 

Series 2007-C33, Class A4, 6.10%,
2/15/51 (b)

 

 

16,380

 

 

17,100,872

 

WaMu Commercial Mortgage Securities Trust,
Series 2005-C1A, Class A2, 5.15%,
5/25/36 (a)(b)

 

 

29

 

 

29,321

 

 

 

 

 

 




 

 

 

 

 

 

525,461,558

 










 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

33




 

 



 

Schedule of Investments (continued)

Master Total Return Portfolio
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Non-Agency Mortgage-Backed Securities

 

Par
(000)

 

Value

 







Interest Only Commercial Mortgage-Backed
Securities — 0.0%

 

 

 

 

 

 

 

WaMu Commercial Mortgage Securities Trust,
Series 2005-C1A, Class X, 2.10%,
5/25/36 (a)(b)

 

USD

6,948

 

$

124,470

 









Total Non-Agency Mortgage-Backed
Securities — 23.5%

 

 

 

 

 

844,852,201

 










 

 

 

 

 

 

 

 









Preferred Securities

 

 

 

 

 

 

 









 

Capital Trusts

 

 

 

 

 

 

 









Capital Markets — 0.2%

 

 

 

 

 

 

 

Credit Suisse Guernsey Ltd., 5.86% (b)(i)

 

 

3,101

 

 

2,947,888

 

Goldman Sachs Capital II, 5.79% (b)(i)

 

 

3,190

 

 

2,707,513

 

Lehman Brothers Holdings Capital Trust VII,
5.86% (c)(d)(i)

 

 

1,868

 

 

187

 

 

 

 

 

 




 

 

 

 

 

 

5,655,588

 









Diversified Financial Services — 0.3%

 

 

 

 

 

 

 

JPMorgan Chase & Co., 7.90% (b)(i)

 

 

10,800

 

 

11,573,604

 

JPMorgan Chase Capital XXI, Series U, 1.42%,
1/15/87 (b)

 

 

285

 

 

203,908

 

 

 

 

 

 




 

 

 

 

 

 

11,777,512

 









Insurance — 0.5%

 

 

 

 

 

 

 

Chubb Corp., 6.38%, 3/29/67 (b)

 

 

6,875

 

 

6,771,875

 

Lincoln National Corp. (b):

 

 

 

 

 

 

 

7.00%, 5/17/66

 

 

4,185

 

 

3,933,900

 

6.05%, 4/20/67

 

 

3,110

 

 

2,713,475

 

The Travelers Cos., Inc., 6.25%, 3/15/67 (b)

 

 

5,790

 

 

5,558,400

 

 

 

 

 

 




 

 

 

 

 

 

18,977,650

 









Total Capital Trusts — 1.0%

 

 

 

 

 

36,410,750

 










 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

Trust Preferred

 

Shares

 

 

 









Diversified Financial Services — 0.2%

 

 

 

 

 

 

 

Citigroup Capital XIII, 7.88%, 10/15/40 (b)(e)

 

 

231,000

 

 

5,775,000

 









Total Trust Preferred — 0.2%

 

 

 

 

 

5,775,000

 









Total Preferred Securities — 1.2%

 

 

 

 

 

42,185,750

 










 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

Taxable Municipal Bonds

 

Par
(000
)

 

 

 

 








The Board of Trustees of The Leland Stanford
Junior University, 4.25%, 5/01/16

 

USD

55

 

 

61,679

 

City of Chicago Illinois, RB, Build America Bonds,
6.40%, 1/01/40

 

 

2,200

 

 

2,347,422

 

Cornell University, 4.35%, 2/01/14

 

 

360

 

 

395,705

 

Dallas Area Rapid Transit, RB, Build America
Bonds, 6.00%, 12/01/44

 

 

2,210

 

 

2,577,987

 

Metropolitan Transportation Authority, RB, Build
America Bonds, 7.34%, 11/15/39

 

 

5,540

 

 

6,967,990

 

New Jersey State Turnpike Authority, RB, Build
America Bonds, 7.41%, 1/01/40

 

 

1,335

 

 

1,665,439

 

New York City Municipal Water Finance Authority,
RB, Build America Bonds, 5.72%, 6/15/42

 

 

6,430

 

 

6,960,668

 

New York State Dormitory Authority, RB, Build
America Bonds, 5.63%, 3/15/39

 

 

4,650

 

 

4,881,756

 


 

 

 

 

 

 

 

 

Taxable Municipal Bonds

 

Par
(000)

 

Value

 







Port Authority of New York & New Jersey, RB,
Consolidated:

 

 

 

 

 

 

 

158th Series, 5.86%, 12/01/24

 

USD

55

 

$

61,415

 

159th Series, 6.04%, 12/01/29

 

 

3,275

 

 

3,682,934

 

State of California, GO:

 

 

 

 

 

 

 

Build America Bonds, 7.30%, 10/01/39

 

 

9,890

 

 

10,486,466

 

Build America Bonds, 7.35%, 11/01/39

 

 

4,980

 

 

5,311,519

 

Build America Bonds, Various Purpose,
7.50%, 4/01/34

 

 

3,310

 

 

3,646,362

 

Various Purpose, Series 3, 5.45%, 4/01/15

 

 

20,425

 

 

21,886,205

 

University of California, RB, Build America Bonds,
5.95%, 5/15/45

 

 

4,220

 

 

4,291,867

 









Total Taxable Municipal Bonds — 2.1%

 

 

 

 

 

75,225,414

 










 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

U.S. Government Sponsored Agency Securities

 

 

 

 

 

 

 









Agency Obligations — 2.2%

 

 

 

 

 

 

 

Fannie Mae:

 

 

 

 

 

 

 

1.75%, 5/07/13

 

 

3,450

 

 

3,541,515

 

6.63%, 11/15/30

 

 

1,450

 

 

1,994,838

 

Federal Home Loan Banks:

 

 

 

 

 

 

 

1.00%, 12/28/11

 

 

4,300

 

 

4,332,267

 

5.00%, 11/17/17 (j)

 

 

10,950

 

 

12,970,833

 

Freddie Mac:

 

 

 

 

 

 

 

2.13%, 3/23/12

 

 

2,000

 

 

2,049,114

 

2.13%, 9/21/12

 

 

4,500

 

 

4,640,148

 

2.50%, 4/23/14 (k)

 

 

11,100

 

 

11,668,142

 

4.38%, 7/17/15 (j)

 

 

7,950

 

 

9,019,180

 

1.75%, 9/10/15 (j)

 

 

4,990

 

 

5,039,386

 

5.50%, 7/18/16 (j)

 

 

1,985

 

 

2,388,316

 

5.00%, 2/16/17 (k)

 

 

4,065

 

 

4,773,859

 

4.88%, 6/13/18 (k)

 

 

4,300

 

 

5,051,838

 

3.75%, 3/27/19

 

 

3,650

 

 

3,968,842

 

6.25%, 7/15/32

 

 

4,300

 

 

5,773,911

 

 

 

 

 

 




 

 

 

 

 

 

77,212,189

 









Collateralized Mortgage Obligations — 0.7%

 

 

 

 

 

 

 

Fannie Mae Mortgage-Backed Securities:

 

 

 

 

 

 

 

Series 2004-29, Class HC, 7.50%, 7/25/30

 

 

584

 

 

604,661

 

Series 2005-48, Class AR, 5.50%, 2/25/35

 

 

64

 

 

70,800

 

Series 2005-118, Class MC, 6.00%, 1/25/32

 

 

29

 

 

29,295

 

Series 2006-26, Class QA, 5.50%, 6/25/26

 

 

405

 

 

410,317

 

Series 2006-M2, Class A2A, 5.27%,
10/25/32 (b)

 

 

4,600

 

 

5,186,674

 

Series 2007-22, Class PA, 5.50%, 3/25/37

 

 

10,100

 

 

11,332,396

 

Freddie Mac Mortgage-Backed Securities:

 

 

 

 

 

 

 

Series 2825, Class VP, 5.50%, 6/15/15

 

 

1,153

 

 

1,259,908

 

Series 3063, Class YB, 5.50%, 6/15/26

 

 

142

 

 

142,540

 

Series 3068, Class VA, 5.50%, 10/15/16

 

 

7,312

 

 

7,579,913

 

 

 

 

 

 




 

 

 

 

 

 

26,616,504

 









Commercial Mortgage-Backed
Securities — 0.0%

 

 

 

 

 

 

 

Freddie Mac Mortgage-Backed Securities,
Series K003, Class A3, 4.32%, 12/25/15

 

 

105

 

 

115,429

 









Interest Only Collateralized Mortgage
Obligations — 2.1%

 

 

 

 

 

 

 

Fannie Mae Mortgage-Backed Securities (b):

 

 

 

 

 

 

 

Series 2006-82, Class SI, 6.10%, 9/25/36

 

 

57,070

 

 

5,951,137

 

Series 2009-42, Class SI, 5.74%, 6/25/39

 

 

45,787

 

 

4,510,468

 

Series 2009-70, Class SI, 6.12%, 9/25/36

 

 

53,756

 

 

6,284,718

 

Series 2009-90, Class IA, 5.49%, 3/25/37

 

 

55,102

 

 

4,821,663

 

Series 2010-118, Class YB, 6.24%, 10/25/40

 

 

67,600

 

 

7,816,250

 

Series 2010-64, Class AS, 6.17%, 6/25/40

 

 

48,223

 

 

5,584,370

 


 

 

 

 

See Notes to Financial Statements.


34

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 



 

Schedule of Investments (continued)

Master Total Return Portfolio
(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

U.S. Government Sponsored Agency Securities

 

Par
(000)

 

Value

 









Interest Only Collateralized Mortgage
Obligations (concluded)

 

 

 

 

 

 

 

Ginnie Mae Mortgage-Backed Securities (b):

 

 

 

 

 

 

 

Series 2006-69, Class SA, 6.46%,
12/20/36

 

USD

8,531

 

$

962,205

 

Series 2007-27, Class S, 6.16%, 5/20/37

 

 

16,032

 

 

1,687,934

 

Series 2007-36, Class SA, 6.13%, 6/20/37

 

 

11,209

 

 

1,295,372

 

Series 2007-9, Class BI, 6.35%, 3/20/37

 

 

20,962

 

 

2,357,185

 

Series 2009-16, Class SL, 7.10%, 1/20/37

 

 

25,452

 

 

2,939,473

 

Series 2009-33, Class SK, 6.14%, 5/20/39

 

 

45,576

 

 

4,363,633

 

Series 2009-66, Class US, 5.72%, 8/16/39

 

 

33,215

 

 

2,967,550

 

Series 2009-88, Class SK, 5.97%, 10/16/39

 

 

23,959

 

 

2,542,314

 

Series 2009-92, Class SL, 6.04%, 10/16/39

 

 

33,410

 

 

3,487,569

 

Series 2009-93, Class SM, 5.77%, 10/16/39

 

 

13,511

 

 

1,181,470

 

Series 2009-93, Class SN, 5.77%, 10/16/39

 

 

19,292

 

 

1,687,038

 

Series 2009-106, Class KS, 6.14%,
11/20/39

 

 

53,051

 

 

5,381,451

 

Series 2009-106, Class SL, 5.84%, 4/20/36

 

 

29,049

 

 

3,869,324

 

Series 2009-106, Class SU, 5.93%, 5/20/37

 

 

22,393

 

 

2,348,958

 

Series 2009-110, Class CS, 6.04%,
11/16/39

 

 

23,817

 

 

2,331,430

 

 

 

 

 

 




 

 

 

 

 

 

74,371,512

 









Mortgage-Backed Securities — 284.2%

 

 

 

 

 

 

 

Fannie Mae Mortgage-Backed Securities:

 

 

 

 

 

 

 

3.29%, 11/01/35 (b)

 

 

23,182

 

 

24,401,451

 

3.50%, 10/01/25 – 10/01/40 (l)

 

 

486,300

 

 

500,138,906

 

4.00%, 1/01/25 – 10/15/40 (l)

 

 

3,375,099

 

 

3,476,806,317

 

4.50%, 10/15/25 – 12/15/40 (l)

 

 

1,455,100

 

 

1,513,721,903

 

5.00%, 10/15/25 – 10/15/40 (l)

 

 

1,129,406

 

 

1,190,327,495

 

5.03%, 8/01/38 (b)

 

 

11,442

 

 

12,141,668

 

5.50%, 12/01/32 – 10/15/40 (l)

 

 

1,056,695

 

 

1,124,524,604

 

5.58%, 10/01/38 (b)

 

 

91

 

 

97,523

 

6.00%, 2/01/34 – 10/15/40 (l)

 

 

1,481,375

 

 

1,591,993,467

 

6.28%, 8/01/11

 

 

1,800

 

 

1,827,214

 

6.50%, 10/15/40 (l)

 

 

21,100

 

 

23,005,583

 

Freddie Mac Mortgage-Backed Securities:

 

 

 

 

 

 

 

4.00%, 4/01/25 – 10/01/25 (l)

 

 

103,223

 

 

108,067,802

 

4.50%, 10/15/40 (l)

 

 

54,500

 

 

56,671,498

 

5.00%, 10/15/40 (l)

 

 

37,500

 

 

39,386,700

 

5.31%, 2/01/37 (b)

 

 

165

 

 

174,470

 

5.35%, 5/01/36 (b)

 

 

94

 

 

98,610

 

5.49%, 2/01/37 (b)

 

 

154

 

 

164,138

 

5.50%, 10/15/40 (l)

 

 

1,700

 

 

1,803,062

 

5.70%, 10/01/36 (b)

 

 

102

 

 

107,696

 

Ginnie Mae Mortgage-Backed Securities:

 

 

 

 

 

 

 

1.88%, 5/20/34 (b)

 

 

1,720

 

 

1,755,799

 

4.00%, 10/15/40 (l)

 

 

145,000

 

 

149,893,750

 

4.50%, 10/15/40 (l)

 

 

61,800

 

 

65,005,875

 

5.00%, 3/15/17 – 11/19/40 (l)

 

 

132,400

 

 

140,892,007

 

5.50%, 10/15/40 (l)

 

 

72,000

 

 

77,582,812

 

6.00%, 10/15/40 – 11/15/40 (l)

 

 

69,000

 

 

74,800,312

 

6.50%, 10/15/40 (l)

 

 

31,000

 

 

34,080,625

 

 

 

 

 

 




 

 

 

 

 

 

10,209,471,287

 









Total U.S. Government Sponsored Agency
Securities — 289.2%

 

 

 

 

 

10,387,786,921

 










 

 

 

 

 

 

 

 

U.S. Treasury Obligations

 

Par
(000)

 

Value

 







U.S. Treasury Bonds (j):

 

 

 

 

 

 

 

7.25%, 5/15/16

 

USD

6,800

 

$

8,917,030

 

8.75%, 8/15/20

 

 

47,793

 

 

73,855,096

 

8.13%, 5/15/21

 

 

9,100

 

 

13,738,161

 

8.00%, 11/15/21

 

 

7,300

 

 

11,010,451

 

7.25%, 8/15/22 (m)

 

 

14,620

 

 

21,196,719

 

6.25%, 8/15/23

 

 

5,450

 

 

7,381,344

 

7.63%, 2/15/25

 

 

7,500

 

 

11,513,670

 

6.13%, 11/15/27

 

 

12,300

 

 

16,983,606

 

5.38%, 2/15/31

 

 

2,850

 

 

3,669,375

 

4.50%, 2/15/36

 

 

11,350

 

 

13,050,729

 

3.50%, 2/15/39 (k)

 

 

23,100

 

 

22,349,250

 

4.38%, 11/15/39

 

 

17,150

 

 

19,240,156

 

4.63%, 2/15/40

 

 

14,640

 

 

17,105,933

 

4.38%, 5/15/40

 

 

35,556

 

 

39,934,011

 

3.88%, 8/15/40

 

 

11,165

 

 

11,541,819

 

U.S. Treasury Notes (j):

 

 

 

 

 

 

 

1.38%, 1/15/13

 

 

44,550

 

 

45,430,575

 

3.38%, 6/30/13

 

 

14,850

 

 

15,991,594

 

1.00%, 7/15/13

 

 

50,000

 

 

50,547,000

 

0.75%, 9/15/13

 

 

28,595

 

 

28,688,820

 

2.38%, 8/31/14 (k)

 

 

26,600

 

 

28,065,075

 

2.38%, 9/30/14

 

 

45,050

 

 

47,548,879

 

4.25%, 11/15/14

 

 

24,050

 

 

27,264,812

 

2.50%, 4/30/15

 

 

23,065

 

 

24,452,498

 

4.25%, 8/15/15

 

 

23,300

 

 

26,629,360

 

1.25%, 9/30/15 (k)

 

 

108,100

 

 

107,931,148

 

5.13%, 5/15/16

 

 

4,400

 

 

5,269,000

 

4.88%, 8/15/16

 

 

