Edgar Filing: BLACKROCK CORPORATE HIGH YIELD FUND III, INC.

See Notes to Consolidated Financial Statements.

SEMI-ANNUAL REPORT

AUGUST 31, 2012

BlackRock Corporate High Yield III

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 811-08497

Name of Fund: BlackRock Corporate High Yield Fund III, Inc. (CYE)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Corporate High Yield Fund III, Inc., 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 02/28/2013

Date of reporting period: 08/31/2012


Item 1 –		Report to Stockholders


		August 31, 2012

Semi-Annual Report (Unaudited)

BlackRock Corporate High Yield Fund, Inc. (COY)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

BlackRock Debt Strategies Fund, Inc. (DSU)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

BlackRock Senior High Income Fund, Inc. (ARK)

Not FDIC Insured • No Bank Guarantee • May Lose Value


Table of Contents


	Page
Dear Shareholder		3
Semi-Annual Report:
Fund Summaries		4
The Benefits and Risks of Leveraging		14
Derivative Financial Instruments		14
Financial Statements:
Consolidated Schedules of Investments		15
Consolidated Statements of Assets and Liabilities		69
Consolidated Statements of Operations		70
Consolidated Statements of Changes in Net Assets		71
Consolidated Statements of Cash Flows		73
Financial Highlights		74
Notes to Consolidated Financial Statements		79
Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements		89
Officers and Directors		93
Additional Information		94



2	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Dear Shareholder

About this time one year ago, financial markets had been upended by sovereign debt turmoil in the United States and Europe as well as growing concerns about the future of the global economy. Since then, asset prices have waxed and waned in broad strokes as investors reacted to developments in Europe’s financial situation, mixed US economic news and global central bank policy action.

After confidence crumbled in the third quarter of 2011, October brought improving economic data and more concerted efforts among European leaders toward stemming the region’s debt crisis, gradually drawing investors back to the markets. Improving sentiment carried over into early 2012 as investors felt some relief from the world’s financial woes. Volatility abated and risk assets (including stocks, commodities and high yield bonds) moved boldly higher through the first two months of 2012 while climbing Treasury yields pressured higher-quality fixed income assets.

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

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

Despite the continuation of heightened market volatility, most asset classes enjoyed a robust summer rally. Global economic data continued to be mixed, but the spate of downside surprises seen in the second quarter began to recede and, outside of Europe, the risk of recession largely subsided. Central bank policy action has been a major driver of market sentiment in 2012. Investors’ anticipation for economic stimulus drove asset prices higher over the summer as the European Central Bank stepped up its efforts to support the region’s troubled nations and the US Federal Reserve reiterated its readiness to take action if economic conditions warrant.

On the whole, most asset classes advanced during the reporting period. US large cap stocks delivered strong returns for the 12 months ended August 31, 2012, while small cap stocks and high yield bonds also performed well. Despite the risk-asset rally in recent months, higher-quality investments including tax-exempt municipal bonds and US Treasury bonds posted exceptional gains by historical standards and outperformed investment-grade corporate bonds. International and emerging equities, however, lagged other asset classes amid ongoing global uncertainty. Near-zero short term interest rates kept yields on money market securities near their all-time lows.

We know that investors continue to face a world of uncertainty and volatile markets, but we also believe these challenging times present many opportunities. We remain committed to working with you and your financial professional to identify actionable ideas for your portfolio. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

“We know that investors continue to face a world of uncertainty and volatile markets, but we also believe these challenging times present many opportunities.”

Rob Kapito

President, BlackRock Advisors, LLC


Total Returns as of August 31, 2012
	6-month			12-month
US large cap equities (S&P 500^® Index)		4.14	%		18.00	%
US small cap equities (Russell 2000^® Index)		0.89			13.40
International equities (MSCI Europe, Australasia, Far East Index)		(4.00	)		(0.04	)
Emerging market equities (MSCI Emerging Markets Index)		(10.51	)		(5.80	)
3-month Treasury bill (BofA Merrill Lynch 3-Month US Treasury Bill Index)		0.06			0.06
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index)		5.25			9.14
US investment grade bonds (Barclays US Aggregate Bond Index)		2.97			5.78
Tax-exempt municipal bonds (S&P Municipal Bond Index)		3.24			9.37
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)		4.80			13.84
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.



		THIS PAGE NOT PART OF YOUR FUND REPORT				3


Fund Summary as of August 31, 2012		BlackRock Corporate High Yield Fund, Inc.

Investment Objective

BlackRock Corporate High Yield Fund, Inc.’s (COY) (the “Fund”) investment objective is to provide shareholders with current income by investing primarily in a diversified portfolio of fixed income securities, which are rated in the lower rating categories of the established rating services (BB or lower by Standard & Poor’s Corporation (“S&P’s”) or Ba or lower by Moody’s Investors Service, Inc. (“Moody’s”)) or are unrated securities considered by BlackRock to be of comparable quality. As a secondary objective, the Fund also seeks to provide shareholders with capital appreciation. The Fund invests, under normal market conditions, at least 80% of its assets in high yield debt instruments, including high yield bonds (commonly referred to as “junk” bonds) and corporate loans which are below investment grade quality. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objectives will be achieved.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended August 31, 2012, the Fund returned 6.02% based on market price and 5.85% based on net asset value (“NAV”). For the same period, the closed-end Lipper High Yield Funds (Leveraged) category posted an average return of 8.15% based on market price and 5.80% based on NAV. All returns reflect reinvestment of dividends. The Fund’s premium to NAV, which widened slightly during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

Security selection across the high yield quality spectrum had a positive impact on performance. From a sector perspective, selection among non-captive diversified financials, cable media and wireless names boosted returns.

Conversely, on a sector basis, security selection among non-rated securities detracted from performance. On a sector basis, selection within independent energy, automotive and gaming had a negative impact on returns. The Fund’s allocation to bank loans also hindered performance as the asset class underperformed relative to the high yield market in the risk asset rally.

Describe recent portfolio activity.

The Fund began the reporting period increasing its risk profile; however, as risk asset prices surged in 2012, the Fund moderated its degree of

risk-taking over the six-month period. While the Fund’s view on high yield remained positive throughout this period, as average prices moved north of par for the market, the Fund’s holdings became increasingly focused on higher-quality income-oriented credit names with stable fundamentals and an attractive coupon rate, since the potential for price appreciation had largely diminished. With global growth concerns posing a persistent threat and fueling uncertainty, the Fund continued to favor issuers in mature industries that exhibit consistent cash flows and good earnings visibility and debt instruments that are backed by profitable assets. The Fund generally remained cautious of cyclical credits that tend to be more vulnerable to slower economic growth and/or macroeconomic weakness.

Describe portfolio positioning at period end.

At period end, the Fund held 78% of its total portfolio in corporate bonds and 14% in floating rate loan interests (bank loans), with the remainder in common stocks, preferred securities and other interests. The Fund’s largest sector exposures included non-cable media, healthcare and chemicals, while its portfolio holdings reflected less emphasis on the riskier, more cyclical segments of the market such as banking, home construction and restaurants. The Fund ended the period with economic leverage at 27% of its total managed assets.

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	SEMI-ANNUAL REPORT	AUGUST 31, 2012


		BlackRock Corporate High Yield Fund, Inc.

Fund Information


Symbol on New York Stock Exchange (“NYSE”)		COY
Initial Offering Date		June 25, 1993
Yield on Closing Market Price as of August 31, 2012 ($7.89)¹		7.76%
Current Monthly Distribution per Common Share²		$0.051
Current Annualized Distribution per Common Share²		$0.612
Economic Leverage as of August 31, 2012³		27%

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

The distribution rate is not constant and is subject to change.

Represents loan outstanding as a percentage of total managed assets, which is the total assets of the Fund (including any assets attributable to borrowings) minus the sum of liabilities (other than borrowings representing financial leverage). For a discussion of leveraging techniques utilized by the Fund, please see The Benefits and Risks of Leveraging on page 14.

The table below summarizes the changes in the Fund’s market price and NAV per share:


	8/31/12		2/29/12		Change			High		Low
Market Price	$	7.89	$	7.76		1.68	%	$	8.15	$	7.13
Net Asset Value	$	7.40	$	7.29		1.51	%	$	7.40	$	7.00

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s corporate bond investments:


Portfolio Composition
	8/31/12			2/29/12
Corporate Bonds		78	%		80	%
Floating Rate Loan Interests		14			12
Common Stocks		5			5
Preferred Securities		2			2
Other Interests		1			1


Credit Quality Allocations⁴
	8/31/12			2/29/12
A		1	%		1	%
BBB/Baa		5			6
BB/Ba		36			42
B		43			40
CCC/Caa		13			10
Not Rated		2			1

⁴

Using the higher of S&P’s or Moody’s ratings.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	5


Fund Summary as of August 31, 2012		BlackRock Corporate High Yield Fund III, Inc.

Investment Objective

BlackRock Corporate High Yield Fund III, Inc.’s (CYE) (the “Fund”) primary investment objective is to provide current income by investing primarily in fixed-income securities, which are rated in the lower rating categories of the established rating services (BBB or lower by S&P’s or Baa or lower by Moody’s) or are unrated securities of comparable quality. The Fund’s secondary investment objective is to provide capital appreciation. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objectives will be achieved.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended August 31, 2012, the Fund returned 9.12% based on market price and 6.10% based on NAV. For the same period, the closed-end Lipper High Yield Funds (Leveraged) category posted an average return of 8.15% based on market price and 5.80% based on NAV. All returns reflect reinvestment of dividends. The Fund’s premium to NAV, which widened during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

Describe recent portfolio activity.

The Fund began the reporting period increasing its risk profile; however, as risk asset prices surged in 2012, the Fund moderated its degree of

Describe portfolio positioning at period end.

At period end, the Fund held 75% of its total portfolio in corporate bonds and 17% in floating rate loan interests (bank loans), with the remainder in common stocks, preferred securities and other interests. The Fund’s largest sector exposures included non-cable media, healthcare and chemicals, while its portfolio holdings reflected less emphasis on the riskier, more cyclical segments of the market such as banking, home construction and retailers. The Fund ended the period with economic leverage at 29% of its total managed assets.



6	SEMI-ANNUAL REPORT	AUGUST 31, 2012


		BlackRock Corporate High Yield Fund III, Inc.

Fund Information


Symbol on NYSE		CYE
Initial Offering Date		January 30, 1998
Yield on Closing Market Price as of August 31, 2012 ($8.11)¹		7.77%
Current Monthly Distribution per Common Share²		$0.0525
Current Annualized Distribution per Common Share²		$0.6300
Economic Leverage as of August 31, 2012³		29%

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

The distribution rate is not constant and is subject to change.

The table below summarizes the changes in the Fund’s market price and NAV per share:


	8/31/12		2/29/12		Change			High		Low
Market Price	$	8.11	$	7.75		4.65	%	$	8.12	$	7.15
Net Asset Value	$	7.54	$	7.41		1.75	%	$	7.54	$	7.11

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s corporate bond investments:


Portfolio Composition
	8/31/12			2/29/12
Corporate Bonds		75	%		77	%
Floating Rate Loan Interests		17			15
Common Stocks		5			6
Preferred Securities		2			2
Other Interests		1			—


Credit Quality Allocations⁴
	8/31/12			2/29/12
A		1	%		1	%
BBB/Baa		5			7
BB/Ba		35			38
B		43			43
CCC/Caa		13			10
Not Rated		3			1

⁴

Using the higher of S&P’s or Moody’s ratings.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	7


Fund Summary as of August 31, 2012		BlackRock Debt Strategies Fund, Inc.

Investment Objective

BlackRock Debt Strategies Fund, Inc.’s (DSU) (the “Fund”) primary investment objective is to provide current income by investing primarily in a diversified portfolio of US companies’ debt instruments, including corporate loans, which are rated in the lower rating categories of the established rating services (BBB or lower by S&P’s or Baa or lower by Moody’s) or unrated debt instruments, which are in the judgment of the investment adviser of equivalent quality. The Fund’s secondary objective is to provide capital appreciation. Corporate loans include senior and subordinated corporate loans, both secured and unsecured. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objectives will be achieved.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended August 31, 2012, the Fund returned 10.04% based on market price and 5.51% based on NAV. For the same period, the closed-end Lipper High Yield Funds (Leveraged) category posted an average return of 8.15% based on market price and 5.80% based on NAV. All returns reflect reinvestment of dividends. The Fund began the period with neither a discount nor a premium to NAV, and moved to a premium by period end. The following discussion relates to performance based on NAV.

What factors influenced performance?

Security selection among lower quality debt instruments (including both bonds and loans) had a positive impact on performance. From a sector perspective, selection within consumer services, wireless and technology contributed positively.

The Fund invests roughly half of its assets in high yield bonds and half in floating rate loan interests (bank loans), while most funds in the Lipper category invest primarily in high yield bonds. While the Fund’s allocation to bank loans did not detract from performance on an absolute basis, the asset class underperformed high yield bonds for the period. Security selection in the independent energy and electric sectors hindered returns for the period.

Describe recent portfolio activity.

The Fund began the reporting period increasing its risk profile; however, as risk asset prices surged in 2012, the Fund moderated its degree of risk-taking over the six-month period. While the Fund’s view on high yield and bank loan assets remained positive throughout this period, its holdings became increasingly focused on higher-quality income-oriented credit names with stable fundamentals and an attractive coupon rate. With global growth concerns posing a persistent threat and fueling uncertainty, the Fund continued to favor issuers in mature industries that exhibit consistent cash flows and good earnings visibility and debt instruments that are backed by profitable assets. The Fund generally remained cautious of cyclical credits that tend to be more vulnerable to slower economic growth and/or macroeconomic weakness.

Describe portfolio positioning at period end.

At period end, the Fund held 53% of its total portfolio in floating rate loan interests, and 43% in corporate bonds, with the remainder in common stocks, asset-backed securities and other interests. The Fund’s largest sector exposures included healthcare, independent energy and chemicals. The Fund ended the period with economic leverage at 30% of its total managed assets.



8	SEMI-ANNUAL REPORT	AUGUST 31, 2012


		BlackRock Debt Strategies Fund, Inc.

Fund Information


Symbol on NYSE		DSU
Initial Offering Date		March 27, 1998
Yield on Closing Market Price as of August 31, 2012 ($4.37)¹		7.41%
Current Monthly Distribution per Common Share²		$0.027
Current Annualized Distribution per Common Share²		$0.324
Economic Leverage as of August 31, 2012³		30%

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

The distribution rate is not constant and is subject to change.

The table below summarizes the changes in the Fund’s market price and NAV per share:


	8/31/12		2/29/12		Change			High		Low
Market Price	$	4.37	$	4.13		5.81	%	$	4.39	$	4.00
Net Asset Value	$	4.19	$	4.13		1.45	%	$	4.19	$	4.00

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s corporate bond investments:


Portfolio Composition
	8/31/12			2/29/12
Floating Rate Loan Interests		53	%		54	%
Corporate Bonds		43			43
Asset-Backed Securities		2			1
Common Stocks		1			1
Other Interests		1			1


Credit Quality Allocations⁴
	8/31/12			2/29/12
A		1	%		1	%
BBB/Baa		5			5
BB/Ba		34			36
B		47			45
CCC/Caa		12			8
Not Rated		1			5

⁴

Using the higher of S&P’s or Moody’s ratings.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	9


Fund Summary as of August 31, 2012		BlackRock Floating Rate Income Strategies Fund II, Inc.

Investment Objective

BlackRock Floating Rate Income Strategies Fund II, Inc.’s (FRB) (the “Fund”) investment objective is to provide shareholders with high current income and such preservation of capital as is consistent with investment in a diversified, leveraged portfolio consisting primarily of floating rate debt securities and instruments. The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in floating rate debt securities, including floating or variable rate debt securities that pay interest at rates that adjust whenever a specified interest rate changes and/or which reset on predetermined dates (such as the last day of a month or calendar quarter). The Fund invests a substantial portion of its investments in floating rate debt securities consisting of secured or unsecured senior floating rate loans that are rated below investment grade. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objective will be achieved.

Portfolio Management Commentary

On May 23, 2012, the Board of Directors of FRB approved a plan of reorganization, whereby BlackRock Floating Rate Income Strategies Fund, Inc. (FRA) will acquire all of the assets and all of the liabilities of FRB in exchange for newly issued shares of FRA in a merger transaction. At a shareholder meeting on September 13, 2012, FRB’s and FRA’s shareholders approved the plan of reorganization. The reorganization took place on October 5, 2012.

How did the Fund perform?

For the six-month period ended August 31, 2012, the Fund returned 6.50% based on market price and 4.59% based on NAV. For the same period, the closed-end Lipper Loan Participation Funds (Leveraged) category posted an average return of 9.00% based on market price and 5.03% based on NAV. All returns reflect reinvestment of dividends. The Fund’s discount to NAV, which narrowed during the period, accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

Security selection among higher and lower quality loan instruments had a positive impact on the Fund’s performance. From a sector perspective, security selection within the consumer services and gaming segments boosted returns. The Fund’s tactical allocation to high yield bonds also contributed positively as the asset class outperformed bank loans and higher-duration fixed income instruments during the period.

Conversely, on a sector basis, security selection in the electric and non-cable media sectors detracted from performance, as did selection among middle quality loan instruments.

Describe recent portfolio activity.

During the period, the Fund maintained its focus on the higher quality portions of the loan market in terms of loan structure, liquidity and overall credit quality. Given mixed economic data along with global policy uncertainty and an overall weak outlook for global growth, the Fund remained cautious of lower-rated less-liquid loans. Instead, the Fund sought issuers with attractive risk-reward characteristics and superior fundamentals. The European Central Bank’s long-term refinancing operations, introduced in December 2011, were supportive of risk markets in first half of 2012. However, this development did not have a significant influence on the Fund’s view on risk within the loan market. More specifically, the Fund continued to adhere to a strict investment discipline with the goal of pursuing yield while minimizing exposure to macroeconomic risks.

Describe portfolio positioning at period end.

At period end, the Fund held 87% of its total portfolio in floating rate loan interests (bank loans) and 10% in corporate bonds, with the remainder in asset-backed securities and common stocks. The Fund’s largest sector exposures included healthcare, technology and chemicals. The Fund ended the period with economic leverage at 30% of its total managed assets.



10	SEMI-ANNUAL REPORT	AUGUST 31, 2012


		BlackRock Floating Rate Income Strategies Fund II, Inc.

Fund Information


Symbol on NYSE		FRB
Initial Offering Date		July 30, 2004
Yield on Closing Market Price as of August 31, 2012 ($13.62)¹		6.43%
Current Monthly Distribution per Common Share²		$0.073
Current Annualized Distribution per Common Share²		$0.876
Economic Leverage as of August 31, 2012³		30%

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

The distribution rate is not constant and is subject to change.

The table below summarizes the changes in the Fund’s market price and NAV per share:


	8/31/12		2/29/12		Change			High		Low
Market Price	$	13.62	$	13.21		3.10	%	$	14.00	$	12.90
Net Asset Value	$	13.77	$	13.60		1.25	%	$	13.77	$	13.37

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s corporate bond investments:


Portfolio Composition
	8/31/12			2/29/12
Floating Rate Loan Interests		87	%		84	%
Corporate Bonds		10			13
Asset-Backed Securities		2			2
Common Stocks		1			1


Credit Quality Allocations⁴
	8/31/12			2/29/12
BBB/Baa		7	%		10	%
BB/Ba		33			36
B		40			39
CCC/Caa		11			7
Not Rated		9			8

⁴

Using the higher of S&P’s or Moody’s ratings.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	11


Fund Summary as of August 31, 2012		BlackRock Senior High Income Fund, Inc.

Investment Objective

BlackRock Senior High Income Fund, Inc.’s (ARK) (the “Fund”) investment objective is to provide high current income by investing principally in senior debt obligations of companies, including corporate loans made by banks and other financial institutions and both privately placed and publicly offered corporate bonds and notes. The Fund may invest directly in such securities or synthetically through the use of derivatives.

No assurance can be given that the Fund’s investment objective will be achieved.

Portfolio Management Commentary

How did the Fund perform?

For the six-month period ended August 31, 2012, the Fund returned 13.11% based on market price and 5.41% based on NAV. For the same period, the closed-end Lipper High Yield Funds (Leveraged) category posted an average return of 8.15% based on market price and 5.80% based on NAV. All returns reflect reinvestment of dividends. The Fund moved from a discount to NAV to a premium by period end, which accounts for the difference between performance based on price and performance based on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?

Security selection among lower quality debt instruments (including both bonds and loans) had a positive impact on performance. From a sector perspective, selection within gaming, wireless and technology contributed positively. The Trust’s exposures to preferred securities and common stock also boosted returns.

Describe recent portfolio activity.

Describe portfolio positioning at period end.

At period end, the Fund held 56% of its total portfolio in floating rate loan interests (bank loans) and 41% in corporate bonds, with the remainder in asset-backed securities and common stocks. The Fund’s largest sector exposures included healthcare, independent energy and chemicals. The Fund ended the period with economic leverage at 27% of its total managed assets.



12	SEMI-ANNUAL REPORT	AUGUST 31, 2012


		BlackRock Senior High Income Fund, Inc.

Fund Information


Symbol on NYSE		ARK
Initial Offering Date		April 30, 1993
Yield on Closing Market Price as of August 31, 2012 ($4.43)¹		6.77%
Current Monthly Distribution per Common Share²		$0.025
Current Annualized Distribution per Common Share²		$0.300
Economic Leverage as of August 31, 2012³		27%

Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future results.

The distribution rate is not constant and is subject to change.

The table below summarizes the changes in the Fund’s market price and NAV per share:


	8/31/12		2/29/12		Change			High		Low
Market Price	$	4.43	$	4.06		9.11	%	$	4.43	$	3.99
Net Asset Value	$	4.22	$	4.15		1.69	%	$	4.22	$	4.03

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s corporate bond investments:


Portfolio Composition
	8/31/12			2/29/12
Floating Rate Loan Interests		56	%		56	%
Corporate Bonds		41			41
Asset-Backed Securities		2			2
Common Stocks		1			1


Credit Quality Allocations⁴
	8/31/12			2/29/12
A		1	%		1	%
BBB/Baa		6			6
BB/Ba		35			39
B		54			48
CCC/Caa		4			3
Not Rated		—			3

⁴

Using the higher of S&P’s or Moody’s ratings.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	13


The Benefits and Risks of Leveraging

The Funds may utilize leverage to seek to enhance the yield and NAV of their common shares (“Common Shares”). However, these objectives cannot be achieved in all interest rate environments.

The Funds may utilize leverage by borrowing through a credit facility. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage, which will be based on short-term interest rates, will normally be lower than the income earned by each Fund on its longer-term portfolio investments. To the extent that the total assets of each Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, each Fund’s shareholders will benefit from the incremental net income.

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

To illustrate these concepts, assume a Fund’s capitalization is $100 million and it borrows for an additional $30 million, creating a total value of $130 million available for investment in long-term securities. If prevailing short-term interest rates are 3% and long-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Fund pays borrowing costs and interest expense on the $30 million of borrowings based on the lower short-term interest rates. At the same time, the securities purchased by the Fund with assets received from the borrowings earn income based on long-term interest rates. In this case, the borrowing costs and interest expense of the borrowings is significantly lower than the income earned on the Fund’s long-term investments, and therefore the Fund’s shareholders are the beneficiaries of the incremental net income.

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

Furthermore, the value of the Funds’ portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the redemption value of the Funds’ borrowings does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Funds’ NAVs positively or negatively in addition to the impact on Fund performance from leverage from borrowings discussed above.

The use of leverage may enhance opportunities for increased income to the Funds, but as described above, it also creates risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Funds’ NAVs, market prices and dividend rates than comparable portfolios without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Fund’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, each Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. Each Fund 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 a Fund to incur losses. The use of leverage may limit each Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. Each Fund will incur expenses in connection with the use of leverage, all of which are borne by shareholders and may reduce income.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), the Funds are permitted to issue senior securities representing indebtedness up to 33¹/₃% of their total managed assets (each Fund’s net assets plus the proceeds of any outstanding borrowings). In addition, each Fund voluntarily limits its aggregate economic leverage to 50% of its managed assets. As of August 31, 2012, the Funds had aggregate economic leverage from borrowings through a credit facility as a percentage of their total managed assets as follows:


	Percent of Economic Leverage
COY		27	%
CYE		29	%
DSU		30	%
FRB		30	%
ARK		27	%


Derivative Financial Instruments

The Funds may invest in various derivative financial instruments, including financial futures contracts, foreign currency exchange contracts, options and swaps as specified in Note 2 of the Notes to Consolidated Financial Statements, which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate and/or foreign currency exchange rate risks. Derivative financial instruments involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative financial instrument. The Funds’ ability to use a

derivative financial instrument successfully depends on the investment advisor’s ability to predict pertinent market movements accurately, which cannot be assured. The use of derivative financial instruments may result in losses greater than if they had not been used, may require a Fund to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause a Fund to hold an investment that it might otherwise sell. The Funds’ investments in these instruments are discussed in detail in the Notes to Consolidated Financial Statements.



14	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments		BlackRock Corporate High Yield Fund, Inc. (COY)
August 31, 2012 (Unaudited)		(Percentages shown are based on Net Assets)



Common Stocks	Shares		Value

Auto Components — 2.3%
Dana Holding Corp.		92,740	$	1,266,828
Delphi Automotive Plc (a)		153,225		4,641,186

				5,908,014
Biotechnology — 0.0%
Ironwood Pharmaceuticals, Inc. (a)		6,540		81,946
Capital Markets — 0.4%
American Capital Ltd. (a)		46,567		511,771
E*Trade Financial Corp. (a)		68,100		583,617

				1,095,388
Chemicals — 0.2%
ADA-ES, Inc. (a)		1,670		39,162
CF Industries Holdings, Inc.		940		194,589
Huntsman Corp.		12,750		183,345

				417,096
Commercial Banks — 0.2%
CIT Group, Inc. (a)		15,830		597,741
Communications Equipment — 0.3%
Loral Space & Communications Ltd.		11,463		841,614
Containers & Packaging — 0.0%
Smurfit Kappa Plc (a)		3,634		29,647
Diversified Financial Services — 0.5%
Kcad Holdings I Ltd.		210,194,127		1,393,797
Diversified Telecommunication Services — 0.2%
Level 3 Communications, Inc. (a)		20,920		450,826
Electrical Equipment — 0.0%
Medis Technologies Ltd.		67,974		204
Energy Equipment & Services — 1.0%
Laricina Energy Ltd. (a)		35,294		1,521,679
Osum Oil Sands Corp. (a)		74,000		938,372

				2,460,051
Hotels, Restaurants & Leisure — 0.0%
Travelport Worldwide Ltd.		70,685		9,189
Media — 2.2%
Belo Corp., Class A		20,724		151,285
Charter Communications, Inc. (a)		65,816		5,120,485
Clear Channel Outdoor Holdings, Inc., Class A (a)		8,934		46,903
Cumulus Media, Inc., Class A (a)		88,000		243,760
DISH Network Corp., Class A		5,420		173,386

				5,735,819
Metals & Mining — 0.1%
African Minerals Ltd. (a)		40,400		161,685
Oil, Gas & Consumable Fuels — 0.1%
African Petroleum Corp. Ltd. (a)		180,300		230,983
Paper & Forest Products — 0.1%
Ainsworth Lumber Co. Ltd. (a)(b)		41,686		91,344
Ainsworth Lumber Co. Ltd. (a)		36,744		80,514
Western Forest Products, Inc. (a)		147,968		160,615
Western Forest Products, Inc. (a)(b)		41,528		45,077

				377,550



Common Stocks	Shares		Value

Semiconductors & Semiconductor Equipment — 0.3%
NXP Semiconductors NV (a)		5,000	$	116,600
Spansion, Inc., Class A (a)		60,342		689,709
SunPower Corp.		123		551

				806,860
Software — 0.2%
Bankruptcy Management Solutions, Inc. (a)		468		5
HMH Holdings/EduMedia		19,102		468,005

				468,010
Total Common Stocks – 8.1%				21,066,420



Corporate Bonds	Par (000)
Aerospace & Defense — 0.7%
Huntington Ingalls Industries, Inc.:
6.88%, 3/15/18	USD	210		224,700
7.13%, 3/15/21		295		319,338
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17		796		847,740
Meccanica Holdings USA, Inc., 6.25%, 7/15/19 (b)		405		366,463

				1,758,241
Air Freight & Logistics — 0.4%
National Air Cargo Group, Inc.:
Series 1 12.38%, 9/02/15		548		558,607
Series 2 12.38%, 8/16/15		555		565,094

				1,123,701
Airlines — 1.5%
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23		1,007		1,067,798
Continental Airlines, Inc.:
Series 1997-4, Class B 6.90%, 7/02/18		268		267,785
Series 2010-1, Class B 6.00%, 7/12/20		355		357,812
Delta Air Lines, Inc.:
Series 2002-1, Class G-1 6.72%, 7/02/24		555		601,640
Series 2009-1 Series B 9.75%, 6/17/18		173		187,232
Series 2010-1, Class B 6.38%, 7/02/17		447		447,000
US Airways Pass Through Trust:
Series 2011-1, Class C 10.88%, 10/22/14		620		635,357
Series 2012-1, Class C 9.13%, 10/01/15		420		428,400

				3,993,024
Auto Components — 2.1%
Dana Holding Corp., 6.75%, 2/15/21		410		441,775
Delphi Corp., 6.13%, 5/15/21		150		165,000
Icahn Enterprises LP, 8.00%, 1/15/18		2,995		3,189,675
IDQ Holdings, Inc., 11.50%, 4/01/17 (b)		355		371,419
International Automotive Components Group SL, 9.13%, 6/01/18 (b)		40		38,350
Jaguar Land Rover Plc, 8.25%, 3/15/20	GBP	439		735,238
Titan International, Inc., 7.88%, 10/01/17	USD	430		450,425

				5,391,882

Portfolio Abbreviations

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


AUD		Australian Dollar
CAD		Canadian Dollar
EBITDA		Earnings Before Interest, Taxes, Depreciation and Amortization
ETF		Exchange –Traded Fund
EUR		Euro