18,800

 

 

22,317,649

 

2.75%, 11/30/16

 

 

18,850

 

 

20,028,125

 

3.13%, 4/30/17

 

 

13,155

 

 

14,235,144

 

2.75%, 5/31/17 (k)

 

 

20,375

 

 

21,554,529

 

2.38%, 7/31/17

 

 

17,000

 

 

17,552,500

 

4.75%, 8/15/17

 

 

8,200

 

 

9,735,581

 

2.75%, 2/15/19

 

 

22,900

 

 

23,756,964

 

3.38%, 11/15/19

 

 

10,980

 

 

11,828,381

 

2.63%, 8/15/20

 

 

204,630

 

 

206,548,406

 









Total U.S. Treasury Obligations — 29.1%

 

 

 

 

 

1,046,863,390

 









Total Long-Term Investments
(Cost — $13,841,460,715) — 387.5%

 

 

 

 

 

13,922,051,081

 










 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

Short-Term Securities

 

Shares

 

 

 

 









Money Market Fund — 0.6%

 

 

 

 

 

 

 

BlackRock Liquidity Funds, TempFund,
Institutional Class, 0.23% (h)(n)

 

 

20,883,348

 

 

20,883,348

 










 

 

 

 

 

 

 

 

 

 

Par
(000)

 

 

 

 








Borrowed Bond Agreements — 2.6%

 

 

 

 

 

 

 

Banc of America Securities LLC, 0.08%

 

USD

50,490

 

 

50,490,000

 

Barclays Capital Inc.:

 

 

 

 

 

 

 

0.20%

 

 

8,727

 

 

8,726,794

 

0.21%

 

 

10,547

 

 

10,547,487

 

Credit Suisse Securities (USA) LLC, 0.25%,
10/06/10

 

 

23,780

 

 

23,780,400

 

 

 

 

 

 




 

 

 

 

 

 

93,544,681

 









Total Short-Term Securities
(Cost — $114,428,029) — 3.2%

 

 

 

 

 

114,428,029

 










 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

35




 

 


 

Schedule of Investments (continued)

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Options Purchased

 

Contracts

 

Value

 







Exchange-Traded Call Options — 0.0%

 

 

 

 

 

 

 

Five-Year U.S. Treasury Bond Future, Strike Price
USD 121.00, Expires 11/26/10

 

 

206

 

$

130,360

 









Exchange-Traded Put Options — 0.0%

 

 

 

 

 

 

 

Five-Year U.S. Treasury Bond Future, Strike Price
USD 117.00, Expires 11/26/10

 

 

206

 

 

8,047

 









 

 

 

 

 

 

 

 

 

 

Notional
Amount
(000)

 

 

 

 







Over-the-Counter Call Options — 0.0%

 

 

 

 

 

 

 

CHF Call Option, Strike Price USD 1.40,
Expires 2/17/11, Broker Citibank NA

 

USD

69,792

 

 

452,255

 

EUR Call Option, Strike Price USD 1.20, Expires
10/13/10, Broker HSBC Securities (USA) Inc.

 

 

68,412

 

 

684

 

EUR Call Option, Strike Price USD 1.40, Expires
2/01/11, Broker HSBC Securities (USA) Inc.

 

 

68,412

 

 

684

 

 

 

 

 

 




 

 

 

 

 

 

453,623

 









Over-the-Counter Call Swaptions — 0.1%

 

 

 

 

 

 

 

Receive a fixed rate of 3.00% and pay a
floating rate based on 3-month LIBOR,
Expires 9/02/11, Broker UBS AG

 

 

48,000

 

 

1,918,032

 

Receive a fixed rate of 3.81% and pay a
floating rate based on 3-month LIBOR,
Expires 9/17/13, Broker Citibank NA

 

 

30,000

 

 

2,103,570

 

 

 

 

 

 




 

 

 

 

 

 

4,021,602

 









Over-the-Counter Put Options — 0.0%

 

 

 

 

 

 

 

CHF Put Option, Strike Price USD 1.25,
Expires 2/17/11, Broker UBS AG

 

 

38,637

 

 

407,234

 









Over-the-Counter Put Swaptions — 0.2%

 

 

 

 

 

 

 

Pay a fixed rate of 3.00% and receive a
floating rate based on 3-month LIBOR,
Expires 9/02/11, Broker UBS AG

 

 

48,000

 

 

1,585,248

 

Pay a fixed rate of 3.81% and receive a
floating rate based on 3-month LIBOR,
Expires 9/17/13, Broker Citibank NA

 

 

30,000

 

 

1,568,760

 

Pay a fixed rate of 4.00% and receive a
floating rate based on 3-month LIBOR,
Expires 9/29/14, Broker Royal Bank of
Scotland Plc

 

 

45,000

 

 

2,687,490

 

Pay a fixed rate of 2.02% and receive a
floating rate based on 3-month LIBOR,
Expires 11/10/10, Broker Bank of America NA

 

 

55,400

 

 

20,387

 

 

 

 

 

 




 

 

 

 

 

 

5,861,885

 









Total Options Purchased
(Cost — $12,908,856) — 0.3%

 

 

 

 

 

10,882,751

 









Total Investments Before Borrowed Bonds,
Investments Sold Short, TBA Sale
Commitments and Options Written
(Cost — $13,968,797,600*) — 391.0%

 

 

 

 

 

14,047,361,861

 









 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Borrowed Bonds

 

Par
(000)

 

 

 

 







U.S. Treasury Notes:

 

 

 

 

 

 

 

1.88%, 8/31/17

 

 

51,000

 

 

(50,956,191

)

3.63%, 2/15/20

 

 

9,710

 

 

(10,649,899

)

4.63%, 2/15/40

 

 

7,515

 

 

(8,780,812

)

4.38%, 5/15/40

 

 

20,860

 

 

(23,428,492

)









Total Borrowed Bonds
(Proceeds — $93,527,926) — (2.6)%

 

 

 

 

 

(93,815,394

)









 

 

 

 

 

 

 

 

Investments Sold Short

 

Par
(000)

 

Value

 







U.S. Treasury Note, 0.38%, 9/30/12

 

USD

70,445

 

$

(70,367,933

)









Total Investments Sold Short
(Proceeds — $70,375,970) — (1.9)%

 

 

 

 

 

(70,367,933

)









 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

TBA Sale Commitments (l)

 

 

 

 

 

 

 







Fannie Mae Mortgage-Backed Securities:

 

 

 

 

 

 

 

3.50%, 10/01/25 – 10/01/40

 

 

300,000

 

 

(309,468,600

)

4.00%, 1/01/25 – 10/15/40

 

 

3,546,400

 

 

(3,652,127,909

)

4.50%, 10/15/25 – 12/15/40

 

 

1,397,800

 

 

(1,455,428,628

)

5.00%, 10/15/25 – 10/15/40

 

 

748,800

 

 

(788,535,747

)

5.50%, 12/01/32 – 10/15/40

 

 

810,300

 

 

(861,301,415

)

6.00%, 2/01/34 – 10/15/40

 

 

1,236,400

 

 

(1,327,970,257

)

Freddie Mac Mortgage-Backed Securities:

 

 

 

 

 

 

 

4.00%, 4/01/25 – 10/01/25

 

 

67,800

 

 

(70,681,500

)

4.50%, 10/15/40

 

 

54,500

 

 

(56,671,498

)

5.00%, 10/15/25 – 10/15/40

 

 

37,500

 

 

(39,386,700

)

Ginnie Mae Mortgage-Backed Securities:

 

 

 

 

 

 

 

5.00%, 3/15/17 – 11/19/40

 

 

392,900

 

 

(418,463,422

)

5.50%, 10/15/40

 

 

36,000

 

 

(38,882,812

)

6.00%, 10/15/40 – 11/15/40

 

 

34,500

 

 

(37,432,500

)









Total TBA Sale Commitments
(Proceeds — $9,060,863,355) — (252.1)%

 

 

 

 

 

(9,056,350,988

)









 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

Options Written

 

Notional
Amount
(000)

 

 

 

 







Over-the-Counter Call Options — (0.0)%

 

 

 

 

 

 

 

CHF Call Option, Strike Price USD 1.40,
Expires 2/17/11, Broker UBS AG

 

 

34,497

 

 

(223,543

)

EUR Call Option, Strike Price USD 1.20,
Expires 10/13/10, Broker HSBC Securities
(USA) Inc.

 

 

136,824

 

 

(1,368

)

EUR Call Option, Strike Price USD 1.25,
Expires 10/13/10, Broker HSBC Securities
(USA) Inc.

 

 

34,206

 

 

(342

)

 

 

 

 

 




 

 

 

 

 

 

(225,253

)









Over-the-Counter Call Swaptions — (0.6)%

 

 

 

 

 

 

 

Pay a fixed rate of 2.21% and receive a
floating rate based on 3-month LIBOR,
Expires 12/01/10, Broker UBS AG

 

 

34,800

 

 

(94,621

)

Pay a fixed rate of 2.72% and receive a
floating rate based on 3-month LIBOR,
Expires 12/02/10, Broker Bank of America NA

 

 

63,800

 

 

(1,234,913

)

Pay a fixed rate of 2.32% and receive a
floating rate based on 3-month LIBOR,
Expires 12/03/10, Broker Citibank NA

 

 

50,000

 

 

(237,850

)

Pay a fixed rate of 2.16% and receive a
floating rate based on 3-month LIBOR,
Expires 12/29/10, Broker Deutsche Bank AG

 

 

58,600

 

 

(228,364

)

Pay a fixed rate of 3.08% and receive a
floating rate based on 3-month LIBOR,
Expires 9/14/11, Broker Bank of America NA

 

 

27,400

 

 

(1,203,545

)

Pay a fixed rate of 3.76% and receive a
floating rate based on 3-month LIBOR,
Expires 7/23/12, Broker JPMorgan
Chase Bank NA

 

 

35,000

 

 

(2,694,440

)

Pay a fixed rate of 5.00% and receive a
floating rate based on 3-month LIBOR,
Expires 4/22/13, Broker JPMorgan
Chase Bank NA

 

 

56,200

 

 

(8,308,833

)

Pay a fixed rate of 3.23% and receive a
floating rate based on 6-month EURIBOR,
Expires 9/03/13, Broker Citibank NA

 

 

53,600

 

 

(3,551,107

)


 

 

 

See Notes to Financial Statements.

 

 




36

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Schedule of Investments (continued)

Master Total Return Portfolio

 

(Percentages shown are based on Net Assets)


 

 

 

 

 

 

 

 

Options Written

 

Notional
Amount
(000)

 

Value

 







Over-the-Counter Call Swaptions (concluded)

 

 

 

 

 

 

Pay a fixed rate of 4.21% and receive a
floating rate based on 3-month LIBOR,
Expires 8/06/15, Broker Goldman Sachs
Bank USA

 

USD

37,600

 

$

(1,876,917

)

Pay a fixed rate of 3.97% and receive a
floating rate based on 3-month LIBOR,
Expires 8/11/15, Broker Bank of America NA

 

 

27,500

 

 

(1,198,835

)

 

 

 

 

 




 

 

 

 

 

 

(20,629,425

)









Over-the-Counter Put Options — (0.0)%

 

 

 

 

 

 

 

CHF Put Option, Strike Price USD 1.25,
Expires 2/17/11, Broker Citibank NA

 

 

78,168

 

 

(823,886

)









Over-the-Counter Put Swaptions — (0.4)%

 

 

 

 

 

 

 

Receive a fixed rate of 3.32% and pay a
floating rate based on 3-month LIBOR,
Expires 10/29/10, Broker JPMorgan
Chase Bank NA

 

 

47,200

 

 

(5,050

)

Receive a fixed rate of 2.32% and pay a
floating rate based on 3-month LIBOR,
Expires 11/10/10, Broker Bank of America NA

 

 

55,400

 

 

(2,216

)

Receive a fixed rate of 1.96% and pay a
floating rate based on 3-month LIBOR,
Expires 11/30/10, Broker Deutsche Bank AG

 

 

72,000

 

 

(100,080

)

Receive a fixed rate of 3.21% and pay a
floating rate based on 3-month LIBOR,
Expires 12/01/10, Broker UBS AG

 

 

34,800

 

 

(67,895

)

Receive a fixed rate of 2.72% and pay a
floating rate based on 3-month LIBOR,
Expires 12/02/10, Broker Bank of America NA

 

 

63,800

 

 

(759,220

)

Receive a fixed rate of 3.32% and pay a
floating rate based on 3-month LIBOR,
Expires 12/03/10, Broker Citibank NA

 

 

50,000

 

 

(68,500

)

Receive a fixed rate of 2.01% and pay a
floating rate based on 3-month LIBOR,
Expires 12/15/10, Broker Bank of America NA

 

 

52,400

 

 

(104,381

)

Receive a fixed rate of 3.16% and pay a
floating rate based on 3-month LIBOR,
Expires 12/29/10, Broker Deutsche Bank AG

 

 

58,600

 

 

(308,939

)

Receive a fixed rate of 3.08% and pay a
floating rate based on 3-month LIBOR,
Expires 9/14/11, Broker Bank of America NA

 

 

27,400

 

 

(854,825

)

Receive a fixed rate of 3.76% and pay a
floating rate based on 3-month LIBOR,
Expires 7/23/12, Broker JPMorgan
Chase Bank NA

 

 

35,000

 

 

(1,122,800

)

Receive a fixed rate of 4.00% and pay a
floating rate based on 3-month LIBOR,
Expires 8/13/12, Broker Morgan Stanley
Capital Services, Inc.

 

 

80,800

 

 

(2,207,779

)

Receive a fixed rate of 5.00% and pay a
floating rate based on 3-month LIBOR,
Expires 4/22/13, Broker JPMorgan
Chase Bank NA

 

 

56,200

 

 

(1,139,736

)

Receive a fixed rate of 3.23% and pay a
floating rate based on 6-month EURIBOR,
Expires 9/03/13, Broker Citibank NA

 

 

53,600

 

 

(3,328,721

)

Receive a fixed rate of 4.46% and pay a
floating rate based on 3-month LIBOR,
Expires 8/05/15, Broker Bank of America NA

 

 

50,000

 

 

(1,376,600

)

Receive a fixed rate of 4.47% and pay a
floating rate based on 3-month LIBOR,
Expires 8/05/15, Broker JPMorgan
Chase Bank NA

 

 

26,200

 

 

(719,609

)

 

 

 

 

 

 

 

 

Options Written

 

Notional
Amount
(000)

 

Value

 







Over-the-Counter Put Swaptions (concluded)

 

 

 

 

 

 

 

Receive a fixed rate of 4.21% and pay a
floating rate based on 3-month LIBOR,
Expires 8/06/15, Broker Goldman
Sachs Bank USA

 

USD

37,600

 

$

(1,169,886

)

Receive a fixed rate of 3.97% and pay a
floating rate based on 3-month LIBOR,
Expires 8/11/15, Broker Bank of America NA

 

 

27,500

 

 

(962,198

)

 

 

 

 

 




 

 

 

 

 

 

(14,298,435

)









Total Options Written
(Premium Received — $35,072,892) — (1.0)%

 

 

 

 

 

(35,976,999

)









Total Investments, Net of Borrowed Bonds,
Investments Sold Short, TBA Sale
Commitments and Options Written — 133.4%

 

 

 

 

 

4,790,850,547

 

Liabilities in Excess of Other Assets — (33.4)%

 

 

 

 

 

(1,198,960,525

)

 

 

 

 

 




Net Assets — 100.0%

 

 

 

 

$

3,591,890,022

 

 

 

 

 

 













 

 

*

The cost and unrealized appreciation (depreciation) of investments as of September 30, 2010, as computed for federal income tax purposes were as follows:


 

 

 

 

 

Aggregate cost

 

$

13,973,511,096

 

 

 




Gross unrealized appreciation

 

$

168,910,384

 

Gross unrealized depreciation

 

 

(95,059,619

)

 

 




Net unrealized appreciation

 

$

73,850,765

 

 

 





 

 

(a)

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.

 

(b)

Variable rate security. Rate shown is as of report date.

 

 

(c)

Issuer filed for bankruptcy and/or is in default of interest payments.

 

 

(d)

Non-income producing security.

 

 

(e)

When-issued security. Unsettled when-issued transactions were as follows:


 

 

 

 

 

 

 

 









Counterparty

 

Value

 

Unrealized
Appreciation

 







UBS AG

 

$

23,848,691

 

 

 

Morgan Stanley Capital Services, Inc.

 

$

9,565,139

 

$

512,077

 

Greenwich Financial

 

$

3,570,750

 

$

120,750

 

Morgan Stanley Capital Services, Inc.

 

$

5,775,000

 

 

 










 

 

(f)

Represents a payment-in-kind security which may pay interest/dividends in additional par/shares.

 

 

(g)

Convertible security.


 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

37




 

 


 

Schedule of Investments (continued)

Master Total Return Portfolio


 

 

(h)

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


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Affiliate

 

Par/Shares
Held at
September 30,
2009

 

Par/Shares
Purchased

 

Par/Shares
Sold

 

Par/Shares
Held at
September 30,
2010

 

Value at
September 30,
2010

 

Realized
Loss

 

Income


BlackRock Capital Finance LP, Series 1997-R2, Class AP, 1.21%, 12/25/35

 

$

10,162

 

 

 

$

(1,004

)

$

9,158

 

$

9,158

 

$

(6

)

$

1,022

 

BlackRock Liquidity Funds, TempFund, Institutional Class

 

 

2,551,335

 

 

18,332,013

1

 

 

 

20,883,348

 

$

20,883,348

 

 

 

 

22,433

 

iShares JPMorgan USD Emerging Markets Bond Fund

 

 

 

 

145,000

 

 

 

 

145,000

 

$

16,145,750

 

 

 

 

 



 

 

 

 

 

 

1

Represents net purchase cost.

 

 

 

(i)

Security is perpetual in nature and has no stated maturity date.

 

 

 

(j)

All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.

 

 

 

(k)

All or a portion of security has been pledged as collateral in connection with swaps.

 

 

 

(l)

Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:


 

 

 

 

 

 

 

 


Counterparty

 

Value

 

Unrealized
Appreciation
(Depreciation)

 


BNP Paribas

 

$

(63,601,736

)

$

635,440

 

Banc of America Securities

 

$

356,703,580

 

$

(414,733

)

Barclays Capital, Inc.

 

$

167,150,452

 

$

(99,864

)

Citigroup Global Markets, Inc.

 

$

623,307,851

 

$

1,774,175

 

Credit Suisse Securities LLC

 

$

(398,464,731

)

$

(755,207

)

Deutsche Bank Securities, Inc.

 

$

144,176,670

 

$

461,424

 

Goldman Sachs & Co.

 

$

201,432,537

 

$

761,407

 

Greenwich Financial Services

 

$

(246,900,924

)

$

539,811

 

JPMorgan Securities, Ltd.

 

$

(286,329,923

)

$

142,526

 

Morgan Stanley Capital Services, Inc.

 

$

(129,893,067

)

$

(210,368

)

Nomura Securities International, Inc.

 

$

(138,147,542

)

$

1,233,268

 

UBS Securities

 

$

(21,986,966

)

$

274,838

 

Wells Fargo Bank, NA

 

$

46,423,837

 

$

64,298

 



 

 

(m)

All or a portion of security has been pledged as collateral in connection with open financial futures contracts.

 

 

(n)

Represents the current yield as of report date.

 

 

For Portfolio compliance purposes, the Portfolio’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Portfolio management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

 

Reverse repurchase agreements outstanding as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Counterparty

 

Interest
Rate

 

Trade
Date

 

Maturity
Date

 

Net Closing
Amount

 

Face
Amount

 


Bank of America

 

 

0.13

%

 

 

7/16/10

 

Open

 

$

24,051,675

 

$

24,045,263

 

Barclays Capital Inc.

 

 

0.06

%

 

 

8/5/10

 

Open

 

 

11,045,482

 

 

11,041,250

 

Bank of America

 

 

0.26

%

 

 

8/10/10

 

10/01/10

 

 

51,698,705

 

 

51,684,750

 

Barclays Capital Inc.

 

 

0.06

%

 

 

8/12/10

 

Open

 

 

6,114,570

 

 

6,112,500

 

Credit Suisse Securities (USA) LLC

 

 

0.33

%

 

 

8/18/10

 

Open

 

 

57,509,503

 

 

57,491,490

 

Barclays Capital Inc.

 

 

0.22

%

 

 

9/03/10

 

10/01/10

 

 

9,315,842

 

 

9,315,212

 

Bank of America

 

 

0.35

%

 

 

9/07/10

 

10/01/10

 

 

79,922,010

 

 

79,908,312

 

Bank of America

 

 

0.35

%

 

 

9/07/10

 

Open

 

 

13,005,368

 

 

13,003,125

 


 

 

Reverse repurchase agreements outstanding as of September 30, 2010 were as follows (concluded):


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Counterparty

 

Interest
Rate

 

Trade
Date

 

Maturity
Date

 

Net Closing
Amount

 

Face
Amount

 


Bank of America

 

 

0.22

%

 

 

9/08/10

 

Open

 

$

13,125,282

 

$

13,123,437

 

Bank of America

 

 

0.24

%

 

 

9/08/10

 

Open

 

 

28,696,774

 

 

28,692,375

 

Bank of America

 

 

0.25

%

 

 

9/08/10

 

Open

 

 

71,145,699

 

 

71,134,337

 

Bank of America

 

 

0.27

%

 

 

9/08/10

 

Open

 

 

21,624,774

 

 

21,621,044

 

Bank of America

 

 

0.29

%

 

 

9/08/10

 

Open

 

 

11,846,870

 

 

11,844,675

 

Bank of America

 

 

0.31

%

 

 

9/08/10

 

Open

 

 

22,920,414

 

 

22,915,875

 

Barclays Capital Inc.

 

 

0.17

%

 

 

9/14/10

 

10/01/10

 

 

80,635,538

 

 

80,630,700

 

Barclays Capital Inc.

 

 

0.23

%

 

 

9/20/10

 

Open

 

 

28,597,780

 

 

28,595,000

 

JPMorgan Securities, Inc.

 

 

0.18

%

 

 

9/21/10

 

10/01/10

 

 

113,475,856

 

 

113,469,615

 

Barclays Capital Inc.

 

 

0.22

%

 

 

9/23/10

 

Open

 

 

10,764,756

 

 

10,764,000

 

Bank of America

 

 

0.12

%

 

 

9/27/10

 

Open

 

 

5,015,067

 

 

5,014,950

 

Bank of America

 

 

0.35

%

 

 

9/27/10

 

Open

 

 

55,140,395

 

 

55,137,500

 

Barclays Capital Inc.

 

 

0.17

%

 

 

9/29/10

 

Open

 

 

88,048,092

 

 

88,045,868

 

Morgan Stanley Capital Services, Inc.

 

 

0.22

%

 

 

9/29/10

 

10/01/10

 

 

199,383,962

 

 

199,382,743

 

Credit Suisse Securities (USA) LLC

 

 

0.40

%

 

 

9/30/10

 

10/01/10

 

 

154,859,164

 

 

154,857,444

 

Barclays Capital Inc.

 

 

0.19

%

 

 

9/30/10

 

10/01/10

 

 

73,881,765

 

 

73,881,375

 

Bank of America

 

 

0.27

%

 

 

9/30/10

 

Open

 

 

50,625,000

 

 

50,625,000

 

Bank of America

 

 

0.45

%

 

 

9/30/10

 

Open

 

 

17,613,018

 

 

17,612,138

 

Credit Suisse Securities (USA) LLC

 

 

0.28

%

 

 

9/30/10

 

Open

 

 

395,853,990

 

 

395,849,569

 

Credit Suisse Securities (USA) LLC

 

 

0.90

%

 

 

9/30/10

 

Open

 

 

13,493,000

 

 

13,493,000

 


Total

 

 

 

 

 

 

 

 

 

 

$

1,709,410,351

 

$

1,709,292,547

 

 

 

 

 

 

 

 

 

 

 

 








 

 

Financial futures contracts purchased as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Contracts

 

Issue

 

Exchange

 

Expiration

 

Notional
Value

 

Unrealized
Appreciation
(Depreciation)


1,005

 

5-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

121,491,456

 

$

(19,932

)

4,354

 

10-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

549,402,995

 

 

(594,901

)

403

 

30-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

53,339,911

 

 

548,745

 


Total

 

 

 

 

 

 

 

 

 

 

 

$

(66,088

)

 

 

 

 

 

 

 

 

 

 

 

 





 

 

 

See Notes to Financial Statements.

 




38

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Schedule of Investments (continued)

Master Total Return Portfolio


 

 

Financial futures contracts sold as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Contracts

 

Issue

 

Exchange

 

Expiration

Notional
Value

Unrealized
Depreciation


246

 

2-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

53,992,688

 

$

(468

)

140

 

10-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

17,539,109

 

 

(107,454

)

155

 

30-Year U.S. Treasury Bond

 

Chicago Mercantile

 

December 2010

 

$

21,897,938

 

 

(656

)

526

 

Euro-Dollar Future

 

Chicago Mercantile

 

December 2010

 

$

130,864,730

 

 

(161,870

)

530

 

Euro-Dollar Future

 

Chicago Mercantile

 

March 2011

 

$

131,857,139

 

 

(99,611

)

454

 

Euro-Dollar Future

 

Chicago Mercantile

 

June 2011

 

$

112,831,810

 

 

(117,715

)

438

 

Euro-Dollar Future

 

Chicago Mercantile

 

September 2011

 

$

108,554,637

 

 

(310,263

)

406

 

Euro-Dollar Future

 

Chicago Mercantile

 

December 2011

 

$

100,553,114

 

 

(236,386

)

332

 

Euro-Dollar Future

 

Chicago Mercantile

 

March 2012

 

$

82,167,891

 

 

(139,059

)

227

 

Euro-Dollar Future

 

Chicago Mercantile

 

June 2012

 

$

56,078,900

 

 

(112,113

)

189

 

Euro-Dollar Future

 

Chicago Mercantile

 

September 2012

 

$

46,613,694

 

 

(100,019

)

171

 

Euro-Dollar Future

 

Chicago Mercantile

 

December 2012

 

$

42,088,455

 

 

(101,520

)

171

 

Euro-Dollar Future

 

Chicago Mercantile

 

March 2013

 

$

42,017,592

 

 

(101,846

)

111

 

Euro-Dollar Future

 

Chicago Mercantile

 

June 2013

 

$

27,224,697

 

 

(63,266

)

31

 

Euro-Dollar Future

 

Chicago Mercantile

 

September 2013

 

$

7,597,777

 

 

(8,461

)


Total

 

 

 

 

 

 

 

 

 

 

$

(1,660,707

)

 

 

 

 

 

 

 

 

 

 

 





 

 

Foreign currency exchange contracts as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Currency
Purchased

 

 

 

Currency
Sold

 

Counterparty

 

Settlement
Date

 

Unrealized
Appreciation
(Depreciation)


CHF

 

73,246,006

 EUR

 

56,160,000

 

Citibank NA

 

10/14/10

 

$

(2,003,562

)

CHF

 

18,224,663

 EUR

 

13,750,000

 

Goldman Sachs Bank USA

 

10/14/10

 

 

(193,969

)

CHF

 

17,680,369

 EUR

 

13,750,000

 

Royal Bank of Scotland

 

10/14/10

 

 

(747,949

)

EUR

 

69,910,000

 CHF

 

91,405,732

 

Goldman Sachs Bank USA

 

10/14/10

 

 

2,263,622

 

EUR

 

13,750,000

 CHF

 

17,951,450

 

Royal Bank of Scotland

 

10/14/10

 

 

472,043

 

EUR

 

26,965,000

 USD

 

35,236,298

 

Citibank NA

 

10/14/10

 

 

1,520,311

 

EUR

 

30,950,000

 USD

 

39,516,651

 

Goldman Sachs Bank USA

 

10/14/10

 

 

2,672,004

 

EUR

 

26,965,000

 USD

 

35,179,887

 

Royal Bank of Scotland

 

10/14/10

 

 

1,576,722

 

EUR

 

6,725,000

 USD

 

8,557,832

 

UBS AG

 

10/14/10

 

 

609,170

 


 

 

Foreign currency exchange contracts as of September 30, 2010 were as follows (continued):


 

 

 

 

 

 

 

 

 

 

 

 


Currency
Purchased

 

 

 

 

Currency
Sold

 

Counterparty

 

Settlement
Date

 

Unrealized
Appreciation
(Depreciation)


JPY

 

7,718,780,433

 USD

 

91,555,000

 

BNP Paribas

 

10/14/10

 

$

918,747

 

JPY

 

2,602,664,455

 USD

 

30,619,052

 

Citibank NA

 

10/14/10

 

 

561,798

 

JPY

 

3,092,941,200

 USD

 

36,880,000

 

Credit Agricole

 

10/14/10

 

 

174,540

 

JPY

 

3,083,760,252

 USD

 

36,780,000

 

Morgan Stanley Capital Services, Inc.

 

10/14/10

 

 

164,549

 

JPY

 

2,423,098,340

 USD

 

28,320,000

 

Royal Bank of Scotland

 

10/14/10

 

 

709,584

 

USD

 

90,140,346

 EUR

 

69,395,000

 

Citibank NA

 

10/14/10

 

 

(4,453,568

)

USD

 

19,846,235

 EUR

 

15,465,000

 

Goldman Sachs Bank USA

 

10/14/10

 

 

(1,234,461

)

USD

 

18,405,000

 JPY

 

1,550,593,642

 

BNP Paribas

 

10/14/10

 

 

(171,666

)

USD

 

37,105,000

 JPY

 

3,110,994,515

 

BNP Paribas

 

10/14/10

 

 

(165,826

)

USD

 

18,405,000

 JPY

 

1,554,872,805

 

Citibank NA

 

10/14/10

 

 

(222,932

)

USD

 

73,885,000

 JPY

 

6,203,436,792

 

Deutsche Bank AG

 

10/14/10

 

 

(434,389

)

USD

 

18,405,000

 JPY

 

1,553,050,710

 

Goldman Sachs Bank USA

 

10/14/10

 

 

(201,102

)

USD

 

18,245,000

 JPY

 

1,540,060,450

 

Royal Bank of Scotland

 

10/14/10

 

 

(205,474

)

USD

 

36,550,000

 JPY

 

3,081,550,602

 

UBS AG

 

10/14/10

 

 

(368,077

)

CAD

 

3,400,000

 MXN

 

42,301,100

 

JPMorgan Chase Bank NA

 

10/19/10

 

 

(48,915

)

MXN

 

89,794,553

 ZAR

 

50,123,000

 

Citibank NA

 

10/19/10

 

 

(52,696

)

ZAR

 

49,551,000

 MXN

 

88,645,833

 

JPMorgan Chase Bank NA

 

10/19/10

 

 

61,920

 

USD

 

7,327,296

 GBP

 

4,800,000

 

Citibank NA

 

10/20/10

 

 

(211,906

)

CNY

 

691,336,485

 USD

 

102,175,000

 

HSBC Bank

 

10/27/10

 

 

1,151,062

 

USD

 

48,578,855

 CNY

 

330,822,000

 

HSBC Bank

 

10/27/10

 

 

(865,280

)

USD

 

7,891,430

 EUR

 

6,128,000

 

UBS AG

 

10/27/10

 

 

(460,951

)

EUR

 

48,611,000

 USD

 

65,740,431

 

UBS AG

 

11/10/10

 

 

507,549

 

USD

 

42,575,500

 EUR

 

31,578,600

 

Deutsche Bank AG

 

11/10/10

 

 

(460,407

)

CZK

 

148,023,000

 EUR

 

5,957,715

 

UBS AG

 

11/15/10

 

 

77,937

 

CZK

 

64,769,250

 NOK

 

21,000,000

 

UBS AG

 

11/15/10

 

 

24,931

 

CZK

 

77,415,468

 SEK

 

29,220,000

 

JPMorgan Chase Bank NA

 

11/15/10

 

 

(42,652

)

EUR

 

6,902,096

 GBP

 

5,675,000

 

Royal Bank of Scotland

 

11/15/10

 

 

494,132

 

GBP

 

5,365,000

 CZK

 

161,781,307

 

Deutsche Bank AG

 

11/15/10

 

 

(533,790

)

NOK

 

50,340,000

 CZK

 

156,215,088

 

UBS AG

 

11/15/10

 

 

(112,587

)

SEK

 

61,662,000

 CZK

 

161,356,443

 

Deutsche Bank AG

 

11/15/10

 

 

201,360

 

EUR

 

3,273,100

 USD

 

4,281,709

 

UBS AG

 

11/17/10

 

 

178,649

 

USD

 

9,451,646

 EUR

 

7,432,000

 

Citibank NA

 

11/17/10

 

 

(676,178

)

CHF

 

19,004,000

 EUR

 

14,220,825

 

Citibank NA

 

11/22/10

 

 

(28,559

)


 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

39




 

 


 

Schedule of Investments (continued)

Master Total Return Portfolio


 

 

Foreign currency exchange contracts as of September 30, 2010 were as follows (concluded):


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Currency
Purchased

 

 

 

 

Currency
Sold

 

Counterparty

 

Settlement
Date

 

 

Unrealized
Appreciation
(Depreciation)

 


CHF

 

9,326,000

 EUR

 

7,227,776

 

UBS AG

 

11/22/10

 

$

(353,410

)

EUR

 

7,343,279

 CHF

 

9,500,000

 

UBS AG

 

11/22/10

 

 

333,636

 

JPY

 

754,490,000

 KRW

 

10,770,334,750

 

HSBC Bank

 

11/22/10

 

 

(381,230

)

KRW

 

21,185,119,000

 JPY

 

1,540,061,037

 

HSBC Bank

 

11/22/10

 

 

78,831

 

USD

 

7,445,648

 JPY

 

639,042,825

 

Citibank NA

 

11/22/10

 

 

(213,364

)

EUR

 

3,891,774

 HUF

 

1,103,784,468

 

Deutsche Bank AG

 

11/29/10

 

 

(98,290

)

EUR

 

3,545,057

 HUF

 

1,016,196,000

 

Royal Bank of Scotland

 

11/29/10

 

 

(142,123

)

HUF

 

1,994,275,809

 PLN

 

27,883,000

 

UBS AG

 

11/29/10

 

 

212,084

 

PLN

 

27,883,000

 EUR

 

6,968,391

 

UBS AG

 

11/29/10

 

 

51,506

 

USD

 

5,527,000

 ZAR

 

38,911,185

 

Citibank NA

 

11/29/10

 

 

(353

)

MXN

 

103,924,257

 CAD

 

8,323,000

 

Deutsche Bank AG

 

12/22/10

 

 

110,111

 

NZD

 

3,560,056

 USD

 

2,605,000

 

HSBC Bank

 

1/11/11

 

 

(15,019

)

USD

 

2,605,000

 IDR

 

23,424,160,000

 

HSBC Bank

 

1/11/11

 

 

28,167

 

USD

 

3,321,000

 UAH

 

27,020,500

 

HSBC Bank

 

1/27/11

 

 

(16,675

)

CNY

 

165,411,000

 USD

 

24,592,774

 

HSBC Bank

 

7/27/11

 

 

328,029

 

USD

 

51,087,018

 CNY

 

342,272,803

 

HSBC Bank

 

7/27/11

 

 

(479,765

)


Total

 

 

 

 

 

 

 

 

 

 

$

(114,131

)

 

 

 

 

 

 

 

 

 

 

 





 

 

Credit default swaps on single-name issuers — buy protection outstanding as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Issuer

 

Pay
Fixed
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 


Radio Shack Corp.