FKA		Formerly Known As
GBP		British Pound
LIBOR		London Interbank Offered Rate
PIK		Payment–in-Kind
SPDR		Standard and Poor’s Depository Receipts
USD		US Dollar

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	15

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Beverages — 0.2%
Crown European Holdings SA:
7.13%, 8/15/18 (b)	EUR	227	$	314,073
7.13%, 8/15/18		171		236,592

				550,665
Biotechnology — 0.0%
QHP Royalty Sub LLC, 10.25%, 3/15/15 (b)	USD	53		53,117
Building Products — 0.8%
Building Materials Corp. of America (b):
7.00%, 2/15/20		500		541,250
6.75%, 5/01/21		710		775,675
Momentive Performance Materials, Inc., 11.50%, 12/01/16		340		207,400
USG Corp., 9.75%, 1/15/18		550		589,875

				2,114,200
Capital Markets — 0.8%
E*Trade Financial Corp.:
12.50%, 11/30/17 (c)		980		1,118,425
2.25%, 8/31/19 (b)(d)(e)		226		193,230
KKR Group Finance Co. LLC, 6.38%, 9/29/20 (b)		600		679,171

				1,990,826
Chemicals — 4.3%
Basell Finance Co. BV, 8.10%, 3/15/27 (b)		380		507,300
Celanese US Holdings LLC, 5.88%, 6/15/21		1,640		1,812,200
Chemtura Corp., 7.88%, 9/01/18		285		307,087
Hexion US Finance Corp.:
6.63%, 4/15/20		215		217,150
9.00%, 11/15/20		285		243,675
Huntsman International LLC, 8.63%, 3/15/21		155		177,475
INEOS Finance Plc (b):
8.38%, 2/15/19		835		878,837
7.50%, 5/01/20		405		413,100
INEOS Group Holdings Plc, 8.50%, 2/15/16 (b)		135		127,238
Kinove German Bondco GmbH, 10.00%, 6/15/18	EUR	315		431,866
Kraton Polymers LLC, 6.75%, 3/01/19	USD	115		117,875
LyondellBasell Industries NV, 5.75%, 4/15/24		2,590		2,933,175
Nexeo Solutions LLC, 8.38%, 3/01/18		170		166,175
OXEA Finance/Cy SCA, 9.63%, 7/15/17 (b)	EUR	330		457,743
PolyOne Corp., 7.38%, 9/15/20	USD	200		218,500
TPC Group LLC, 8.25%, 10/01/17		310		340,225
Tronox Finance LLC, 6.38%, 8/15/20 (b)		1,740		1,757,400

				11,107,021
Commercial Banks — 1.1%
CIT Group, Inc.:
7.00%, 5/02/16 (b)		901		904,569
5.25%, 3/15/18		510		531,675
5.50%, 2/15/19 (b)		490		510,825
5.00%, 8/15/22		530		534,015
6.00%, 4/01/36		500		452,915

				2,933,999
Commercial Services & Supplies — 2.0%
ARAMARK Corp., 8.50%, 2/01/15		330		338,253
ARAMARK Holdings Corp., 8.63%, 5/01/16 (b)(c)		405		414,623
Aviation Capital Group Corp., 6.75%, 4/06/21 (b)		500		513,375
Brickman Group Holdings, Inc., 9.13%, 11/01/18 (b)		24		24,240
Casella Waste Systems, Inc., 7.75%, 2/15/19		430		425,700
Clean Harbors, Inc., 5.25%, 8/01/20 (b)		484		496,705
Covanta Holding Corp., 6.38%, 10/01/22		585		639,623
EC Finance Plc, 9.75%, 8/01/17	EUR	300		391,019
Mead Products LLC/ACCO Brands Corp., 6.75%, 4/30/20 (b)	USD	205		216,788



Corporate Bonds	Par (000)		Value

Commercial Services & Supplies (concluded)
Mobile Mini, Inc., 7.88%, 12/01/20	USD	335	$	359,287
RSC Equipment Rental, Inc., 8.25%, 2/01/21		800		876,000
Verisure Holding AB:
8.75%, 9/01/18	EUR	169		212,568
8.75%, 12/01/18		100		111,315
West Corp., 8.63%, 10/01/18	USD	125		126,875

				5,146,371
Communications Equipment — 1.8%
Avaya, Inc., 9.75%, 11/01/15		650		563,875
Frontier Communications Corp., 6.25%, 1/15/13		830		844,525
Hughes Satellite Systems Corp., 6.50%, 6/15/19		370		396,362
Zayo Group LLC/Zayo Capital, Inc.:
8.13%, 1/01/20		1,420		1,508,750
10.13%, 7/01/20		1,160		1,244,100

				4,557,612
Computers & Peripherals — 0.1%
SanDisk Corp., 1.50%, 8/15/17 (e)		200		221,500
Construction & Engineering — 0.2%
Boart Longyear Management Property Ltd., 7.00%, 4/01/21 (b)		175		181,563
H&E Equipment Services, Inc., 7.00%, 9/01/22 (b)		305		316,437
URS Corp., 5.00%, 4/01/22 (b)		65		65,909

				563,909
Construction Materials — 1.4%
HD Supply, Inc. (b):
8.13%, 4/15/19		1,425		1,546,125
11.00%, 4/15/20		1,350		1,485,000
Xefin Lux SCA:
8.00%, 6/01/18 (b)	EUR	233		285,741
8.00%, 6/01/18		200		245,271

				3,562,137
Consumer Finance — 0.8%
Credit Acceptance Corp., 9.13%, 2/01/17	USD	435		478,500
Ford Motor Credit Co. LLC:
7.00%, 4/15/15		480		534,327
12.00%, 5/15/15		670		834,150
6.63%, 8/15/17		131		150,595

				1,997,572
Containers & Packaging — 1.8%
Ardagh Packaging Finance Plc:
7.38%, 10/15/17 (b)		200		214,250
7.38%, 10/15/17 (b)	EUR	335		445,592
7.38%, 10/15/17		200		266,025
9.13%, 10/15/20 (b)	USD	365		379,600
9.13%, 10/15/20 (b)		205		214,225
9.13%, 10/15/20 (b)		204		212,670
Berry Plastics Corp.:
4.34%, 9/15/14 (f)		275		270,875
8.25%, 11/15/15		110		115,775
9.75%, 1/15/21		390		431,925
Beverage Packaging Holdings Luxembourg II SA, 8.00%, 12/15/16	EUR	617		760,541
GCL Holdings SCA, 9.38%, 4/15/18 (b)		244		297,696
Graphic Packaging International, Inc., 7.88%, 10/01/18	USD	340		379,100
OI European Group BV, 6.88%, 3/31/17	EUR	152		197,399
Sealed Air Corp., 8.38%, 9/15/21 (b)	USD	175		196,875
Tekni-Plex, Inc., 9.75%, 6/01/19 (b)		165		172,425

				4,554,973

See Notes to Consolidated Financial Statements.



16	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Distributors — 0.6%
VWR Funding, Inc., 7.25%, 9/15/17 (b)(g)	USD	1,485	$	1,503,563
Diversified Consumer Services — 1.5%
Laureate Education, Inc., 9.25%, 9/01/19 (b)		555		555,000
Service Corp. International, 7.00%, 6/15/17		2,800		3,192,000
ServiceMaster Co., 8.00%, 2/15/20		175		186,594

				3,933,594
Diversified Financial Services — 4.1%
Aircastle Ltd., 6.75%, 4/15/17		430		464,400
Ally Financial, Inc.:
7.50%, 12/31/13		350		374,062
8.00%, 11/01/31		2,705		3,198,662
8.00%, 11/01/31		560		664,717
CNG Holdings, Inc., 9.38%, 5/15/20 (b)		280		285,600
DPL, Inc., 7.25%, 10/15/21 (b)		1,075		1,225,500
Gala Group Finance Plc, 8.88%, 9/01/18	GBP	300		444,201
General Motors Financial Co., Inc., 6.75%, 6/01/18	USD	270		299,361
Leucadia National Corp., 8.13%, 9/15/15		790		890,725
Reynolds Group Issuer, Inc.:
7.75%, 10/15/16	EUR	187		242,853
7.13%, 4/15/19	USD	230		247,825
9.75%, 4/15/19		260		264,225
7.88%, 8/15/19		315		350,438
9.88%, 8/15/19		955		1,009,912
8.25%, 2/15/21		125		122,813
WMG Acquisition Corp.:
9.50%, 6/15/16		110		120,175
11.50%, 10/01/18		382		419,245

				10,624,714
Diversified Telecommunication Services — 2.3%
Broadview Networks Holdings, Inc., 11.38%, 9/01/12 (a)(h)		1,000		675,000
Consolidated Communications Finance Co., 10.88%, 6/01/20 (b)		550		589,875
ITC Deltacom, Inc., 10.50%, 4/01/16		260		280,150
Level 3 Communications, Inc., 8.88%, 6/01/19 (b)		295		300,900
Level 3 Financing, Inc.:
8.13%, 7/01/19		1,224		1,282,140
7.00%, 6/01/20 (b)		525		522,375
8.63%, 7/15/20		785		839,950
OTE Plc, 5.00%, 8/05/13	EUR	104		113,377
Telenet Finance V Luxembourg SCA:
6.25%, 8/15/22		137		173,180
6.75%, 8/15/24		350		446,834
Windstream Corp.:
8.13%, 8/01/13	USD	400		422,000
7.88%, 11/01/17		360		391,500

				6,037,281
Electric Utilities — 0.7%
Mirant Mid Atlantic Pass Through Trust, Series B, 9.13%, 6/30/17		269		289,152
The Tokyo Electric Power Co., Inc., 4.50%, 3/24/14	EUR	1,150		1,439,671

				1,728,823
Electrical Equipment — 0.1%
Belden, Inc., 5.50%, 9/01/22 (b)	USD	340		340,850
Electronic Equipment, Instruments & Components — 0.5%
CDW LLC/CDW Finance Corp., 8.50%, 4/01/19		354		387,630
Jabil Circuit, Inc., 8.25%, 3/15/18		215		258,000
Micron Technology, Inc., 2.38%, 5/01/32 (b)(e)		407		387,159
NXP BV/NXP Funding LLC, 9.75%, 8/01/18 (b)		190		217,075

				1,249,864



Corporate Bonds	Par (000)		Value

Energy Equipment & Services — 3.4%
Atwood Oceanics, Inc., 6.50%, 2/01/20	USD	130	$	138,775
Calfrac Holdings LP, 7.50%, 12/01/20 (b)		360		352,800
Compagnie Générale de Géophysique, Veritas:
7.75%, 5/15/17		235		245,575
6.50%, 6/01/21		1,150		1,197,437
Forbes Energy Services Ltd., 9.00%, 6/15/19		335		324,950
FTS International Services LLC/ FTS International Bonds Inc., 8.13%, 11/15/18 (b)		1,615		1,667,487
Gulfmark Offshore, Inc., 6.38%, 3/15/22 (b)		145		147,900
Hornbeck Offshore Services, Inc., 5.88%, 4/01/20		290		295,800
Key Energy Services, Inc., 6.75%, 3/01/21		415		422,263
MEG Energy Corp. (b):
6.50%, 3/15/21		1,105		1,163,012
6.38%, 1/30/23		415		432,638
Oil States International, Inc., 6.50%, 6/01/19		290		308,125
Peabody Energy Corp.:
6.25%, 11/15/21 (b)		1,285		1,307,487
7.88%, 11/01/26		345		368,288
Precision Drilling Corp.:
6.63%, 11/15/20		70		73,500
6.50%, 12/15/21		275		288,750

				8,734,787
Food & Staples Retailing — 0.2%
Bakkavor Finance 2 Plc, 8.25%, 2/15/18	GBP	100		139,731
Rite Aid Corp., 9.25%, 3/15/20	USD	345		354,487

				494,218
Food Products — 0.4%
Darling International, Inc., 8.50%, 12/15/18		105		118,913
Del Monte Corp., 7.63%, 2/15/19		56		55,930
Post Holdings, Inc., 7.38%, 2/15/22 (b)		405		426,769
Smithfield Foods, Inc., 6.63%, 8/15/22		531		543,611

				1,145,223
Health Care Equipment & Supplies — 1.5%
Biomet, Inc.:
10.00%, 10/15/17		180		190,463
6.50%, 8/01/20 (b)		645		669,187
DJO Finance LLC:
10.88%, 11/15/14		476		496,825
8.75%, 3/15/18 (b)		415		440,937
7.75%, 4/15/18		95		86,925
Fresenius Medical Care US Finance, Inc., 6.50%, 9/15/18 (b)		192		215,280
Fresenius Medical Care US Finance II, Inc., 5.88%, 1/31/22 (b)		600		637,500
Fresenius US Finance II, Inc., 9.00%, 7/15/15 (b)		500		575,625
Kinetic Concepts, Inc./KCI USA, Inc., 12.50%, 11/01/19 (b)		255		231,413
Teleflex, Inc., 6.88%, 6/01/19		270		288,900

				3,833,055
Health Care Providers & Services — 7.3%
Aviv Healthcare Properties LP, 7.75%, 2/15/19		520		540,800
CHS/Community Health Systems, Inc.:
5.13%, 8/15/18		785		809,531
7.13%, 7/15/20		415		434,712
ConvaTec Healthcare E SA, 7.38%, 12/15/17 (b)	EUR	400		538,338
Crown Newco 3 Plc, 7.00%, 2/15/18 (b)	GBP	331		529,521
DaVita, Inc., 5.75%, 8/15/22	USD	849		882,960
HCA, Inc.:
8.50%, 4/15/19		120		135,300
6.50%, 2/15/20		2,160		2,373,300
7.88%, 2/15/20		85		94,881
7.25%, 9/15/20		2,405		2,665,041
5.88%, 3/15/22		250		265,938

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	17

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Health Care Providers & Services (concluded)
Hologic, Inc., 6.25%, 8/01/20 (b)	USD	1,464	$	1,550,010
IASIS Healthcare LLC, 8.38%, 5/15/19		1,420		1,354,325
INC Research LLC, 11.50%, 7/15/19 (b)		375		367,500
inVentiv Health, Inc., 10.00%, 8/15/18 (b)		115		96,888
Omnicare, Inc., 7.75%, 6/01/20		905		997,762
PSS World Medical, Inc., 6.38%, 3/01/22		307		324,653
Symbion, Inc., 8.00%, 6/15/16		315		318,347
Tenet Healthcare Corp.:
10.00%, 5/01/18		792		910,800
6.25%, 11/01/18		300		325,687
8.88%, 7/01/19		2,355		2,678,812
United Surgical Partners International, Inc., 9.00%, 4/01/20 (b)		270		289,913
Vanguard Health Holding Co. II LLC, 7.75%, 2/01/19 (b)		425		443,062

				18,928,081
Health Care Technology — 1.0%
IMS Health, Inc., 12.50%, 3/01/18 (b)		2,235		2,626,125
Hotels, Restaurants & Leisure — 4.6%
Affinity Gaming LLC/Affinity Gaming Finance Corp., 9.00%, 5/15/18 (b)		265		269,638
Caesars Entertainment Operating Co., Inc.:
11.25%, 6/01/17		1,270		1,368,425
10.00%, 12/15/18		2,935		1,849,050
8.50%, 2/15/20 (b)		280		276,150
Caesars Operating Escrow LLC, 9.00%, 2/15/20 (b)		1,533		1,525,335
Carlson Wagonlit BV, 6.88%, 6/15/19 (b)		295		306,800
Cirsa Funding Luxembourg SA, 8.75%, 5/15/18	EUR	202		222,951
Diamond Resorts Corp., 12.00%, 8/15/18	USD	1,100		1,170,125
El Dorado Resorts LLC, 8.63%, 6/15/19 (b)		125		121,875
Enterprise Inns Plc, 6.50%, 12/06/18	GBP	296		406,553
Gategroup Finance Luxembourg SA, 6.75%, 3/01/19	EUR	250		321,525
Little Traverse Bay Bands of Odawa Indians, 9.00%, 8/31/20 (b)	USD	270		245,700
MGM Resorts International:
10.38%, 5/15/14		175		198,625
4.25%, 4/15/15 (e)		996		1,005,960
11.13%, 11/15/17		1,315		1,462,937
MTR Gaming Group, Inc., 11.50%, 8/01/19 (c)		136		139,406
Travelport LLC:
5.09%, 9/01/14 (f)		165		117,150
9.88%, 9/01/14		35		27,825
9.00%, 3/01/16		110		78,100
6.46%, 12/01/16 (b)(c)		385		297,456
Tropicana Entertainment LLC, 9.63%, 12/15/14 (a)(h)		315		—
Wynn Las Vegas LLC, 5.38%, 3/15/22 (b)		565		577,713

				11,989,299
Household Durables — 1.7%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (b)		30		30,675
Jarden Corp., 7.50%, 1/15/20	EUR	285		386,255
Libbey Glass, Inc., 6.88%, 5/15/20 (b)	USD	560		597,100
Pulte Group, Inc., 6.38%, 5/15/33		175		152,250
Ryland Group, Inc., 6.63%, 5/01/20		315		332,325
Spie BondCo 3 SCA, 11.00%, 8/15/19	EUR	276		352,360
Standard Pacific Corp.:
10.75%, 9/15/16	USD	1,285		1,551,637
8.38%, 1/15/21		955		1,064,825

				4,467,427



Corporate Bonds	Par (000)		Value

Household Products — 0.3%
Ontex IV SA:
7.50%, 4/15/18 (b)	EUR	130	$	165,967
9.00%, 4/15/19		213		246,478
Spectrum Brands Holdings, Inc., 9.50%, 6/15/18	USD	330		376,613

				789,058
Independent Power Producers & Energy Traders — 3.3%
The AES Corp., 7.38%, 7/01/21		250		286,250
Calpine Corp. (b):
7.25%, 10/15/17		165		176,550
7.50%, 2/15/21		95		105,450
7.88%, 1/15/23		405		457,650
Energy Future Holdings Corp., 10.00%, 1/15/20		1,765		1,945,913
Energy Future Intermediate Holding Co. LLC:
6.88%, 8/15/17 (b)		280		285,950
10.00%, 12/01/20		2,786		3,127,285
11.75%, 3/01/22 (b)		547		582,555
GenOn REMA LLC, 9.24%, 7/02/17		222		238,967
Laredo Petroleum, Inc.:
9.50%, 2/15/19		445		505,075
7.38%, 5/01/22		345		370,875
QEP Resources, Inc., 5.38%, 10/01/22		305		312,625

				8,395,145
Industrial Conglomerates — 2.4%
Sequa Corp. (b):
11.75%, 12/01/15		2,190		2,299,500
13.50%, 12/01/15		3,759		3,984,277

				6,283,777
Insurance — 1.0%
Alliant Holdings I, Inc., 11.00%, 5/01/15 (b)		1,600		1,654,000
CNO Financial Group, Inc., 9.00%, 1/15/18 (b)		339		370,781
Genworth Financial, Inc., 7.63%, 9/24/21		390		398,502
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (b)		235		210,325

				2,633,608
IT Services — 3.1%
Ceridian Corp., 8.88%, 7/15/19 (b)		1,355		1,453,237
Epicor Software Corp., 8.63%, 5/01/19		510		525,300
First Data Corp.:
7.38%, 6/15/19 (b)		1,445		1,491,962
8.88%, 8/15/20 (b)		495		539,550
6.75%, 11/01/20 (b)		815		808,888
8.25%, 1/15/21 (b)		570		565,013
12.63%, 1/15/21		1,528		1,547,100
SunGard Data Systems, Inc.:
7.38%, 11/15/18		500		531,250
7.63%, 11/15/20		550		589,875

				8,052,175
Machinery — 1.1%
SPX Corp., 6.88%, 9/01/17		160		177,600
UR Merger Sub Corp. (b):
5.75%, 7/15/18		236		249,570
7.38%, 5/15/20		405		429,300
7.63%, 4/15/22		1,935		2,089,800

				2,946,270
Media — 13.1%
Affinion Group, Inc., 7.88%, 12/15/18		745		532,675
AMC Networks, Inc., 7.75%, 7/15/21		205		232,163
CCH II LLC, 13.50%, 11/30/16		982		1,075,689
CCO Holdings LLC:
6.50%, 4/30/21		431		462,247
5.25%, 9/30/22		900		891,000
Cengage Learning Acquisitions, Inc., 11.50%, 4/15/20 (b)		1,055		1,110,387

See Notes to Consolidated Financial Statements.



18	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Media (concluded)
Checkout Holding Corp., 16.00%, 11/15/15 (b)(d)	USD	615	$	375,150
Cinemark USA, Inc., 8.63%, 6/15/19		200		224,000
Clear Channel Communications, Inc., 9.00%, 3/01/21		409		350,718
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/17		1,379		1,492,767
Series B, 9.25%, 12/15/17		4,816		5,231,380
Series B, 7.63%, 3/15/20		1,494		1,449,180
Cox Enterprises, Inc. (b):
Loan Close 2, 12.00%, 8/15/18		655		655,708
Loan Close 3, 12.00%, 8/15/18		749		749,663
Shares Loan, 12.00%, 8/15/18		773		773,166
CSC Holdings LLC, 8.50%, 4/15/14		370		406,538
DISH DBS Corp., 5.88%, 7/15/22 (b)		680		685,100
Harron Communications LP, 9.13%, 4/01/20 (b)		300		324,750
Intelsat Jackson Holdings SA:
11.25%, 6/15/16		812		854,630
7.25%, 10/15/20 (b)		750		808,125
Intelsat Luxembourg SA:
11.25%, 2/04/17		560		588,000
11.50%, 2/04/17 (c)		1,100		1,155,000
Interactive Data Corp., 10.25%, 8/01/18		1,235		1,392,462
The Interpublic Group of Cos., Inc., 10.00%, 7/15/17		315		352,013
Kabel Deutschland Vertrieb und Service GmbH & Co. KG, 6.50%, 6/29/18 (b)	EUR	315		426,913
Lamar Media Corp., 5.88%, 2/01/22	USD	130		137,800
Live Nation Entertainment, Inc., 8.13%, 5/15/18 (b)		675		722,250
NAI Entertainment Holdings LLC, 8.25%, 12/15/17 (b)		513		571,995
Nielsen Finance LLC:
11.63%, 2/01/14		45		51,075
7.75%, 10/15/18		2,085		2,345,625
Odeon & UCI Finco Plc, 9.00%, 8/01/18 (b)	GBP	189		297,853
ProQuest LLC, 9.00%, 10/15/18 (b)	USD	460		422,050
ProtoStar I Ltd., 18.00%, 10/15/12 (a)(b)(e)(h)		812		406
Truven Health Analytics, Inc., 10.63%, 6/01/20 (b)		470		501,725
Unitymedia GmbH:
9.63%, 12/01/19	EUR	158		223,326
9.63%, 12/01/19 (b)		530		749,130
9.50%, 3/15/21		385		552,654
Unitymedia Hessen GmbH & Co. KG:
8.13%, 12/01/17 (b)	USD	817		884,402
8.13%, 12/01/17 (b)	EUR	122		165,536
7.50%, 3/15/19		722		994,404
UPC Holding BV, 9.88%, 4/15/18 (b)	USD	400		449,000
UPCB Finance II Ltd.:
6.38%, 7/01/20 (b)	EUR	753		989,744
6.38%, 7/01/20		300		394,320
WaveDivision Escrow LLC/WaveDivision Escrow Corp., 8.13%, 9/01/20 (b)	USD	275		283,250
Ziggo Bond Co. BV, 8.00%, 5/15/18 (b)	EUR	343		473,489
Ziggo Finance BV, 6.13%, 11/15/17 (b)		56		75,191

				33,884,649
Metals & Mining — 3.8%
Eco-Bat Finance Plc, 7.75%, 2/15/17		435		552,614
FMG Resources August 2006 Property Ltd. (b):
6.88%, 2/01/18	USD	325		309,563
6.88%, 4/01/22		165		151,800
Global Brass and Copper, Inc., 9.50%, 6/01/19 (b)		275		289,438
Goldcorp, Inc., 2.00%, 8/01/14 (e)		970		1,117,925
Kaiser Aluminum Corp., 8.25%, 6/01/20 (b)		205		217,300
New Gold, Inc., 7.00%, 4/15/20 (b)		140		147,350
New World Resources NV, 7.88%, 5/01/18	EUR	627		784,697



Corporate Bonds	Par (000)		Value

Metals & Mining (concluded)
Newmont Mining Corp., Series A, 1.25%, 7/15/14 (e)	USD	1,345	$	1,709,831
Novelis, Inc., 8.75%, 12/15/20		3,045		3,402,787
Schmolz + Bickenbach Luxembourg SA, 9.88%, 5/15/19	EUR	295		299,624
Steel Dynamics, Inc., 6.38%, 8/15/22 (b)	USD	225		232,875
Taseko Mines Ltd., 7.75%, 4/15/19		385		366,713
Vedanta Resources Plc, 8.25%, 6/07/21 (b)		245		233,975

				9,816,492
Multiline Retail — 0.3%
Dollar General Corp., 4.13%, 7/15/17		727		756,080
Oil, Gas & Consumable Fuels — 10.9%
Access Midstream Partners LP, 6.13%, 7/15/22		250		259,375
Alpha Appalachia Holdings, Inc., 3.25%, 8/01/15 (e)		746		669,535
Alpha Natural Resources, Inc.:
6.00%, 6/01/19		290		261,000
6.25%, 6/01/21		240		214,800
Aurora USA Oil & Gas, Inc., 9.88%, 2/15/17 (b)		610		637,450
Berry Petroleum Co., 6.38%, 9/15/22		375		399,375
BreitBurn Energy Partners LP, 7.88%, 4/15/22 (b)		235		239,700
CCS, Inc., 11.00%, 11/15/15 (b)		520		538,200
Chaparral Energy, Inc., 7.63%, 11/15/22 (b)		205		216,788
Chesapeake Energy Corp.:
7.25%, 12/15/18		15		15,713
6.63%, 8/15/20		165		169,538
6.88%, 11/15/20		160		166,000
6.13%, 2/15/21		545		540,912
Coffeyville Resources LLC, 9.00%, 4/01/15 (b)		103		109,695
Concho Resources, Inc.:
7.00%, 1/15/21		150		167,250
6.50%, 1/15/22		100		108,000
5.50%, 10/01/22		430		443,975
Consol Energy, Inc., 8.25%, 4/01/20		1,625		1,750,937
Continental Resources, Inc., 7.13%, 4/01/21		340		380,800
Copano Energy LLC, 7.13%, 4/01/21		275		287,375
Crosstex Energy LP:
8.88%, 2/15/18		165		176,138
7.13%, 6/01/22 (b)		140		139,300
Crown Oil Partners IV LP, 15.00%, 3/07/15		545		545,482
Denbury Resources, Inc., 8.25%, 2/15/20		42		47,670
Energy XXI Gulf Coast, Inc.:
9.25%, 12/15/17		510		568,650
7.75%, 6/15/19		815		865,937

EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (b)		315		337,837
EP Energy LLC/Everest Acquisition Finance, Inc., 7.75%, 9/01/22 (b)		195		195,488
EV Energy Partners LP, 8.00%, 4/15/19		140		144,550
Hilcorp Energy I LP, 7.63%, 4/15/21 (b)		690		759,000
Holly Energy Partners LP, 6.50%, 3/01/20 (b)		145		151,525
Kodiak Oil & Gas Corp., 8.13%, 12/01/19 (b)		320		340,000
Linn Energy LLC:
6.50%, 5/15/19 (b)		90		89,550
6.25%, 11/01/19 (b)		1,865		1,841,687
8.63%, 4/15/20		205		221,400
7.75%, 2/01/21		185		192,863
MarkWest Energy Partners LP:
6.25%, 6/15/22		75		79,688
5.50%, 2/15/23		200		204,500
Newfield Exploration Co., 6.88%, 2/01/20		715		781,137
Northern Oil and Gas, Inc., 8.00%, 6/01/20 (b)		285		290,700
Oasis Petroleum, Inc.:
7.25%, 2/01/19		240		253,200
6.50%, 11/01/21		270		275,400

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	19

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Oil, Gas & Consumable Fuels (concluded)
Offshore Group Investments Ltd.:
11.50%, 8/01/15 (b)	USD	1,215	$	1,342,575
11.50%, 8/01/15		300		331,500
OGX Petroleo e Gas Participacoes SA (b):
8.50%, 6/01/18		2,057		1,825,587
8.38%, 4/01/22		640		544,000
PBF Holding Co. LLC, 8.25%, 2/15/20 (b)		275		287,375
PetroBakken Energy Ltd., 8.63%, 2/01/20 (b)		1,105		1,129,862
Petroleum Geo-Services ASA, 7.38%, 12/15/18 (b)		530		565,775
Pioneer Natural Resources Co.:
6.88%, 5/01/18		425		514,547
7.50%, 1/15/20		135		168,840
Range Resources Corp.:
8.00%, 5/15/19		345		381,225
5.75%, 6/01/21		900		957,375
5.00%, 8/15/22		403		419,624
Sabine Pass Liquified Natural Gas LP, 7.50%, 11/30/16		560		599,200
Samson Investment Co., 9.75%, 2/15/20 (b)		78		80,340
SandRidge Energy, Inc.:
7.50%, 3/15/21 (b)		630		637,875
7.50%, 3/15/21		230		232,875
8.13%, 10/15/22 (b)		235		245,575
7.50%, 2/15/23 (b)		515		517,575
SESI LLC:
6.38%, 5/01/19		300		318,000
7.13%, 12/15/21		215		239,188
SM Energy Co.:
6.63%, 2/15/19		120		125,400
6.50%, 11/15/21		240		250,800
6.50%, 1/01/23 (b)		115		119,888
Vanguard Natural Resources, 7.88%, 4/01/20		250		250,000

				28,163,121
Paper & Forest Products — 1.3%
Ainsworth Lumber Co. Ltd., 11.00%, 7/29/15 (b)(c)		372		338,190
Boise Paper Holdings LLC:
9.00%, 11/01/17		55		60,913
8.00%, 4/01/20		105		116,025
Clearwater Paper Corp.:
10.63%, 6/15/16		370		413,475
7.13%, 11/01/18		535		584,487
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (b)		315		326,025
NewPage Corp., 11.38%, 12/31/14 (a)(h)		1,935		1,310,962
Sappi Papier Holding GmbH (b):
8.38%, 6/15/19		200		210,500
6.63%, 4/15/21		120		111,000

				3,471,577
Pharmaceuticals — 1.0%
Capsugel Finance Co. SCA:
9.88%, 8/01/19 (b)	EUR	200		281,118
9.88%, 8/01/19		100		140,559
Pharmaceutical Product Development, Inc., 9.50%, 12/01/19 (b)	USD	160		178,400
Spectrum Brands, Inc., 6.75%, 3/15/20 (b)		240		252,000
Valeant Pharmaceuticals International (b):
6.50%, 7/15/16		1,140		1,202,700
6.75%, 8/15/21		520		527,800

				2,582,577
Professional Services — 0.4%
FTI Consulting, Inc., 6.75%, 10/01/20		850		907,375



Corporate Bonds	Par (000)		Value

Real Estate Investment Trusts (REITs) — 0.7%
Felcor Lodging LP, 6.75%, 6/01/19	USD	1,110	$	1,190,475
The Rouse Co. LP, 6.75%, 11/09/15		480		505,800

				1,696,275
Real Estate Management & Development — 2.3%
CBRE Services, Inc., 6.63%, 10/15/20		310		338,675
Crescent Resources LLC/Crescent Ventures, Inc., 10.25%, 8/15/17 (b)		650		666,250
Forest City Enterprises, Inc., 7.63%, 6/01/15		392		389,795
Realogy Corp.:
11.50%, 4/15/17		360		382,500
12.00%, 4/15/17		90		94,275
7.88%, 2/15/19 (b)		1,895		1,951,850
7.63%, 1/15/20 (b)		465		506,850
9.00%, 1/15/20 (b)		305		329,400
Shea Homes LP, 8.63%, 5/15/19		1,145		1,273,812

				5,933,407
Road & Rail — 1.3%
Florida East Coast Railway Corp., 8.13%, 2/01/17		410		430,500
The Hertz Corp.:
7.50%, 10/15/18		505		544,769
6.75%, 4/15/19 (b)		265		278,250
7.38%, 1/15/21		380		413,250
Hertz Holdings Netherlands BV:
8.50%, 7/31/15	EUR	172		234,730
8.50%, 7/31/15 (b)		1,031		1,407,019

				3,308,518
Semiconductors & Semiconductor Equipment — 0.2%
Spansion LLC, 7.88%, 11/15/17	USD	540		526,500
Software — 1.3%
Audatex North America, Inc., 6.75%, 6/15/18 (b)		480		514,800
Infor US, Inc., 9.38%, 4/01/19 (b)		1,520		1,645,400
Nuance Communications, Inc., 5.38%, 8/15/20 (b)		805		823,112
Sophia LP, 9.75%, 1/15/19 (b)		408		438,600

				3,421,912
Specialty Retail — 2.8%
Asbury Automotive Group, Inc., 8.38%, 11/15/20		335		370,175
Claire’s Stores, Inc., 9.00%, 3/15/19 (b)		450		466,875
House of Fraser Funding Plc, 8.88%, 8/15/18	GBP	480		677,377
Limited Brands, Inc.:
8.50%, 6/15/19	USD	745		894,000
5.63%, 2/15/22		150		157,875
Party City Holdings, Inc., 8.88%, 8/01/20 (b)		729		770,917
Penske Automotive Group, Inc., 5.75%, 10/01/22 (b)		495		504,900
Phones4u Finance Plc, 9.50%, 4/01/18 (b)	GBP	370		566,942
QVC, Inc. (b):
7.13%, 4/15/17	USD	210		222,122
7.50%, 10/01/19		565		626,028
7.38%, 10/15/20		270		300,853
5.13%, 7/02/22		392		410,872
Sally Holdings LLC:
6.88%, 11/15/19		500		558,750
5.75%, 6/01/22		400		430,500
Sonic Automotive, Inc., 9.00%, 3/15/18		345		376,913

				7,335,099
Textiles, Apparel & Luxury Goods — 0.2%
Levi Strauss & Co., 6.88%, 5/01/22		400		415,000
Trading Companies & Distributors — 0.6%
Ashtead Capital, Inc., 6.50%, 7/15/22 (b)		455		473,200
Doric Nimrod Air Finance Alpha Ltd. (b):
Series 2012-1, Class A, 5.13%, 11/30/24		550		558,250
Series 2012-1, Class B, 6.50%, 5/30/21		530		536,265

				1,567,715

See Notes to Consolidated Financial Statements.



20	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Corporate Bonds	Par (000)		Value

Transportation Infrastructure — 0.2%
Aguila 3 SA, 7.88%, 1/31/18 (b)	USD	398	$	419,393
Wireless Telecommunication Services — 4.2%
Cricket Communications, Inc.:
7.75%, 5/15/16		226		238,430
7.75%, 10/15/20		205		198,850
Digicel Group Ltd. (b):
9.13%, 1/15/15		1,711		1,727,738
8.25%, 9/01/17		1,135		1,203,100
10.50%, 4/15/18		900		972,000
Matterhorn Mobile Holdings SA, 8.25%, 2/15/20	EUR	190		258,698
MetroPCS Wireless, Inc., 6.63%, 11/15/20	USD	710		734,850
NII Capital Corp., 7.63%, 4/01/21		324		250,290
SBA Telecommunications, Inc., 5.75%, 7/15/20 (b)		262		273,790
Sprint Capital Corp., 6.88%, 11/15/28		1,876		1,697,780
Sprint Nextel Corp. (b):
9.00%, 11/15/18		1,590		1,876,200
7.00%, 3/01/20		1,220		1,335,900

				10,767,626
Total Corporate Bonds – 105.7%				273,331,003



Floating Rate Loan Interests (f)
Airlines — 0.2%
Delta Air Lines, Inc., Credit Term Loan B, 5.50%, 4/20/17		395		397,607
Auto Components — 0.5%
Federal-Mogul Corp., Term Loan B, 2.17%—2.18%, 12/29/14		895		854,406
Schaeffler AG, Term Loan C2, 6.00%, 1/27/17		360		361,051

				1,215,457
Building Products — 0.1%
Goodman Global, Inc., Term Loan (Second Lien), 9.00%, 10/30/17		318		322,360
Capital Markets — 0.7%
American Capital Holdings, Term Loan, 5.50%, 7/19/16		743		745,786
Nuveen Investments, Inc.:
Incremental Term Loan, 7.25%, 5/13/17		600		602,700
Second Lien Term Loan, 8.25%, 2/28/19		380		382,375

				1,730,861
Chemicals — 0.6%
Evergreen Acqco 1 LP, Term Loan B, 6.25%, 7/09/19		155		156,454
INEOS US Finance LLC, 6 Year Term Loan, 6.50%, 5/04/18		1,047		1,048,904
PQ Corp., Term Loan B, 3.98%, 7/30/14		313		307,178

				1,512,536
Communications Equipment — 0.8%
Avaya, Inc., Term Loan B1, 3.18%, 10/24/14		229		219,639
Zayo Group, LLC, Term Loan B, 7.13%, 7/02/19		1,905		1,932,985

				2,152,624
Construction & Engineering — 0.7%
Safway Services LLC, Mezzanine Loan, 15.63%, 12/16/17		1,750		1,750,000
Construction Materials — 0.4%
HD Supply, Inc., Senior Debt B, 7.25%, 10/12/17		1,045		1,067,645



Floating Rate Loan Interests (f)	Par (000)		Value

Consumer Finance — 1.5%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17	USD	3,940	$	3,805,055
Diversified Consumer Services — 0.1%
Laureate Education, Inc., Extended Term Loan, 5.25%, 6/18/18		134		131,018
ServiceMaster Co.:
Delayed Draw Term Loan, 2.74%, 7/24/14		8		7,539
Term Loan, 2.75%—2.97%, 7/24/14		76		75,702

				214,259
Diversified Financial Services — 0.5%
Residential Capital LLC:
DIP Term Loan A1, 5.00%, 11/18/13		1,150		1,152,875
DIP Term Loan A2, 6.75%, 11/18/13		170		171,984

				1,324,859
Diversified Telecommunication Services — 0.5%
Level 3 Financing, Inc.:
2016 Term Loan B, 4.75%, 2/01/16		645		646,290
2019 Term Loan B, 5.25%, 8/01/19		530		530,774

				1,177,064
Electronic Equipment, Instruments & Components — 0.1%
CDW LLC, Extended Term Loan, 4.00%, 7/14/17		251		247,978
Energy Equipment & Services — 1.0%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		1,325		1,374,396
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		963		1,007,771
Tervita Corp., Incremental Term Loan, 6.50%, 10/17/14		249		248,544

				2,630,711
Food & Staples Retailing — 0.0%
US Foods, Inc.(FKA U.S. Foodservice, Inc.), Extended Term Loan B, 5.75%, 3/31/17		69		66,935
Food Products — 0.1%
Advance Pierre Foods, Term Loan (Second Lien), 11.75%, 9/29/17		200		201,200
Health Care Equipment & Supplies — 0.3%
Bausch & Lomb, Inc., Term Loan B, 5.25%, 5/17/19		440		441,465
LHP Hospital Group, Inc., Term Loan, 9.00%, 7/03/18		260		261,950

				703,415
Health Care Providers & Services — 0.5%
Harden Healthcare LLC:
Add on Term Loan A, 7.75%, 3/02/15		369		357,628
Term Loan A, 8.50%, 3/02/15		323		316,806
inVentiv Health, Inc., Combined Term Loan, 6.50%, 8/04/16		698		649,917

				1,324,351
Hotels, Restaurants & Leisure — 1.2%
Caesars Entertainment Operating Co., Inc.:
Extended Term Loan B6, 5.49%, 1/26/18		185		162,626
Incremental Term Loan B4, 9.50%, 10/31/16		448		456,533
Term Loan B1, 3.24%, 1/28/15		371		352,042
Term Loan B2, 3.24%, 1/28/15		409		388,020
Term Loan B3, 3.24%—3.46%, 1/28/15		895		848,628
OSI Restaurant Partners LLC:
Revolver, 2.49%—4.50%, 6/14/13		9		8,463
Term Loan B, 2.56%, 6/14/14		86		85,297
Sabre, Inc., Non Extended Initial Term Loan, 2.23%, 9/30/14		57		56,665

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	21

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Floating Rate Loan Interests (f)	Par (000)		Value

Hotels, Restaurants & Leisure (concluded)
Station Casinos, Inc., Term Loan B1, 3.23%, 6/17/16		USD 785	$	746,113
Travelport LLC:
Extended Tranche A Term Loan, 6.44%, 9/28/12		177		53,166
Extended Tranche B Term Loan, 13.94%, 12/01/16		571		45,708

				3,203,261
Industrial Conglomerates — 0.1%
Sequa Corp.:
Incremental Term Loan, 6.25%, 12/03/14		164		163,986
Term Loan, 3.69%—3.72%, 12/03/14		140		139,038

				303,024
IT Services — 0.3%
Ceridian Corp., Extended Term Loan, 5.99%, 5/09/17		62		62,323
First Data Corp., 2018 Term Loan B, 4.24%, 3/23/18		720		679,802

				742,125
Leisure Equipment & Products — 0.2%
Eastman Kodak Co., DIP Term Loan B, 8.50%, 7/19/13		600		594,453
Machinery — 0.5%
Navistar International Corp., Term Loan B, 7.00%, 8/17/17		620		623,175
Rexnord Corp., Term Loan B, 5.00%, 4/02/18		542		544,406

				1,167,581
Media — 4.7%
Affinion Group, Inc., Term Loan B, 5.00%, 7/15/15		40		33,616
Cengage Learning Acquisitions, Inc.:
Non-Extended Term Loan, 2.49%, 7/03/14		293		270,168
Tranche 1 Incremental, Term Loan, 7.50%, 7/03/14		1,432		1,386,000
Cequel Communications LLC, Term Loan B, 4.00%, 2/14/19		399		398,170
Clear Channel Communications, Inc.:
Term Loan B, 3.88%, 1/28/16		1,774		1,373,868
Term Loan C, 3.88%, 1/28/16		348		264,946
EMI Music Publishing Ltd., Term Loan B, 5.50%, 6/29/18		400		402,700
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		5,706		5,724,099
Interactive Data Corp., Term Loan B, 4.50%, 2/12/18		379		379,596
Newsday LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		1,375		1,382,452
Thomson Reuters (Healthcare), Inc., Term Loan B, 6.75%, 6/06/19		345		347,443
Univision Communications, Inc., Extended Term Loan, 4.48%, 3/31/17		279		269,452

				12,232,510
Metals & Mining — 0.2%
Constellium Holding Co. BV, Term Loan B, 9.25%, 5/25/18		390		382,200
Multiline Retail — 0.5%
HEMA Holding BV, Mezzanine, 8.64%, 7/05/17	EUR	1,154		1,205,001
Oil, Gas & Consumable Fuels — 0.8%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17	USD	1,090		1,092,343
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		926		926,279

				2,018,622



Floating Rate Loan Interests (f)	Par (000)		Value

Paper & Forest Products — 0.4%
Ainsworth Lumber Co. Ltd., Term Loan, 5.25%, 6/26/14 (g)	USD	360	$	348,300
Verso Paper Finance Holdings LLC, Term Loan, 6.49%—7.24%, 2/01/13		1,420		710,209

				1,058,509
Pharmaceuticals — 0.1%
Pharmaceutical Product Development, Inc., Term Loan B, 6.25%, 12/05/18		288		291,496
Real Estate Investment Trusts (REITs) — 0.5%
iStar Financial, Inc.:
Term Loan A1, 5.00%, 6/28/13		1,388		1,389,104
Term Loan A2, 7.00%, 6/30/14		5		5,005

				1,394,109
Real Estate Management & Development — 0.4%
Realogy Corp.:
Extended Letter of Credit Loan, 4.50%, 10/10/16		104		99,974
Extended Term Loan, 4.49%, 10/10/16		689		664,920
Stockbridge SBE Holdings LLC, Term Loan B, 13.00%, 5/02/17		170		169,150

				934,044
Semiconductors & Semiconductor Equipment — 0.0%
NXP BV, Term Loan A-2, 5.50%, 3/03/17		65		65,443
Software — 0.4%
Infor US, Inc. (FKA Lawson Software, Inc.), Term Loan B, 6.25%, 4/05/18		1,127		1,138,762
Specialty Retail — 0.1%
Claire’s Stores, Inc., Term Loan B, 2.98%—3.20%, 5/29/14		356		349,553
Textiles, Apparel & Luxury Goods — 0.4%
Ascend Performance Materials LLC, Term Loan B, 6.75%, 4/10/18		1,047		1,037,771
Wireless Telecommunication Services — 0.0%
Crown Castle International Corp., Term Loan B, 4.00%, 1/31/19		54		54,320
Total Floating Rate Loan Interests — 19.4%				50,017,701



Other Interests (i)	Beneficial Interest (000)
Chemicals — 0.0%
Wellman Holdings, Inc., Litigation Trust Certificate		2,650		26
Media — 0.0%
Adelphia Escrow (a)		700		7
Adelphia Recovery Trust (a)		878		88

				95
Total Other Interests — 0.0%				121



Preferred Securities

Capital Trusts — 0.2%	Par (000)
Insurance — 0.2%
Genworth Financial, Inc., 6.15%, 11/15/66 (f)		790		474,000

See Notes to Consolidated Financial Statements.



22	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments
(continued)

BlackRock Corporate High Yield Fund, Inc. (COY)

(Percentages shown are based on Net Assets)



Preferred Stocks	Shares		Value

Auto Components — 0.4%
Dana Holding Corp., 4.00% (b)(e)		7,570	$	884,744
Diversified Financial Services — 1.4%
Ally Financial, Inc., 7.00% (b)		4,023		3,663,319
Total Preferred Stocks – 1.8%				4,548,063



Trust Preferreds
Diversified Financial Services — 0.8%
GMAC Capital Trust I, Series 2, 8.13%, 2/15/40 (b)		70,660		1,746,206
RBS Capital Funding Trust VII, 6.08% (a)(f)(h)(j)		26,500		454,210
Total Trust Preferreds — 0.8%				2,200,416
Total Preferred Securities — 2.8%				7,222,479



Warrants (k)
Health Care Providers & Services — 0.0%
HealthSouth Corp. (Expires 1/16/14)		29,930		—
Media — 0.0%
New Vision Holdings LLC (Expires 9/30/14)		15		—
Software — 0.0%
Bankruptcy Management Solutions, Inc. (Expires 9/28/17)		312		—
HMH Holdings/EduMedia (Issued/Exercisable 3/09/10, 19 Shares for 1 Warrant, Expires 6/22/19, Strike Price $42.27)		1,070		—
Total Warrants – 0.0%				—
Total Long-Term Investments (Cost — $345,014,624) — 136.0%				351,637,724



Options Purchased	Contracts
Over-the-Counter Call Options — 0.0%
Marsico Parent Superholdco LLC, Strike Price USD 942.86, Expires 12/14/19, Broker Goldman Sachs Group, Inc.		17		—
Total Options Purchased (Cost — $16,622) — 0.0%				—
Total Investments (Cost — $345,031,246) — 136.0%				351,637,724
Liabilities in Excess of Other Assets — (36.0)%				(93,146,505	)

Net Assets — 100.0%			$	258,491,219

(a)

Non-income producing security.

(b)

Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c)

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

(d)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(e)

Convertible security.

(f)

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

(g)

When-issued security. Unsettled when-issued transaction was as follows:


Counterparty	Value		Unrealized Appreciation
Goldman Sachs Group, Inc.	$	1,851,863	$	15,413

(h)

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

(i)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(j)

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

(k)

Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

Investments in issuers considered to be an affiliate of the Fund during the six months ended August 31, 2012, for purposes of Section 2(a)(3) of the 1940 Act, as amended, were as follows:


Affiliate	Shares Held at February 29, 2012		Net Activity			Shares Held at August 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		2,264,805		(2,264,805	)		—	$	1,117

Financial futures contracts sold as of August 31, 2012 were as follows:


Contracts	Issue	Exchange	Expiration	Notional Value		Unrealized Depreciation
108	S&P 500 Index E-Mini	Chicago Mercantile	September 2012	$	7,587,540	$	(522,208	)

Foreign currency exchange contracts as of August 31, 2012 were as follows:


Currency Purchased		Currency Sold			Counter party	Settle ment Date		Unrealized Appreci ation (Depreci ation)
GBP	103,000		USD	159,655	Credit Suisse Group AG		10/17/12	$	3,869
GBP	148,000		USD	232,085	UBS AG		10/17/12		2,883
USD	68,178		AUD	67,500	Citigroup, Inc.		10/17/12		(1,288	)
USD	119,010		AUD	117,000	UBS AG		10/17/12		(1,396	)
USD	2,596,553		CAD	2,637,000	UBS AG		10/17/12		(76,153	)
USD	145,793		GBP	93,000	Deutsche Bank AG		10/17/12		(1,855	)
USD	3,797,156		GBP	2,446,000	UBS AG		10/17/12		(86,155	)
USD	92,521		GBP	59,000	UBS AG		10/17/12		(1,149	)
USD	86,393		GBP	55,000	UBS AG		10/17/12		(926	)
EUR	50,000		USD	61,834	Citigroup, Inc.		10/22/12		1,088
EUR	181,000		USD	221,660	UBS AG		10/22/12		6,120
EUR	699,000		USD	867,358	UBS AG		10/22/12		12,297
USD	18,786,611		EUR	15,323,500	Citigroup, Inc.		10/22/12		(497,226	)
USD	222,494		EUR	181,000	Citigroup, Inc.		10/22/12		(5,285	)
USD	385,156		EUR	310,000	Citigroup, Inc.		10/22/12		(4,963	)
USD	126,569		EUR	102,000	Royal Bank of Scotland Group Plc		10/22/12		(1,792	)
USD	512,701		EUR	415,000	UBS AG		10/22/12		(9,556	)
USD	260,389		EUR	211,000	UBS AG		10/22/12		(5,144	)
USD	224,679		EUR	182,000	UBS AG		10/22/12		(4,358	)
USD	126,612		EUR	103,000	UBS AG		10/22/12		(3,009	)
Total								$	(673,998	)

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	23


Consolidated Schedule of Investments (continued)		BlackRock Corporate High Yield Fund, Inc. (COY)

Credit default swaps on single-name issues - buy protection outstanding as of August 31, 2012 were as follows:


Issuer	Pay Fixed Rate	Counter party	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	95	$	(7,042	)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	80		(6,570	)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	155		(11,042	)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	85		(4,339	)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	80		(4,585	)
Republic of Hungary	1.00%	Deutsche Bank AG	12/20/15	$	280		5,093
Israel (State of)	1.00%	Deutsche Bank AG	3/20/17	$	210		(4,707	)
Israel Government Bond	1.00%	Deutsche Bank AG	3/20/17	$	625		(14,401	)
Total						$	(47,593	)

Credit default swaps on single-name issues — sold protection outstanding as of August 31, 2012 were as follows:


Issuer	Receive Fixed Rate			Counter party	Expira tion Date		Issuer Credit Rating¹		Notional Amount (000)²		Unrea lized Appreci ation (Depreci ation)
Air Lease Corp.		5.00	%	Goldman Sachs Group, Inc.		2/14/13		NR	$	500	$	8,290
CIT Group, Inc.		5.00	%	Deutsche Bank AG		9/20/15		BB-	$	3,100		403,195
ARAMARK Corp.		5.00	%	Goldman Sachs Group, Inc.		3/20/16		B	$	500		41,882
ARAMARK Corp.		5.00	%	Goldman Sachs Group, Inc.		6/20/16		B	$	300		25,338
ARAMARK Corp.		5.00	%	Goldman Sachs Group, Inc.		6/20/16		B	$	300		27,000
ARAMARK Corp.		5.00	%	Credit Suisse Group AG		9/20/16		B	$	125		14,933
ARAMARK Corp.		5.00	%	Goldman Sachs Group, Inc.		9/20/16		B	$	350		30,667
ARAMARK Corp.		5.00	%	Goldman Sachs Group, Inc.		9/20/16		B	$	125		14,522
ARAMARK Corp.		5.00	%	Deutsche Bank AG		3/20/17		B	$	185		12,212
Crown Castle International Corp.		7.25	%	Deutsche Bank AG		3/20/17		B–	$	430		6,129
Ford Motor Co.		5.00	%	Deutsche Bank AG		3/20/17		BB+	$	1,300		57,262
Hertz Corp.		5.00	%	Citigroup, Inc.		6/20/17		B	$	165		(5,451	)
Goodyear Tire & Rubber Co.		5.00	%	Deutsche Bank AG		6/20/17		B+	$	290		13,513
Goodyear Tire & Rubber Co.		5.00	%	Goldman Sachs Group, Inc.		6/20/17		B+	$	300		10,572
CCO Holdings LLC		8.00	%	Deutsche Bank AG		9/20/17		BB–	$	1,500		122,198
Level 3 Communic ations, Inc.		5.00	%	Goldman Sachs Group, Inc.		6/20/19		B–	$	900		24,602
Total											$	806,864

Using S&P’s rating.

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

Credit default swaps on traded indexes — buy protection outstanding as of August 31, 2012 were as follows:


Index	Pay Fixed Rate			Counter party	Expiration Date		Notional Amount (000)		Unrealized Depreciation
Dow Jones CDX North America High Yield Series 18		5.00	%	Credit Suisse Group AG		6/20/17	$	1,683	$	(5,458	)

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

Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivative financial instrument. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

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

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 Fund’s own assumptions used in determining the fair value of investments and derivative financial instrument)

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to Note 1 of the Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.



24	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (continued)		BlackRock Corporate High Yield Fund, Inc. (COY)

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of August 31, 2012:


	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks	$	16,544,041		$	668,526		$	3,853,853	$	21,066,420
Corporate Bonds		—			269,237,177			4,093,826		273,331,003
Floating Rate Loan Interests		—			42,446,578			7,571,123		50,017,701
Other Interests		88			—			33		121
Preferred Securities		2,200,416			5,022,063			—		7,222,479

Total	$	18,744,545		$	317,374,344		$	15,518,835	$	351,637,724


	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments¹
Assets:
Credit contracts		—		$	277,596		$	539,812	$	817,408
Foreign currency exchange contracts		—			26,257			—		26,257
Liabilities:
Credit contracts		—			(63,595	)		—		(63,595	)
Equity contracts	$	(522,208	)		—			—		(522,208	)
Foreign currency exchange contracts		—			(700,255	)		—		(700,255	)

Total	$	(522,208	)	$	(459,997	)	$	539,812	$	(442,393	)

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

Certain of the Fund’s assets and liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of August 31, 2012, such assets and liabilities are categorized within the disclosure hierarchy as follows:


	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	1,506,487		—			—	$	1,506,487
Cash pledged as collateral for financial futures contracts		432,000		—			—		432,000
Foreign currency at value		260,020		—			—		260,020
Liabilities:
Cash received as collateral for swaps		—	$	(600,000	)		—		(600,000	)
Loan payable		—		(98,000,000	)		—		(98,000,000	)

Total	$	2,198,507	$	(98,600,000	)		—	$	(96,401,493	)

As of February 29, 2012, the Fund used observable inputs in determining the value of certain equity securities. During the year, the Fund began valuing these securities using unadjusted price quotations from an exchange. As a result, investments with a beginning of period value of $6,894,626 transferred from Level 2 to Level 1 in the disclosure hierarchy.

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	25


Consolidated Schedule of Investments (continued)		BlackRock Corporate High Yield Fund, Inc. (COY)

The following table summarizes the valuation techniques used and unobservable inputs developed by the BlackRock Global Valuation Methodologies Committee (“Global Valuation Committee”) to determine the fair value of certain of the Fund’s Level 3 investments as of August 31, 2012:

Value

Valuation Techniques

Unobservable Inputs¹

Range of
Unobservable

Inputs

Weighted

Average of
Unobservable

Inputs²

Assets:

Common Stocks

3,853,848

Market Comparable Companies

EBITDA Multiple

5.9x

Forward EBITDA Multiple

4.6x

Cost

N/A³

—

Corporate Bonds

3,847,720

Market Comparable Companies

Yield

7.00%—9.67%

8.76%

EBITDA Multiple

6.0x

Cost

N/A³

—

Floating Rate Loan Interests

3,134,643

Market Comparable Companies

Illiquidity Discount

50%

Yield

9.65%

Cost

N/A³

—

Total⁴

10,836,211

A change to the unobservable input may result in a significant change to the value of the investment as follows:


Unobservable Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
EBITDA Multiple	Increase	Decrease
Forward EBITDA Multiple	Increase	Decrease
Illiquidity Discount	Decrease	Increase
Yield	Decrease	Increase

Unobservable inputs are weighted based on the fair value of the investments included in the range.

The Fund fair values certain of its Level 3 investments using prior transaction prices (acquisition cost), although the transaction may not have occurred during the current reporting period. In such cases, these investments are generally privately held investments. There may not be a secondary market, and/or there are a limited number of investors. The determination to fair value such investments at cost is based upon factors consistent with the principles of fair value measurement that are reasonably available to the Global Valuation Committee, or its delegate. Valuations are reviewed utilizing available market information to determine if the carrying value should be adjusted. Such market data may include, but is not limited to, observations of the trading multiples of public companies considered comparable to the private companies being valued, financial or operational information released by the company, and/or news or corporate events that affect the investment. Valuations may be adjusted to account for company-specific issues, the lack of liquidity inherent in a nonpublic investment and the fact that comparable public companies are not identical to the investments being fair valued by the Fund.

⁴

Does not include Level 3 investments with values derived utilizing prices from recent prior transactions or third party pricing information without adjustment for which such inputs are unobservable. See above valuation input table for values of such Level 3 investments. A significant change in third party pricing information could result in a significantly lower or higher value in such Level 3 investments.

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


	Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests			Total
Assets:
Opening balance, as of February 29, 2012	$	4,138,509		$	4,181,040		$	5,454,878		$	34		$	13,774,461
Transfers into Level 3⁵		—			—			2,003,700			—			2,003,700
Transfers out of Level 3⁶		(35,343	)		—			(201,394	)		—			(236,737	)
Accrued discounts/premiums		—			1,564			62,000			—			63,564
Net realized gain (loss)		(1,186,175	)		—			(328,514	)		—			(1,514,689	)
Net change in unrealized appreciation/depreciation⁷		790,896			(53,051	)		290,432			(1	)		1,028,276
Purchases		145,977			53,465			1,615,477			—			1,814,919
Sales		(11	)		(89,192	)		(1,325,456	)		—			(1,414,659	)

Closing Balance, as of August 31, 2012	$	3,853,853		$	4,093,826		$	7,571,123		$	33		$	15,518,835

⁵

As of February 29, 2012, the Fund used observable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $2,003,700 transferred from Level 2 to Level 3 in the disclosure hierarchy.

⁶

As of February 29, 2012, the Fund used significant unobservable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $236,737 transferred from Level 3 to Level 2 in the disclosure hierarchy.

⁷

Included in the related net change in unrealized appreciation/depreciation in the Consolidated Statements of Operations. The change in unrealized appreciation/depreciation on investments still held as of August 31, 2012 was $(440,350).


Consolidated Schedule of Investments (concluded)		BlackRock Corporate High Yield Fund, Inc. (COY)

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


	Credit Contracts
Assets/Liabilities:
Opening balance, as of February 29, 2012	$	216,962
Transfers into Level 3¹		—
Transfers out of Level 3¹		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation/depreciation²		322,850
Purchases		—
Issuances³		—
Sales		—
Settlements⁴		—

Closing Balance, as of August 31, 2012	$	539,812

Transfers into and transfers out of Level 3 represent the beginning of the reporting period value.

Included in the related net change in unrealized appreciation/depreciation in the Consolidated Statements of Operations. The change in unrealized appreciation/depreciation on derivative financial instruments still held as of August 31, 2012 was $322,850.

Issuances represent upfront cash received on certain derivative financial instruments.

⁴

Settlements represent periodic contractual cash flows and/or cash flows to terminate certain derivative financial instruments.