 

1.16

%

 

UBS AG

 

December 2010

 

$

7,625

 

$

(3,335

)

Computer Sciences Corp.

 

0.88

%

 

Morgan Stanley Capital Services, Inc.

 

June 2011

 

$

7,770

 

 

(35,022

)

NOVA Chemicals Corp.

 

5.00

%

 

Citibank NA

 

March 2012

 

$

405

 

 

(12,535

)

NOVA Chemicals Corp.

 

5.00

%

 

JPMorgan Chase Bank NA

 

June 2012

 

$

555

 

 

(15,297

)

Radian Group, Inc.

 

5.00

%

 

Citibank NA

 

March 2013

 

$

13,350

 

 

(205,302

)

Belo Corp.

 

5.00

%

 

Barclays Bank Plc

 

June 2013

 

$

1,665

 

 

(251,157

)

Eastman Chemical Co.

 

0.68

%

 

Morgan Stanley Capital Services, Inc.

 

September 2013

 

$

7,800

 

 

(12,031

)

NOVA Chemicals Corp.

 

5.00

%

 

Goldman Sachs Bank USA

 

December 2013

 

$

2,292

 

 

(118,748

)

Radian Group, Inc.

 

5.00

%

 

Citibank NA

 

June 2015

 

$

13,350

 

 

(148,656

)

Alcoa, Inc.

 

5.00

%

 

Citibank NA

 

September 2015

 

$

3,750

 

 

(146,151

)

Alcoa, Inc.

 

5.00

%

 

Morgan Stanley Capital Services, Inc.

 

September 2015

 

$

3,750

 

 

(121,924

)

Wells Fargo & Co.

 

1.00

%

 

Barclays Bank Plc

 

September 2015

 

$

10,000

 

 

(91,259

)


 

 

Credit default swaps on single-name issuers — buy protection outstanding as of September 30, 2010 were as follows (concluded):


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Issuer

 

Pay
Fixed
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 


MGIC Investment Corp.

 

5.00

%

 

Citibank NA

 

December 2015

 

$

8,010

 

$

(99,701

)

Sabre Holdings Corp.

 

5.00

%

 

JPMorgan Chase Bank NA

 

March 2016

 

$

5,040

 

 

(2,287,509

)

Sabre Holdings Corp.

 

5.00

%

 

JPMorgan Chase Bank NA

 

March 2016

 

$

5,040

 

 

(2,307,960

)

American Greetings Corp.

 

5.00

%

 

Royal Bank of Scotland Plc

 

September 2016

 

$

570

 

 

(83,409

)

The PMI Group, Inc.

 

5.00

%

 

Citibank NA

 

September 2016

 

$

13,350

 

 

(86,111

)

Brunswick Corp.

 

5.00

%

 

Goldman Sachs Bank USA

 

December 2016

 

$

2,500

 

 

31,589

 


Total

 

 

 

 

 

 

 

 

 

 

 

$

(5,994,518

)

 

 

 

 

 

 

 

 

 

 

 

 





 

 

Credit default swaps on traded indexes — buy protection outstanding as of September 30, 2010 were as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Issuer

 

Pay
Fixed
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 


Dow Jones CDX North America Investment Grade Index Series 14

 

1.00

%

 

Citibank NA

 

June 2015

 

$

32,200

 

$

(157,996

)

Dow Jones CDX North America Investment Grade Index Series 14

 

1.00

%

 

Citibank NA

 

June 2015

 

$

32,200

 

 

(186,732

)

Dow Jones CDX North America Investment Grade Index Series 14

 

1.00

%

 

Citibank NA

 

June 2015

 

$

34,420

 

 

(172,443

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Citibank NA

 

June 2015

 

$

13,960

 

 

(382,192

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Citibank NA

 

June 2015

 

$

11,500

 

 

(348,403

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Credit Suisse International

 

June 2015

 

$

2,500

 

 

(69,565

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Deutsche Bank AG

 

June 2015

 

$

11,500

 

 

(341,361

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Morgan Stanley Capital Services, Inc.

 

June 2015

 

$

23,250

 

 

(736,051

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Morgan Stanley Capital Services, Inc.

 

June 2015

 

$

15,500

 

 

(205,593

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Morgan Stanley Capital Services, Inc.

 

June 2015

 

$

7,430

 

 

(220,549

)

Dow Jones CDX North America High Yield Series 14

 

5.00

%

 

Morgan Stanley Capital Services, Inc.

 

June 2015

 

$

11,500

 

 

(348,403

)


 

 

 

See Notes to Financial Statements.

 




40

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

 

Schedule of Investments (continued)

Master Total Return Portfolio


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit default swaps on traded indexes — buy protection outstanding as of September 30, 2010 were as follows (concluded):

 

 















 

Issuer

 

Pay
Fixed
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 

 













 

Dow Jones CDX North America High Yield Series 14

 

5.00%

 

Morgan Stanley Capital Services, Inc.

 

June 2015

 

$

6,340

 

$

(184,993

)

 

ABX Home Equity 06-2 AAA Index

 

0.11%

 

Credit Suisse International

 

May 2046

 

$

33,505

 

 

(682,705

)

 

ABX Home Equity 06-2 AAA Index

 

0.11%

 

JPMorgan Chase Bank NA

 

May 2046

 

$

32,725

 

 

52,998

 

 















 

Total

 

 

 

 

 

 

 

 

 

 

$

(3,983,988

)

 

 

 

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit default swaps on single-name issuers — sold protection outstanding as of September 30, 2010 were as follows:

 

 


 

Issuer

 

Receive
Fixed
Rate

 

Counterparty

 

Expiration

 

Credit
Rating1

 

Notional
Amount
(000)2

 

Unrealized
Appreciation
(Depreciation)

 

 















 

SLM Corp.

 

5.00%

 

Barclays Bank Plc

 

March 2013

 

BBB–

 

$

5,000

 

$

99,423

 

 

Assured Guaranty Ltd.

 

5.00%

 

Citibank NA

 

September 2015

 

A+

 

$

2,500

 

 

(32,206

)

 

Assured Guaranty Ltd.

 

5.00%

 

Deutsche Bank AG

 

September 2015

 

A+

 

$

5,000

 

 

27,185

 

 

MetLife, Inc.

 

1.00%

 

Citibank NA

 

September 2015

 

A–

 

$

13,330

 

 

96,100

 

 

MetLife, Inc.

 

1.00%

 

Citibank NA

 

September 2015

 

A–

 

$

10,000

 

 

7,482

 

 

MetLife, Inc.

 

1.00%

 

Deutsche Bank AG

 

September 2015

 

A–

 

$

7,300

 

 

68,277

 

 

















 

Total

 

 

 

 

 

 

 

 

 

 

 

 

$

266,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 





 

 

 

 

1

Using S&P’s rating.

 

 

 

 

2

The maximum potential amount the Master LLC may pay should a negative event take place as defined under the terms of agreement.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit default swaps on traded indexes — sold protection outstanding as of September 30, 2010 were as follows:

 

 


 

Issuer

 

Receive
Fixed
Rate

 

Counterparty

 

Expiration

 

Credit
Rating3

 

Notional
Amount
(000)4

 

Unrealized
Depreciation

 

 















 

MCDX North America Series 14

 

0.00%

 

Goldman Sachs International

 

June 2020

 

AA

 

$

10,340

 

$

(365,460

)

 


















 

 

 

 

3

Using S&P’s rating.

 

 

 

 

4

The maximum potential amount the Master LLC may pay should a negative event take place as defined under the terms of agreement.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps outstanding as of September 30, 2010 were as follows:

 

 


 

Fixed
Rate

 

Floating
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 

 













 

0.69% (a)

 

3-month LIBOR

 

Barclays Bank Plc

 

September 2012

 

$

325,000

 

$

(653,963

)

 

1.67% (b)

 

3-month LIBOR

 

JPMorgan Chase Bank NA

 

May 2013

 

$

31,000

 

 

725,422

 

 

2.20% (b)

 

3-month LIBOR

 

Credit Suisse International

 

June 2015

 

$

75,000

 

 

2,661,479

 

 

2.09% (b)

 

3-month LIBOR

 

Credit Suisse International

 

June 2015

 

$

43,300

 

 

1,323,759

 

 

1.65% (a)

 

3-month LIBOR

 

Citibank NA

 

August 2015

 

$

75,000

 

 

(618,200

)

 

1.63% (a)

 

3-month LIBOR

 

Credit Suisse International

 

August 2015

 

$

87,500

 

 

(636,073

)

 

1.62% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

August 2015

 

$

87,600

 

 

(593,650

)

 

1.64% (b)

 

3-month LIBOR

 

Goldman Sachs International

 

August 2015

 

$

43,700

 

 

335,946

 

 

1.64% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

August 2015

 

$

89,900

 

 

(716,430

)

 

1.66% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

August 2015

 

$

12,600

 

 

(109,194

)

 

1.69% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

August 2015

 

$

22,400

 

 

(228,556

)

 

1.71% (a)

 

3-month LIBOR

 

Citibank NA

 

September 2015

 

$

98,620

 

 

(1,008,844

)

 

1.57% (b)

 

3-month LIBOR

 

JPMorgan Chase Bank NA

 

September 2015

 

$

40,000

 

 

167,034

 

 

1.58% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

September 2015

 

$

35,000

 

 

158,716

 

 

2.13% (a)

 

3-month LIBOR

 

Barclays Bank Plc

 

August 2017

 

$

20,200

 

 

(123,036

)

 

2.11% (b)

 

3-month LIBOR

 

UBS AG

 

September 2017

 

$

50,000

 

 

219,901

 

 

3.51% (a)

 

3-month LIBOR

 

BNP Paribas SA

 

May 2020

 

$

13,000

 

 

(1,128,411

)

 

3.54% (b)

 

3-month LIBOR

 

Deutsche Bank AG

 

May 2020

 

$

13,000

 

 

1,164,064

 

 

3.72% (b)

 

3-month LIBOR

 

JPMorgan Chase Bank NA

 

May 2020

 

$

30,000

 

 

3,141,389

 

 

3.54% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

May 2020

 

$

8,500

 

 

760,188

 

 

4.80% (a)

 

3-month LIBOR

 

Barclays Bank Plc

 

June 2020

 

$

107,600

 

 

(16,113,256

)

 

3.35% (b)

 

3-month LIBOR

 

Credit Suisse International

 

June 2020

 

$

35,100

 

 

2,540,421

 

 

3.38% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

June 2020

 

$

12,800

 

 

(956,723

)

 

3.48% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

June 2020

 

$

21,700

 

 

1,821,250

 

 

2.93% (b)

 

3-month LIBOR

 

Citibank NA

 

July 2020

 

$

4,200

 

 

142,539

 

 

3.06% (b)

 

3-month LIBOR

 

Citibank NA

 

July 2020

 

$

40,000

 

 

1,844,603

 

 

2.95% (a)

 

3-month LIBOR

 

Credit Suisse International

 

July 2020

 

$

800

 

 

(29,023

)

 

2.98% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

July 2020

 

$

24,800

 

 

957,529

 

 

3.02% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

July 2020

 

$

32,000

 

 

(1,372,942

)


 

 

 

See Notes to Financial Statements.

 

 


BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

41




 

 


 

 

Schedule of Investments (continued)

Master Total Return Portfolio


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps outstanding as of September 30, 2010 were as follows (continued):

 

 


 

Fixed
Rate

 

Floating
Rate

 

Counterparty

 

Expiration

 

 

Notional
Amount
(000)

 

 

Unrealized
Appreciation
(Depreciation)

 

 















 

2.61% (b)

 

3-month LIBOR

 

Barclays Bank Plc

 

August 2020

 

$

52,300

 

$

249,594

 

 

2.92% (a)

 

3-month LIBOR

 

Barclays Bank Plc

 

August 2020

 

$

14,900

 

 

(491,312

)

 

2.59% (a)

 

3-month LIBOR

 

Credit Suisse International

 

August 2020

 

$

35,000

 

 

(108,062

)

 

2.50% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

August 2020

 

$

113,500

 

 

621,734

 

 

4.12% (a)

 

3-month LIBOR

 

Goldman Sachs International

 

August 2020

 

$

27,600

 

 

(2,584,525

)

 

2.61% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

August 2020

 

$

50,000

 

 

221,683

 

 

2.76% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

August 2020

 

$

13,000

 

 

(242,036

)

 

2.61% (b)

 

3-month LIBOR

 

BNP Paribas SA

 

September 2020

 

$

34,900

 

 

160,675

 

 

2.69% (a)

 

3-month LIBOR

 

Citibank NA

 

September 2020

 

$

51,000

 

 

(553,257

)

 

2.82% (a)

 

3-month LIBOR

 

Citibank NA

 

September 2020

 

$

4,800

 

 

(109,431

)

 

2.62% (a)

 

3-month LIBOR

 

Credit Suisse International

 

September 2020

 

$

30,800

 

 

(155,119

)

 

2.53% (b)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2020

 

$

18,800

 

 

(50,686

)

 

2.57% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2020

 

$

9,800

 

 

(6,810

)

 

2.59% (b)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2020

 

$

17,200

 

 

36,291

 

 

2.70% (b)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2020

 

$

118,000

 

 

1,445,402

 

 

2.77% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2020

 

$

22,000

 

 

(406,883

)

 

2.72% (a)

 

3-month LIBOR

 

JPMorgan Chase Bank NA

 

September 2020

 

$

125,000

 

 

(1,771,555

)

 

2.54% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

42,100

 

 

59,331

 

 

2.56% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

41,100

 

 

10,724

 

 

2.60% (b)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

40,200

 

 

130,425

 

 

2.68% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

26,700

 

 

(285,140

)

 

2.70% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

13,300

 

 

(156,302

)

 

2.76% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2020

 

$

26,000

 

 

(465,148

)

 

2.80% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

September 2020

 

$

11,100

 

 

(233,805

)

 

2.55% (a)

 

3-month LIBOR

 

UBS AG

 

September 2020

 

$

15,700

 

 

21,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps outstanding as of September 30, 2010 were as follows (concluded):

 

 


 

Fixed
Rate

 

Floating
Rate

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 

 













 

2.62% (a)

 

3-month LIBOR

 

UBS AG

 

September 2020

 

$

22,900

 

$

(112,227

)

 

2.58% (a)

 

3-month LIBOR

 

Citibank NA

 

October 2020

 

$

21,300

 

 

 

 

2.59% (b)

 

3-month LIBOR

 

Citibank NA

 

October 2020

 

$

34,600

 

 

 

 

2.54% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

October 2020

 

$

34,600

 

 

 

 

3.77% (b)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

October 2024

 

$

15,300

 

 

 

 

3.38% (b)

 

3-month LIBOR

 

Citibank NA

 

September 2040

 

$

17,400

 

 

163,329

 

 

3.50% (a)

 

3-month LIBOR

 

Deutsche Bank AG

 

September 2040

 

$

21,200

 

 

(697,411

)

 

3.48% (a)

 

3-month LIBOR

 

Morgan Stanley Capital Services, Inc.