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	27


Consolidated Schedule of Investments		BlackRock Corporate High Yield Fund III, Inc. (CYE)
August 31, 2012 (Unaudited)		(Percentages shown are based on Net Assets)


Common Stocks	Shares		Value

Auto Components — 2.0%
Dana Holding Corp.		36,200	$	494,492
Delphi Automotive Plc (a)		171,704		5,200,902

				5,695,394
Biotechnology — 0.0%
Ironwood Pharmaceuticals, Inc. (a)		7,130		89,339
Capital Markets — 0.4%
American Capital Ltd. (a)		53,273		585,470
E*Trade Financial Corp. (a)		74,600		639,322

				1,224,792
Chemicals — 0.2%
ADA-ES, Inc. (a)		1,820		42,679
CF Industries Holdings, Inc.		1,000		207,010
Huntsman Corp.		14,000		201,320

				451,009
Commercial Banks — 0.2%
CIT Group, Inc. (a)		17,270		652,115
Communications Equipment — 0.3%
Loral Space & Communications Ltd.		12,778		938,161
Diversified Financial Services — 0.5%
Kcad Holdings I Ltd.		220,203,372		1,460,169
Diversified Telecommunication Services — 0.2%
Level 3 Communications, Inc. (a)		22,280		480,134
Electrical Equipment — 0.0%
Medis Technologies Ltd.		70,784		212
Energy Equipment & Services — 0.9%
Laricina Energy Ltd. (a)		35,294		1,521,679
Osum Oil Sands Corp. (a)		82,000		1,039,817

				2,561,496
Hotels, Restaurants & Leisure — 0.0%
Travelport Worldwide Ltd.		76,940		10,002
Media — 2.2%
Belo Corp., Class A		23,782		173,609
Charter Communications, Inc. (a)		70,305		5,469,729
Clear Channel Outdoor Holdings, Inc., Class A (a)		9,964		52,311
Cumulus Media, Inc., Class A (a)		93,867		260,011
DISH Network Corp., Class A		5,900		188,741

				6,144,401
Metals & Mining — 0.1%
African Minerals Ltd. (a)		47,050		188,299
Oil, Gas & Consumable Fuels — 0.1%
African Petroleum Corp. Ltd. (a)		196,300		251,481
Paper & Forest Products — 0.3%
Ainsworth Lumber Co. Ltd. (a)(b)		140,415		307,681
Ainsworth Lumber Co. Ltd. (a)		122,117		267,586
Western Forest Products, Inc. (a)		158,023		171,529
Western Forest Products, Inc. (a)(b)		45,762		49,673

				796,469
Semiconductors & Semiconductor Equipment — 0.3%
NXP Semiconductors NV (a)		5,400		125,928
Spansion, Inc., Class A (a)		64,237		734,229
SunPower Corp.		271		1,214

				861,371
Software — 0.2%
Bankruptcy Management Solutions, Inc. (a)		501		5
HMH Holdings/EduMedia		20,718		507,588

				507,593
Total Common Stocks — 7.9%				22,312,437


Corporate Bonds	Par (000)		Value

Aerospace & Defense — 0.7%
Huntington Ingalls Industries, Inc.:
6.88%, 3/15/18	USD	230	$	246,100
7.13%, 3/15/21		330		357,225
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17		846		900,990
Meccanica Holdings USA, Inc., 6.25%, 7/15/19 (b)		435		393,608

				1,897,923
Air Freight & Logistics — 0.4%
National Air Cargo Group, Inc.:
Series 1 12.38%, 9/02/15		596		606,832
Series 2 12.38%, 8/16/15		603		613,879

				1,220,711
Airlines — 1.5%
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23		1,087		1,152,151
Continental Airlines, Inc.:
Series 1997-4, Class B 6.90%, 7/02/18 (c)		278		277,703
Series 2010-1, Class B 6.00%, 7/12/20		444		447,265
Delta Air Lines, Inc.:
Series 2002-1, Class G-1 6.72%, 7/02/24		611		662,744
Delta Air Lines, Inc.:
Series 2009-1-B 9.75%, 6/17/18		192		207,396
Series 2010-1, Class B 6.38%, 7/02/17		500		500,000
US Airways Pass Through Trust:
Series 2011-1, Class C 10.88%, 10/22/14		679		695,867
Series 2012-1, Class C 9.13%, 10/01/15		450		459,000

				4,402,126
Auto Components — 2.1%
Dana Holding Corp., 6.75%, 2/15/21		450		484,875
Delphi Corp., 6.13%, 5/15/21		170		187,000
Icahn Enterprises LP:
4.00%, 8/15/13 (b)(d)(e)		255		255,000
8.00%, 1/15/18		3,035		3,232,275
IDQ Holdings, Inc., 11.50%, 4/01/17 (b)		380		397,575
International Automotive Components Group SL, 9.13%, 6/01/18 (b)		40		38,350
Jaguar Land Rover Plc, 8.25%, 3/15/20	GBP	482		807,254
Titan International, Inc., 7.88%, 10/01/17	USD	465		487,088

				5,889,417
Beverages — 0.2%
Crown European Holdings SA:
7.13%, 8/15/18 (b)	EUR	251		347,279
7.13%, 8/15/18		188		260,113

				607,392
Biotechnology — 0.0%
QHP Royalty Sub LLC, 10.25%, 3/15/15 (b)	USD	54		53,876
Building Products — 0.8%
Building Materials Corp. of America (b):
7.00%, 2/15/20		530		573,725
6.75%, 5/01/21		790		863,075
Momentive Performance Materials, Inc., 11.50%, 12/01/16		375		228,750
USG Corp., 9.75%, 1/15/18		610		654,225

				2,319,775

See Notes to Consolidated Financial Statements.



28	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Capital Markets — 0.8%
E*Trade Financial Corp.:
12.50%, 11/30/17 (f)	USD	1,070	$	1,221,138
2.25%, 8/31/19 (b)(e)(g)		244		208,620
Series A 2.25%, 8/31/19 (g)		7		5,985
KKR Group Finance Co. LLC, 6.38%, 9/29/20 (b)		650		735,768

				2,171,511
Chemicals — 4.1%
Basell Finance Co. BV, 8.10%, 3/15/27 (b)		420		560,700
Celanese US Holdings LLC, 5.88%, 6/15/21		1,785		1,972,425
Chemtura Corp., 7.88%, 9/01/18		310		334,025
Hexion US Finance Corp.:
6.63%, 4/15/20		245		247,450
9.00%, 11/15/20		310		265,050
Huntsman International LLC, 8.63%, 3/15/21		170		194,650
INEOS Finance Plc (b):
8.38%, 2/15/19		890		936,725
7.50%, 5/01/20		440		448,800
INEOS Group Holdings Plc, 8.50%, 2/15/16 (b)		145		136,663
Kinove German Bondco GmbH, 10.00%, 6/15/18	EUR	342		468,883
Kraton Polymers LLC, 6.75%, 3/01/19	USD	125		128,125
LyondellBasell Industries NV, 5.75%, 4/15/24		2,820		3,193,650
Nexeo Solutions LLC, 8.38%, 3/01/18		185		180,838
PolyOne Corp., 7.38%, 9/15/20		215		234,887
TPC Group LLC, 8.25%, 10/01/17		335		367,662
Tronox Finance LLC, 6.38%, 8/15/20 (b)		1,900		1,919,000

				11,589,533
Commercial Banks — 0.9%
CIT Group, Inc.:
7.00%, 5/02/16 (b)		378		378,713
5.25%, 3/15/18		550		573,375
5.50%, 2/15/19 (b)		530		552,525
5.00%, 8/15/22		580		584,394
6.00%, 4/01/36		550		498,206

				2,587,213
Commercial Services & Supplies — 2.0%
ARAMARK Corp., 8.50%, 2/01/15		360		369,004
ARAMARK Holdings Corp., 8.63%, 5/01/16 (b)(f)		440		450,454
Aviation Capital Group Corp., 6.75%, 4/06/21 (b)		540		554,445
AWAS Aviation Capital Ltd., 7.00%, 10/17/16 (b)		108		113,788
Brickman Group Holdings, Inc., 9.13%, 11/01/18 (b)		25		25,250
Casella Waste Systems, Inc., 7.75%, 2/15/19		470		465,300
Clean Harbors, Inc., 5.25%, 8/01/20 (b)		528		541,860
Covanta Holding Corp., 6.38%, 10/01/22		635		694,291
EC Finance Plc, 9.75%, 8/01/17	EUR	352		458,795
Mead Products LLC/ACCO Brands Corp., 6.75%, 4/30/20 (b)	USD	222		234,765
Mobile Mini, Inc., 7.88%, 12/01/20		365		391,463
RSC Equipment Rental, Inc., 8.25%, 2/01/21		875		958,125
Verisure Holding AB:
8.75%, 9/01/18	EUR	184		231,435
8.75%, 12/01/18		100		111,315
West Corp., 8.63%, 10/01/18	USD	135		137,025

				5,737,315
Communications Equipment — 1.8%
Avaya, Inc., 9.75%, 11/01/15		780		676,650
Frontier Communications Corp., 6.25%, 1/15/13		900		915,750
Hughes Satellite Systems Corp., 6.50%, 6/15/19		410		439,212
Zayo Group LLC/Zayo Capital, Inc.:
8.13%, 1/01/20		1,550		1,646,875
10.13%, 7/01/20		1,270		1,362,075

				5,040,562


Corporate Bonds	Par (000)		Value

Computers & Peripherals — 0.1%
SanDisk Corp., 1.50%, 8/15/17 (e)	USD	220	$	243,650
Construction & Engineering — 0.2%
Boart Longyear Management Property Ltd., 7.00%, 4/01/21 (b)		200		207,500
H&E Equipment Services, Inc., 7.00%, 9/01/22 (b)		330		342,375
URS Corp., 5.00%, 4/01/22 (b)		75		76,049

				625,924
Construction Materials — 1.4%
HD Supply, Inc. (b):
8.13%, 4/15/19		1,545		1,676,325
11.00%, 4/15/20		1,475		1,622,500
Xefin Lux SCA:
8.00%, 6/01/18 (b)	EUR	254		311,494
8.00%, 6/01/18		200		245,271

				3,855,590
Consumer Finance — 0.2%
Credit Acceptance Corp., 9.13%, 2/01/17	USD	445		489,500
Containers & Packaging — 1.7%
Ardagh Packaging Finance Plc:
7.38%, 10/15/17 (b)	EUR	375		498,796
7.38%, 10/15/17 (b)	USD	200		214,250
7.38%, 10/15/17	EUR	200		266,025
9.13%, 10/15/20 (b)	USD	395		410,800
9.13%, 10/15/20 (b)		205		214,225
9.13%, 10/15/20 (b)		204		212,670
Berry Plastics Corp.:
4.34%, 9/15/14 (d)		300		295,500
8.25%, 11/15/15		115		121,037
9.75%, 1/15/21		420		465,150
Beverage Packaging Holdings Luxembourg II SA, 8.00%, 12/15/16	EUR	706		870,247
GCL Holdings SCA, 9.38%, 4/15/18 (b)		267		325,758
Graphic Packaging International, Inc., 7.88%, 10/01/18	USD	375		418,125
OI European Group BV, 6.88%, 3/31/17	EUR	155		201,295
Sealed Air Corp., 8.38%, 9/15/21 (b)	USD	185		208,125
Tekni-Plex, Inc., 9.75%, 6/01/19 (b)		180		188,100

				4,910,103
Distributors — 0.6%
VWR Funding, Inc., 7.25%, 9/15/17 (b)(h)		1,619		1,639,238
Diversified Consumer Services — 1.5%
Laureate Education, Inc., 9.25%, 9/01/19 (b)		605		605,000
Service Corp. International, 7.00%, 6/15/17		3,000		3,420,000
ServiceMaster Co., 8.00%, 2/15/20		190		202,588

				4,227,588
Diversified Financial Services — 4.4%
Aircastle Ltd., 6.75%, 4/15/17		470		507,600
Ally Financial, Inc.:
7.50%, 12/31/13		280		299,250
8.00%, 11/01/31		3,650		4,316,125
CNG Holdings, Inc., 9.38%, 5/15/20 (b)		300		306,000
DPL, Inc., 7.25%, 10/15/21 (b)		1,175		1,339,500
Gala Group Finance Plc, 8.88%, 9/01/18	GBP	300		444,201
General Motors Financial Co., Inc., 6.75%, 6/01/18	USD	300		332,623
Lehman Brothers Holdings, Inc. (a)(i):
5.38%, 10/17/12	EUR	150		48,111
4.75%, 1/16/14		760		243,762
1.00%, 2/05/14		1,600		520,226
1.00%, 9/22/18	USD	175		43,094
1.00%, 12/31/49		620		152,675
Leucadia National Corp., 8.13%, 9/15/15		825		930,187

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	29

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Diversified Financial Services (concluded)
Reynolds Group Issuer, Inc.:
7.75%, 10/15/16	EUR	209	$	271,424
7.13%, 4/15/19	USD	245		263,988
9.75%, 4/15/19		275		279,469
7.88%, 8/15/19		355		394,937
9.88%, 8/15/19		1,045		1,105,087
8.25%, 2/15/21		135		132,638
WMG Acquisition Corp.:
9.50%, 6/15/16		120		131,100
11.50%, 10/01/18		416		456,560

				12,518,557
Diversified Telecommunication Services — 2.3%
Broadview Networks Holdings, Inc., 11.38%, 9/01/12 (a)(i)		1,035		698,625
Consolidated Communications Finance Co., 10.88%, 6/01/20 (b)		595		638,137
ITC Deltacom, Inc., 10.50%, 4/01/16		280		301,700
Level 3 Communications, Inc., 8.88%, 6/01/19 (b)		315		321,300
Level 3 Financing, Inc.:
8.13%, 7/01/19		1,325		1,387,937
7.00%, 6/01/20 (b)		574		571,130
8.63%, 7/15/20		845		904,150
OTE Plc, 5.00%, 8/05/13	EUR	112		122,099
Telenet Finance V Luxembourg SCA:
6.25%, 8/15/22		150		189,613
6.75%, 8/15/24		367		468,537
Windstream Corp.:
8.13%, 8/01/13	USD	460		485,300
7.88%, 11/01/17		393		427,388

				6,515,916
Electric Utilities — 0.7%
Mirant Mid Atlantic Pass Through Trust, Series B, 9.13%, 6/30/17		290		311,742
The Tokyo Electric Power Co., Inc., 4.50%, 3/24/14	EUR	1,300		1,627,455

				1,939,197
Electrical Equipment — 0.1%
Belden, Inc., 5.50%, 9/01/22 (b)	USD	370		370,925
Electronic Equipment, Instruments & Components — 0.5%
CDW LLC/CDW Finance Corp., 8.50%, 4/01/19		370		405,150
Jabil Circuit, Inc., 8.25%, 3/15/18		235		282,000
Micron Technology, Inc., 2.38%, 5/01/32 (b)(e)		441		419,501
NXP BV/NXP Funding LLC, 9.75%, 8/01/18 (b)		200		228,500

				1,335,151
Energy Equipment & Services — 3.4%
Atwood Oceanics, Inc., 6.50%, 2/01/20		140		149,450
Calfrac Holdings LP, 7.50%, 12/01/20 (b)		395		387,100
Compagnie Générale de Géophysique, Veritas:
7.75%, 5/15/17		250		261,250
6.50%, 6/01/21		1,255		1,306,769
Forbes Energy Services Ltd., 9.00%, 6/15/19		365		354,050
FTS International Services LLC/ FTS International Bonds Inc., 8.13%, 11/15/18 (b)		1,755		1,812,037
Gulfmark Offshore, Inc., 6.38%, 3/15/22 (b)		155		158,100
Hornbeck Offshore Services, Inc., 5.88%, 4/01/20		315		321,300
Key Energy Services, Inc., 6.75%, 3/01/21		450		457,875
MEG Energy Corp. (b):
6.50%, 3/15/21		1,205		1,268,263
6.38%, 1/30/23		450		469,125
Oil States International, Inc., 6.50%, 6/01/19		320		340,000
Peabody Energy Corp.:
6.25%, 11/15/21 (b)		1,405		1,429,587
7.88%, 11/01/26		375		400,313


Corporate Bonds	Par (000)		Value

Energy Equipment & Services (concluded)
Precision Drilling Corp.:
6.63%, 11/15/20	USD	75	$	78,750
6.50%, 12/15/21		295		309,750

				9,503,719
Food & Staples Retailing — 0.2%
Bakkavor Finance 2 Plc, 8.25%, 2/15/18	GBP	100		139,731
Rite Aid Corp., 9.25%, 3/15/20	USD	375		385,312

				525,043
Food Products — 0.4%
Darling International, Inc., 8.50%, 12/15/18		115		130,237
Del Monte Corp., 7.63%, 2/15/19		61		60,924
Post Holdings, Inc., 7.38%, 2/15/22 (b)		385		405,694
Smithfield Foods, Inc., 6.63%, 8/15/22		588		601,965

				1,198,820
Health Care Equipment & Supplies — 1.5%
Biomet, Inc.:
10.00%, 10/15/17		195		206,335
6.50%, 8/01/20 (b)		708		734,550
DJO Finance LLC:
10.88%, 11/15/14		519		541,706
8.75%, 3/15/18 (b)		450		478,125
7.75%, 4/15/18		100		91,500
Fresenius Medical Care US Finance, Inc., 6.50%, 9/15/18 (b)		208		233,220
Fresenius Medical Care US Finance II, Inc., 5.88%, 1/31/22 (b)		650		690,625
Fresenius US Finance II, Inc., 9.00%, 7/15/15 (b)		540		621,675
Kinetic Concepts, Inc./KCI USA, Inc., 12.50%, 11/01/19 (b)		280		254,100
Teleflex, Inc., 6.88%, 6/01/19		295		315,650

				4,167,486
Health Care Providers & Services — 7.3%
Aviv Healthcare Properties LP, 7.75%, 2/15/19		570		592,800
CHS/Community Health Systems, Inc.:
5.13%, 8/15/18		785		809,531
7.13%, 7/15/20		456		477,660
ConvaTec Healthcare E SA, 7.38%, 12/15/17 (b)	EUR	494		664,848
Crown Newco 3 Plc, 7.00%, 2/15/18 (b)	GBP	364		582,313
DaVita, Inc., 5.75%, 8/15/22	USD	928		965,120
HCA, Inc.:
8.50%, 4/15/19		135		152,213
6.50%, 2/15/20		2,355		2,587,556
7.88%, 2/15/20		95		106,044
7.25%, 9/15/20		2,600		2,881,125
5.88%, 3/15/22		275		292,531
Hologic, Inc., 6.25%, 8/01/20 (b)		1,597		1,690,824
IASIS Healthcare LLC, 8.38%, 5/15/19		1,538		1,466,867
INC Research LLC, 11.50%, 7/15/19 (b)		410		401,800
inVentiv Health, Inc., 10.00%, 8/15/18 (b)		135		113,738
Omnicare, Inc., 7.75%, 6/01/20		1,005		1,108,012
PSS World Medical, Inc., 6.38%, 3/01/22		334		353,205
Symbion, Inc., 8.00%, 6/15/16		345		348,666
Tenet Healthcare Corp.:
10.00%, 5/01/18		839		964,850
6.25%, 11/01/18		330		358,256
8.88%, 7/01/19		2,624		2,984,800
United Surgical Partners International, Inc., 9.00%, 4/01/20 (b)		290		311,388
Vanguard Health Holding Co. II LLC, 7.75%, 2/01/19 (b)		465		484,762

				20,698,909

See Notes to Consolidated Financial Statements.



30	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Health Care Technology — 1.0%
IMS Health, Inc., 12.50%, 3/01/18 (b)	USD	2,405	$	2,825,875
Hotels, Restaurants & Leisure — 4.5%
Affinity Gaming LLC/Affinity Gaming Finance Corp., 9.00%, 5/15/18 (b)		290		295,075
Caesars Entertainment Operating Co., Inc.:
11.25%, 6/01/17		1,360		1,465,400
10.00%, 12/15/18		2,684		1,690,920
8.50%, 2/15/20 (b)		305		300,806
Caesars Operating Escrow LLC, 9.00%, 2/15/20 (b)		1,673		1,664,635
Carlson Wagonlit BV, 6.88%, 6/15/19 (b)		325		338,000
Cirsa Funding Luxembourg SA, 8.75%, 5/15/18	EUR	211		232,885
Diamond Resorts Corp., 12.00%, 8/15/18	USD	1,190		1,265,862
El Dorado Resorts LLC, 8.63%, 6/15/19 (b)		140		136,500
Enterprise Inns Plc, 6.50%, 12/06/18	GBP	324		445,011
Gategroup Finance Luxembourg SA, 6.75%, 3/01/19	EUR	265		340,817
Little Traverse Bay Bands of Odawa Indians, 9.00%, 8/31/20 (b)	USD	300		273,000
MGM Resorts International:
10.38%, 5/15/14		190		215,650
4.25%, 4/15/15 (e)		1,080		1,090,800
11.13%, 11/15/17		1,400		1,557,500
MTR Gaming Group, Inc., 11.50%, 8/01/19 (f)		151		154,896
Travelport LLC:
5.09%, 9/01/14 (d)		180		127,800
9.88%, 9/01/14		40		31,800
9.00%, 3/01/16		120		85,200
6.46%, 12/01/16 (b)(f)		419		323,781
Tropicana Entertainment LLC, 9.63%, 12/15/14 (a)(i)		305		—
Wynn Las Vegas LLC, 5.38%, 3/15/22 (b)		620		633,950

				12,670,288
Household Durables — 1.7%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (b)		50		51,125
Jarden Corp., 7.50%, 1/15/20	EUR	305		413,360
Libbey Glass, Inc., 6.88%, 5/15/20 (b)	USD	610		650,413
Pulte Group, Inc., 6.38%, 5/15/33		190		165,300
Ryland Group, Inc., 6.63%, 5/01/20		340		358,700
Spie BondCo 3 SCA, 11.00%, 8/15/19	EUR	303		386,830
Standard Pacific Corp.:
10.75%, 9/15/16	USD	1,390		1,678,425
8.38%, 1/15/21		1,055		1,176,325

				4,880,478
Household Products — 0.6%
Ontex IV SA:
7.50%, 4/15/18	EUR	104		132,773
7.50%, 4/15/18 (b)		150		191,500
9.00%, 4/15/19		213		246,478
Spectrum Brands Holdings, Inc.:
9.50%, 6/15/18	USD	360		410,850
9.50%, 6/15/18 (b)		590		673,338

				1,654,939
Independent Power Producers & Energy Traders — 3.1%
The AES Corp., 7.38%, 7/01/21		275		314,875
Calpine Corp. (b):
7.25%, 10/15/17		180		192,600
7.50%, 2/15/21		100		111,000
7.88%, 1/15/23		445		502,850
Energy Future Holdings Corp., 10.00%, 1/15/20		1,920		2,116,800
Energy Future Intermediate Holding Co. LLC:
6.88%, 8/15/17 (b)		305		311,481
10.00%, 12/01/20		2,691		3,020,648


Corporate Bonds	Par (000)		Value

Independent Power Producers & Energy Traders (concluded)
11.75%, 3/01/22 (b)	USD	588	$	626,220
GenOn REMA LLC, 9.24%, 7/02/17		242		259,665
Laredo Petroleum, Inc.:
9.50%, 2/15/19		485		550,475
7.38%, 5/01/22		370		397,750
QEP Resources, Inc., 5.38%, 10/01/22		333		341,325

				8,745,689
Industrial Conglomerates — 2.3%
Sequa Corp. (b):
11.75%, 12/01/15		2,340		2,457,000
13.50%, 12/01/15		3,954		4,191,252

				6,648,252
Insurance — 1.0%
Alliant Holdings I, Inc., 11.00%, 5/01/15 (b)		1,700		1,757,375
CNO Financial Group, Inc., 9.00%, 1/15/18 (b)		367		401,406
Genworth Financial, Inc., 7.63%, 9/24/21		430		439,374
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (b)		260		232,700

				2,830,855
IT Services — 3.1%
Ceridian Corp., 8.88%, 7/15/19 (b)		1,480		1,587,300
Epicor Software Corp., 8.63%, 5/01/19		570		587,100
First Data Corp.:
7.38%, 6/15/19 (b)		1,580		1,631,350
8.88%, 8/15/20 (b)		535		583,150
6.75%, 11/01/20 (b)		895		888,288
8.25%, 1/15/21 (b)		620		614,575
12.63%, 1/15/21		1,699		1,720,237
SunGard Data Systems, Inc.:
7.38%, 11/15/18		550		584,375
7.63%, 11/15/20		600		643,500

				8,839,875
Machinery — 1.2%
SPX Corp., 6.88%, 9/01/17		175		194,250
UR Merger Sub Corp. (b):
5.75%, 7/15/18		257		271,778
7.38%, 5/15/20		440		466,400
7.63%, 4/15/22		2,157		2,329,560

				3,261,988
Media — 12.7%
Affinion Group, Inc., 7.88%, 12/15/18		815		582,725
AMC Networks, Inc., 7.75%, 7/15/21		225		254,813
CCO Holdings LLC:
6.50%, 4/30/21		498		534,105
5.25%, 9/30/22		990		980,100
Cengage Learning Acquisitions, Inc., 11.50%, 4/15/20 (b)		1,065		1,120,912
Checkout Holding Corp., 16.00%, 11/15/15 (b)(g)		670		408,700
Cinemark USA, Inc., 8.63%, 6/15/19		220		246,400
Clear Channel Communications, Inc., 9.00%, 3/01/21		449		385,018
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/17		1,495		1,618,337
Series B, 9.25%, 12/15/17		5,202		5,650,672
Series B, 7.63%, 3/15/20		1,624		1,575,280
Cox Enterprises, Inc. (b):
Loan Close 2, 12.00%, 8/15/18		688		688,495
Loan Close 3, 12.00%, 8/15/18		786		787,146
Shares Loan, 12.00%, 8/15/18		811		811,824
CSC Holdings LLC, 8.50%, 4/15/14		390		428,513
DISH DBS Corp., 5.88%, 7/15/22 (b)		1,150		1,158,625

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	31

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Media (concluded)
Harron Communications LP, 9.13%, 4/01/20 (b)	USD	320	$	346,400
Intelsat Jackson Holdings SA:
11.25%, 6/15/16		883		929,357
7.25%, 10/15/20 (b)		820		883,550
Intelsat Luxembourg SA:
11.25%, 2/04/17		620		651,000
11.50%, 2/04/17 (f)		1,200		1,260,000
Interactive Data Corp., 10.25%, 8/01/18		1,345		1,516,487
The Interpublic Group of Cos., Inc., 10.00%, 7/15/17		340		379,950
Kabel Deutschland Vertrieb und Service GmbH & Co. KG, 6.50%, 6/29/18 (b)	EUR	345		467,571
Lamar Media Corp., 5.88%, 2/01/22	USD	140		148,400
Live Nation Entertainment, Inc., 8.13%, 5/15/18 (b)		735		786,450
NAI Entertainment Holdings LLC, 8.25%, 12/15/17 (b)		558		622,170
Nielsen Finance LLC:
11.63%, 2/01/14		117		132,795
7.75%, 10/15/18		2,145		2,413,125
Odeon & UCI Finco Plc, 9.00%, 8/01/18 (b)	GBP	207		326,220
ProQuest LLC, 9.00%, 10/15/18 (b)	USD	500		458,750
ProtoStar I Ltd., 18.00%, 10/15/12 (a)(b)(e)(i)		850		425
Truven Health Analytics, Inc., 10.63%, 6/01/20 (b)		510		544,425
Unitymedia GmbH:
9.63%, 12/01/19 (b)	EUR	570		805,668
9.63%, 12/01/19		168		237,460
9.50%, 3/15/21		320		459,349
Unitymedia Hessen GmbH & Co. KG:
8.13%, 12/01/17 (b)	USD	956		1,034,870
8.13%, 12/01/17 (b)	EUR	135		183,175
7.50%, 3/15/19		794		1,093,569
UPC Holding BV, 9.88%, 4/15/18 (b)	USD	400		449,000
UPCB Finance II Ltd.:
6.38%, 7/01/20 (b)	EUR	822		1,080,438
6.38%, 7/01/20		300		394,320
WaveDivision Escrow LLC/WaveDivision Escrow Corp., 8.13%, 9/01/20 (b)	USD	300		309,000
Ziggo Bond Co. BV, 8.00%, 5/15/18 (b)	EUR	388		535,609
Ziggo Finance BV, 6.13%, 11/15/17 (b)		74		99,360

				35,780,558
Metals & Mining — 3.8%
Eco-Bat Finance Plc, 7.75%, 2/15/17		460		584,374
FMG Resources August 2006 Property Ltd. (b):
6.88%, 2/01/18	USD	360		342,900
6.88%, 4/01/22		190		174,800
Global Brass and Copper, Inc., 9.50%, 6/01/19 (b)		300		315,750
Goldcorp, Inc., 2.00%, 8/01/14 (e)		1,060		1,221,650
Kaiser Aluminum Corp., 8.25%, 6/01/20 (b)		225		238,500
New Gold, Inc., 7.00%, 4/15/20 (b)		150		157,875
New World Resources NV, 7.88%, 5/01/18	EUR	655		819,740
Newmont Mining Corp., Series A, 1.25%, 7/15/14 (e)	USD	1,475		1,875,094
Novelis, Inc., 8.75%, 12/15/20		3,315		3,704,512
Schmolz + Bickenbach Luxembourg SA, 9.88%, 5/15/19	EUR	315		319,937
Steel Dynamics, Inc., 6.38%, 8/15/22 (b)	USD	245		253,575
Taseko Mines Ltd., 7.75%, 4/15/19		420		400,050
Vedanta Resources Plc, 8.25%, 6/07/21 (b)		270		257,850

				10,666,607
Multiline Retail — 0.3%
Dollar General Corp., 4.13%, 7/15/17		792		823,680


Corporate Bonds	Par (000)		Value

Oil, Gas & Consumable Fuels — 10.7%
Access Midstream Partners LP, 6.13%, 7/15/22	USD	275	$	285,313
Alpha Appalachia Holdings, Inc., 3.25%, 8/01/15 (e)		803		720,692
Alpha Natural Resources, Inc.:
6.00%, 6/01/19		315		283,500
6.25%, 6/01/21		255		228,225
Aurora USA Oil & Gas, Inc., 9.88%, 2/15/17 (b)		680		710,600
Berry Petroleum Co., 6.38%, 9/15/22		410		436,650
BreitBurn Energy Partners LP, 7.88%, 4/15/22 (b)		255		260,100
CCS, Inc., 11.00%, 11/15/15 (b)		570		589,950
Chaparral Energy, Inc., 7.63%, 11/15/22 (b)		220		232,650
Chesapeake Energy Corp.:
7.25%, 12/15/18		15		15,713
6.63%, 8/15/20		180		184,950
6.88%, 11/15/20		175		181,563
6.13%, 2/15/21		595		590,537
Coffeyville Resources LLC, 9.00%, 4/01/15 (b)		116		123,540
Concho Resources, Inc.:
7.00%, 1/15/21		160		178,400
6.50%, 1/15/22		110		118,800
5.50%, 10/01/22		475		490,437
Consol Energy, Inc., 8.25%, 4/01/20		1,765		1,901,787
Continental Resources, Inc., 7.13%, 4/01/21		370		414,400
Copano Energy LLC, 7.13%, 4/01/21		300		313,500
Crosstex Energy LP:
8.88%, 2/15/18		180		192,150
7.13%, 6/01/22 (b)		150		149,250
Crown Oil Partners IV LP, 15.00%, 3/07/15		597		596,620
Denbury Resources, Inc., 8.25%, 2/15/20		47		53,345
Energy XXI Gulf Coast, Inc.:
9.25%, 12/15/17		555		618,825
7.75%, 6/15/19		900		956,250
EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (b)		345		370,012
EP Energy LLC/Everest Acquisition Finance, Inc., 7.75%, 9/01/22 (b)		215		215,538
EV Energy Partners LP, 8.00%, 4/15/19		150		154,875
Hilcorp Energy I LP, 7.63%, 4/15/21 (b)		745		819,500
Holly Energy Partners LP, 6.50%, 3/01/20 (b)		155		161,975
Kodiak Oil & Gas Corp., 8.13%, 12/01/19 (b)		350		371,875
Linn Energy LLC:
6.50%, 5/15/19 (b)		95		94,525
6.25%, 11/01/19 (b)		2,045		2,019,437
8.63%, 4/15/20		225		243,000
7.75%, 2/01/21		200		208,500
MarkWest Energy Partners LP:
6.25%, 6/15/22		80		85,000
5.50%, 2/15/23		225		230,063
Newfield Exploration Co., 6.88%, 2/01/20		780		852,150
Northern Oil and Gas, Inc., 8.00%, 6/01/20 (b)		310		316,200
Oasis Petroleum, Inc.:
7.25%, 2/01/19		265		279,575
6.50%, 11/01/21		290		295,800
Offshore Group Investments Ltd.:
11.50%, 8/01/15 (b)		1,330		1,469,650
11.50%, 8/01/15		325		359,125
OGX Petroleo e Gas Participacoes SA (b):
8.50%, 6/01/18		1,997		1,772,337
8.38%, 4/01/22		500		425,000
PBF Holding Co. LLC, 8.25%, 2/15/20 (b)		295		308,275
PetroBakken Energy Ltd., 8.63%, 2/01/20 (b)		1,195		1,221,887
Petroleum Geo-Services ASA, 7.38%, 12/15/18 (b)		575		613,812
Pioneer Natural Resources Co.:
6.88%, 5/01/18		460		556,922
7.50%, 1/15/20		145		181,347
Range Resources Corp.:
8.00%, 5/15/19		345		381,225
5.75%, 6/01/21		985		1,047,794
5.00%, 8/15/22		435		452,944

See Notes to Consolidated Financial Statements.



32	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Oil, Gas & Consumable Fuels (concluded)
Sabine Pass Liquified Natural Gas LP, 7.50%, 11/30/16	USD	610	$	652,700
Samson Investment Co., 9.75%, 2/15/20 (b)		83		85,490
SandRidge Energy, Inc.:
7.50%, 3/15/21		250		253,125
7.50%, 3/15/21 (b)		690		698,625
8.13%, 10/15/22 (b)		255		266,475
7.50%, 2/15/23 (b)		545		547,725
SESI LLC:
6.38%, 5/01/19		325		344,500
7.13%, 12/15/21		235		261,438
SM Energy Co.:
6.63%, 2/15/19		130		135,850
6.50%, 11/15/21		265		276,925
6.50%, 1/01/23 (b)		125		130,313
Vanguard Natural Resources, 7.88%, 4/01/20		270		270,000

				30,259,256
Paper & Forest Products — 1.6%
Ainsworth Lumber Co. Ltd., 11.00%, 7/29/15 (b)(f)		1,252		1,139,184
Boise Paper Holdings LLC:
9.00%, 11/01/17		60		66,450
8.00%, 4/01/20		125		138,125
Clearwater Paper Corp.:
10.63%, 6/15/16		390		435,825
7.13%, 11/01/18		585		639,113
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (b)		345		357,075
NewPage Corp., 11.38%, 12/31/14 (a)(i)		2,070		1,402,425
Sappi Papier Holding GmbH (b):
8.38%, 6/15/19		200		210,500
6.63%, 4/15/21		140		129,500

				4,518,197
Pharmaceuticals — 1.0%
Capsugel Finance Co. SCA:
9.88%, 8/01/19	EUR	100		140,559
9.88%, 8/01/19 (b)		200		281,118
Pharmaceutical Product Development, Inc., 9.50%, 12/01/19 (b)	USD	185		206,275
Spectrum Brands, Inc., 6.75%, 3/15/20 (b)		260		273,000
Valeant Pharmaceuticals International (b):
6.50%, 7/15/16		1,245		1,313,475
6.75%, 8/15/21		570		578,550

				2,792,977
Professional Services — 0.3%
FTI Consulting, Inc., 6.75%, 10/01/20		920		982,100
Real Estate Investment Trusts (REITs) — 0.7%
Felcor Lodging LP, 6.75%, 6/01/19		1,215		1,303,088
The Rouse Co. LP, 6.75%, 11/09/15		520		547,950

				1,851,038
Real Estate Management & Development — 2.3%
CBRE Services, Inc., 6.63%, 10/15/20		335		365,987
Crescent Resources LLC/Crescent Ventures, Inc., 10.25%, 8/15/17 (b)		710		727,750
Forest City Enterprises, Inc., 7.63%, 6/01/15		426		423,604
IVG Immobilien AG, 8.00% (j)	EUR	200		114,208
Realogy Corp.:
11.50%, 4/15/17	USD	400		425,000
12.00%, 4/15/17		100		104,750
7.88%, 2/15/19 (b)		2,065		2,126,950
7.63%, 1/15/20 (b)		505		550,450
9.00%, 1/15/20 (b)		335		361,800
Shea Homes LP, 8.63%, 5/15/19		1,250		1,390,625

				6,591,124


Corporate Bonds	Par (000)		Value

Road & Rail — 1.3%
Florida East Coast Railway Corp., 8.13%, 2/01/17	USD	410	$	430,500
The Hertz Corp.:
7.50%, 10/15/18		550		593,312
6.75%, 4/15/19 (b)		290		304,500
7.38%, 1/15/21		415		451,313
Hertz Holdings Netherlands BV:
8.50%, 7/31/15	EUR	188		256,566
8.50%, 7/31/15 (b)		1,115		1,521,655

				3,557,846
Semiconductors & Semiconductor Equipment — 0.2%
Spansion LLC, 7.88%, 11/15/17	USD	580		565,500
Software — 1.3%
Audatex North America, Inc., 6.75%, 6/15/18 (b)		530		568,425
Infor US, Inc., 9.38%, 4/01/19 (b)		1,650		1,786,125
Nuance Communications, Inc., 5.38%, 8/15/20 (b)		885		904,913
Sophia LP, 9.75%, 1/15/19 (b)		442		475,150

				3,734,613
Specialty Retail — 2.8%
Asbury Automotive Group, Inc., 8.38%, 11/15/20		365		403,325
Claire’s Stores, Inc., 9.00%, 3/15/19 (b)		490		508,375
House of Fraser Funding Plc:
8.88%, 8/15/18 (b)	GBP	285		402,193
8.88%, 8/15/18		221		311,876
Limited Brands, Inc.:
8.50%, 6/15/19	USD	785		942,000
5.63%, 2/15/22		160		168,400
Party City Holdings, Inc., 8.88%, 8/01/20 (b)		793		838,597
Penske Automotive Group, Inc., 5.75%, 10/01/22 (b)		540		550,800
Phones4u Finance Plc, 9.50%, 4/01/18 (b)	GBP	400		612,910
QVC, Inc. (b):
7.13%, 4/15/17	USD	230		243,276
7.50%, 10/01/19		625		692,509
7.38%, 10/15/20		290		323,138
5.13%, 7/02/22		429		449,653
Sally Holdings LLC:
6.88%, 11/15/19		545		609,038
5.75%, 6/01/22		435		468,169
Sonic Automotive, Inc., 9.00%, 3/15/18		370		404,225

				7,928,484
Textiles, Apparel & Luxury Goods — 0.2%
Levi Strauss & Co., 6.88%, 5/01/22		440		456,500
Trading Companies & Distributors — 0.6%
Ashtead Capital, Inc., 6.50%, 7/15/22 (b)		490		509,600
Doric Nimrod Air Finance Alpha Ltd. (b):
Series 2012-1, Class A, 5.13%, 11/30/24		635		644,525
Series 2012-1, Class B, 6.50%, 5/30/21		575		581,797

				1,735,922
Transportation Infrastructure — 0.2%
Aguila 3 SA, 7.88%, 1/31/18 (b)		431		454,166
Wireless Telecommunication Services — 4.0%
Cricket Communications, Inc.:
7.75%, 5/15/16		110		116,050
7.75%, 10/15/20		215		208,550
Digicel Group Ltd. (b):
9.13%, 1/15/15		1,783		1,800,830
8.25%, 9/01/17		1,180		1,250,800
10.50%, 4/15/18		1,020		1,101,600
Matterhorn Mobile Holdings SA, 8.25%, 2/15/20	EUR	195		265,506
MetroPCS Wireless, Inc., 6.63%, 11/15/20	USD	760		786,600
NII Capital Corp., 7.63%, 4/01/21		341		263,422
SBA Telecommunications, Inc., 5.75%, 7/15/20 (b)		286		298,870

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	33

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Wireless Telecommunication Services (concluded)
Sprint Capital Corp., 6.88%, 11/15/28		USD 1,827	$	1,653,435
Sprint Nextel Corp. (b):
9.00%, 11/15/18		1,780		2,100,400
7.00%, 3/01/20		1,330		1,456,350

				11,302,413
Total Corporate Bonds – 104.3%				294,641,890




Floating Rate Loan Interests (d)
Airlines — 0.1%
Delta Air Lines, Inc., Credit, Term Loan B, 5.50%, 4/20/17		396		398,797
Auto Components — 0.5%
Federal-Mogul Corp., Term Loan B, 2.17%—2.18%, 12/29/14		945		901,873
Schaeffler AG, Term Loan C2, 6.00%, 1/27/17		395		396,153

				1,298,026
Building Products — 0.2%
Goodman Global, Inc., Term Loan (Second Lien), 9.00%, 10/30/17		398		402,949
Capital Markets — 0.7%
American Capital Holdings, Term Loan, 5.50%, 7/19/16		816		819,060
Nuveen Investments, Inc.:
Incremental Term Loan, 7.25%, 5/13/17		655		657,947
Second Lien Term Loan, 8.25%, 2/28/19		415		417,594

				1,894,601
Chemicals — 0.7%
Evergreen Acqco 1 LP, Term Loan B, 6.25%, 7/09/19		170		171,595
INEOS US Finance LLC, 6 Year Term Loan, 6.50%, 5/04/18		1,147		1,148,800
PQ Corp., Term Loan B, 3.98%, 7/30/14		290		284,529
Styron Sarl LLC, Term Loan B, 8.00%, 8/02/17		393		365,804

				1,970,728
Commercial Services & Supplies — 0.7%
AWAS Finance Luxembourg Sarl, Term Loan B, 5.25%, 6/10/16		465		465,004
Delos Aircraft, Inc., Term Loan B2, 4.75%, 4/12/16		550		555,500
Volume Services America, Inc., Term Loan B, 10.50%—10.75%, 9/16/16		983		982,500

				2,003,004
Communications Equipment — 0.8%
Avaya, Inc., Term Loan B1, 3.18%, 10/24/14		254		243,513
Zayo Group, LLC, Term Loan B, 7.13%, 7/02/19		2,075		2,105,482

				2,348,995
Construction & Engineering — 0.7%
Safway Services LLC, Mezzanine Loan, 15.63%, 12/16/17		2,000		2,000,000
Construction Materials — 0.4%
HD Supply, Inc., Senior Debt B, 7.25%, 10/12/17		1,115		1,139,162
Consumer Finance — 1.7%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17		5,085		4,910,839
Diversified Consumer Services — 0.1%
Laureate Education, Inc., Extended Term Loan, 5.25%, 6/18/18		144		140,723


Floating Rate Loan Interests (d)	Par (000)		Value
Diversified Consumer Services (concluded)
ServiceMaster Co.:
Delayed Draw Term Loan, 2.74%, 7/24/14	USD	8	$	8,426
Term Loan, 2.75%—2.97%, 7/24/14		85		84,608

				233,757
Diversified Financial Services — 0.5%
Residential Capital LLC:
DIP Term Loan A1, 5.00%, 11/18/13		1,255		1,258,137
DIP Term Loan A2, 6.75%, 11/18/13		185		187,159

				1,445,296
Diversified Telecommunication Services — 0.5%
Level 3 Financing, Inc.:
2016 Term Loan B, 4.75%, 2/01/16		330		330,660
2019 Term Loan B, 5.25%, 8/01/19		270		270,394
Term Loan B3, 5.75%, 8/31/18		850		852,244

				1,453,298
Electronic Equipment, Instruments & Components — 0.1%
CDW LLC, Extended Term Loan, 4.00%, 7/14/17		276		272,290
Energy Equipment & Services — 2.2%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		1,981		2,055,246
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		3,626		3,795,937
Tervita Corp., Incremental Term Loan, 6.50%, 10/17/14		274		273,398

				6,124,581
Food & Staples Retailing — 0.0%
US Foods, Inc. (FKA U.S. Foodservice, Inc.), Extended Term Loan B, 5.75%, 3/31/17		74		71,704
Food Products — 0.3%
Advance Pierre Foods, Term Loan (Second Lien), 11.25%, 9/29/17		900		905,400
Health Care Equipment & Supplies — 0.5%
Bausch & Lomb, Inc., Term Loan B, 5.25%, 5/17/19		475		476,582
Hupah Finance, Inc., Term Loan B, 6.25%, 1/21/19		763		765,949
LHP Hospital Group, Inc., Term Loan, 9.00%, 7/03/18		285		287,137

				1,529,668
Health Care Providers & Services — 0.5%
Harden Healthcare LLC:
Add on Term Loan A, 7.75%, 3/02/15		387		375,509
Term Loan A, 8.50%, 3/02/15		367		360,007
InVentiv Health, Inc., Combined Term Loan, 6.50%, 8/04/16		683		635,995

				1,371,511
Hotels, Restaurants & Leisure — 1.2%
Caesars Entertainment Operating Co., Inc.:
Extended Term Loan B6, 5.49%, 1/26/18		200		175,812
Incremental Term Loan B4, 9.50%, 10/31/16		483		492,041
Term Loan B1, 3.24%, 1/28/15		411		389,885
Term Loan B2, 3.24%, 1/28/15		444		421,185
Term Loan B3, 3.24%—3.46%, 1/28/15		965		915,341
OSI Restaurant Partners LLC:
Revolver, 2.49%—4.50%, 6/14/13		9		9,354
Term Loan B, 2.56%, 6/14/14		95		94,275
Sabre, Inc., Non Extended Initial Term Loan, 2.23%, 9/30/14		64		62,961
Station Casinos, Inc., Term Loan B1, 3.23%, 6/17/16		868		824,651
Travelport LLC:
Extended Tranche A Term Loan, 6.44%, 9/28/12		193		57,871
Extended Tranche B Term Loan, 13.94%, 12/01/16		622		49,753

				3,493,129

See Notes to Consolidated Financial Statements.



34	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (d)	Par (000)		Value

Industrial Conglomerates — 0.1%
Sequa Corp.:
Incremental Term Loan, 6.25%, 12/03/14		USD 178	$	178,898
Term Loan, 3.69%—3.72%, 12/03/14		155		153,935

				332,833
IT Services — 0.3%
Ceridian Corp., Extended Term Loan, 5.99%, 5/09/17		68		68,258
First Data Corp., 2018 Term Loan B, 4.24%, 3/23/18		785		741,174

				809,432
Leisure Equipment & Products — 0.2%
Eastman Kodak Co., DIP Term Loan B, 8.50%, 7/19/13		653		646,881
Machinery — 0.5%
Navistar International Corp., Term Loan B, 7.00%, 8/17/17		676		678,879
Rexnord Corp., Term Loan B, 5.00%, 4/02/18		592		594,352

				1,273,231
Media — 4.8%
Affinion Group, Inc., Term Loan B, 5.00%, 7/15/15		40		33,595
Cengage Learning Acquisitions, Inc.:
Non-Extended Term Loan, 2.49%, 7/03/14		323		297,642
Tranche 1 Incremental, Term Loan, 7.50%, 7/03/14		1,676		1,617,000
Cequel Communications LLC, Term Loan B, 4.00%, 2/14/19		474		472,827
Clear Channel Communications, Inc.:
Term Loan B, 3.88%, 1/28/16		1,936		1,499,459
Term Loan C, 3.88%, 1/28/16		385		292,430
EMI Music Publishing Ltd., Term Loan B, 5.50%, 6/29/18		435		437,936
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		6,364		6,385,066
Interactive Data Corp., Term Loan B, 4.50%, 2/12/18		409		409,564
Newsday LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		1,325		1,332,182
Thomson Reuters (Healthcare), Inc., Term Loan B, 6.75%, 6/06/19		375		377,655
Univision Communications, Inc., Extended Term Loan, 4.48%, 3/31/17		301		291,182

				13,446,538
Metals & Mining — 0.2%
Constellium Holding Co. BV, Term Loan B, 9.25%, 5/25/18		430		421,400
Oil, Gas & Consumable Fuels — 0.8%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17		1,200		1,202,580
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		1,003		1,003,160

				2,205,740
Paper & Forest Products — 0.6%
Ainsworth Lumber Co. Ltd., Term Loan, 5.25%, 6/26/14		390		377,325
NewPage Corp., DIP Term Loan, 8.00%, 3/07/13		600		605,628
Verso Paper Finance Holdings LLC, Term Loan, 6.49%—7.24%, 2/01/13		1,535		767,555

				1,750,508
Pharmaceuticals — 0.5%
Aptalis Pharma, Inc., Term Loan B, 5.50%, 2/10/17		985		981,306
Pharmaceutical Product Development, Inc., Term Loan B, 6.25%, 12/05/18		313		316,621

				1,297,927


Floating Rate Loan Interests (d)	Par (000)		Value

Real Estate Investment Trusts (REITs) — 0.4%
iStar Financial, Inc.:
Term Loan A1, 5.00%, 6/28/13		USD 1,080	$	1,080,900
Term Loan A2, 7.00%, 6/30/14		5		5,005

				1,085,905
Real Estate Management & Development — 0.4%
Realogy Corp.:
Extended Letter of Credit Loan, 4.50%, 10/10/16		111		107,609
Extended Term Loan, 4.49%, 10/10/16		737		711,002
Stockbridge SBE Holdings LLC, Term Loan B, 13.00%, 5/02/17		185		184,075

				1,002,686
Semiconductors & Semiconductor Equipment — 0.0%
NXP BV, Term Loan A-2, 5.50%, 3/03/17		70		70,477
Software — 0.4%
Infor US, Inc. (FKA Lawson Software, Inc.), Term Loan B, 6.25%, 4/05/18		1,232		1,244,577
Specialty Retail — 0.1%
Claire’s Stores, Inc., Term Loan B, 2.98%—3.20%, 5/29/14		387		380,054
Textiles, Apparel & Luxury Goods — 0.4%
Ascend Performance Materials LLC, Term Loan B, 6.75%, 4/10/18		1,137		1,126,722
Wireless Telecommunication Services — 1.2%
Crown Castle International Corp., Term Loan B, 4.00%, 1/31/19		49		49,414
Vodafone Americas Finance 2, Inc. (f):
Term Loan, 6.88%, 8/11/15		1,938		2,015,700
Term Loan B, 6.25%, 7/11/16		1,341		1,367,437

				3,432,551
Total Floating Rate Loan Interests – 23.3%				65,795,197



Other Interests (k)	Beneficial Interest (000)
Auto Components — 0.0%
Lear Corp. Escrow		460,000		4,887
Chemicals — 0.0%
Wellman Holdings, Inc., Litigation Trust Certificate		2,830,000		28
Hotels, Restaurants & Leisure — 0.0%
Buffets, Inc. (a)		575,000		6
Media — 0.0%
Adelphia Escrow (a)		750,000		8
Adelphia Recovery Trust (a)		940,601		94

				102
Total Other Interests – 0.0%				5,023



Preferred Securities
Capital Trusts — 0.2%	Par (000)
Insurance — 0.2%
Genworth Financial, Inc., 6.15%, 11/15/66 (d)		865		519,000

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	35

Consolidated Schedule of Investments (continued)

BlackRock Corporate High Yield Fund III, Inc. (CYE)

(Percentages shown are based on Net Assets)


Preferred Stocks	Shares		Value

Auto Components — 0.7%
Dana Holding Corp., 4.00% (b)(e)		17,830	$	2,083,881
Diversified Financial Services — 1.5%
Ally Financial, Inc., 7.00% (b)		4,464		4,064,891
Real Estate Investment Trusts (REITs) — 0.1%
MPG Office Trust, Inc., Series A, 7.63% (a)		8,994		206,682
Thrifts & Mortgage Finance — 0.0%
Fannie Mae, Series O, 7.00% (a)		30,000		36,000
Freddie Mac, Series Z, 8.38% (a)		75,961		70,644

				106,644
Total Preferred Stocks – 2.3%				6,462,098



Trust Preferreds
Diversified Financial Services — 0.9%
GMAC Capital Trust I, Series 2, 8.13%, 2/15/40 (b)		76,790		1,897,696
RBS Capital Funding Trust VII, 6.08% (a)(d)(i)(j)		26,500		497,060
Total Trust Preferreds – 0.9%				2,394,756
Total Preferred Securities – 3.4%				9,375,854



Warrants (l)
Containers & Packaging — 0.0%
MDP Acquisitions Plc (Expires 10/10/13)		700		29,437
Health Care Providers & Services — 0.0%
HealthSouth Corp. (Expires 1/16/14)		32,042		—
Media — 0.0%
New Vision Holdings LLC (Expires 9/30/14)		22		—
Software — 0.0%
Bankruptcy Management Solutions, Inc. (Expires 9/28/17)		334		—
HMH Holdings/EduMedia (Issued/Exercisable 3/09/10, 19 Shares for 1 Warrant, Expires 6/22/19, Strike Price $42.27)		1,164		—

				—
Total Warrants – 0.0%				29,437
Total Long-Term Investments (Cost – $383,887,453) – 138.9%				392,159,838



Options Purchased	Contracts
Over-the-Counter Call Options — 0.0%
Marsico Parent Superholdco LLC, Strike Price USD 942.86, Expires 12/14/19, Broker Goldman Sachs Group, Inc.		19		—
Total Options Purchased (Cost — $18,578) – 0.0%				—
Total Investments (Cost — $383,906,031) – 138.9%				392,159,838
Liabilities in Excess of Other Assets – (38.9)%				(109,733,285	)

Net Assets – 100.0%			$	282,426,553

(a)

Non-income producing security.

(b)

(c)

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

(d)

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

(e)

Convertible security.

(f)

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

(g)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(h)

When-issued security. Unsettled when-issued transaction was as follows:


Counterparty	Value		Unrealized Appreciation
Goldman Sachs Group, inc.	$	1,639,238	$	20,238

(i)

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

(j)

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

(k)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(l)

Investments in issuers considered to be an affiliate of the Fund during the six months ended August 31, 2012, for purposes of Section 2(a)(3) of the 1940 Act, as amended, were as follows:

Affiliate

Shares

Held at
February 29,
2012

Net
Activity

Shares
Held at
August 31,
2012

Income

BlackRock Liquidity Funds, TempFund, Institutional Class

—

444

Financial futures contracts sold as of August 31, 2012 were as follows:


Contracts	Issue	Exchange	Expiration	Notional Value		Unrealized Depreciation
117	S&P 500 E-Mini Index	Chicago Mercantile	September 2012	$	8,219,835	$	(565,522	)

Foreign currency exchange contracts as of August 31, 2012 were as follows:


Currency Purchased		Currency Sold			Counter party	Settle ment Date		Unrealized Appreciation (Depreciation)
GBP	155,000		USD	240,823	Citigroup, Inc.		10/17/12	$	5,258
GBP	72,000		USD	112,584	UBS AG		10/17/12		1,724
USD	74,743		AUD	74,000	Citigroup, Inc.		10/17/12		(1,412	)
USD	129,182		AUD	127,000	UBS AG		10/17/12		(1,516	)
USD	2,776,254		CAD	2,819,500	UBS AG		10/17/12		(81,423	)
USD	4,179,821		GBP	2,692,500	UBS AG		10/17/12		(94,837	)
USD	73,703		GBP	47,000	UBS AG		10/17/12		(915	)
USD	70,686		GBP	45,000	UBS AG		10/17/12		(757	)
EUR	270,000		USD	330,556	Citigroup, Inc.		10/22/12		9,225
EUR	300,000		USD	367,285	Citigroup, Inc.		10/22/12		10,250
EUR	292,000		USD	358,211	Credit Suisse Group AG		10/22/12		9,256
EUR	169,000		USD	208,807	UBS AG		10/22/12		3,871
USD	18,442,105		EUR	15,042,500	Citigroup, Inc.		10/22/12		(488,108	)
USD	242,162		EUR	197,000	Citigroup, Inc.		10/22/12		(5,752	)
USD	422,430		EUR	340,000	Citigroup, Inc.		10/22/12		(5,443	)
USD	106,848		EUR	85,000	Royal Bank of Scotland Group Plc		10/22/12		(120	)
USD	562,117		EUR	455,000	UBS AG		10/22/12		(10,477	)
USD	262,857		EUR	213,000	UBS AG		10/22/12		(5,193	)

See Notes to Consolidated Financial Statements.



36	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (continued)		BlackRock Corporate High Yield Fund III, Inc. (CYE)

Foreign currency exchange contracts as of August 31, 2012 were as follows (concluded):


Currency Purchased		Currency Sold			Counter party	Settle ment Date		Unrealized Appreci ation (Depreci ation)
USD	255,542		EUR	207,000	UBS AG		10/22/12	$	(4,957)
USD	132,758		EUR	108,000	UBS AG		10/22/12		(3,155)
USD	65,174		EUR	52,000	UBS AG		10/22/12		(266)
Total								$	(664,747)

Credit default swaps on single-name issues - buy protection outstanding as of August 31, 2012 were as follows:


Issuer	Pay Fixed Rate	Counterparty	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	170	$	(12,110)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	105		(7,783)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	85		(6,981)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	90		(4,594)
MGM Resorts International	5.00%	Deutsche Bank AG	6/20/15	$	90		(5,158)
Republic of Hungary	1.00%	Deutsche Bank AG	12/20/15	$	300		5,456
Israel (State of)	1.00%	Deutsche Bank AG	3/20/17	$	225		(5,043)
Israel Government Bond	1.00%	Deutsche Bank AG	3/20/17	$	675		(15,553)
Total						$	(51,766)

Credit default swaps on single-name issues — sold protection outstanding as of August 31, 2012 were as follows:


Issuer	Receive Fixed Rate	Counter party	Expiration Date	Issuer Credit Rating¹		Notional Amount (000) ²		Unrealized Appreciation
Air Lease Corp.	5.00%	Goldman Sachs Group, Inc.	2/14/13		NR	$	500	$	8,290
CIT Group, Inc.	5.00%	Deutsche Bank AG	9/20/15		BB-	$	3,400		442,214
Aramark Corp.	5.00%	Goldman Sachs Group, Inc.	3/20/16		B	$	500		41,882
Aramark Corp.	5.00%	Goldman Sachs Group, Inc.	6/20/16		B	$	300		25,338
Aramark Corp.	5.00%	Goldman Sachs Group, Inc.	6/20/16		B	$	300		27,000
Aramark Corp.	5.00%	Credit Suisse Group AG	9/20/16		B	$	125		14,934
Aramark Corp.	5.00%	Goldman Sachs Group, Inc.	9/20/16		B	$	350		30,667
Aramark Corp.`	5.00%	Goldman Sachs Group, Inc.	9/20/16		B	$	125		14,522
Aramark Corp.	5.00%	Deutsche Bank AG	3/20/17		B	$	200		13,202

Credit default swaps on single-name issues — sold protection outstanding as of August 31, 2012 were as follows (concluded):


Issuer	Receive Fixed Rate	Counter party	Expiration Date	Issuer Credit Rating¹		Notional Amount (000) ²		Unrealized Appreci ation
Crown Castle International Corp.	7.25%	Deutsche Bank AG	3/20/17		B-	$	470	$	6,699
Ford Motor Co.	5.00%	Deutsche Bank AG	3/20/17		BB+	$	1,500		66,071
Goodyear Tire & Rubber Co.	5.00%	Deutsche Bank AG	6/20/17		B+	$	310		14,445
Goodyear Tire & Rubber Co.	5.00%	Goldman Sachs Group, Inc.	6/20/17		B+	$	300		10,572
CCO Holdings LLC	8.00%	Deutsche Bank AG	9/20/17		BB-	$	1,600		130,344
Level 3 Communi cations, Inc.	5.00%	Goldman Sachs Group, Inc.	6/20/19		B-	$	1,000		27,335
Total								$	873,515

Using S&P’s rating.