 

September 2040

 

$

13,800

 

 

(396,993

)

 

3.37% (a)

 

3-month LIBOR

 

Royal Bank of Scotland Plc

 

September 2040

 

$

17,400

 

 

(120,952

)

 















 

Total

 

 

 

 

 

 

 

 

 

 

$

(12,150,955

)

 

 

 

 

 

 

 

 

 

 

 

 





 

 

 

 

(a)

Pays fixed interest rate and receives floating rate.

 

 

 

 

(b)

Pays floating interest rate and receives fixed rate.


 

 

 

 

 

 

 

 

 

 

 

 

 

Total return swaps outstanding as of September 30, 2010 were as follows:

 

 


 

Interest
Rate
Payable

 

Counterparty

 

Expiration

 

Notional
Amount
(000)

 

Unrealized
Appreciation
(Depreciation)

 

 











 

6.50%

 

Credit Suisse International

 

January 2038

 

$

40,117

 

$

(212,426

) (d)

 

6.50%

 

Goldman Sachs International

 

January 2038

 

$

18,924

 

 

(142,580

) (d)

 

6.50%

 

JPMorgan Chase Bank NA

 

January 2038

 

$

18,847

 

 

(64,088

) (d)

 

6.50%

 

JPMorgan Chase Bank NA

 

January 2038

 

$

45,963

 

 

(124,466

) (d)

 

5.50%

 

Goldman Sachs International

 

January 2039

 

$

33,360

 

 

379,779

(e)

 













 

 

 

 

 

 

 

 

 

 

$

(163,781

)

 

 

 

 

 

 

 

 

 

 





 

 

 

 

(d)

Based on the change in the return of the Markit IOS Index referencing the interest component of the 6.50% coupon, 30-year, fixed-rate Fannie Mae residential mortgage-backed securities pools.

 

 

 

 

(e)

Based on the change in the return of the Markit IOS Index referencing the interest component of the 5.50% coupon, 30-year, fixed-rate Fannie Mae residential mortgage-backed securities pools.


 

 

 

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

 

 

 

 

Level 1 — price quotations in active markets/exchanges for identical assets and liabilities

 

 

 

 

Level 2 — other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

 

 

 

 

Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Master Portfolio’s own assumptions used in determining the fair value of investments and derivatives)

 

 

 

 

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Master Portfolio’s policy regarding valuation of investments and other significant accounting policies, please refer to the Note 1 of the Notes to Financial Statements.


 

 

 

See Notes to Financial Statements.


42

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

Schedule of Investments (continued)

Master Total Return Portfolio

The following tables summarize the inputs used as of September 30, 2010 in determining the fair valuation of the Master Portfolio’s investments and derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 















Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 















Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets-Backed Securities

 

 

 

$

293,228,030

 

$

17,382,858

 

$

310,610,888

 

Corporate Bonds

 

 

 

 

1,128,959,037

 

 

 

 

1,128,959,037

 

Foreign Agency Obligations

 

 

 

 

69,421,730

 

 

 

 

69,421,730

 

Investment Companies

 

$

16,145,750

 

 

 

 

 

 

16,145,750

 

Non-Agency Mortgage-Backed Securities

 

 

 

 

800,825,962

 

 

44,026,239

 

 

844,852,201

 

Preferred Securities

 

 

 

 

42,185,750

 

 

 

 

42,185,750

 

Taxable Municipal Bonds

 

 

 

 

75,225,414

 

 

 

 

75,225,414

 

U.S. Government Sponsored Agency Securities

 

 

 

 

10,387,786,921

 

 

 

 

10,387,786,921

 

U.S. Treasury Obligations

 

 

 

 

1,046,863,390

 

 

 

 

1,046,863,390

 

Short-Term Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market Fund

 

 

20,883,348

 

 

 

 

 

 

20,883,348

 

Borrowed Bond Agreements

 

 

 

 

93,544,681

 

 

 

 

93,544,681

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowed Bonds

 

 

 

 

(93,815,394

)

 

 

 

(93,815,394

)

Investments Sold Short

 

 

 

 

(70,367,933

)

 

 

 

(70,367,933

)

TBA Sale Commitments

 

 

 

 

(9,056,350,988

)

 

 

 

(9,056,350,988

)

 

 













Total

 

$

37,029,098

 

$

4,717,506,600

 

$

61,409,097

 

$

4,815,944,795

 

 

 














 

 

 

 

 

 

 

 

 

 

 

 

 

 















 

 

Derivative Financial Instruments1

 

 

 



Valuation Inputs

 

Level 1

 

Level 2

 

Level 3

 

Total

 











Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit contracts

 

 

 

$

383,054

 

 

 

$

383,054

 

Foreign currency exchange contracts

 

 

 

 

16,343,851

 

 

 

 

16,343,851

 

Interest rate contracts

 

$

687,152

 

 

30,968,487

 

$

379,779

 

 

32,035,418

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit contracts

 

 

 

 

(10,011,890

)

 

(448,869

)

 

(10,460,759

)

Foreign currency exchange contracts

 

 

 

 

(16,646,264

)

 

 

 

(16,646,264

)

Interest rate contracts

 

 

(2,275,540

)

 

(68,163,815

)

 

(543,560

)

 

(70,982,915

)

 

 













Total

 

$

(1,588,388

)

$

(47,126,577

)

$

(612,650

)

$

(49,327,615

)

 

 














 

 

 

 

1

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

 

 

 

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 













 

 

Asset-Backed
Securities

 

Corporate
Bonds

 

Non-Agency
Mortgage-Backed
Securities

 

TALF Loans

 

Total

 













Assets/Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as of September 30, 2009

 

$

14,543,431

 

$

194,412

 

$

15,999

 

$

(176,205,090

)

$

(161,451,248

)

Accrued discounts/premium

 

 

(9,570

)

 

22,006

 

 

 

 

 

 

12,436

 

Net realized gain (loss)

 

 

(5,876

)

 

 

 

178

 

 

 

 

(5,698

)

Net change in unrealized appreciation/depreciation2

 

 

2,599,768

 

 

207,758

 

 

5,598

 

 

 

 

2,813,124

 

Purchases

 

 

 

 

51,554

 

 

 

 

 

 

51,554

 

Sales

 

 

(612,416

)

 

 

 

(8,535

)

 

176,205,090

 

 

175,584,139

 

Transfers in3

 

 

3,571,074

 

 

 

 

44,013,238

 

 

 

 

47,584,312

 

Transfers out3

 

 

(2,703,553

)

 

(475,730

)

 

(239

)

 

 

 

(3,179,522

)

 

 
















Balance, as of September 30, 2010

 

$

17,382,858

 

 

 

$

44,026,239

 

 

 

$

61,409,097

 

 

 

















 

 

 

 

2

Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation on securities still held at September 30, 2010 was $713,852.

 

 

 

 

3

The Master Portfolio’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.


 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

43




 

 



 

Schedule of Investments (concluded)

Master Total Return Portfolio

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

 

 

 

 

 

 

 

 

 

 

 









Assets/Liabilities:

 

Credit
Contracts

 

Interest
Rate
Contracts

 

Total

 









Balance, as of September 30, 2009

 

$

21,125

 

 

 

$

21,125

 

Accrued discounts/premium

 

 

 

 

 

 

 

Net realized gain (loss)

 

 

 

 

 

 

 

Net change in unrealized appreciation/
depreciation4

 

 

(104,534

)

 

 

 

(104,534

)

Purchases

 

 

 

 

 

 

 

Sales

 

 

 

 

 

 

 

Transfers in5

 

 

(365,460

)

$

(163,781

)

 

(529,241

)

Transfers out5

 

 

 

 

 

 

 

 

 










Balance, as of September 30, 2010

 

$

(448,869

)

$

(163,781

)

$

(612,650

)

 

 











 

 

 

 

4

Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation on swaps still held at September 30, 2010 was $(104,534).

 

 

 

 

5

The Master Portfolio’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.


 

 

 

 

See Notes to Financial Statements.


44

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 


 

Statement of Assets and Liabilities

Master Total Return Portfolio


 

 

 

 

 

September 30, 2010

 

 

 

 






Assets

 

 

 

 






Investments at value — unaffiliated (cost — $13,931,775,671)

 

$

14,010,323,605

 

Investments at value — affiliated (cost — $37,021,929)

 

 

37,038,256

 

Unrealized appreciation on swaps

 

 

21,847,833

 

Unrealized appreciation on foreign currency exchange contracts

 

 

15,482,994

 

Foreign currency at value (cost — $299,361)

 

 

303,475

 

TBA sale commitments receivable

 

 

8,967,031,040

 

Investments sold receivable

 

 

1,380,006,672

 

Reverse repurchase agreements receivable

 

 

176,202,013

 

Investments sold short receivable

 

 

70,375,970

 

Interest receivable

 

 

47,239,828

 

Swaps premiums paid

 

 

39,991,943

 

Swaps receivable

 

 

9,277,527

 

Contributions receivable from investors

 

 

6,719,121

 

Prepaid expenses

 

 

49,038

 

 

 




Total assets

 

 

24,781,889,315

 

 

 




 

 

 

 

 






Liabilities

 

 

 

 






TBA sale commitments at value (proceeds — $9,060,863,355)

 

 

9,056,350,988

 

Borrowed bonds (proceeds — $93,527,926)

 

 

93,815,394

 

Investments sold short (proceeds — $70,375,970)

 

 

70,367,933

 

Reverse repurchase agreements

 

 

1,709,292,547

 

Options written at value (premiums received — $35,072,892)

 

 

35,976,999

 

Unrealized depreciation on swaps

 

 

44,240,274

 

Unrealized depreciation on foreign currency exchange contracts

 

 

15,597,125

 

Bank overdraft

 

 

19

 

Investments purchased payable

 

 

10,105,588,306

 

Payable due to custodian

 

 

29,951,063

 

Swap premiums received

 

 

14,631,566

 

Swaps payable

 

 

9,915,634

 

Cash held as collateral for reverse repurchase agreements

 

 

3,383,000

 

Investment advisory fees payable

 

 

196,194

 

Margin variation payable

 

 

151,887

 

Interest expense payable

 

 

55,503

 

Other affiliates payable

 

 

23,071

 

Directors’ fees payable

 

 

1,184

 

Other accrued expenses payable

 

 

460,606

 

 

 




Total liabilities

 

 

21,189,999,293

 

 

 




Net Assets

 

$

3,591,890,022

 

 

 




 

 

 

 

 






Net Assets Consist of

 

 

 

 






Investors’ capital

 

$

3,534,210,233

 

Net unrealized appreciation

 

 

57,679,789

 

 

 




Net Assets

 

$

3,591,890,022

 

 

 





 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

45




 

 


 

Statement of Operations

Master Total Return Portfolio


 

 

 

 

 

Year Ended September 30, 2010

 

 

 

 






Investment Income

 

 

 

 






Interest

 

$

185,276,355

 

Income — affiliated

 

 

23,455

 

 

 




Total income

 

 

185,299,810

 

 

 




 

 

 

 

 






Expenses

 

 

 

 






Investment advisory

 

 

2,238,333

 

Accounting services

 

 

659,460

 

Borrowing costs1

 

 

139,062

 

Professional

 

 

404,361

 

Custodian

 

 

447,477

 

Directors

 

 

87,937

 

Printing

 

 

11,048

 

Miscellaneous

 

 

259,774

 

 

 




Total expenses excluding interest expense

 

 

4,247,452

 

Interest expense

 

 

15,179,568

 

 

 




Total expenses

 

 

19,427,020

 

Less fees waived by advisor

 

 

(13,143

)

Less fees paid indirectly

 

 

(1,289

)

 

 




Total expenses after fees waived and paid indirectly

 

 

19,412,588

 

 

 




Net investment income

 

 

165,887,222

 

 

 




 

 

 

 

 






Realized and Unrealized Gain (Loss)

 

 

 

 






Net realized gain (loss) from:

 

 

 

 

Investments — unaffiliated

 

 

75,378,057

 

Investments — affiliated

 

 

(6

)

Financial futures contracts

 

 

(2,076,243

)

Swaps

 

 

(20,061,000

)

Options written

 

 

43,739,757

 

Foreign currency transactions

 

 

6,000,155

 

Borrowed bonds

 

 

(13,631,462

)

 

 




 

 

 

89,349,258

 

 

 




 

 

 

 

 

Net change in unrealized appreciation/depreciation on:

 

 

 

 

Investments

 

 

168,825,770

 

Financial futures contracts

 

 

(4,222,340

)

Swaps

 

 

(6,263,031

)

Options written

 

 

(2,359,785

)

Foreign currency transactions

 

 

(499,547

)

Investments sold short

 

 

8,037

 

Borrowed bonds

 

 

(287,468

)

 

 




 

 

 

155,201,636

 

 

 




Total realized and unrealized gain

 

 

244,550,894

 

 

 




Net Increase in Net Assets Resulting from Operations

 

$

410,438,116

 

 

 





 

 

1

See Note 5 of the Notes to Financial Statements for details of borrowings.


 

 

 

See Notes to Financial Statements.

 

 




46

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

Statements of Changes in Net Assets

Master Total Return Portfolio


 

 

 

 

 

 

 

 

 

 

Year Ended
September 30,

 

 



Increase (Decrease) in Net Assets:

 

2010

 

2009

 







Operations

 

 

 

 

 

 

 









Net investment income

 

$

165,887,222

 

$

168,909,042

 

Net realized gain (loss)

 

 

89,349,258

 

 

(212,646,370

)

Net change in unrealized appreciation/depreciation

 

 

155,201,636

 

 

321,179,419

 

 

 







Net increase in net assets resulting from operations

 

 

410,438,116

 

 

277,442,091

 

 

 







 

 

 

 

 

 

 

 









Capital Transactions

 

 

 

 

 

 

 









Proceeds from contributions

 

 

1,369,758,919

 

 

889,293,142

 

Value of withdrawals

 

 

(1,311,961,794

)

 

(1,288,029,428

)

 

 







Net increase (decrease) in net assets derived from capital transactions

 

 

57,797,125

 

 

(398,736,286

)

 

 







 

 

 

 

 

 

 

 









Net Assets

 

 

 

 

 

 

 









Total increase (decrease) in net assets

 

 

468,235,241

 

 

(121,294,195

)

Beginning of year

 

 

3,123,654,781

 

 

3,244,948,976

 

 

 







End of year

 

$

3,591,890,022

 

$

3,123,654,781

 

 

 








 

 

 

 

See Notes to Financial Statements.

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

47




 

 


 

Statement of Cash Flows

Master Total Return Portfolio


 

 

 

 

 

Year Ended September 30, 2010

 

 

 

 






Cash Used for Operating Activities

 

 

 

 






Net increase in net assets resulting from operations

 

$

410,438,116

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities:

 

 

 

 

Increase in interest receivable

 

 

(24,191,801

)

Increase in swaps receivable

 

 

(5,738,136

)

Decrease in margin variation receivable

 

 

690,529

 

Decrease in prepaid expenses

 

 

11,688

 

Increase in investment advisory fees payable

 

 

27,830

 

Decrease in interest expense payable

 

 

(302,399

)

Increase in other affiliates payable

 

 

7,672

 

Increase in other accrued expenses payable

 

 

165,409

 

Increase in margin variation payable

 

 

151,887

 

Increase in swaps payable

 

 

6,592,770

 

Increase in cash held as collateral in connection with reverse repurchase agreements

 

 

3,383,000

 

Decrease in other liabilities

 

 

(1,258,741

)

Increase in payable due to custodian

 

 

29,951,063

 

Decrease in Officer’s and Directors’ fees payable

 

 

(1,105

)

Net periodic and termination payments of swaps

 

 

(35,084,020

)

Net realized and unrealized gain

 

 

(242,004,062

)

Amortization of premium and accretion of discount on investments

 

 

(2,896,720

)

Premiums received from options written

 

 

145,612,318

 

Proceeds from sales and paydowns of long-term investments

 

 

95,074,731,708

 

Purchases of long-term investments

 

 

(96,516,835,735

)

Net purchases of short-term securities

 

 

(111,876,694

)

Premiums paid on closing options written

 

 

(131,237,590

)

 

 




Cash used for operating activities

 

 

(1,399,633,013

)

 

 




 

 

 

 

 






Cash Provided by Financing Activities

 

 

 

 






Cash receipts from contributions

 

 

1,380,456,405

 

Cash payments on withdrawals

 

 

(1,322,568,157

)

Cash receipts from borrowings

 

 

26,671,468,596

 

Cash payments on borrowings

 

 

(25,329,396,820

)

Increase in bank overdraft

 

 

(19

)

 

 




Cash provided by financing activities

 

 

1,399,960,005

 

 

 




 

 

 

 

 






Cash Impact from Foreign Exchange Fluctuations

 

 

 

 






Cash impact from foreign exchange fluctuations

 

 

3,871

 

 

 




 

 

 

 

 






Cash

 

 

 

 






Net increase in cash and foreign currency

 

 

300,863

 

Cash and foreign currency at beginning of year

 

 

2,612

 

 

 




Cash and foreign currency at end of year

 

$

303,475

 

 

 




 

 

 

 

 






Cash Flow Information

 

 

 

 






Cash paid for interest

 

$

15,481,967

 

 

 





 

 

 

A Statement of Cash Flows is presented when the Master Portfolio had a significant amount of borrowings during the period, based on the average borrowing outstanding in relation to average total assets.


 

 

 

See Notes to Financial Statements.

 

 




48

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

Financial Highlights

Master Total Return Portfolio


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended September 30,

 

 

 



 

 

2010

 

2009

 

2008

 

2007

 

2006

 













Total Investment Return

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total investment return

 

 

13.05

%

 

10.95

%

 

(5.76

)%

 

4.45

%

 

3.88

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Ratios to Average Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Total expenses

 

 

0.58

%

 

0.17

%

 

0.15

%

 

0.10

%

 

0.12

%

 

 
















Total expenses after fees waived and paid indirectly

 

 

0.58

%

 

0.17

%

 

0.15

%

 

0.10

%

 

0.12

%

 

 
















Total expenses after fees waived and paid indirectly and excluding interest expense

 

 

0.13

%

 

0.13

%

 

0.10

%

 

0.10

%

 

0.12

%

 

 
















Net investment income

 

 

4.97

%

 

6.10

%

 

5.59

%

 

5.35

%

 

4.90

%

 

 
















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Supplemental Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















Net assets, end of year (000)

 

$

3,591,890

 

$

3,123,655

 

$

3,244,949

 

$

3,980,172

 

$

2,902,237

 

 

 
















Portfolio turnover

 

 

1,754

%1

 

708

%2

 

1,081

%3

 

153

%

 

208

%

 

 

















 

 

 

 

1

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 1,248%.

 

 

 

 

2

Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover would have been 469%.

 

 

 

 

3

Includes TBA transactions. Excluding these transactions, the portfolio turnover rate would have been 418%.


 

 

 

 

See Notes to Financial Statements.


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

49




 

 



 

Notes to Financial Statements

Master Total Return Portfolio

1. Organization and Significant Accounting Policies:

Master Total Return Portfolio (the “Master Portfolio”) is a part of Master Bond LLC (the “Master LLC”) and is registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and is organized as a Delaware limited liability company. The Limited Liability Company Agreement permits the Board of Directors (the “Board”) to issue non transferable interests in the Master LLC, subject to certain limitations. The Master Portfolio’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

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

Valuation: The Master Portfolio fair values its financial instruments at market value using independent dealers or pricing services under policies approved by the Board. The Master Portfolio values its bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. 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. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. Swap agreements are valued utilizing quotes received daily by the Master Portfolio’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows and trades and values of the underlying reference instruments. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security.

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

Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. Over-the-counter (“OTC”) options and swaptions are valued by an independent pricing service using a mathematical model which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Master Portfolio might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Master Portfolio’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board.

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

The Master Portfolio reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed and Mortgaged-Backed Securities: The Master Portfolio may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of

 

 

 

 





50

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 



 

Notes to Financial Statements (continued)

Master Total Return Portfolio

owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the Master Portfolio has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

The Master Portfolio may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed Mortgage Pass-Through Certificates which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury.

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

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

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

Zero-Coupon Bonds: The Master Portfolio may invest in zero-coupon bonds, which are normally issued at a significant discount from face value and do not provide for periodic interest payments. Zero-coupon bonds may experience greater volatility in market value than similar maturity debt obligations which provide for regular interest payments.

Capital Trusts: 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.

Borrowed Bond Agreements: In a borrowed bond agreement, the Master Portfolio borrows securities from a third party at an agreed-upon rate, with the commitment that the securities be returned to the lender on an agreed-upon date. Borrowed bond agreements are primarily entered into to enable the Master Portfolio to settle short bond positions. To support the borrowing, the Master Portfolio’s third party broker or prime party broker takes possession of collateral of securities or cash that will be released upon termination of the borrowing. The value of the underlying collateral securities or cash approximates the market value of the borrowed bond transaction, including accrued interest. To the extent that borrowed bond transactions exceed one business day, the value of the collateral in the possession of the Master Portfolio’s prime broker or third party broker is marked-to-market on a daily basis to ensure the adequacy of the collateral. In the event of default by the counter-party and the value of noncash collateral increases, the Master Portfolio’s amount of loss is the unrealized gain of the collateral. Full realization of the collateral by the Master Portfolio may be limited if the value of an investment purchased with the cash collateral by the lender decreases. The Master Portfolio may also experience delays in gaining access to the collateral.

 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

51




 

 



 

Notes to Financial Statements (continued)

Master Total Return Portfolio

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

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

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

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

Treasury Roll Transactions: A treasury roll transaction involves the sale of a Treasury security, with an agreement to repurchase the same security at an agreed upon price and date. Treasury rolls constitute a borrowing and the difference between the sale and repurchase price represents interest expense at an agreed upon rate. Whether such a transaction produces a positive impact on performance depends upon whether the income on the securities purchased with the proceeds received from the sale of the security exceeds the interest expense incurred by the Master Portfolio. For accounting purposes, treasury rolls are not considered purchases and sales and any gains or losses incurred on the treasury rolls will be deferred until the Treasury securities are disposed.

Treasury roll transactions involve the risk that the market value of the securities that the Master Portfolio is required to purchase may decline below the agreed upon purchase price of those securities. If investment performance of securities purchased with proceeds from these transactions does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the treasury roll, the use of this technique will adversely impact the investment performance of the Master Portfolio.

Reverse Repurchase Agreements: The Master Portfolio may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Master Portfolio sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. The Master Portfolio may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Reverse repurchase agreements involve leverage risk and also the risk that the market value of the securities that the Master Portfolio is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Master Portfolio’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Master Portfolio’s obligation to repurchase the securities.

 

 

 

 





52

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 



 

Notes to Financial Statements (continued)

Master Total Return Portfolio

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

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

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

The Master Portfolio files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Master Portfolio’s US federal tax returns remains open for each of the four years ended September 30, 2010. The statutes of limitations on the Master Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Master Portfolio are charged to the Master Portfolio. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Master Portfolio has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2. Derivative Financial Instruments:

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

Losses may arise if the value of the contract decreases due to an unfavorable change in the price of the underlying instrument or if the counterparty does not perform under the contract. The Master Portfolio’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Master Portfolio bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counter-party fail to perform under the contracts. Options written by the Master Portfolio do not give rise to counterparty credit risk, as options written obligate the Master Portfolio to perform and not the counterparty. Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Master Portfolio’s net assets decline by a stated percentage or the Master Portfolio fails to meet the terms of its ISDA Master Agreements, which would cause the Master Portfolio to accelerate payment of any net liability owed to the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is minimal because of the protection against defaults provided by the exchange on which these contracts trade.

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

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

Financial Futures Contracts: The Master Portfolio purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. Pursuant to the contract, the Master Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as margin variation and are

 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

53




 

 



 

Notes to Financial Statements (continued)

Master Total Return Portfolio

recognized by the Master Portfolio as unrealized gains or losses. When the contract is closed, the Master Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

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

Options: The Master Portfolio purchases and writes call and put options to increase or decrease its exposure to underlying instruments (including credit risk, foreign currency exchange rate and/or interest rate risk) and/or, in the case of options written, to generate gains from options premiums. 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 instrument 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 instrument at the exercise price at any time or at a specified time during the option period. When the Master Portfolio purchases (writes) an option, an amount equal to the premium paid (received) by the Master Portfolio is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Master Portfolio enters into a closing transaction), the Master Portfolio realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premiums received or paid). When the Master Portfolio writes a call option, such option is “covered,” meaning that the Master Portfolio holds the underlying instrument subject to being called by the option counterparty. When the Master Portfolio writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swap option is granting or buying the right to enter into a previously agreed upon interest rate or credit default swap agreement at any time before the expiration of the option.

The Master Portfolio also purchases or sells listed or OTC foreign currency options, foreign currency futures and related options on foreign currency futures as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies. When foreign currency is purchased or sold through an exercise of a foreign currency option, the related premium paid (or received) is added to (or deducted from) the basis of the foreign currency acquired or deducted from (or added to) the proceeds of the foreign currency sold. Such transactions may be effected with respect to hedges on non-U.S. dollar denominated instruments owned by the Master Portfolio but not yet delivered, or committed or anticipated to be purchased by the Master Portfolio.

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

Swaps: The Master Portfolio enters into swap agreements, in which the Master Portfolio and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Master Portfolio are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and amortized over the term of the swap, which is recognized as realized gain or loss in the Statement of Operations. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Master Portfolio will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Master Portfolio’s basis in the contract, if any. Generally, the basis of the contracts is the premium received or paid. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

 

 

Credit default swaps — The Master Portfolio enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Master Portfolio enters into credit default agreements to provide a measure of protection against the default of an issuer (as buyer protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). The Master Portfolio may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default


 

 

 

 





54

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 

 


 

 

Notes to Financial Statements (continued)

Master Total Return Portfolio


 

 

 

swaps on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Master Portfolio will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising of an index. As a seller (writer), if an underlying credit event occurs, the Master Portfolio will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising of an index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising of an index.

 

 

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

 

 

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


 

 

 

 

 

 

 

 

 

 

 

 

Derivative Instruments Categorized by Risk Exposure:


Fair Values of Derivative Instruments as of September 30, 2010


 

 

Asset Derivatives

 

Liability Derivatives

 

 

 


 



 

 

Statement of Assets and
Liabilities Location

 

Value

 

Statement of Assets and
Liabilities Location

 

Value

 











Interest rate contracts*

 

Net unrealized appreciation/depreciation*; Unrealized appreciation on swaps; Investments at value — unaffiliated**

 

$

32,035,418

 

Net unrealized appreciation/depreciation*; Unrealized depreciation on swaps; Options written at value

 

$

70,982,915

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange contracts

 

Unrealized appreciation on foreign currency exchange contracts; Investments at value — unaffiliated**

 

 

16,343,851

 

Unrealized depreciation on foreign currency exchange contracts; Options written at value

 

 

16,646,264

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit contracts

 

Unrealized appreciation on swaps

 

 

383,054

 

Unrealized depreciation on swaps

 

 

10,460,759

 













Total

 

 

 

$

48,762,323

 

 

 

$

98,089,938

 

 

 

 

 



 

 

 





 

 

*

Includes cumulative unrealized appreciation/depreciation of financial futures contracts as reported in the Schedule of Investments. Only the current day’s margin variation is reported within the Statement of Assets and Liabilities.

 

 

**

Includes options purchased at value as reported in the Schedule of Investments.


 

 

 

 

 

 

 

 

 

 

 

 

 

 



The Effect of Derivative Instruments on the Statement of Operations
Year Ended September 30, 2010

 



 

 

Net Realized Gain (Loss) from

 

 

 



 

 

Financial Futures
Contracts

 

Swaps

 

Options***

 

Foreign Currency
Transactions

 











Interest rate contracts

 

$

(2,076,243

)

$

(5,745,556

)

$

24,896,034

 

 

 

Foreign currency exchange contracts

 

 

 

 

 

 

(444,487

)

$

7,429,834

 

Credit contracts

 

 

 

 

(14,315,444

)

 

417,723

 

 

 















Total

 

$

(2,076,243

)

$

(20,061,000

)

$

24,869,270

 

$

7,429,834

 

 

 













 

 

Net Change in Unrealized Appreciation/Depreciation on

 

 

 



 

 

Financial Futures
Contracts

 

Swaps

 

Options***

 

Foreign Currency
Transactions

 











Interest rate contracts

 

$

(4,222,340

)

$

(13,945,337

)

$

2,878,375

 

 

 

Foreign currency exchange contracts

 

 

 

 

 

 

(533,294

)

$

(522,089

)

Credit contracts

 

 

 

 

7,682,306

 

 

 

 

 















Total

 

$

(4,222,340

)

$

(6,263,031

)

$

2,345,081

 

$

(522,089

)

 

 














 

 

***

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


 

 

 

 


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

55




 

 


 

 

Notes to Financial Statements (continued)

Master Total Return Portfolio

For the year ended September 30, 2010, the average quarterly balances of outstanding derivative financial instruments were as follows:

 

 

 

 

 






Financial futures contracts:

 

 

 

 

Average number of contracts purchased

 

 

2,011

 

Average number of contracts sold

 

 

4,583

 

Average notional value of contracts purchased

 

$

248,323,173

 

Average notional value of contracts sold

 

$

859,693,596

 

Foreign currency exchange contracts:

 

 

 

 

Average number of contracts — US dollars purchased

 

 

22

 

Average number of contracts — US dollars sold

 

 

20

 

Average US dollar amounts purchased

 

$

334,635,009

 

Average US dollar amounts sold

 

$

306,401,982

 

Options:

 

 

 

 

Average number of contracts purchased

 

 

1,982

 

Average number of contracts written

 

 

1,851

 

Average notional amount (000) of contracts purchased

 

$

1,395,513

 

Average notional amount (000) of contracts written

 

$

1,337,474

 

Average notional value of contracts purchased

 

$

1,399,088,618

 

Average notional value of contracts written

 

$

1,340,917,971

 

Credit default swaps:

 

 

 

 

Average number of contracts — buy protection

 

 

43

 

Average number of contracts — sell protection

 

 

3

 

Average notional value — buy protection

 

$

227,289,517

 

Average notional value — sell protection

 

$

30,342,500

 

Interest rate swaps:

 

 

 

 

Average number of contracts — pays fixed rate

 

 

17

 

Average number of contracts — receives fixed rate

 

 

17

 

Average notional value — pays fixed rate

 

$

667,200,000

 

Average notional value — receives fixed rate

 

$

641,347,685

 

Total return swaps:

 

 

 

 

Average number of contracts

 

 

2

 

Average notional value

 

$

65,727,605

 






3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Master Portfolio for 1940 Act purposes, but BAC and Barclays are not.

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

 

 



Portion of Average Daily Value of Net Assets

Rate



Not exceeding $250 million

0.20%

In excess of $250 million, but less than $500 million

0.15%

In excess of $500 million, but not exceeding $750 million

0.10%

In excess of $750 million

0.05%



For the year ended September 30, 2010, the aggregate average daily net asset value of the Master Portfolio and High Income Fund was approximately $4,397,230,000.

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

The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Master Portfolio to the Manager.

For the year ended September 30, 2010, the Master Portfolio reimbursed the Manager $86,993 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

4. Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions and excluding short-term securities and US government securities for the year ended September 30, 2010, were $68,394,256,049 and $58,972,390,192 respectively.

Purchases and sales of U.S. government securities for the year ended September 30, 2010, were $19,223,886,653 and $18,472,932,072, respectively.

For the year ended September 30, 2010, purchases and sales of mortgage dollar rolls were $22,307,507,199 and $22,324,010,811, respectively.

 

 

 


56

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 


 

 

Notes to Financial Statements (continued)

Master Total Return Portfolio

Transactions in options written for the year ended September 30, 2010, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calls

 

Puts

 

 

 


 



 

 

Contracts

 

Notional
Amount
(000)

 

Premiums
Received

 

Contracts

 

Notional
Amount
(000)

 

Premiums
Received

 















Outstanding options, beginning of year

 

 

$

956,800

 

$

38,167,102

 

 

$

1,166,800

 

$

41,862,605

 

Options written

 

2,362

 

 

1,983,927

 

 

63,628,871

 

4,735

 

 

2,434,308

 

 

81,983,448

 

Options expired

 

 

 

(374,178

)

 

(3,522,931

)

(1,422

)

 

(738,058

)

 

(20,757,994

)

Options exercised

 

(1,550

)

 

(341,600

)

 

(15,329,216

)

 

 

(4,000

)

 

(262,570

)

Options closed

 

(812

)

 

(1,574,922

)

 

(67,843,957

)

(3,313

)

 

(1,952,382

)

 

(82,852,466

)

 

 


 



 



 


 



 




Outstanding options, end of year

 

 

$

650,027

 

$

15,099,869

 

 

$

906,668

 

$

19,973,023

 

 

 


 



 



 


 



 




5. Borrowings:

The Master Portfolio, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010 and was subsequently renewed until November 2011. The Master Portfolio may borrow under the credit agreement to fund shareholder redemptions. Effective November 2008, the credit agreement had the following terms: 0.02% upfront fee on the aggregate commitment amount which was allocated to the Master Portfolio based on its net assets as of October 31, 2008, a commitment fee of 0.08% per annum based on the Master Portfolio’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) federal funds effective rate and (b) reserve adjusted one-month LIBOR, plus, in each case, the higher of (i) 1.50% and (ii) 50% of the CDX Index (as defined in the credit agreement) on amounts borrowed. Effective November 2009, the credit agreement was renewed with the following terms: 0.02% upfront fee on the aggregate commitment amount which was allocated to the Master Portfolio based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Master Portfolio’s pro rata share of the unused portion of the credit agreement which is included in miscellaneous in the Statement of Operations and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Master Portfolio did not borrow under the credit agreement during the year ended September 30, 2010.