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

Credit default swaps on traded indexes - buy protection outstanding as of August 31, 2012 were as follows:


Index	Pay Fixed Rate	Counterparty	Expiration Date	Notional Amount (000)		Unrealized Depreciation
Dow Jones CDX North America High Yield Series 18	5.00%	Credit Suisse Group AG	6/20/17	$	1,881	$	(6,100	)

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

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	37


Consolidated Schedule of Investments (continued)		BlackRock Corporate High Yield Fund III, Inc. (CYE)

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of August 31, 2012:


	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks	$	17,584,878	$	705,889	$	4,021,670	$	22,312,437
Corporate Bonds		—		290,263,669		4,378,221		294,641,890
Floating Rate Loan Interests		—		53,781,377		12,013,820		65,795,197
Other Interests		94		—		4,929		5,023
Preferred Securities		2,708,082		6,667,772		—		9,375,854
Warrants		—		29,437		—		29,437

Total	$	20,293,054	$	351,448,144	$	20,418,640	$	392,159,838


	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments¹
Assets:
Credit contracts		—		$	291,424		$	587,547	$	878,971
Foreign currency exchange contracts		—			39,584			—		39,584
Liabilities:
Credit contracts		—			(63,322	)		—		(63,322	)
Equity contracts	$	(565,522	)		—			—		(565,522	)
Foreign currency exchange contracts		—			(704,331	)		—		(704,331	)

Total	$	(565,522	)	$	(436,645	)	$	587,547	$	(414,620	)


	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	893,481		—			—	$	893,481
Cash pledged as collateral for financial futures contracts		533,000		—			—		533,000
Cash pledged as collateral for swaps		100,000		—			—		100,000
Foreign currency at value		229,653		—			—		229,653
Liabilities:
Cash received as collateral for swaps		—	$	(400,000	)		—		(400,000	)
Loan payable		—		(115,000,000	)		—		(115,000,000	)

Total	$	1,756,134	$	(115,400,000	)		—	$	(113,643,866	)

As of February 29, 2012, the Fund used observable inputs in determining the value of certain equity securities. During the year, the Fund began valuing these securities using unadjusted price quotations from an exchange. As a result, investments with a beginning of period value of $7,570,792 transferred from Level 2 to Level 1 in the disclosure hierarchy.

The following table summarizes the valuation techniques used and unobservable inputs developed by the Global Valuation Committee to determine the fair value of certain of the Fund’s Level 3 investments as of August 31, 2012:

Value

Valuation Techniques

Unobservable Inputs²

Range of
Unobservable
Inputs

Weighted
Average of
Unobservable
Inputs³

Assets:

Common Stocks

4,021,665

Market Comparable Companies

EBITDA Multiple

5.9x

Forward EBITDA Multiple

4.6x

Cost

N/A⁴

—

Corporate Bonds

4,104,796

Market Comparable Companies

Yield

7.00%—9.67%

8.74%

EBITDA Multiple

6.0x

Cost

N/A⁴

—

Floating Rate Loan interests

3,503,071

Market Comparable Companies

Illiquidity Discount

50%

Yield

9.65%

Cost

N/A⁴

—

Total⁵

11,629,532

A change to the unobservable input may result in a significant change to the value of the investment as follows:


Unobservable Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
EBITDA Multiple	Increase	Decrease
Forward EBITDA Multiple	Increase	Decrease
Illiquidity Discount	Decrease	Increase
Yield	Decrease	Increase

See Notes to Consolidated Financial Statements.



38	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (concluded)		BlackRock Corporate High Yield Fund III, Inc. (CYE)

Unobservable inputs are weighted based on the value of the investments included in the range.

⁴

⁵

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


	Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests		Preferred Securities			Warrants			Total
Assets/Liabilities:
Opening balance, as of February 29, 2012	$	4,322,217		$	4,458,734		$	9,295,244		$	4,642	$	352,582		$	1		$	18,433,420
Transfers into Level 3¹		—			—			2,542,871			—		—			—			2,542,871
Transfers out of Level 3²		(38,470	)		—			(219,217	)		—		—			—			(257,687	)
Accrued discounts/premiums		—			1,737			62,211			—		—			—			63,948
Net realized gain (loss)		(937,908	)		—			(352,573	)		—		(87,104	)		(177,871	)		(1,555,456	)
Net change in unrealized appreciation/depreciation³		522,915			(55,811	)		399,346			287		110,561			177,870			1,155,168
Purchases		152,928			56,611			1,732,804			—		—			—			1,942,343
Sales		(12	)		(83,050	)		(1,446,866	)		—		(376,039	)		—			(1,905,967	)

Closing Balance, as of August 31, 2012	$	4,021,670		$	4,378,221		$	12,013,820		$	4,929		—			—		$	20,418,640

As of February 29, 2012, the Fund used observable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $2,542,871 transferred from Level 2 to Level 3 in the disclosure hierarchy.

As of February 29, 2012, the Fund used significant unobservable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $257,687 transferred from Level 3 to Level 2 in the disclosure hierarchy.

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


	Credit Contracts
Assets/Liabilities:
Opening balance, as of February 29, 2012	$	237,861
Transfers into Level 3⁴		—
Transfers out of Level 3⁴		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation/depreciation⁵		349,686
Purchases		—
Issuances⁶		—
Sales		—
Settlements⁷		—

Closing Balance, as of August 31, 2012	$	587,547

⁴

Transfers into and transfers out of Level 3 represent the values as of the beginning of the reporting period.

⁵

Included in the related net change in unrealized appreciation/depreciation in the Consolidated Statement of Operations. The change in unrealized appreciation/depreciation on derivative financial instruments still held at August 31, 2012 was $349,686.

⁶

Issuances represent upfront cash received on certain derivative financial instruments.

⁷

Settlements represent periodic contractual cash flows and/or cash flows to terminate certain derivative financial instruments.

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	39


Consolidated Schedule of Investments		BlackRock Debt Strategies Fund, Inc. (DSU)
August 31, 2012 (Unaudited)		(Percentages shown are based on Net Assets)


Asset-Backed Securities	Par (000)		Value

CSAM Funding, Series 2A, Class B1, 7.05%, 10/15/16 (a)	USD	625	$	631,500
Fraser Sullivan CLO Ltd., Series 2012-7A, Class C, 4.47%, 4/20/23 (a)(b)		765		679,779
Gannett Peak CLO Ltd., Series 2006-1X, Class A2, 0.81%, 10/27/20 (b)		940		791,950
Goldentree Loan Opportunities VI Ltd., Series 2012-6A, Class D, 4.66%, 4/17/22 (a)(b)		1,250		1,136,375
Greyrock CDO Ltd., Series 2005-1X, Class A2L, 0.85%, 11/15/17 (b)		1,980		1,751,706
Highbridge Loan Management Ltd., Series 2012-1A, Class C, 5.71%, 9/20/22 (a)(b)(c)		1,200		1,107,600
ING Investment Management, Series 2012-2A, Class D, 4.99%, 10/15/22 (a)(b)		1,275		1,136,803
LCM LP (a)(b):
Series 11A, Class D2, 4.41%, 4/19/22		1,300		1,137,500
Series 9A, Class E, 4.66%, 7/14/22		1,000		775,100
Symphony CLO Ltd. (a)(b):
Series 2012-10A, Class D, 5.69%, 7/23/23		1,200		1,110,000
Series 2012-9A, Class D, 4.71%, 4/16/22		1,075		958,040

Total Asset-Backed Securities – 2.5%				11,216,353



Common Stocks (d)	Shares
Chemicals — 0.0%
GEO Specialty Chemicals, Inc.		339,340		156,096
Containers & Packaging — 0.1%
Smurfit Kappa Plc		36,342		296,488
Diversified Financial Services — 0.9%
Kcad Holdings I Ltd.		590,545,406		3,915,907
Electrical Equipment — 0.0%
Medis Technologies Ltd.		286,757		860
Hotels, Restaurants & Leisure — 0.0%
HRP PIK Corp., Class B (a)		5,000		—
Metals & Mining — 0.1%
Euramax International		2,337		498,623
Paper & Forest Products — 0.6%
Ainsworth Lumber Co. Ltd. (a)		1,237,553		2,711,757
Western Forest Products, Inc. (a)		211,149		229,195

				2,940,952
Semiconductors & Semiconductor Equipment — 0.0%
SunPower Corp.		1,707		7,647
Software — 0.3%
Bankruptcy Management Solutions, Inc.		1,870		19
HMH Holdings/EduMedia		52,041		1,275,011

				1,275,030
Specialty Retail — 0.0%
Movie Gallery, Inc.		503,737		5
Total Common Stocks – 2.0%				9,091,608


Corporate Bonds	Par (000)		Value

Aerospace & Defense — 0.6%
Huntington Ingalls Industries, Inc., 7.13%, 3/15/21	USD	810	$	876,825
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17		1,364		1,452,660
Meccanica Holdings USA, Inc., 6.25%, 7/15/19 (a)		405		366,463

				2,695,948
Airlines — 0.1%
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23		611		648,085
Delta Air Lines, Inc., Series 2009-1-B, 9.75%, 6/17/18		176		190,113

				838,198
Auto Components — 1.5%
Delphi Corp., 6.13%, 5/15/21		560		616,000
Icahn Enterprises LP:
7.75%, 1/15/16		220		231,000
8.00%, 1/15/18		4,035		4,297,275
Jaguar Land Rover Plc, 8.25%, 3/15/20	GBP	392		656,522
Titan International, Inc., 7.88%, 10/01/17	USD	940		984,650
Venture Holdings Co. LLC (d)(e):
12.00%, 7/01/49		4,450		1
Series B, 9.50%, 7/01/05		1,800		—

				6,785,448
Beverages — 0.2%
Crown European Holdings SA:
7.13%, 8/15/18 (a)	EUR	304		420,608
7.13%, 8/15/18		257		355,580
Refresco Group BV, 7.38%, 5/15/18		213		251,837

				1,028,025
Biotechnology — 0.0%
QHP Royalty Sub LLC, 10.25%, 3/15/15 (a)	USD	45		44,770
Building Products — 0.6%
Building Materials Corp. of America (a):
7.00%, 2/15/20		1,000		1,082,500
6.75%, 5/01/21		590		644,575
USG Corp., 9.75%, 1/15/18		980		1,051,050

				2,778,125
Capital Markets — 0.7%
E*Trade Financial Corp.:
12.50%, 11/30/17 (f)		1,765		2,014,306
2.25%, 8/31/19 (a)(g)(h)		593		507,015
KKR Group Finance Co. LLC, 6.38%, 9/29/20 (a)		540		611,254

				3,132,575
Chemicals — 4.9%
Ashland, Inc., 4.75%, 8/15/22 (a)		475		476,188
Celanese US Holdings LLC, 5.88%, 6/15/21		1,415		1,563,575
GEO Specialty Chemicals, Inc. (a):
7.50%, 3/31/15 (f)(h)		4,171		5,004,944
10.00%, 3/31/15		4,106		4,105,600
Hexion US Finance Corp.:
6.63%, 4/15/20		895		903,950
9.00%, 11/15/20		670		572,850
Huntsman International LLC, 8.63%, 3/15/21		735		841,575
INEOS Finance Plc (a):
8.38%, 2/15/19		1,470		1,547,175
7.50%, 5/01/20		365		372,300
INEOS Group Holdings Plc, 8.50%, 2/15/16 (a)		240		226,200

See Notes to Consolidated Financial Statements.



40	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments
(continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Chemicals (concluded)
LyondellBasell Industries NV:
6.00%, 11/15/21	USD	930	$	1,060,200
5.75%, 4/15/24		1,775		2,010,187
NOVA Chemicals Corp., 8.63%, 11/01/19		570		649,800
Orion Engineered Carbons Bondco GmbH, 9.63%, 6/15/18 (a)		800		844,000
Tronox Finance LLC, 6.38%, 8/15/20 (a)		2,035		2,055,350

				22,233,894
Commercial Banks — 0.9%
CIT Group, Inc.:
7.00%, 5/02/16 (a)		1,556		1,559,880
5.00%, 5/15/17		620		646,350
5.50%, 2/15/19 (a)		1,430		1,490,775
5.00%, 8/15/22		480		483,636

				4,180,641
Commercial Services & Supplies — 1.3%
ARAMARK Holdings Corp., 8.63%, 5/01/16 (a)(f)		625		639,850
AWAS Aviation Capital Ltd., 7.00%, 10/17/16 (a)		757		798,323
Brickman Group Holdings, Inc., 9.13%, 11/01/18 (a)		55		55,550
Clean Harbors, Inc., 5.25%, 8/01/20 (a)		427		438,209
Covanta Holding Corp., 6.38%, 10/01/22		800		874,698
The Geo Group, Inc., 7.75%, 10/15/17		850		921,187
Mead Products LLC/ACCO Brands Corp., 6.75%, 4/30/20 (a)		617		652,477
Mobile Mini, Inc., 7.88%, 12/01/20		640		686,400
Verisure Holding AB:
8.75%, 9/01/18	EUR	400		503,120
8.75%, 12/01/18		149		165,860
West Corp., 8.63%, 10/01/18	USD	315		319,725

				6,055,399
Communications Equipment — 0.8%
Avaya, Inc., 9.75%, 11/01/15		360		312,300
Hughes Satellite Systems Corp., 6.50%, 6/15/19		720		771,300
Zayo Group LLC/Zayo Capital, Inc.:
8.13%, 1/01/20		1,320		1,402,500
10.13%, 7/01/20		1,020		1,093,950

				3,580,050
Construction Materials — 0.5%
HD Supply, Inc., 8.13%, 4/15/19 (a)		2,080		2,256,800
Consumer Finance — 0.1%
Ford Motor Credit Co. LLC:
7.00%, 4/15/15		280		311,691
6.63%, 8/15/17		148		170,138

				481,829
Containers & Packaging — 1.5%
Ardagh Packaging Finance Plc:
7.38%, 10/15/17	EUR	100		133,012
7.38%, 10/15/17 (a)		385		512,098
7.38%, 10/15/17		100		133,012
7.38%, 10/15/17 (a)	USD	206		220,678
9.13%, 10/15/20 (a)		300		312,000
Ball Corp., 6.75%, 9/15/20		625		690,625
Berry Plastics Corp.:
4.34%, 9/15/14 (b)		495		487,575
8.25%, 11/15/15		655		689,388
9.75%, 1/15/21		475		526,063
Beverage Packaging Holdings Luxembourg II SA, 8.00%, 12/15/16	EUR	1,243		1,532,176
Sealed Air Corp. (a):
8.13%, 9/15/19	USD	770		856,625


Corporate Bonds	Par (000)		Value

Containers & Packaging (concluded)
Sealed Air Corp. (a) (concluded) :
8.38%, 9/15/21	USD	150	$	168,750
Smurfit Kappa Acquisitions, 7.75%, 11/15/19	EUR	390		537,143

				6,799,145
Distributors — 0.2%
VWR Funding, Inc., 7.25%, 9/15/17 (a)(c)	USD	725		734,063
Diversified Consumer Services — 0.2%
Laureate Education, Inc., 9.25%, 9/01/19 (a)		585		585,000
ServiceMaster Co., 8.00%, 2/15/20		235		250,569

				835,569
Diversified Financial Services — 3.0%
Ally Financial, Inc.:
7.50%, 12/31/13		90		96,188
8.30%, 2/12/15		1,330		1,476,300
7.50%, 9/15/20		1,990		2,278,550
8.00%, 11/01/31		2,460		2,908,950
8.00%, 11/01/31		1,030		1,222,604
Archemedes Funding III Ltd., 5.50%, 11/29/12		1,829		—
CNG Holdings, Inc., 9.38%, 5/15/20 (a)		490		499,800
DPL, Inc., 7.25%, 10/15/21 (a)		180		205,200
Gala Group Finance Plc, 8.88%, 9/01/18	GBP	200		296,134
Reynolds Group Issuer, Inc.:
7.75%, 10/15/16	EUR	350		454,537
7.13%, 4/15/19	USD	1,070		1,152,925
9.88%, 8/15/19		1,845		1,951,087
6.88%, 2/15/21		665		719,863
8.25%, 2/15/21		155		152,288
WMG Acquisition Corp., 9.50%, 6/15/16		200		218,500

				13,632,926
Diversified Telecommunication Services — 1.8%
ITC Deltacom, Inc., 10.50%, 4/01/16		1,010		1,088,275
Level 3 Communications, Inc., 8.88%, 6/01/19 (a)		520		530,400
Level 3 Financing, Inc.:
4.47%, 2/15/15 (b)		2,420		2,395,800
8.13%, 7/01/19		2,902		3,039,845
7.00%, 6/01/20 (a)		460		457,700
OTE Plc, 5.00%, 8/05/13	EUR	88		95,935
Telefonica Emisiones SAU, 4.69%, 11/11/19		50		58,042
Telenet Finance V Luxembourg SCA:
6.25%, 8/15/22		119		150,427
6.75%, 8/15/24		222		283,420

				8,099,844
Electric Utilities — 0.1%
Mirant Mid Atlantic Pass Through Trust, Series B, 9.13%, 6/30/17	USD	475		510,534
Electrical Equipment — 0.1%
Belden, Inc., 5.50%, 9/01/22 (a)		360		360,900
Electronic Equipment, Instruments & Components — 0.0%
Muzak Holdings LLC, 13.00%, 3/15/10 (d)(e)		2,675		—
Energy Equipment & Services — 2.5%
Calfrac Holdings LP, 7.50%, 12/01/20 (a)		1,680		1,646,400
Compagnie Générale de Géophysique, Veritas, 6.50%, 6/01/21		2,100		2,186,625
FTS International Services LLC / FTS International Bonds Inc., 8.13%, 11/15/18 (a)		1,190		1,228,675
Gulfmark Offshore, Inc., 6.38%, 3/15/22 (a)		130		132,600
Hornbeck Offshore Services, Inc., 5.88%, 4/01/20		265		270,300
Key Energy Services, Inc., 6.75%, 3/01/21		740		752,950
MEG Energy Corp. (a):
6.50%, 3/15/21		950		999,875
6.38%, 1/30/23		315		328,388
Oil States International, Inc., 6.50%, 6/01/19		475		504,687

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	41

Consolidated Schedule of Investments (continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Energy Equipment & Services (concluded)
Peabody Energy Corp., 6.25%, 11/15/21 (a)		USD 2,045	$	2,080,787
Precision Drilling Corp.:
6.63%, 11/15/20		125		131,250
6.50%, 12/15/21		840		882,000

				11,144,537
Food & Staples Retailing — 0.1%
Bakkavor Finance 2 Plc, 8.25%, 2/15/18	GBP	100		139,731
Rite Aid Corp., 9.25%, 3/15/20	USD	435		446,962

				586,693
Food Products — 0.4%
Constellation Brands, Inc., 6.00%, 5/01/22		460		516,925
Post Holdings, Inc., 7.38%, 2/15/22 (a)		465		489,994
Smithfield Foods, Inc., 6.63%, 8/15/22		687		703,316

				1,710,235
Health Care Equipment & Supplies — 0.6%
Biomet, Inc., 6.50%, 8/01/20 (a)		523		542,612
DJO Finance LLC:
10.88%, 11/15/14		284		296,425
8.75%, 3/15/18 (a)		215		228,438
7.75%, 4/15/18		770		704,550
Fresenius Medical Care US Finance II, Inc., 5.88%, 1/31/22 (a)		640		680,000
Teleflex, Inc., 6.88%, 6/01/19		475		508,250

				2,960,275
Health Care Providers & Services — 3.5%
Aviv Healthcare Properties LP, 7.75%, 2/15/19		700		728,000
CHS/Community Health Systems, Inc.:
5.13%, 8/15/18		345		355,781
7.13%, 7/15/20		333		348,818
Crown Newco 3 Plc:
7.00%, 2/15/18 (a)	GBP	108		172,774
7.00%, 2/15/18		194		310,353
DaVita, Inc., 5.75%, 8/15/22	USD	686		713,440
HCA, Inc.:
6.50%, 2/15/20		2,020		2,219,475
7.88%, 2/15/20		1,210		1,350,662
5.88%, 3/15/22		2,380		2,531,725
Hologic, Inc., 6.25%, 8/01/20 (a)		977		1,034,399
IASIS Healthcare LLC, 8.38%, 5/15/19		1,243		1,185,511
Omnicare, Inc., 7.75%, 6/01/20		1,310		1,444,275
Tenet Healthcare Corp., 8.88%, 7/01/19		2,305		2,621,937
United Surgical Partners International, Inc., 9.00%, 4/01/20 (a)		330		354,338
Vanguard Health Holding Co. II LLC, 7.75%, 2/01/19 (a)		565		589,013

				15,960,501
Health Care Technology — 0.8%
IMS Health, Inc., 12.50%, 3/01/18 (a)		3,205		3,765,875
Hotels, Restaurants & Leisure — 2.3%
Affinity Gaming LLC/Affinity Gaming Finance Corp., 9.00%, 5/15/18 (a)		235		239,112
Caesars Entertainment Operating Co., Inc.:
11.25%, 6/01/17		770		829,675
10.00%, 12/15/18		518		326,340
8.50%, 2/15/20 (a)		880		867,900
Caesars Operating Escrow LLC, 9.00%, 2/15/20 (a)		1,343		1,336,285
Carlson Wagonlit BV, 6.88%, 6/15/19 (a)		260		270,400
Choice Hotels International, Inc., 5.75%, 7/01/22		170		182,325
Cirsa Funding Luxembourg SA, 8.75%, 5/15/18	EUR	1,679		1,853,145
Diamond Resorts Corp., 12.00%, 8/15/18	USD	1,040		1,106,300
Gategroup Finance Luxembourg SA, 6.75%, 3/01/19	EUR	235		302,233


Corporate Bonds	Par (000)		Value

Hotels, Restaurants & Leisure (concluded)
HRP Myrtle Beach Holdings LLC, 14.50%, 4/01/14 (a)(d)(e)	USD	6,892	$	1
HRP Myrtle Beach Operations LLC (a)(d)(e):
0.00%, 4/01/12		5,000		1
12.50%, 4/01/13		5,000		1
Little Traverse Bay Bands of Odawa Indians, 9.00%, 8/31/20 (a)		609		554,190
Travelport LLC:
5.09%, 9/01/14 (b)		1,770		1,256,700
9.88%, 9/01/14		390		310,050
Tropicana Entertainment LLC, 9.63%, 12/15/14 (d)(e)		530		—
Wynn Las Vegas LLC, 5.38%, 3/15/22 (a)		888		907,980

				10,342,638
Household Durables — 0.7%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (a)		640		654,400
Libbey Glass, Inc., 6.88%, 5/15/20 (a)		175		186,594
Spie BondCo 3 SCA, 11.00%, 8/15/19	EUR	244		311,506
Standard Pacific Corp., 8.38%, 1/15/21	USD	1,685		1,878,775

				3,031,275
Household Products — 0.0%
Ontex IV SA, 9.00%, 4/15/19	EUR	110		127,289
Independent Power Producers & Energy Traders — 3.5%
The AES Corp.:
7.75%, 10/15/15	USD	300		339,000
9.75%, 4/15/16		1,305		1,559,475
7.38%, 7/01/21		130		148,850
Calpine Corp. (a):
7.25%, 10/15/17		920		984,400
7.50%, 2/15/21		365		405,150
Energy Future Holdings Corp., 10.00%, 1/15/20		2,315		2,552,287
Energy Future Intermediate Holding Co. LLC:
10.00%, 12/01/20		6,060		6,802,350
11.75%, 3/01/22 (a)		470		500,550
GenOn REMA LLC, 9.24%, 7/02/17		392		421,486
Laredo Petroleum, Inc.:
9.50%, 2/15/19		1,210		1,373,350
7.38%, 5/01/22		360		387,000
QEP Resources, Inc., 5.38%, 10/01/22		335		343,375

				15,817,273
Industrial Conglomerates — 1.6%
Sequa Corp. (a):
11.75%, 12/01/15		2,850		2,992,500
13.50%, 12/01/15		4,023		4,264,216
				7,256,716
Insurance — 0.6%
CNO Financial Group, Inc., 9.00%, 1/15/18 (a)		1,649		1,803,594
Genworth Financial, Inc., 7.63%, 9/24/21		700		715,260
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (a)		415		371,425

				2,890,279
IT Services — 1.2%
Ceridian Corp., 8.88%, 7/15/19 (a)		980		1,051,050
Epicor Software Corp., 8.63%, 5/01/19		720		741,600
First Data Corp.:
7.38%, 6/15/19 (a)		835		862,137
6.75%, 11/01/20 (a)		870		863,475
8.25%, 1/15/21 (a)		535		530,319
12.63%, 1/15/21		764		773,550
SunGard Data Systems, Inc., 7.63%, 11/15/20		600		643,500

				5,465,631

See Notes to Consolidated Financial Statements.



42	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Machinery — 0.9%
UR Financing Escrow Corp. (a):
5.75%, 7/15/18	USD	877	$	927,427
7.38%, 5/15/20		565		598,900
7.63%, 4/15/22		2,328		2,514,240

				4,040,567
Media — 5.6%
AMC Networks, Inc., 7.75%, 7/15/21		365		413,363
Cengage Learning Acquisitions, Inc., 11.50%, 4/15/20 (a)		815		857,787
Checkout Holding Corp., 16.03%, 11/15/15 (a)(g)		1,090		664,900
Cinemark USA, Inc., 8.63%, 6/15/19		410		459,200
Clear Channel Communications, Inc., 9.00%, 3/01/21		617		529,078
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/17		639		691,717
Series B, 9.25%, 12/15/17		5,512		5,987,410
Series B, 7.63%, 3/15/20		1,677		1,626,690
DISH DBS Corp., 5.88%, 7/15/22 (a)		1,440		1,450,800
Intelsat Jackson Holdings SA:
11.25%, 6/15/16		182		191,555
7.25%, 10/15/20 (a)		1,370		1,476,175
Intelsat Luxembourg SA:
11.25%, 2/04/17		250		262,500
11.50%, 2/04/17 (f)		1,190		1,249,500
Interactive Data Corp., 10.25%, 8/01/18		1,545		1,741,987
Lamar Media Corp., 5.88%, 2/01/22		480		508,800
NAI Entertainment Holdings LLC, 8.25%, 12/15/17 (a)		920		1,025,800
Nielsen Finance LLC, 7.75%, 10/15/18		1,235		1,389,375
ProQuest LLC, 9.00%, 10/15/18 (a)		415		380,763
Truven Health Analytics, Inc., 10.63%, 6/01/20 (a)		380		405,650
Unitymedia Hessen GmbH & Co. KG:
8.13%, 12/01/17 (a)		2,730		2,955,225
7.50%, 3/15/19		1,040		1,125,301
Ziggo Finance BV, 6.13%, 11/15/17 (a)	EUR	51		68,478

				25,462,054
Metals & Mining — 1.5%
Eco-Bat Finance Plc, 7.75%, 2/15/17		305		387,465
FMG Resources August 2006 Property Ltd. (a):
6.88%, 2/01/18	USD	640		609,600
6.88%, 4/01/22		290		266,800
Global Brass and Copper, Inc., 9.50%, 6/01/19 (a)		485		510,463
Kaiser Aluminum Corp., 8.25%, 6/01/20 (a)		360		381,600
New Gold, Inc., 7.00%, 4/15/20 (a)		120		126,300
Novelis, Inc., 8.75%, 12/15/20		3,625		4,050,938
RathGibson, Inc., 11.25%, 2/15/14 (d)(e)		4,440		—
Schmolz + Bickenbach Luxembourg SA, 9.88%, 5/15/19	EUR	260		264,075
Steel Dynamics, Inc., 6.38%, 8/15/22 (a)	USD	390		403,650

				7,000,891
Multiline Retail — 0.1%
Dollar General Corp., 4.13%, 7/15/17		241		250,640
Oil, Gas & Consumable Fuels — 7.4%
Access Midstream Partners LP, 6.13%, 7/15/22		785		814,437
Alpha Natural Resources, Inc.:
6.00%, 6/01/19		460		414,000
6.25%, 6/01/21		345		308,775
Berry Petroleum Co., 6.38%, 9/15/22		340		362,100
CCS, Inc., 11.00%, 11/15/15 (a)		920		952,200
Chaparral Energy, Inc., 7.63%, 11/15/22 (a)		215		227,363
Chesapeake Energy Corp.:
7.25%, 12/15/18		45		47,138
6.63%, 8/15/20		500		513,750
6.88%, 11/15/20		285		295,688


Corporate Bonds	Par (000)		Value

Oil, Gas & Consumable Fuels (concluded)
Chesapeake Energy Corp. (concluded) :
6.13%, 2/15/21	USD	435	$	431,737
Coffeyville Resources LLC, 9.00%, 4/01/15 (a)		191		203,415
Concho Resources, Inc., 5.50%, 10/01/22		395		407,837
Consol Energy, Inc.:
8.25%, 4/01/20		2,145		2,311,237
6.38%, 3/01/21		440		435,600
Crosstex Energy LP:
8.88%, 2/15/18		100		106,750
7.13%, 6/01/22 (a)		370		368,150
Denbury Resources, Inc., 8.25%, 2/15/20		50		56,750
Energy XXI Gulf Coast, Inc., 7.75%, 6/15/19		1,300		1,381,250
EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (a)		440		471,900
Hilcorp Energy I LP, 7.63%, 4/15/21 (a)		2,100		2,310,000
Holly Energy Partners LP, 6.50%, 3/01/20 (a)		150		156,750
Kodiak Oil & Gas Corp., 8.13%, 12/01/19 (a)		605		642,812
Linn Energy LLC:
6.25%, 11/01/19 (a)		2,780		2,745,250
8.63%, 4/15/20		360		388,800
7.75%, 2/01/21		930		969,525
MarkWest Energy Partners LP, 5.50%, 2/15/23		275		281,188
Newfield Exploration Co.:
5.75%, 1/30/22		255		279,225
5.63%, 7/01/24		1,200		1,302,000
Northern Oil and Gas, Inc., 8.00%, 6/01/20 (a)		505		515,100
Oasis Petroleum, Inc.:
7.25%, 2/01/19		270		284,850
6.50%, 11/01/21		290		295,800
Offshore Group Investments Ltd.:
11.50%, 8/01/15		840		928,200
11.50%, 8/01/15 (a)		800		884,000
OGX Petroleo e Gas Participacoes SA (a):
8.50%, 6/01/18		1,324		1,175,050
8.38%, 4/01/22		565		480,250
PetroBakken Energy Ltd., 8.63%, 2/01/20 (a)		1,240		1,267,900
Pioneer Natural Resources Co., 7.20%, 1/15/28		1,080		1,371,966
Range Resources Corp.:
5.75%, 6/01/21		1,230		1,308,412
5.00%, 8/15/22		547		569,564
Sabine Pass Liquified Natural Gas LP, 7.50%, 11/30/16		1,015		1,086,050
Samson Investment Co., 9.75%, 2/15/20 (a)		76		78,280
SandRidge Energy, Inc.:
7.50%, 3/15/21 (a)		305		308,813
7.50%, 3/15/21		225		227,813
8.13%, 10/15/22 (a)		205		214,225
7.50%, 2/15/23 (a)		535		537,675
SESI LLC:
6.38%, 5/01/19		530		561,800
7.13%, 12/15/21		525		584,062
SM Energy Co.:
6.50%, 11/15/21		425		444,125
6.50%, 1/01/23 (a)		200		208,500
Targa Resources Partners LP, 6.88%, 2/01/21		370		397,750
Titan Petrochemicals Group Ltd., 8.50%, 3/18/49 (d)(e)		1,760		440,000