During the years ended September 30, 2009 and September 30, 2010, the Master Portfolio borrowed under the Term Asset-Backed Securities Loan Facility (“TALF”). The TALF program was launched by the U.S. Department of Treasury and the Federal Reserve Board as a credit facility designed to restore liquidity to the market for asset-backed securities. The Federal Reserve Bank of New York (“FRBNY”) provided up to $1 trillion in non-recourse loans to support the issuance of certain AAA-rated asset-backed securities and commercial mortgage-backed securities (“Eligible Securities”). The Master Portfolio posted as collateral already-held Eligible Securities, which were all commercial mortgage-backed securities, in return for non-recourse, 5-year term loans (“TALF loans”) in an amount equal to approximately 85% of the value of such Eligible Securities.

The non-recourse provision of the TALF loans allowed the Master Portfolio to satisfy loan obligations with Eligible Securities, subject to certain conditions, even if the value of the Eligible Securities falls below the outstanding amount of the loan. The Master Portfolio could repay TALF loans prior to the maturity dates with no penalty. Principal and interest due on the loans was typically paid with principal paydowns and interest received from the Eligible Securities. Credit agreements underlying each loan contain provisions to address instances in which interest payments on Eligible Securities fell short of amounts due to the FRBNY. The Master Portfolio paid to the FRBNY a onetime administration fee of 0.20% of the amount borrowed, which was expensed as incurred in the current period by the Fund and is included in borrowing costs in the Statement of Operations. The Master Portfolio also paid a financing fee equal to the 5-year LIBOR swap rate plus 1.00% on the outstanding loan amount payable monthly, which is included in interest expense in the Statement of Operations.

During the year ended September 30, 2010, the Master Portfolio repaid its outstanding TALF loans and the Eligible Securities posted as collateral were returned to the Master Portfolio.

Since the Master Portfolio had the ability to potentially satisfy TALF loan obligations by surrendering Eligible Securities, potential losses by the Master Portfolio associated with the TALF loans were limited to the difference between the amount of Eligible Securities posted at the time of loan initiation and the loan proceeds received by the Master Portfolio.

The Master Portfolio elected to account for the outstanding TALF loans at fair value. The Master Portfolio elected to fair value its TALF loans to more closely align changes in the value of the TALF loans with changes in the value of the Eligible Securities and to reduce the potential volatility in the Statement of Operations which could result if only the Eligible Securities were fair valued. The TALF loans were valued utilizing quotations received from a Board approved pricing service. TALF-eligible Asset-Backed Securities/Collateralized Mortgage-Backed Securities (“ABS/CMBS”) value may be affected by historic defaults and prepayments on the asset pool, expected future defaults and prepayments, current interest rate levels, current and forward modeled ABS/CMBS spread levels. Accordingly, TALF loan valuation methodologies may include, but are not limited to, the following inputs: (i) ABS/CMBS prepayment assumptions, (ii) discount rates and (iii) the non-recourse put option valuation. The resulting TALF loan valuation combines the present value of the future loan cash flows, plus the value of the non-recourse option.


 

 

 

 


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

57




 

 



 

 

Notes to Financial Statements (concluded)

Master Total Return Portfolio

For the year ended September 30, 2010 the Master Portfolio’s daily average amount of outstanding transactions considered as borrowings from reverse repurchase agreements, treasury roll transactions and TALF loans was approximately $1,357,551,000 and the daily weighted average interest rate was 1.16%.

6. Concentration, Market and Credit Risk:

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

The Master Portfolio invests a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Please see the Schedule of Investments for these securities. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

7. Subsequent Events:

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

 

 

 




58

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 

 



 

 

Report of Independent Registered Public Accounting Firm

Master Total Return Portfolio

To the Investors and Board of Directors of Master Bond LLC:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Master Total Return Portfolio, of Master Bond LLC (the “Master LLC”), as of September 30, 2010, 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 Master LLC’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Master LLC is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Master LLC’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2010, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Master Total Return Portfolio of Master Bond LLC as of September 30, 2010, 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
November 29, 2010

 

 

 

 


 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

59




 


 

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors of Master Total Return Portfolio (the “Master Portfolio”), a series of Master Bond LLC (the “Master LLC”), and the Board of Directors of BlackRock Total Return Fund (the “Total Return Fund”), a series of the BlackRock Bond Fund, Inc. (the “Corporation”), met on April 13, 2010 and May 11 – 12, 2010 to consider the approval of the investment advisory agreements (collectively, the “Advisory Agreements”) for the Master LLC, on behalf of the Master Portfolio, and the Corporation, on behalf of the Total Return Fund, with BlackRock Advisors, LLC (the “Manager”), the Master Portfolio’s and the Total Return Fund’s investment advisor. The Board of Directors of each of the Master LLC and the Corporation also considered the approval of the sub-advisory agreements (collectively, the “Sub-Advisory Agreements”) between the Manager and BlackRock Financial Management, Inc. (the “Sub-Advisor”), with respect to each of the Master Portfolio and the Total Return Fund. The Total Return Fund is a “feeder” fund that invests all of its investable assets in the Master Portfolio. Accordingly, the Board of Directors of the Corporation also considered the approval of the Advisory Agreement and the Sub-Advisory Agreement with respect to the Master LLC. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.” For simplicity, the Board of Directors of the Master LLC and the Board of Directors of the Corporation are referred to herein collectively as the “Board,” and the members are referred to herein as “Board Members.”

Activities and Composition of the Board

The Board consists of fourteen individuals, eleven of whom are not “interested persons” of the Master LLC or the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Master Portfolio or the Total Return Fund, as pertinent, and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member) and is chaired by Independent Board Members. The Board also has one ad hoc committee, the Joint Product Pricing Committee, which consists of Independent Board Members and directors/trustees of the boards of certain other BlackRock-managed funds, who are not “interested persons” of their respective funds.

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Master Portfolio and the Total Return Fund by the personnel of BlackRock and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services and assistance in meeting applicable legal and regulatory requirements.

From time to time throughout the year, the Board, acting directly and through its committees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Master Portfolio, the Total Return Fund and their shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Master Portfolio and/or the Total Return Fund for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Master Portfolio’s and/or the Total Return Fund’s operating expenses; (d) the resources devoted to and compliance reports relating to the Master Portfolio’s and the Total Return Fund’s investment objective, policies and restrictions; (e) the Master Portfolio’s and the Total Return Fund’s compliance with each of their respective 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 policies approved by the Board; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Master Portfolio’s and/or the Total Return Fund’s valuation and liquidity procedures; (k) an analysis of contractual and actual management fees for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels, as applicable; and (l) periodic updates on BlackRock’s business.

 

 

 




60

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 


 

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

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 13, 2010 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in a process with BlackRock to periodically review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included: (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on fees and expenses of the Master Portfolio and the Total Return Fund, as applicable, and the investment performance of the Total Return Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by the Master Portfolio and/or the Total Return Fund to BlackRock; (f) sales and redemption data regarding the Total Return Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.

At an in-person meeting held on April 13, 2010, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 13, 2010 meeting, the Board presented BlackRock with questions and requests for additional information and BlackRock responded to these requests with additional written information in advance of the May 11 – 12, 2010 Board meeting.

At an in-person meeting held on May 11 – 12, 2010, the Board of the Master LLC and the Corporation, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreements between the Manager and each of the Master LLC, on behalf of the Master Portfolio, and the Corporation, on behalf of the Total Return Fund, and the Sub-Advisory Agreements between the Manager and the Sub-Advisor with respect to each of the Master Portfolio and the Total Return Fund, each for a one-year term ending June 30, 2011. The Board of the Corporation, including the Independent Board Members, also considered the continuation of the Agreements with respect to the Master LLC and found the Agreements to be satisfactory. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Master Portfolio, the Total Return Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Master Portfolio and the Total Return Fund; (d) economies of scale; and (e) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of the Total Return Fund’s shares, services related to the valuation and pricing of the portfolio holdings of the Master Portfolio, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with the Master Portfolio and the Total Return Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock:

The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Total Return Fund. Throughout the year, the Board compared the Total Return Fund’s performance to the performance of a comparable group of mutual funds, and the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by the portfolio management team discussing performance and the investment objective, strategies and outlook.

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

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Master Portfolio and the Total Return Fund. BlackRock and its affiliates and significant shareholders provide the Master Portfolio and the Total Return Fund with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to the Master Portfolio and the Total Return Fund by third parties) and officers and other personnel as are necessary for the operations of the Master Portfolio and the Total Return Fund. In addition to investment advisory services, BlackRock and its affiliates provide the Master Portfolio and the Total Return Fund with other services, including: (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board

 

 

 

 





 

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

meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Master Portfolio and the Total Return Fund, such as tax reporting, fulfilling regulatory filing requirements, and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Master Portfolio, the Total Return Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of the Master Portfolio and the Total Return Fund, as applicable. The Board noted that the Master Portfolio’s investment results correspond directly to the investment results of the Total Return Fund. In preparation for the April 13, 2010 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of the Total Return Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of the Total Return Fund as compared to a representative group of similar funds as determined by Lipper and to all funds in the Total Return Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of the Master Portfolio and the Total Return Fund, as applicable, throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that the Total Return Fund ranked in the second, fourth and fourth quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Total Return Fund’s underperformance during the three- and five-year periods compared with its Peers. The Board was informed that, among other things, performance in 2008 suffered primarily due to an overweight to high quality spread assets (agency and non-agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities) and an underweight to Treasuries.

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

The Board noted that BlackRock has made changes to the organization of the overall fixed income group management structure designed to result in a strengthened leadership team with clearer accountability.

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

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Master Portfolio and the Total Return Fund. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Master Portfolio and the Total Return Fund. The Board reviewed BlackRock’s profitability with respect to the Master Portfolio and the Total Return Fund, as applicable, and other funds the Board currently oversees for the year ended December 31, 2009 compared to available aggregate profitability data provided for the year ended December 31, 2008. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Nevertheless, to the extent such information was available, the Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. That data indicates that operating margins for BlackRock with respect to its registered funds are generally consistent with margins earned by similarly situated publicly traded competitors. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly traded asset management firms. That third party data indicates that larger asset bases do not, in themselves, translate to higher profit margins.

In addition, the Board considered the cost of the services provided to the Master Portfolio and the Total Return Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Master Portfolio and the Total Return Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of the Master Portfolio and the Total Return Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and

 

 

 

 





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

retain high-quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that the Master Portfolio’s and/or Total Return Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the Total Return Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the Master Portfolio’s and/or Total Return Fund’s actual advisory fee rate, after giving effect to any expense reimbursements or fee waivers by BlackRock, was lower than or equal to the median actual advisory fee rate paid by the Total Return Fund’s Peers, after giving effect to any expense reimbursements or fee waivers. The Manager has contractually agreed to waive the Total Return Fund’s advisory fee in the amount of the Total Return Fund’s share of the advisory fee paid by the Master Portfolio. The Board also noted that the Total Return Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Total Return Fund, combined with the assets of the BlackRock High Income Fund, also a series of the Corporation, increase above certain contractually specified levels. The Master Portfolio also has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the aggregate assets of the Master Portfolio and the BlackRock High Income Fund increase above certain contractually specified levels. The Board further noted that BlackRock has contractually and/or voluntarily agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Total Return Fund’s total net expenses on a class-by-class basis, as applicable.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Master Portfolio and the Total Return Fund increase. The Board also considered the extent to which the Master Portfolio and the Total Return Fund benefit from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Master Portfolio and the Total Return Fund to participate in these economies of scale, for example through the use of revised breakpoints in the advisory fee based upon the asset level of the Master Portfolio, the Total Return Fund and/or the BlackRock High Income Fund.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from their respective relationships with the Master Portfolio and the Total Return Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to the Master Portfolio and the Total Return Fund, including for administrative, transfer agency and distribution services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain mutual fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that BlackRock completed the acquisition of a complex of exchange-traded funds (“ETFs”) on December 1, 2009, and that BlackRock’s funds may invest in such ETFs without any offset against the management fees payable by the funds to BlackRock.

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

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

Conclusion

The Board of each of the Master LLC and the Corporation, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreements between the Manager and each of the Master LLC, on behalf of the Master Portfolio, and the Corporation, on behalf of the Total Return Fund, for a one-year term ending June 30, 2011 and the Sub-Advisory Agreements between the Manager and the Sub-Advisor, with respect to each of the Master Portfolio and the Total Return Fund, for a one-year term ending June 30, 2011. As part of its approval, the Board considered the discussions of BlackRock’s fee structure, as it applies to the Master Portfolio and the Total Return Fund, being conducted by the ad hoc Joint Product Pricing Committee. Based upon its evaluation of all of the aforementioned factors in their totality, the Board of the Master LLC and the Corporation, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Master Portfolio and the Total Return Fund, as applicable, and their shareholders. The Board of the Corporation, including the Independent Board Members, also considered the continuation of the Agreements with respect to the Master Portfolio and found the Agreements to be satisfactory. In arriving at a decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Master Portfolio and the Total Return Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

 

 

 

 





 

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63




 


 

Officers and Directors


 

 

 

 

 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s) Held
with Fund/
Master LLC

 

Length
of Time
Served as
a Director2

 

Principal Occupation(s) During Past Five Years

 

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

Public
Directorships












Non-Interested Directors1












Robert M. Hernandez
55 East 52nd Street
New York, NY 10055
1944

 

Chairman of the Board, Director and Member of the Audit Committee

 

Since
2007

 

Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001.

 

34 RICs consisting of
98 Portfolios

 

ACE Limited (insurance company); Eastman Chemical Company (chemicals); RTI International Metals, Inc. (metals); TYCO Electronics (electronics)












Fred G. Weiss
55 East 52nd Street
New York, NY 10055
1941

 

Vice Chairman of the Board, Chairman of the Audit Committee and Director

 

Since
2007

 

Managing Director, FGW Associates (consulting and investment company) since 1997; Director, Michael J. Fox Foundation for Parkinson’s Research since 2000; Director, BTG International Plc (a global technology commercialization company) from 2001 to 2007.

 

34 RICs consisting of
98 Portfolios

 

Watson Pharmaceutical Inc.












James H. Bodurtha
55 East 52nd Street
New York, NY 10055
1944

 

Director

 

Since
2007

 

Director, The China Business Group, Inc. (consulting firm) since 1996 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980.

 

34 RICs consisting of
98 Portfolios

 

None












Bruce R. Bond
55 East 52nd Street
New York, NY 10055
1946

 

Director

 

Since
2007

 

Trustee and member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.

 

34 RICs consisting of
98 Portfolios

 

None












Donald W. Burton
55 East 52nd Street
New York, NY 10055
1944

 

Director

 

Since
2007

 

Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007.

 

34 RICs consisting of
98 Portfolios

 

Knology, Inc. (telecommunications); Capital Southwest (financial)












Honorable
Stuart E. Eizenstat
55 East 52nd Street
New York, NY 10055
1943

 

Director

 

Since
2007

 

Partner and Head of International Practice, Covington and Burling LLP (law firm) since 2001; International Advisory Board Member, The Coca-Cola Company since 2002; Advisory Board Member, BT Americas (telecommunications) since 2004; Member of the Board of Directors, Chicago Climate Exchange (environmental) since 2006; Member of the International Advisory Board GML (energy) since 2003.

 

34 RICs consisting of
98 Portfolios

 

Alcatel-Lucent (telecommunications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service)












Kenneth A. Froot
55 East 52nd Street
New York, NY 10055
1957

 

Director

 

Since
2007

 

Professor, Harvard University since 1992.

 

34 RICs consisting of
98 Portfolios

 

None












John F. O’Brien
55 East 52nd Street
New York, NY 10055
1943

 

Director

 

Since
2007

 

Chairman and Director, Woods Hole Oceanographic Institute since 2009 and Trustee thereof from 2003 to 2009; Director, Allmerica Financial Corporation from 1995 to 2003; Director, ABIOMED from 1989 to 2006; Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007; Vice Chairman and Director, Boston Lyric Opera from 2002 to 2007.

 

34 RICs consisting of
98 Portfolios

 

Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer)












Roberta Cooper Ramo
55 East 52nd Street
New York, NY 10055
1942

 

Director

 

Since
2007

 

Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s Inc. (retail) since 2000; Director, ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; President, American Bar Association from 1995 to 1996.