				33,355,812
Paper & Forest Products — 0.6%
Clearwater Paper Corp., 10.63%, 6/15/16		640		715,200
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (a)		280		289,800
NewPage Corp., 11.38%, 12/31/14 (d)(e)		2,280		1,544,700
Sappi Papier Holding GmbH, 8.38%, 6/15/19 (a)		200		210,500

				2,760,200

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	43

Consolidated Schedule of Investments (continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Pharmaceuticals — 0.4%
Valeant Pharmaceuticals International (a):
6.50%, 7/15/16	USD	990	$	1,044,450
7.25%, 7/15/22		660		681,450

				1,725,900
Real Estate Investment Trusts (REITs) — 0.4%
Felcor Lodging LP, 6.75%, 6/01/19		1,575		1,689,188
Real Estate Management & Development — 1.2%
Realogy Corp.:
11.50%, 4/15/17		275		292,187
12.00%, 4/15/17		160		167,600
7.88%, 2/15/19 (a)		1,760		1,812,800
7.63%, 1/15/20 (a)		1,190		1,297,100
9.00%, 1/15/20 (a)		310		334,800
Shea Homes LP, 8.63%, 5/15/19		1,240		1,379,500

				5,283,987
Road & Rail — 0.9%
Florida East Coast Railway Corp., 8.13%, 2/01/17		370		388,500
The Hertz Corp.:
7.50%, 10/15/18		1,490		1,607,337
6.75%, 4/15/19		265		278,250
6.75%, 4/15/19 (a)		285		299,250
7.38%, 1/15/21		1,280		1,392,000

				3,965,337
Software — 0.8%
Infor US, Inc., 9.38%, 4/01/19 (a)		2,420		2,619,650
Nuance Communications, Inc., 5.38%, 8/15/20 (a)		1,225		1,252,563

				3,872,213
Specialty Retail — 0.6%
Claire’s Stores, Inc., 9.00%, 3/15/19 (a)		430		446,125
Party City Holdings, Inc., 8.88%, 8/01/20 (a)		422		446,265
Penske Automotive Group, Inc., 5.75%, 10/01/22 (a)		495		504,900
QVC, Inc., 5.13%, 7/02/22 (a)		260		272,517
Sally Holdings LLC:
6.88%, 11/15/19		650		726,375
5.75%, 6/01/22		300		322,875

				2,719,057
Textiles, Apparel & Luxury Goods — 0.2%
Levi Strauss & Co., 6.88%, 5/01/22		265		274,938
PVH Corp., 7.75%, 11/15/23		410		478,346

				753,284
Trading Companies & Distributors — 0.5%
Doric Nimrod Air Finance Alpha Ltd. (a):
Series 2012-1, Class A, 5.13%, 11/30/24		1,190		1,207,850
Series 2012-1, Class B, 6.50%, 5/30/21		940		951,111

				2,158,961
Transportation Infrastructure — 0.1%
Aguila 3 SA, 7.88%, 1/31/18 (a)		353		371,974
Wireless Telecommunication Services — 4.0%
Cricket Communications, Inc., 7.75%, 5/15/16		3,050		3,217,750
Digicel Group Ltd. (a):
9.13%, 1/15/15		3,948		3,987,480
8.25%, 9/01/17		810		858,600
10.50%, 4/15/18		400		432,000
MetroPCS Wireless, Inc., 6.63%, 11/15/20		690		714,150
SBA Telecommunications, Inc., 5.75%, 7/15/20 (a)		230		240,350
Sprint Capital Corp., 6.88%, 11/15/28		1,720		1,556,600
Sprint Nextel Corp. (a):
9.00%, 11/15/18		4,260		5,026,800
7.00%, 3/01/20		1,770		1,938,150

				17,971,880
Total Corporate Bonds – 62.1%				281,505,845


Floating Rate Loan Interests (b)	Par (000)		Value

Aerospace & Defense — 0.3%
TransDigm, Inc.:
Add on Term Loan B2, 4.00%, 2/14/17	USD	263	$	264,452
Term Loan B, 4.00%, 2/14/17		1,193		1,197,326

				1,461,778
Airlines — 0.4%
Delta Air Lines, Inc., Credit, Term Loan B, 5.50%, 4/20/17		1,862		1,875,232
US Airways Group, Inc., Term Loan, 2.74%, 3/21/14		100		96,625

				1,971,857
Auto Components — 1.7%
Autoparts Holdings Ltd.:
First Lien Term Loan, 6.50%, 7/28/17		1,390		1,361,710
Second Lien Term Loan, 10.50%, 1/29/18		1,800		1,566,000
Federal-Mogul Corp.:
Term Loan B, 2.17%—2.18%, 12/29/14		1,516		1,446,900
Term Loan C, 2.17%—2.18%, 12/28/15		248		236,610
The Goodyear Tire & Rubber Co., Term Loan (Second Lien), 4.75%, 4/30/19		2,170		2,161,863
Schaeffler AG, Term Loan C2, 6.00%, 1/27/17		750		752,190

				7,525,273
Biotechnology — 0.2%
Grifols, Inc., Term Loan B, 4.50%, 6/01/17		1,032		1,034,506
Building Products — 1.6%
Armstrong World Industries, Inc., Term Loan B, 4.00%, 3/09/18		1,111		1,107,797
CPG International, Inc., Term Loan B, 6.00%, 2/18/17		1,182		1,162,792
Goodman Global, Inc.:
Initial Term Loan (First Lien), 5.75%, 10/28/16		3,025		3,027,871
Term Loan (Second Lien), 9.00%, 10/30/17		764		773,663
Momentive Performance Materials, Inc. (Nautilus), Extended Term Loan, 3.62%, 5/05/15	EUR	1,053		1,212,118

				7,284,241
Capital Markets — 1.1%
American Capital Holdings, Term Loan, 5.50%, 7/19/16	USD	925		928,469
HarbourVest Partners LLC, Term Loan B, 6.25%, 12/16/16		1,508		1,506,163
Nuveen Investments, Inc.:
Extended (First Lien), Term Loan, 5.95%—5.96%, 5/13/17		418		418,700
Extended Term Loan, 5.92%—5.96%, 5/12/17		1,682		1,686,289
Incremental Term Loan, 7.25%, 5/13/17		555		557,497

				5,097,118
Chemicals — 4.0%
American Rock Salt Holdings LLC, Term Loan, 5.50%, 4/25/17		2,242		2,176,618
Chemtura Corp., Exit Term Loan B, 5.50%, 8/27/16		1,300		1,303,796
Evergreen Acqco 1 LP, Term Loan B, 6.25%, 7/09/19		620		625,816
Gentek, Inc., Term Loan, 5.00%—5.75%, 10/06/15		951		946,495
INEOS US Finance LLC, 6 Year Term Loan, 6.50%, 5/04/18		4,691		4,698,212
MacDermid, Inc., Tranche C Term Loan, 2.32%, 4/11/14	EUR	612		760,883
Nexeo Solutions LLC, Term Loan B, 5.00%, 9/08/17	USD	1,605		1,561,570
PolyOne Corp., Term Loan, 5.00%, 12/20/17		657		658,670
PQ Corp., Term Loan B, 3.98%, 7/30/14		3,091		3,035,419
Styron Sarl LLC, Term Loan B, 8.00%, 8/02/17		584		543,979
Tronox Pigments (Netherlands) BV:
Delayed Draw Term Loan, 4.25%, 2/08/18		208		207,356
Term Loan B, 4.25%, 2/08/18		762		760,306
Univar, Inc., Term Loan B, 5.00%, 6/30/17		798		792,681

				18,071,801

See Notes to Consolidated Financial Statements.



44	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments
(continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Commercial Services & Supplies — 3.0%
ACCO Brands Corp., Term Loan B, 4.25%, 4/30/19	USD	1,343	$	1,342,135
Altegrity, Inc., Tranche D Term Loan, 7.75%, 2/20/15		2,517		2,503,508
AWAS Finance Luxembourg 2012 SA, Term Loan, 5.75%, 7/16/18		440		440,000
AWAS Finance Luxembourg Sarl, Term Loan B, 5.25%, 6/10/16		822		821,673
Delos Aircraft, Inc., Term Loan B2, 4.75%, 4/12/16		975		984,750
KAR Auction Services, Inc., Term Loan B, 5.00%, 5/19/17		2,373		2,372,730
Protection One, Inc., Term Loan, 5.75%, 3/21/19		958		967,176
Synagro Technologies, Inc., Term Loan B, 2.24%, 4/02/14		869		770,779
Volume Services America, Inc., Term Loan B, 10.50%—10.75%, 9/16/16		1,769		1,768,500
West Corp., Term Loan B6, 5.75%, 6/29/18		1,600		1,605,008

				13,576,259
Communications Equipment — 2.3%
Avaya, Inc.:
Extended Term Loan B3, 4.93%, 10/26/17		123		110,142
Term Loan B1, 3.18%, 10/24/14		2,018		1,937,696
CommScope, Inc., Term Loan, 4.25%, 1/12/18		1,481		1,480,717
Telesat Canada, Term Loan A, 4.41%, 3/28/17	CAD	2,630		2,547,959
Zayo Group, LLC, Term Loan B, 7.13%, 7/02/19	USD	4,090		4,150,082

				10,226,596
Construction & Engineering — 0.9%
BakerCorp. International, Inc., Term Loan B, 4.75%, 6/01/18		1,189		1,183,754
Safway Services LLC, First Out Term Loan, 9.00%, 12/16/17		2,750		2,750,000

				3,933,754
Construction Materials — 1.0%
HD Supply, Inc., Senior Debt B, 7.25%, 10/12/17		4,630		4,730,332
Consumer Finance — 0.3%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17		1,635		1,579,001
Containers & Packaging — 0.2%
Sealed Air Corp., Term Loan B, 4.75%, 10/03/18		855		859,634
Diversified Consumer Services — 2.0%
Coinmach Service Corp., Term Loan B, 3.33%, 11/20/14		4,090		3,923,884
Education Management LLC, Term Loan C3, 8.25%, 3/29/18		1,092		960,991
Laureate Education, Inc., Extended Term Loan, 5.25%, 6/18/18		1,798		1,754,146
ServiceMaster Co.:
Delayed Draw Term Loan, 2.74%, 7/24/14		152		151,126
Term Loan, 2.75% — 2.97%, 7/24/14		1,527		1,517,633
Weight Watchers International, Inc., Term Loan F, 4.00%, 3/15/19		887		876,109

				9,183,889
Diversified Financial Services — 1.4%
Residential Capital LLC, DIP Term Loan A1, 5.00%, 11/18/13		2,035		2,040,088
Reynolds Group Holdings, Inc.:
Term Loan B, 6.50%, 2/09/18		943		948,053
Term Loan C, 6.50%, 8/09/18		3,376		3,418,815

				6,406,956
Diversified Telecommunication Services — 2.4%
Hawaiian Telcom Communications, Inc., Term Loan B, 7.00%, 2/28/17		2,025		2,050,312
Level 3 Financing, Inc.:
2016 Term Loan B, 4.75%, 2/01/16		135		135,270


Floating Rate Loan Interests (b)	Par (000)		Value

Diversified Telecommunication Services (concluded)
Level 3 Financing, Inc. (concluded):
2019 Term Loan B, 5.25%, 8/01/19	USD	110	$	110,161
Term Loan B2, 5.75%, 9/03/18		5,500		5,514,520
Term Loan B3, 5.75%, 8/31/18		1,500		1,503,960
US Telepacific Corp., Term Loan B, 5.75%, 2/23/17		1,490		1,423,282

				10,737,505
Electronic Equipment, Instruments & Components — 0.4%
CDW LLC, Extended Term Loan, 4.00%, 7/14/17		831		820,421
Sensata Technologies Finance Co. LLC, Term Loan, 4.00%, 5/11/18		1,148		1,149,419

				1,969,840
Energy Equipment & Services — 2.0%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		1,631		1,691,485
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		2,984		3,124,090
MEG Energy Corp., Term Loan B, 4.00%, 3/16/18		2,978		2,980,865
Tervita Corp., Term Loan B, 3.23%, 11/14/14		1,355		1,329,474

				9,125,914
Food & Staples Retailing — 1.4%
AB Acquisitions UK Topco 2, Term Loan B1, 3.52%, 7/09/15	GBP	3,000		4,495,603
Pilot Travel Centers LLC, Term Loan B2, 4.25%, 8/07/19	USD	860		862,150
US Foods, Inc. (FKA U.S. Foodservice, Inc.), Extended Term Loan B, 5.75%, 3/31/17		972		939,437

				6,297,190
Food Products — 1.9%
Advance Pierre Foods:
Term Loan (First Lien), 7.00%, 9/30/16		2,550		2,561,486
Term Loan (Second Lien), 11.25%, 9/29/17		1,800		1,810,800
Del Monte Foods Co., Term Loan, 4.50%, 3/08/18		1,651		1,628,797
Pinnacle Foods Finance LLC, Term Loan E, 4.75%, 10/17/18		1,376		1,370,828
Solvest Ltd. (Dole):
Term Loan B-2, 5.00%—6.00%, 7/06/18		400		400,708
Term Loan C-2, 5.00%—6.00%, 7/06/18		716		717,057

				8,489,676
Health Care Equipment & Supplies — 3.1%
Bausch & Lomb, Inc., Term Loan B, 5.25%, 5/17/19		2,150		2,157,159
Biomet, Inc., Term Loan B, 3.00%—3.47%, 3/25/15		200		199,476
BSN Medical Acquisition Holding GmbH, Term Loan B, 6.00%, 7/27/19		1,360		1,363,400
DJO Finance LLC:
Extended Term Loan B2, 5.23%, 11/01/16		759		758,923
Term Loan B3, 6.25%, 9/15/17		2,334		2,336,087
Hologic, Inc., Term Loan B, 4.50%, 8/01/19		3,580		3,601,731
Hupah Finance, Inc., Term Loan B, 6.25%, 1/21/19		1,262		1,266,569
Immucor, Inc., Term Loan B, 7.25%, 8/17/18		1,509		1,514,257
LHP Hospital Group, Inc., Term Loan, 9.00%, 7/03/18		755		760,663

				13,958,265
Health Care Providers & Services — 3.0%
ConvaTec, Inc., Term Loan, 5.75%, 12/22/16		1,766		1,768,889
DaVita, Inc.:
Term Loan B, 4.50%, 10/20/16		1,970		1,974,925
Term Loan B2, 4.00%, 9/02/19		1,115		1,109,603
Emergency Medical Services Corp., Term Loan, 5.25%, 5/25/18		720		719,388
Harden Healthcare LLC:
Add on Term Loan A, 7.75%, 3/02/15		1,956		1,895,429
Term Loan A, 8.50%, 3/02/15		588		576,011

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	45

Consolidated Schedule of Investments
(continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Health Care Providers & Services (concluded)
HCA, Inc.:
Extended Term Loan B3, 3.48%, 5/01/18	USD	1,035	$	1,018,668
Term Loan B, 2.48%, 11/18/13		245		244,610
inVentiv Health, Inc.:
Combined Term Loan, 6.50%, 8/04/16		411		382,649
Incremental Term Loan B-3, 6.75%, 5/15/18		1,013		944,377
Medpace, Inc., Term Loan, 6.50%—7.25%, 6/16/17		1,915		1,828,658
Sheridan Holdings, Inc., First Lien Term Loan, 6.00%, 6/29/18		345		345,286
US Renal Care, Inc., First Lien Term Loan, 6.25%—7.25%, 7/02/19		910		916,825

				13,725,318
Health Care Technology — 0.9%
IMS Health, Inc., Term Loan B, 4.50%, 8/25/17		1,969		1,974,786
Kinetic Concepts, Inc., Term Loan B, 7.00%, 5/04/18		1,303		1,314,308
MedAssets, Inc., Term Loan, 5.25%, 11/16/16		813		814,929

				4,104,023
Hotels, Restaurants & Leisure — 3.6%
Alpha D2 Ltd., Term Loan B, 5.75%, 4/28/17		1,102		1,107,969
Caesars Entertainment Operating Co., Inc.:
Extended Term Loan B6, 5.49%, 1/26/18		330		290,090
Incremental Term Loan B4, 9.50%, 10/31/16		1,004		1,023,456
Term Loan B1, 3.24%, 1/28/15		1,934		1,834,233
Term Loan B3, 3.24%—3.46%, 1/28/15		4,276		4,055,093
Dunkin’ Brands, Inc., Term Loan B2, 4.00%, 11/23/17		3,044		3,010,665
Golden Living, Term Loan, 5.00%, 5/04/18		243		231,833
OSI Restaurant Partners LLC:
Revolver, 2.49%—4.50%, 6/14/13		15		15,145
Term Loan B, 2.56%, 6/14/14		154		152,636
Sabre, Inc., Non Extended Initial Term Loan, 2.23%, 9/30/14		372		368,324
SeaWorld Parks & Entertainment, Inc., Term Loan B, 4.00%, 8/17/17		1,468		1,468,423
Six Flags Theme Parks, Inc., Term Loan B, 4.25%, 12/20/18		790		791,849
Wendy’s International, Inc., Term Loan B, 4.75%, 5/15/19		1,785		1,792,961

				16,142,677
Household Products — 0.3%
Prestige Brands, Inc., Term Loan, 5.25%—6.25%, 1/31/19		1,323		1,332,718
Independent Power Producers & Energy Traders —0.6%
The AES Corp., Term Loan, 4.25%, 6/01/18		1,778		1,781,944
Calpine Corp., Term Loan B, 4.50%, 4/02/18		760		761,049
GenOn Energy, Inc., Term Loan B, 6.00%, 12/01/17		295		297,112

				2,840,105
Industrial Conglomerates — 0.7%
Sequa Corp.:
Incremental Term Loan, 6.25%, 12/03/14		552		553,605
Term Loan, 3.69%—3.72%, 12/03/14		2,643		2,625,018

				3,178,623
Insurance — 0.2%
Asurion LLC, Term Loan (First Lien), 5.50%, 5/24/18		1,067		1,069,201
Internet Software & Services — 0.2%
Web.com Group, Inc., Term Loan B, 7.00%, 10/27/17		1,133		1,127,487
IT Services — 3.7%
Ceridian Corp., Extended Term Loan, 5.99%, 5/09/17		1,568		1,567,491


Floating Rate Loan Interests (b)	Par (000)		Value

IT Services (concluded)
First Data Corp.:
2018 Term Loan B, 4.24%, 3/23/18	USD	6,888	$	6,503,537
Non-Extended Term Loan B-1, 2.99%, 9/24/14		449		442,136
Non-Extended Term Loan B-3, 2.99%, 9/24/14		121		118,791
Genpact International, Inc., Term Loan B, 4.25%, 8/16/19		980		980,000
InfoGroup, Inc., Term Loan, 5.75%, 5/25/18		853		755,033
iPayment, Inc., Term Loan B, 5.75%, 5/08/17		1,028		1,028,000
Neustar, Inc., Term Loan B, 5.00%, 11/08/18		1,444		1,451,308
TransUnion LLC, Term Loan B, 5.50%, 2/12/18		3,683		3,707,541

				16,553,837
Leisure Equipment & Products — 0.9%
Eastman Kodak Co., DIP Term Loan B, 8.50%, 7/19/13		1,380		1,367,638
EB Sports Corp., Term Loan, 11.50%, 12/31/15		1,838		1,801,073
FGI Operating Company, LLC, Term Loan, 5.50%—6.50%, 4/19/19		680		682,128

				3,850,839
Machinery — 2.0%
Intelligrated, Inc., First Lien Term Loan, 6.75%, 7/30/18		800		792,000
Navistar International Corp., Term Loan B, 7.00%, 8/17/17		734		737,488
Rexnord Corp., Term Loan B, 5.00%, 4/02/18		1,027		1,030,785
Terex Corp.:
Term Loan, 6.00%, 4/28/17	EUR	218		273,268
Term Loan B, 5.50%, 4/28/17	USD	2,032		2,041,673
Tomkins LLC, Term Loan B, 4.25%, 9/29/16		2,062		2,067,124
Wabash National Corp., Term Loan B, 6.00%, 5/02/19		1,940		1,952,263

				8,894,601
Media — 9.3%
Acosta, Inc., Term Loan B, 5.75%, 3/01/18		582		582,891
Affinion Group, Inc., Term Loan B, 5.00%, 7/16/15		349		296,324
AMC Networks, Inc., Term Loan B, 4.00%, 12/31/18		1,408		1,407,072
Capsugel Holdings US, Inc., Term Loan B, 4.75%, 8/01/18		1,424		1,425,312
Cengage Learning Acquisitions, Inc., Tranche 1 Incremental, 7.50%, 7/03/14		1,244		1,200,074
Charter Communications Operating LLC:
Extended Term Loan C, 3.49%, 9/06/16		2,050		2,044,712
Term Loan D, 4.00%, 5/15/19		798		797,456
Clear Channel Communications, Inc.:
Term Loan B, 3.88%, 1/28/16		2,420		1,874,054
Term Loan C, 3.88%, 1/28/16		556		423,009
Cumulus Media, Inc., First Lien Term Loan, 5.75%, 9/17/18		1,492		1,494,567
EMI Music Publishing Ltd., Term Loan B, 5.50%, 6/29/18		895		901,041
Gray Television, Inc., Term Loan B, 3.75%, 12/31/14		1,212		1,205,154
Houghton Mifflin Harcourt Publishing Co., DIP Term Loan B, 7.25%, 6/01/18		1,521		1,538,301
Hubbard Broadcasting, Term Loan B, 5.25%, 4/28/17		965		965,734
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		7,241		7,264,096
Interactive Data Corp., Term Loan B, 4.50%, 2/12/18		1,683		1,685,457
Kabel Deutschland GmbH, Term Loan F, 4.25%, 2/01/19		2,265		2,260,900

See Notes to Consolidated Financial Statements.



46	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Media (concluded)
Lavena Holding 4 GmbH (Prosiebensat.1 Media AG):
Term Loan B, 2.95%, 3/06/15	EUR	304	$	349,790
Term Loan C, 3.32%, 3/04/16		608		703,402
Newsday LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		USD 4,250		4,273,035
Nielsen Finance LLC, Class C Term Loan, 3.49%, 5/02/16		401		400,408
Sinclair Television Group, Inc., Term Loan B, 4.00%, 10/28/16		2,042		2,040,975
Thomson Reuters (Healthcare), Inc., Term Loan B, 6.75%, 6/06/19		1,060		1,067,505
Univision Communications, Inc., Extended Term Loan, 4.48%, 3/31/17		2,389		2,309,232
UPC Broadband Holding BV, Term Loan U, 4.15%, 12/29/17	EUR	196		244,786
UPC Financing Partnership:
Term Loan, 4.75%, 12/29/17	USD	1,050		1,053,066
Term Loan T, 3.75%, 12/30/16		255		252,611
WC Luxco Sarl, Term Loan B3, 4.25%, 3/15/18		502		499,660
Weather Channel, Term Loan B, 4.25%, 2/13/17		1,000		1,002,906
WideOpenWest Finance LLC, First Lien Term Loan, 6.25%, 7/17/18		655		654,594

				42,218,124
Metals & Mining — 1.7%
Constellium Holding Co BV, Term Loan B, 9.25%, 5/25/18		920		901,600
Novelis, Inc.:
Incremental Term Loan B2, 4.00%, 3/10/17		1,124		1,116,261
Term Loan, 4.00%, 3/10/17		2,078		2,065,138
SunCoke Energy, Inc., Term Loan B, 4.00%, 7/26/18		1,584		1,576,083
Walter Energy, Inc., Term Loan B, 4.00%, 4/02/18		2,173		2,136,548

				7,795,630
Multiline Retail — 1.3%
99¢ Only Stores, Term Loan, 5.25%, 1/11/19		1,493		1,500,882
Hema Holding BV:
Second Lien Term Loan, 5.14%, 1/05/17	EUR	2,900		3,419,644
Term Loan B, 2.89%, 7/06/15		357		433,171
Term Loan C, 2.14%, 7/05/16		357		435,420

				5,789,117
Oil, Gas & Consumable Fuels — 1.4%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17	USD	1,930		1,934,149
Everest Acquisition LLC, Term Loan B, 5.00%, 4/24/18		1,190		1,192,975
Gibson Energy ULC, Term Loan B, 4.75%, 6/15/18		1,310		1,315,380
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		1,934		1,933,520

				6,376,024
Paper & Forest Products — 0.9%
Ainsworth Lumber Co. Ltd., Term Loan, 5.25%, 6/26/14		630		609,525
NewPage Corp., DIP Term Loan, 8.00%, 3/07/13		1,050		1,059,849
Verso Paper Finance Holdings LLC, Term Loan, 6.49%—7.24%, 2/01/13		4,820		2,410,006

				4,079,380
Pharmaceuticals — 2.0%
Aptalis Pharma, Inc., Term Loan B, 5.50%, 2/10/17		1,773		1,766,351
Pharmaceutical Product Development, Inc., Term Loan B, 6.25%, 12/05/18		2,489		2,516,613
Quintiles Transnational Corp., Term Loan B, 5.00%, 6/08/18		772		773,652


Floating Rate Loan Interests (b)	Par (000)		Value

Pharmaceuticals (concluded)
RPI Finance Trust:
Incremental Tranche 2, 4.00%, 11/09/18	USD	324	$	324,527
Term Loan Tranche 2, 4.00%, 5/09/18		568		568,465
Valeant Pharmaceuticals International, Inc.:
Add-On Term Loan B, 4.75%, 2/13/19		1,067		1,069,801
Series A Tranche B, 4.75%, 2/13/19		505		506,172
Warner Chilcott Corp.:
Incremental Term Loan B-1, 4.25%, 3/15/18		278		275,992
Term Loan B-1, 4.25%, 3/15/18		731		726,778
Term Loan B-2, 4.25%, 3/15/18		365		363,389

				8,891,740
Professional Services — 0.9%
Booz Allen Hamilton, Inc., Term Loan B, 4.50%, 7/31/19		1,140		1,141,425
Emdeon, Inc., Term Loan B1, 5.00%, 11/02/18		2,584		2,585,035
ON Assignment, Inc., Term Loan B, 5.00%, 5/15/19		430		427,963

				4,154,423
Real Estate Investment Trusts (REITs) — 0.8%
iStar Financial, Inc.:
Term Loan A1, 5.00%, 6/28/13		3,423		3,425,624
Term Loan A2, 7.00%, 6/30/14		140		140,132

				3,565,756
Real Estate Management & Development — 0.9%
Realogy Corp.:
Extended Letter of Credit Loan, 4.50%, 10/10/16		383		370,121
Extended Term Loan, 4.49%, 10/10/16		3,700		3,572,003
Stockbridge SBE Holdings LLC, Term Loan B, 13.00%, 5/02/17		300		298,500

				4,240,624
Road & Rail — 0.7%
Avis Budget Car Rental LLC, Incremental Term Loan, 6.25%, 9/21/18		612		614,922
RailAmerica, Inc., Term Loan B, 4.00%, 3/01/19		1,571		1,570,088
Road Infrastructure Investment LLC, Term Loan B, 6.25%, 3/30/18		823		818,823

				3,003,833
Semiconductors & Semiconductor Equipment — 0.5%
Freescale Semiconductor, Inc., Extended Term Loan B, 4.50%, 12/01/16		1,373		1,317,319
NXP BV, Term Loan A-2, 5.50%, 3/03/17		952		963,448

				2,280,767
Software — 1.9%
Blackboard, Inc., Term Loan B, 7.50%, 10/04/18		597		586,929
Infor US, Inc. (FKA Lawson Software, Inc.), Term Loan B, 6.25%, 4/05/18		3,621		3,658,148
Sophia, LP, Term Loan B, 6.25%, 7/19/18		1,197		1,206,875
SS&C Technologies, Inc.:
Term Loan B-1, 5.00%, 6/07/19		1,573		1,574,813
Term Loan B-2, 5.00%, 6/07/19		163		162,912
WaveDivision Holdings LLC, Term Loan B, 5.50%, 8/23/19		1,240		1,244,625

				8,434,302

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	47

Consolidated Schedule of Investments (continued)

BlackRock Debt Strategies Fund, Inc. (DSU)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Specialty Retail — 3.9%
Academy Ltd., Term Loan, 6.00%, 8/03/18		USD 1,891	$	1,897,117
Bass Pro Group LLC, Term Loan, 5.25%, 6/13/17		823		828,764
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50%, 2/23/17		519		520,169
Claire’s Stores, Inc., Term Loan B, 2.98%—3.20%, 5/29/14		1,109		1,087,805
General Nutrition Centers, Inc., Term Loan B, 4.25%, 3/02/18		2,170		2,166,940
Harbor Freight Tools USA, Inc., Term Loan B, 5.50%, 11/14/17		810		808,858
Jo-Ann Stores, Inc., Term Loan, 4.75%, 3/16/18		774		772,879
Michaels Stores, Inc.:
Extended Term Loan B3, 5.00%, 7/29/16		980		985,326
Term Loan B2, 5.00%, 7/29/16		862		866,756
Party City Holdings, Inc., Term Loan B, 5.75%, 7/26/19		1,505		1,511,893
PETCO Animal Supplies, Inc., Term Loan, 4.50%, 11/24/17		2,555		2,556,910
Things Remembered, Inc., Term Loan B, 8.00%, 5/24/18		1,100		1,078,000
Toys ‘R’ Us Delaware, Inc.:
Incremental Term Loan B2, 5.25%, 5/25/18		688		659,090
Term Loan, 6.00%, 9/01/16		470		461,287
Term Loan B3, 5.25%, 5/25/18		234		225,036
The Yankee Candle Co., Inc., Term Loan B, 5.25%, 4/02/19		1,062		1,066,459

				17,493,289
Textiles, Apparel & Luxury Goods — 0.5%
Ascend Performance Materials LLC, Term Loan B, 6.75%, 4/10/18		1,431		1,418,287
Wolverine Worldwide, Inc., 6.75%, Term Loan B, 6/26/19		1,010		1,016,292

				2,434,579
Wireless Telecommunication Services — 1.7%
Crown Castle International Corp., Term Loan B, 4.00%, 1/31/19		223		222,275
MetroPCS Wireless, Inc., Term Loan B-3, 4.00%, 3/16/18		1,255		1,250,309
Vodafone Americas Finance 2, Inc., Term Loan, 6.88%, 8/11/15 (f)		6,091		6,335,057

				7,807,641
Total Floating Rate Loan Interests – 76.1%				344,906,043


Other Interests (i)	Beneficial Interest (000)

Auto Components — 0.0%
Intermet Liquidating Trust Class A (d)		833		1
Chemicals — 0.0%
Wellman Holdings, Inc., Litigation Trust Certificate		10,000		100
Diversified Financial Services — 0.3%
JG Wentworth LLC Preferred Equity Interests (d)		1		1,454,714
Hotels, Restaurants & Leisure — 0.0%
Buffets, Inc. (d)		1,440		14
Household Durables — 0.6%
Stanley Martin, Class B Membership Units		2		2,940,570


Other Interests (i)	Beneficial Interest (000)		Value

Media — 0.0%
Adelphia Escrow (d)		USD 7,500	$	75
Adelphia Preferred Escrow (d)		5		—
Adelphia Recovery Trust (d)		9,406		941
Adelphia Recovery Trust Series ACC-6B INT (d)		500		2,500

				3,516
Specialty Retail — 0.0%
Movie Gallery, Inc. Default Escrow (d)		21,700		217
Total Other Interests – 0.9%				4,399,132


Warrants (j)	Shares
Health Care Providers & Services — 0.0%
HealthSouth Corp. (Expires 1/16/14)		126,761		1
Media — 0.1%
Charter Communications, Inc. (Issued/exercisable 11/30/09, 1 Share for 1 warrant, Expires 11/30/14, Strike Price $51.28)		12,661		366,536
Software — 0.0%
Bankruptcy Management Solutions, Inc. (Expires 9/28/17)		1,247		—
HMH Holdings/EduMedia (Issued/Exercisable 3/09/10, 19 Shares for 1 Warrant, Expires 6/22/19, Strike Price $42.27)		2,067		—

				—
Total Warrants — 0.1%				366,537
Total Long-Term Investments (Cost — $696,154,128) — 143.7%				651,485,518



Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (k)(l)		2,038,105		2,038,105
Total Short-Term Securities (Cost — $2,038,105) — 0.4%				2,038,105
Total Investments (Cost — $698,192,233) — 144.1%				653,523,623
Liabilities in Excess of Other Assets — (44.1)%				(200,087,811	)

Net Assets — 100.0%			$	453,435,812

(a)

(b)

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

(c)

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


Counterparty	Value		Unrealized Appreciation
Credit Suisse Group AG	$	1,107,600		—
Goldman Sachs Group, Inc.	$	734,063	$	9,063

(d)

Non-income producing security.