 

34 RICs consisting of
98 Portfolios

 

None













 

 

 


64

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 


 

Officers and Directors (continued)


 

 

 

 

 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s) Held
with Fund/
Master LLC

 

Length
of Time
Served as
a Director2

 

Principal Occupation(s) During Past Five Years

 

Number of BlackRock-
Advised Registered
Investment Companies
(“RICs”) Consisting of
Investment Portfolios
(“Portfolios”) Overseen

 

Public
Directorships












Non-Interested Directors1 (concluded)












David H. Walsh
55 East 52nd Street
New York, NY 10055
1941

 

Director

 

Since
2007

 

Director, National Museum of Wildlife Art since 2007; Trustee, University of Wyoming Foundation since 2008; Director, Ruckleshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Director, The American Museum of Fly Fishing since 1997; Director, The National Audubon Society from 1998 to 2005.

 

34 RICs consisting of
98 Portfolios

 

None












Richard R. West
55 East 52nd Street
New York, NY 10055
1938

 

Director and Member of the Audit Committee

 

Since
1981

 

Dean Emeritus, New York University’s Leonard N. Stern School of Business Administration since 1995.

 

34 RICs consisting of
98 Portfolios

 

Bowne & Co., Inc. (financial printers); Vornado Realty Trust (real estate company); Alexander’s Inc. (real estate company)


 

 

 

 



 

1

Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.

 

 

 

 

2

Date shown is the earliest date a person has served as a director of the Fund/Master LLC covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows certain directors as joining the Fund/Master LLC board in 2007, each director first became a member of the board of other legacy MLIM or legacy BlackRock Funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 2000; David H. Walsh, 2003; Fred G. Weiss, 1998; and Richard R. West, 1978.


 

 

 

 

 

 

 

 

 

 

 


Interested Directors3












Richard S. Davis
55 East 52nd Street
New York, NY 10055
1945

 

Director

 

Since
2007

 

Managing Director, BlackRock, Inc. since 2005; Chief Executive Officer, State Street Research & Management Company from 2000 to 2005; Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005.

 

169 RICs consisting of
290 Portfolios

 

None












Laurence D. Fink
55 East 52nd Street
New York, NY 10055
1952

 

Director

 

Since
2007

 

Chairman and Chief Executive Officer of BlackRock, Inc. since its formation in 1998 and of BlackRock, Inc.’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Managing Director, The First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; Chairman of the Board of several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; Member of the Board of Trustees of New York University, Chair of the Financial Affairs Committee and a member of the Executive Committee, the Ad Hoc Committee on Board Governance, and the Committee on Trustees; Co-Chairman of the NYU Hospitals Center Board of Trustees, Chairman of the Development/ Trustee Stewardship Committee and Chairman of the Finance Committee; Trustee, The Boys’ Club of New York.

 

34 RICs consisting of
98 Portfolios

 

None












Henry Gabbay
55 East 52nd Street
New York, NY 10055
1947

 

Director

 

Since
2007

 

Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.

 

169 RICs consisting of
290 Portfolios

 

None


 

 

 

 



 

3

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


 

 

 

 


 

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65




 


 

Officers and Directors (concluded)


 

 

 

 

 

 

 

Name, Address
and Year of Birth

 

Position(s) Held
with Fund/
Master LLC

 

Length
of Time
Served

 

Principal Occupation(s) During Past Five Years








Officers*

 

 

 

 

 

 








John M. Perlowski
55 East 52nd Street
New York, NY 10055
1964

 

President and Chief Executive Officer

 

Since
2010

 

Managing Director of BlackRock, Inc. since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009.








Jeffrey Holland, CFA
55 East 52nd Street
New York, NY 10055
1971

 

Vice President

 

Since
2009

 

Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2006 to 2009; Chief Operating Officer of BlackRock’s US Retail Group since 2009; Co-head of Product Development and Management for BlackRock’s US Retail Group from 2007 to 2009; Product Manager of Raymond James & Associates from 2003 to 2006.








Brendan Kyne
55 East 52nd Street
New York, NY 10055
1977

 

Vice President

 

Since
2009

 

Managing Director of BlackRock, Inc. since 2010; Director of BlackRock, Inc. from 2008 to 2009; Head of Product Development and Management for BlackRock’s US Retail Group since 2009, co-head thereof from 2007 to 2009; Vice President of BlackRock, Inc. from 2005 to 2008.








Brian Schmidt
55 East 52nd Street
New York, NY 10055
1958

 

Vice President

 

Since
2009

 

Managing Director of BlackRock, Inc. since 2004; Various positions with US Trust Company from 1991 to 2003 including Director from 2001 to 2003 and Senior Vice President from 1998 to 2003; Vice President, Chief Financial Officer and Treasurer of Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior Funds Trust from 2001 to 2003.








Neal Andrews
55 East 52nd Street
New York, NY 10055
1966

 

Chief Financial Officer

 

Since
2007

 

Managing Director of BlackRock, Inc. since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (US) Inc. from 1992 to 2006.








Jay Fife
55 East 52nd Street
New York, NY 10055
1970

 

Treasurer

 

Since
2007

 

Managing Director of BlackRock, Inc. since 2007 and Director in 2006; Assistant Treasurer of the Merrill Lynch Investment Managers, L.P. (“MLIM”) and Fund Asset Management, L.P. advised Funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.








Brian Kindelan
55 East 52nd Street
New York, NY 10055
1959

 

Chief Compliance Officer

 

Since
2007

 

Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock, Inc. since 2005.








Howard Surloff
55 East 52nd Street
New York, NY 10055
1965

 

Secretary

 

Since
2007

 

Managing Director and General Counsel of US Funds at BlackRock, Inc. since 2006; General Counsel (US) of Goldman Sachs Asset Management, L.P. from 1993 to 2006.


 

 

 

 



 

*

Officers of the Fund/Master LLC serve at the pleasure of the Board.

 



 

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




 

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

 

Sub-Advisor

BlackRock Financial Management, Inc.

New York, NY 10022

 

Custodian

State Street Bank and Trust Company

North Quincy, MA 02171

 

Distributor

BlackRock Investments, LLC

New York, NY 10022

 

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Providence, RI 02940

 

Accounting Agent

State Street Bank and Trust Company

Princeton, NJ 08540

 

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Princeton, NJ 08540

 

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

 

Address of the Fund

100 Bellevue Parkway

Wilmington, DE 19809


 

Effective September 15, 2010, John M. Perlowski became President and Chief Executive Officer of the Fund/Master LLC.


 

 

 


66

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010




 


 

Additional Information

 


General Information


Electronic Delivery

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

To enroll:

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

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

Shareholders Who Hold Accounts Directly with BlackRock:

 

 

1)

Access the BlackRock website at http://www.blackrock.com/edelivery

 

 

2)

Select “eDelivery” under the “More Information” section

 

 

3)

Log into your account

Householding

The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call (800) 441-7762.

Availability of Quarterly Portfolio Schedule

The Fund/Master LLC files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s/Master LLC’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Fund’s/Master LLC’s Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

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

Availability of Proxy Voting Record

Information about how the Fund/Master LLC votes proxies relating to securities held in the Fund’s/Master LLC’s portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

67




 


 

Additional Information (continued)

 


Shareholder Privileges


Account Information

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

Automatic Investment Plans

Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.

Systematic Withdrawal Plans

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.

Retirement Plans

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

 

 

 

 





68

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 




 


 

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.

 

 

 

 





 

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

69




 


 

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.

 


Equity Funds


BlackRock All-Cap Energy & Resources Portfolio
BlackRock Asset Allocation Portfolio†
BlackRock Balanced Capital Fund†
BlackRock Basic Value Fund
BlackRock Capital Appreciation Fund
BlackRock Energy & Resources Portfolio
BlackRock Equity Dividend Fund
BlackRock EuroFund
BlackRock Focus Growth Fund
BlackRock Focus Value Fund
BlackRock Global Allocation Fund†
BlackRock Global Dynamic Equity Fund
BlackRock Global Emerging Markets Fund
BlackRock Global Financial Services Fund
BlackRock Global Growth Fund
BlackRock Global Opportunities Portfolio
BlackRock Global SmallCap Fund
BlackRock Health Sciences Opportunities Portfolio
BlackRock Healthcare Fund
BlackRock Index Equity Portfolio*
BlackRock International Fund
BlackRock International Index Fund
BlackRock International Opportunities Portfolio
BlackRock International Value Fund
BlackRock Large Cap Core Fund
BlackRock Large Cap Core Plus Fund
BlackRock Large Cap Growth Fund
BlackRock Large Cap Value Fund
BlackRock Latin America Fund
BlackRock Mid-Cap Growth Equity Portfolio
BlackRock Mid-Cap Value Equity Portfolio
BlackRock Mid Cap Value Opportunities Fund
BlackRock Natural Resources Trust
BlackRock Pacific Fund
BlackRock Science & Technology Opportunities Portfolio
BlackRock Small Cap Core Equity Portfolio
BlackRock Small Cap Growth Equity Portfolio
BlackRock Small Cap Growth Fund II
BlackRock Small Cap Index Fund
BlackRock Small/Mid-Cap Growth Portfolio
BlackRock S&P 500 Index Fund
BlackRock S&P 500 Stock Fund
BlackRock U.S. Opportunities Portfolio
BlackRock Utilities and Telecommunications Fund
BlackRock Value Opportunities Fund
BlackRock World Gold Fund

 


Fixed Income Funds


BlackRock Bond Index Fund
BlackRock Bond Portfolio
BlackRock Emerging Market Debt Portfolio
BlackRock Floating Rate Income Portfolio
BlackRock GNMA Portfolio
BlackRock Global Dividend Income Portfolio†
BlackRock Government Income Portfolio
BlackRock High Income Fund
BlackRock High Yield Bond Portfolio
BlackRock Income Portfolio†
BlackRock Inflation Protected Bond Portfolio
BlackRock Intermediate Government Bond Portfolio
BlackRock International Bond Portfolio
BlackRock Long Duration Bond Portfolio
BlackRock Low Duration Bond Portfolio
BlackRock Managed Income Portfolio
BlackRock Multi-Sector Bond Portfolio
BlackRock Short-Term Bond Fund
BlackRock Strategic Income Opportunities Portfolio
BlackRock Total Return Fund
BlackRock Total Return Portfolio II
BlackRock World Income Fund

 


Municipal Bond Funds


BlackRock AMT-Free Municipal Bond Portfolio
BlackRock California Municipal Bond Fund
BlackRock High Yield Municipal Fund
BlackRock Intermediate Municipal Fund
BlackRock Kentucky Municipal Bond Portfolio
BlackRock Municipal Insured Fund
BlackRock National Municipal Fund
BlackRock New Jersey Municipal Bond Fund
BlackRock New York Municipal Bond Fund
BlackRock Ohio Municipal Bond Portfolio
BlackRock Pennsylvania Municipal Bond Fund
BlackRock Short-Term Municipal Fund

 


Target Risk & Target Date Funds†



BlackRock Prepared Portfolios
Conservative Prepared Portfolio
Moderate Prepared Portfolio
Growth Prepared Portfolio
Aggressive Growth Prepared Portfolio

BlackRock Lifecycle Prepared Portfolios
2015
2020
2025
2030
2035
2040
2045
2050

BlackRock LifePath Portfolios
Retirement
2020
2025
2030
2035
2040
2045
2050
2055

 

 

*

See the prospectus for information on specific limitations on investments in the fund.

 

 

Mixed asset fund.

BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.

 

 

 

 





70

BLACKROCK TOTAL RETURN FUND OF BLACKROCK BOND FUND, INC.

SEPTEMBER 30, 2010

 



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

(GO PAPERLESS LOGO)

 

 

#10251-1-9/10

(BLACKROCK LOGO)


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:

 

Robert M. Hernandez

 

Fred G. Weiss

 

Richard R. West

 

 

 

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 Fees1

(c) Tax Fees2

(d) All Other Fees3

Entity Name

Current Fiscal Year End

Previous Fiscal Year End

Current Fiscal Year End

Previous Fiscal Year End

Current Fiscal Year End

Previous Fiscal Year End

Current Fiscal Year End

Previous Fiscal Year End

BlackRock Total Return Fund of BlackRock Bond Fund, Inc.

$6,800

$6,800

$0

$0

$6,100

$6,100

$549

$1,028

Master Total Return Portfolio of Master Bond LLC

$51,300

$51,300

$0

$0

$9,200

$9,200

$0

$0

 

1 The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

2 The nature of the services include tax compliance, tax advice and tax planning.

3 The nature of the services include a review of compliance procedures and attestation thereto.

 

 

    

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

 

 

 

The registrant’s audit committee (the “Committee”) has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant’s affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC’s auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the

 


 

Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operation or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

 

 

 

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

 

 

 

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the 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 Year End

Previous Fiscal Year End

BlackRock Total Return Fund of BlackRock Bond Fund, Inc.

$17,426

$409,628

Master Total Return Portfolio of Master Bond LLC

$20,526

$411,700

 

 

 

(h) The registrant’s audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrant’s investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

 

 

 

Regulation S-X Rule 2-01(c)(7)(ii) – $10,777, 0%

 

 

Item 5 –

Audit Committee of Listed Registrants – Not Applicable

 

 

Item 6 –

Investments

 

(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form.

 

(b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

 

Item 7 –

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not Applicable

 

 

Item 8 –

Portfolio Managers of Closed-End Management Investment Companies – Not Applicable

 

 

Item 9 –

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

 

 


Item 10 –

Submission of Matters to a Vote of Security Holders – The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures.

 

 

Item 11 –

Controls and Procedures

 

 

11(a) –

The registrant’s principal executive and principal financial officers or persons performing similar functions have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

 

11(b) –

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

 

Item 12 –

Exhibits attached hereto

 

 

12(a)(1) –

Code of Ethics – See Item 2

 

 

12(a)(2) –

Certifications – Attached hereto

 

 

12(a)(3) –

Not Applicable

 

 

12(b) –

Certifications – Attached hereto

 


     

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

   
  By: /s/ John M. Perlowski  
    John M. Perlowski
    Chief Executive Officer of
    BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC
   
  Date: December 1, 2010
   
  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/ John M. Perlowski  
    John M. Perlowski
    Chief Executive Officer (principal executive officer) of
    BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC
   
  Date: December 1, 2010
   
  By: /s/ Neal J. Andrews  
    Neal J. Andrews
    Chief Financial Officer (principal financial officer) of
    BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC
     
  Date: December 1, 2010

 


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EX-99. CERT

 

CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, John M. Perlowski, Chief Executive Officer (principal executive officer) of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC, certify that:

1.

I have reviewed this report on Form N-CSR of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrants as of, and for, the periods presented in this report;

4.

The registrants' other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrants and have:

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

 

d)

disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and

5.

The registrants' other certifying officer(s) and I have disclosed to the registrants' auditors and the audit committees of the registrants' board of directors (or persons performing the equivalent functions):

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize, and report financial information; and

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.

Date: December 1, 2010

/s/ John M. Perlowski  

John M. Perlowski

Chief Executive Officer (principal executive officer) of

BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

 


EX-99. CERT

 

CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Neal J. Andrews, Chief Financial Officer (principal financial officer) of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC, certify that:

1.

I have reviewed this report on Form N-CSR of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrants as of, and for, the periods presented in this report;

4.

The registrants' other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrants and have:

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

 

d)

disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and

5.

The registrants' other certifying officer(s) and I have disclosed to the registrants' auditors and the audit committees of the registrants' board of directors (or persons performing the equivalent functions):

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize, and report financial information; and

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.

Date: December 1, 2010

/s/ Neal J. Andrews  

Neal J. Andrews

Chief Financial Officer (principal financial officer) of

BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

 


EX-99.906CERT 8 i00538_ex99-906cert.htm

Exhibit 99.1350CERT

 

Certification Pursuant to Rule 30a-2(b) under the 1940 Act and

Section 906 of the Sarbanes Oxley Act

 

Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC (the “registrants”), hereby certifies, to the best of his knowledge, that the registrants'Report on Form N-CSR for the period ended September 30, 2010 (the “Report”) fully complies with the requirements of Section 15d of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrants.

Date: December 1, 2010

/s/ John M. Perlowski  

John M. Perlowski

Chief Executive Officer (principal executive officer) of

BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

 

Pursuant to 18 U.S.C. § 1350, the undersigned officer of BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC (the “registrants”), hereby certifies, to the best of his knowledge, that the registrants' Report on Form N-CSR for the period ended September 30, 2010 (the “Report”) fully complies with the requirements of Section 15d of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrants.

Date: December 1, 2010

/s/ Neal J. Andrews  

Neal J. Andrews

Chief Financial Officer (principal financial officer) of

BlackRock Total Return Fund of BlackRock Bond Fund, Inc. and Master Total Return Portfolio of Master Bond LLC

 

 

This certification is being furnished pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.

 


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