(e)

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

(f)

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

(g)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(h)

Convertible security.

(i)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

See Notes to Consolidated Financial Statements.



48	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (continued)		BlackRock Debt Strategies Fund, Inc. (DSU)

(j)

(k)

Investments in issuers considered to be an affiliate of the Fund during the six months ended August 31, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:

Affiliate

Shares
Held at
February 29,
2012

Net
Activity

Shares
Held at
August 31,

2012

Income

BlackRock Liquidity Funds, TempFund, Institutional Class

—

2,038,105

1,179

(l)

Represents the current yield as of report date.

Foreign currency exchange contracts as of August 31, 2012 were as follows:


Currency Purchased		Currency Sold		Counter party	Settle ment Date	Unrealized Appreciation (Depreciation)
USD	238,119	GBP	150,000	Royal Bank of Scotland Group Plc	9/04/12	$	(59	)
USD	226,440	EUR	180,000	Deutsche Bank AG	9/05/12		36
GBP	150,000	USD	238,085	Royal Bank of Scotland Group Plc	10/17/12		58
USD	2,206,135	CAD	2,240,500	UBS AG	10/17/12		(64,703	)
USD	446,528	GBP	285,000	Citigroup, Inc.	10/17/12		(5,943	)
USD	133,252	GBP	85,000	Deutsche Bank AG	10/17/12		(1,696	)
USD	5,352,655	GBP	3,448,000	UBS AG	10/17/12		(121,448	)
USD	120,747	GBP	77,000	UBS AG	10/17/12		(1,499	)
EUR	106,000	USD	131,357	Citigroup, Inc.	10/22/12		2,038
EUR	180,000	USD	226,555	Deutsche Bank AG	10/22/12		(34	)
EUR	145,000	USD	179,154	UBS AG	10/22/12		3,322
USD	13,891,193	EUR	11,330,500	Citigroup, Inc.	10/22/12		(367,659	)
USD	576,649	EUR	466,000	Citigroup, Inc.	10/22/12		(9,788	)
USD	447,278	EUR	360,000	Citigroup, Inc.	10/22/12		(5,763	)
USD	127,842	EUR	104,000	Citigroup, Inc.	10/22/12		(3,037	)
USD	57,080	EUR	46,000	Royal Bank of Scotland Group Plc	10/22/12		(808	)
USD	738,772	EUR	601,000	UBS AG	10/22/12		(17,556	)
USD	297,515	EUR	241,000	UBS AG	10/22/12		(5,771	)
USD	250,516	EUR	203,000	UBS AG	10/22/12		(4,949	)
USD	167,190	EUR	136,000	UBS AG	10/22/12		(3,959	)
Total						$	(609,218	)

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments other significant accounting policies, please refer to Note 1 of the Notes to Consolidated Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of August 31, 2012:


	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—		—		$	11,216,353	$	11,216,353
Common Stocks	$	2,949,459	$	2,070,122			4,072,027		9,091,608
Corporate Bonds		—		271,841,107			9,664,738		281,505,845
Floating Rate Loan Interests		—		308,847,920			36,058,123		344,906,043
Other Interests		3,441		—			4,395,691		4,399,132
Warrants		366,536		—			1		366,537
Short-Term Securities		2,038,105		—			—		2,038,105

Total	$	5,357,541	$	582,759,149		$	65,406,933	$	653,523,623


	Level 1		Level 2			Level 3		Total
Derivative Financial Instruments¹
Assets:
Foreign currency exchange contracts		—	$	5,454			—	$	5,454
Liabilities:
Foreign currency exchange contracts		—		(614,672	)		—		(614,672	)

Total		—	$	(609,218	)		—	$	(609,218	)

Derivative financial instruments are foreign currency exchange contracts, which are valued at the unrealized appreciation/depreciation on the instrument.


	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	80,941		—			—	$	80,941
Foreign currency at value		290,567		—			—		290,567
Liabilities:
Loan payable		—	$	(195,000,000	)		—		(195,000,000	)

Total	$	371,508	$	(195,000,000	)		—	$	(194,628,492	)

There were no transfers between Level 1 and Level 2 during the six months ended August 31, 2012.

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	49


Consolidated Schedule of Investments (concluded)		BlackRock Debt Strategies Fund, Inc. (DSU)

Value

Valuation Techniques

Unobservable Inputs¹

Range of
Unobservable
Inputs

Weighted
Average of
Unobservable
Inputs²

Assets:

Common Stocks

4,072,003

Market Comparable Companies

EBITDA Multiple

5.0x -5.9x

5.9x

Forward EBITDA Multiple

4.6x

Illiquidity Discount

20%

Proforma Revenue Increase

37%

Other Interests

2,940,570

Market Comparable Companies

Tangible Book Value Multiple

1.44x

Corporate Bonds

9,110,544

Market Comparable Companies

EBITDA Multiple

5.0x

Illiquidity Discount

20%

Proforma Revenue Increase

37%

Floating Rate Loan Interests

7,631,445

Market Comparable Companies

Yield

9.65%

Illiquidity Discount

50%

Cost

N/A³

—

Total⁴

23,754,562

A change to the unobservable input may result in a significant change to the value of the investment as follows:


Unobservable Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
EBITDA Multiple	Increase	Decrease
Forward EBITDA Multiple	Increase	Decrease
Illiquidity Discount	Decrease	Increase
Proforma Revenue Increase	Increase	Decrease
Tangible Book Value Multiple	Increase	Decrease
Yield	Decrease	Increase

Unobservable inputs are weighted based on the value of the investments included in the range.

⁴

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


	Asset-Backed Securities			Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests		Warrants			Total
Assets:
Opening balance, as of February 29, 2012	$	4,989,143		$	5,458,062		$	9,604,936		$	28,186,100		$	3,410,858	$	2		$	51,649,101
Transfers into Level 3⁵		—			—			—			7,215,466			—		—			7,215,466
Transfers out of Level 3⁶		—			(677,817	)		—			(4,536,423	)		—		—			(5,214,240	)
Accrued discounts/ premiums		99,738			—			202,235			136,007			—		—			437,980
Net realized gain (loss)		(45,069	)		(2,511,903	)		—			(928,362	)		—		(433,873	)		(3,919,207	)
Net change in unrealized appreciation/depreciation⁷		56,727			1,393,580			(222,602	)		956,313			984,833		433,872			3,602,723
Purchases		8,129,039			410,126			80,169			8,743,925			—		—			17,363,259
Sales		(2,013,225	)		(21	)		—			(3,714,903	)		—		—			(5,728,149	)

Closing Balance, as of August 31, 2012	$	11,216,353		$	4,072,027		$	9,664,738		$	36,058,123		$	4,395,691	$	1		$	65,406,933

⁵

As of February 29, 2012, the Fund used observable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $7,215,466 transferred from Level 2 to Level 3 in the disclosure hierarchy.

⁶

As of February 29, 2012, the Fund used significant unobservable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $5,214,140 transferred from Level 3 to Level 2 in the disclosure hierarchy.

⁷

See Notes to Consolidated Financial Statements.



50	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments		BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)
August 31, 2012 (Unaudited)		(Percentages shown are based on Net Assets)


Asset-Backed Securities	Par (000)		Value

Fraser Sullivan CLO Ltd., Series 2012-7A, Class C, 4.47%, 4/20/23 (a)(b)	USD	250	$	222,150
Gannett Peak CLO Ltd., Series 2006-1X, Class A2, 0.81%, 10/27/20 (b)		305		256,962
Goldentree Loan Opportunities VI Ltd., Series 2012-6A, Class D, 4.66%, 4/17/22 (a)(b)		400		363,640
Goldman Sachs Asset Management CLO Plc, Series 2007-1A, Class B, 0.89%, 8/01/22 (a)(b)		665		561,925
Highbridge Loan Management Ltd., Series 2012-1A, Class C, 5.71%, 9/20/22 (a)(b)(c)		400		369,200
ING Investment Management, Series 2012-2A, Class D, 4.99%, 10/15/22 (a)(b)		400		356,644
LCM LP, Series 11A, Class D2, 4.41%, 4/19/22 (a)(b)		425		371,875
MAPS CLO Fund LLC, Series 2005-1A, Class C, 1.42%, 12/21/17 (a)(b)		300		284,610
Race Point CLO, Series 2012-6A, Class D, 4.93%, 5/24/23 (a)(b)		275		248,518
Symphony CLO Ltd. (a)(b):
Series 2012-10A, Class D, 5.69%, 7/23/23		400		370,000
Series 2012-9A, Class D, 4.71%, 4/16/22		500		445,600
Total Asset-Backed Securities – 2.6%				3,851,124


Common Stocks (d)	Shares
Auto Components — 0.3%
Delphi Automotive Plc		15,181		459,824
Chemicals — 0.0%
GEO Specialty Chemicals, Inc.		10,732		4,937
Electrical Equipment — 0.0%
Medis Technologies Ltd.		13,053		39
Semiconductors & Semiconductor Equipment — 0.0%
SunPower Corp.		1,860		8,333
Software — 0.3%
HMH Holdings/EduMedia		16,429		402,509
Total Common Stocks – 0.6%				875,642


Corporate Bonds	Par (000)
Airlines — 0.1%
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23	USD	143		151,220
Delta Air Lines, Inc., Series 2009-1-B, 9.75%, 6/17/18		53		57,610

				208,830
Auto Components — 0.8%
Icahn Enterprises LP:
7.75%, 1/15/16		30		31,500
8.00%, 1/15/18		1,075		1,144,875

				1,176,375
Capital Markets — 0.0%
E*Trade Financial Corp., 2.25%, 8/31/19 (a)(e)(f)		46		39,330
Chemicals — 1.3%
GEO Specialty Chemicals, Inc. (a):
7.50%, 3/31/15 (f)(g)		702		842,521
10.00%, 3/31/15		766		765,560
Hexion US Finance Corp., 6.63%, 4/15/20		145		146,450
INEOS Finance Plc, 8.38%, 2/15/19 (a)		125		131,563

				1,886,094
Commercial Services & Supplies — 0.3%
ARAMARK Corp., 3.94%, 2/01/15 (b)		75		74,812
AWAS Aviation Capital Ltd., 7.00%, 10/17/16 (a)		318		335,043


Corporate Bonds	Par (000)		Value

Commercial Services & Supplies (concluded)
Brickman Group Holdings, Inc., 9.13%, 11/01/18 (a)	USD	12	$	12,120

				421,975
Communications Equipment — 0.5%
Zayo Group LLC/Zayo Capital, Inc.:
8.13%, 1/01/20		430		456,875
10.13%, 7/01/20		290		311,025

				767,900
Consumer Finance — 0.3%
Inmarsat Finance Plc, 7.38%, 12/01/17 (a)		425		462,187
Containers & Packaging — 0.1%
OI European Group BV, 6.88%, 3/31/17	EUR	113		146,751
Diversified Financial Services — 0.8%
Ally Financial, Inc., 2.62%, 12/01/14 (b)	USD	505		496,344
Reynolds Group Issuer, Inc.:
7.75%, 10/15/16	EUR	200		259,736
6.88%, 2/15/21	USD	395		427,587

				1,183,667
Diversified Telecommunication Services — 0.2%
ITC Deltacom, Inc., 10.50%, 4/01/16		290		312,475
Energy Equipment & Services — 0.1%
FTS International Services LLC/ FTS International Bonds Inc., 8.13%, 11/15/18 (a)		180		185,850
Health Care Equipment & Supplies — 0.2%
DJO Finance LLC:
10.88%, 11/15/14		144		150,300
7.75%, 4/15/18		95		86,925

				237,225
Health Care Providers & Services — 0.8%
CHS/Community Health Systems, Inc., 5.13%, 8/15/18		410		422,813
HCA, Inc., 6.50%, 2/15/20		455		499,931
Tenet Healthcare Corp., 8.88%, 7/01/19		170		193,375

				1,116,119
Health Care Technology — 0.8%
IMS Health, Inc., 12.50%, 3/01/18 (a)		980		1,151,500
Hotels, Restaurants & Leisure — 0.7%
Little Traverse Bay Bands of Odawa Indians, 9.00%, 8/31/20 (a)		383		348,530
Travelport LLC:
5.04%, 9/01/14 (b)		665		472,150
9.88%, 9/01/14		150		119,250

				939,930
Household Durables — 0.2%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (a)		205		209,613
Independent Power Producers & Energy Traders — 1.9%
Calpine Corp., 7.25%, 10/15/17 (a)		625		668,750
Energy Future Holdings Corp., 10.00%, 1/15/20		365		402,412
Energy Future Intermediate Holding Co. LLC, 10.00%, 12/01/20		1,510		1,694,975

				2,766,137
Industrial Conglomerates — 0.5%
Sequa Corp., 13.50%, 12/01/15 (a)		679		719,387
IT Services — 0.2%
First Data Corp., 6.75%, 11/01/20 (a)		280		277,900
Machinery — 0.1%
UR Financing Escrow Corp., 5.75%, 7/15/18 (a)		90		95,175
Media — 2.1%
AMC Networks, Inc., 7.75%, 7/15/21		120		135,900
Checkout Holding Corp., 16.29%, 11/15/15 (a)(e)		350		213,500

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	51

Consolidated Schedule of Investments (continued)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Media (concluded)
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/17	USD	212	$	229,490
Series B, 9.25%, 12/15/17		967		1,050,404
NAI Entertainment Holdings LLC, 8.25%, 12/15/17 (a)		297		331,155
Unitymedia Hessen GmbH & Co. KG, 8.13%, 12/01/17 (a)		1,000		1,082,500

				3,042,949
Oil, Gas & Consumable Fuels — 0.2%
Coffeyville Resources LLC, 9.00%, 4/01/15 (a)		144		153,360
EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (a)		165		176,962

				330,322
Paper & Forest Products — 0.1%
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (a)		180		186,300
Pharmaceuticals — 0.2%
Valeant Pharmaceuticals International, 6.50%, 7/15/16 (a)		210		221,550
Real Estate Management & Development — 0.1%
Realogy Corp., 7.63%, 1/15/20 (a)		190		207,100
Wireless Telecommunication Services — 2.2%
Cricket Communications, Inc., 7.75%, 5/15/16		825		870,375
Digicel Group Ltd. (a):
9.13%, 1/15/15		399		402,990
8.25%, 9/01/17		265		280,900
iPCS, Inc., 2.57%, 5/01/13 (b)		500		496,250
Sprint Nextel Corp. (a):
9.00%, 11/15/18		400		472,000
7.00%, 3/01/20		630		689,850

				3,212,365
Total Corporate Bonds – 14.8%				21,505,006



Floating Rate Loan Interests (b)
Aerospace & Defense — 1.7%
DynCorp International, Term Loan B, 6.25%, 7/07/16		385		384,754
SI Organization, Inc., Term Loan B, 4.50%, 11/22/16		465		452,000
Spirit Aerosystems, Inc., Term Loan B, 3.75%, 4/18/19		419		419,650
TransDigm, Inc.:
Add on Term Loan B2, 4.00%, 2/14/17		224		225,088
Term Loan B, 4.00%, 2/14/17		596		598,282
Wesco Aircraft Hardware Corp., Term Loan B, 4.25%, 4/07/17		356		356,002

				2,435,776
Airlines — 0.8%
Delta Air Lines, Inc., Credit, Term Loan B, 5.50%, 4/20/17		1,105		1,112,617
US Airways Group, Inc., Term Loan, 2.73%, 3/21/14		65		62,806

				1,175,423
Auto Components — 2.8%
Autoparts Holdings Ltd., First Lien Term Loan, 6.50%, 7/28/17		744		729,487
Federal-Mogul Corp.:
Term Loan B, 2.17%—2.18%, 12/29/14		993		947,925
Term Loan C, 2.17%—2.18%, 12/28/15		337		321,311
The Goodyear Tire & Rubber Co., Term Loan (Second Lien), 4.75%, 4/30/19		1,310		1,305,087
GPX International Tire Corp. (d)(h):
Term Loan, 8.37%, 3/30/12		9		—
Term Loan, 12.00%, 3/31/12		549		—


Floating Rate Loan Interests (b)	Par (000)		Value

Auto Components (concluded)
Schaeffler AG, Term Loan C2, 6.00%, 1/27/17	USD	430	$	431,256
UCI International, Inc., Term Loan, 5.50%, 7/26/17		394		394,985

				4,130,051
Biotechnology — 0.5%
Grifols, Inc., Term Loan B, 4.50%, 6/01/17		707		708,905
Building Products — 3.2%
Armstrong World Industries, Inc., Term Loan B, 4.00%, 3/09/18		976		973,457
CPG International, Inc., Term Loan B, 6.00%, 2/18/17		936		920,544
Goodman Global, Inc., Initial Term Loan (First Lien), 5.75%, 10/28/16		2,327		2,329,131
Momentive Performance Materials, Inc. (Nautilus), Extended Term Loan, 3.62%, 5/05/15	EUR	338		389,006

				4,612,138
Capital Markets — 2.0%
American Capital Holdings, Term Loan, 5.50%, 7/19/16	USD	586		588,198
HarbourVest Partners LLC, Term Loan B, 6.25%, 12/16/16		754		753,081
Nuveen Investments, Inc.:
Extended (First Lien), Term Loan, 5.95%—5.96%, 5/13/17		459		459,384
Extended Term Loan, 5.92%—5.96%, 5/12/17		916		918,479
Incremental Term Loan, 7.25%, 5/13/17		180		180,810

				2,899,952
Chemicals — 6.2%
American Rock Salt Holdings LLC, Term Loan, 5.50%, 4/25/17		711		690,381
Ashland, Inc., Term Loan B, 3.75%, 8/23/18		297		297,686
Chemtura Corp., Exit Term Loan B, 5.50%, 8/27/16		800		802,336
Evergreen Acqco 1 LP, Term Loan B, 6.25%, 7/09/19		405		408,799
Gentek, Inc., Term Loan, 5.00%—5.75%, 10/06/15		442		439,353
INEOS US Finance LLC:
3 Year Term Loan, 5.50%, 5/04/15		100		100,498
6 Year Term Loan, 6.50%, 5/04/18		2,157		2,160,487
MacDermid, Inc., Tranche C Term Loan, 2.32%, 4/11/14	EUR	250		310,993
Nexeo Solutions LLC, Term Loan B, 5.00%, 9/08/17	USD	617		600,604
PolyOne Corp., Term Loan, 5.00%, 12/20/17		214		214,567
PQ Corp., Term Loan B, 3.98%, 7/30/14		1,255		1,232,596
Styron Sarl LLC, Term Loan B, 8.00%, 8/02/17		290		270,020
Tronox Pigments (Netherlands) BV:
Delayed Draw Term Loan, 4.25%, 2/08/18		180		179,566
Term Loan B, 4.25%, 2/08/18		660		658,409
Univar, Inc., Term Loan B, 5.00%, 6/30/17		687		682,789

				9,049,084
Commercial Services & Supplies — 5.7%
ACCO Brands Corp., Term Loan B, 4.25%, 4/30/19		985		984,233
Altegrity, Inc., Tranche D Term Loan, 7.75%, 2/20/15		839		834,503
ARAMARK Corp.:
Extended Term Loan B, 3.48%, 7/26/16		196		195,165
Extended Term Loan C, 3.48%—3.71%, 7/26/16		111		110,624
Letter of Credit, 3.50%, 7/26/16		13		12,835
Letter of Credit Facility, 3.50%, 7/26/16		9		8,911
AWAS Finance Luxembourg 2012 SA, Term Loan, 5.75%, 7/16/18		325		325,000
AWAS Finance Luxembourg Sarl, Term Loan B, 5.25%, 6/10/16		462		462,255
Delos Aircraft, Inc., Term Loan B2, 4.75%, 4/12/16		1,000		1,010,000
KAR Auction Services, Inc., Term Loan B, 5.00%, 5/19/17		1,335		1,334,661
Protection One, Inc., Term Loan, 5.75%, 3/21/19		643		649,821
Synagro Technologies, Inc., Term Loan B, 2.24%, 4/02/14		855		758,018

See Notes to Consolidated Financial Statements.



52	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Commercial Services & Supplies (concluded)
Volume Services America, Inc., Term Loan B, 10.50%—10.75%, 9/16/16	USD	516	$	515,813
West Corp., Term Loan B6, 5.75%, 6/29/18		1,025		1,028,208

				8,230,047
Communications Equipment — 3.5%
Avaya, Inc.:
Extended Term Loan B3, 4.93%, 10/26/17		148		132,128
Term Loan B1, 3.18%, 10/24/14		918		881,448
CommScope, Inc., Term Loan, 4.25%, 1/12/18		765		764,232
Telesat Canada, Term Loan A, 4.41%, 3/24/17	CAD	870		842,861
Zayo Group, LLC, Term Loan B, 7.13%, 7/02/19	USD	2,385		2,420,036

				5,040,705
Construction & Engineering — 0.9%
BakerCorp. International, Inc., Term Loan B, 4.75%, 6/01/18		426		423,891
Safway Services LLC, First Out Term Loan, 9.00%, 12/16/17		900		900,000

				1,323,891
Construction Materials — 2.0%
HD Supply, Inc., Senior Debt B, 7.25%, 10/12/17		2,885		2,947,518
Consumer Finance — 0.8%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17		1,215		1,173,386
Containers & Packaging — 0.5%
Sealed Air Corp., Term Loan B, 4.75%, 10/03/18		698		701,984
Diversified Consumer Services — 3.3%
Coinmach Service Corp., Term Loan B, 3.33%, 11/20/14		1,334		1,279,396
Education Management LLC, Term Loan C3, 8.25%, 3/29/18		354		311,554
Laureate Education, Inc., Extended Term Loan, 5.25%, 6/18/18		1,168		1,139,579
ServiceMaster Co.:
Delayed Draw Term Loan, 2.74%, 7/24/14		125		123,884
Term Loan, 2.75%—2.97%, 7/24/14		1,252		1,244,041
Weight Watchers International, Inc., Term Loan F, 4.00%, 3/15/19		688		679,524

				4,777,978
Diversified Financial Services — 2.0%
Residential Capital LLC:
DIP Term Loan A1, 5.00%, 11/18/13		665		666,662
DIP Term Loan A2, 6.75%, 11/18/13		95		96,109
Reynolds Group Holdings, Inc.:
Term Loan B, 6.50%, 2/09/18		684		687,707
Term Loan C, 6.50%, 8/09/18		1,398		1,415,538

				2,866,016
Diversified Telecommunication Services — 4.3%
Hawaiian Telcom Communications, Inc., Term Loan B, 7.00%, 2/28/17		565		572,062
Integra Telecom Holdings, Inc., Term Loan B, 9.25%, 4/15/15		784		772,240
Level 3 Financing, Inc.:
2016 Term Loan B, 4.75%, 2/01/16		860		861,720
2019 Term Loan B, 5.25%, 8/01/19		705		706,029
Term Loan B2, 5.75%, 9/03/18		1,800		1,804,752
Term Loan B3, 5.75%, 8/31/18		650		651,716
US Telepacific Corp., Term Loan B, 5.75%, 2/23/17		890		850,140

				6,218,659


Floating Rate Loan Interests (b)	Par (000)		Value

Electronic Equipment, Instruments & Components — 0.9%
CDW LLC, Extended Term Loan, 4.00%, 7/14/17	USD	591	$	583,252
Flextronics International Ltd. Delay Draw:
Term Loan A-2, 2.48%, 10/01/14		20		20,202
Term Loan A-3, 2.48%, 10/01/14		24		23,569
Sensata Technologies Finance Co. LLC, Term Loan, 4.00%, 5/11/18		701		701,572

				1,328,595
Energy Equipment & Services — 2.9%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		517		536,375
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		674		705,440
MEG Energy Corp., Term Loan B, 4.00%, 3/16/18		1,737		1,738,838
Tervita Corp.:
Incremental Term Loan, 6.50%, 10/17/14		403		402,640
Term Loan B, 3.23%, 11/14/14		866		850,105

				4,233,398
Food & Staples Retailing — 1.6%
Alliance Boots Holdings Ltd., Term Loan B1, 3.52%, 7/09/15	GBP	675		1,011,511
Pilot Travel Centers LLC, Term Loan B2, 4.25%, 8/07/19	USD	555		556,387
US Foods, Inc. (FKA U.S. Foodservice, Inc.), Extended Term Loan B, 5.75%, 3/31/17		719		695,295

				2,263,193
Food Products — 3.0%
Advance Pierre Foods:
Term Loan (First Lien), 7.00%, 9/30/16		922		926,376
Term Loan (Second Lien), 11.25%, 9/29/17		655		658,930
Del Monte Foods Co., Term Loan, 4.50%, 3/08/18		1,225		1,208,397
Michael Foods Group, Inc., Term Loan B, 4.25%, 2/23/18		143		142,801
Pinnacle Foods Finance LLC:
Extended Term Loan B, 3.75%, 10/03/16		50		49,055
Term Loan E, 4.75%, 10/17/18		593		590,928
Solvest Ltd. (Dole):
Term Loan B-2, 5.00%—6.00%, 7/06/18		298		298,362
Term Loan C-2, 5.00%—6.00%, 7/06/18		533		533,913

				4,408,762
Health Care Equipment & Supplies — 5.3%
Bausch & Lomb, Inc., Term Loan B, 5.25%, 5/17/19		1,520		1,525,062
Biomet, Inc., Term Loan B, 3.23%—3.47%, 3/25/15		361		360,261
BSN Medical Acquisition Holding GmbH, Term Loan B, 6.00%, 7/27/19		440		441,100
DJO Finance LLC:
Extended Term Loan B2, 5.23%, 11/01/16		223		222,858
Term Loan B3, 6.25%, 9/15/17		1,197		1,197,994
Hologic, Inc., Term Loan B, 4.50%, 8/01/19		2,010		2,022,201
Hupah Finance, Inc., Term Loan B, 6.25%, 1/21/19		409		410,509
Iasis Healthcare LLC, Term Loan, 5.00%, 5/03/18		402		395,452
Immucor, Inc., Term Loan B, 6.00%, 8/17/18		948		951,392
LHP Hospital Group, Inc., Term Loan, 9.00%, 7/03/18		245		246,837

				7,773,666
Health Care Providers & Services — 4.9%
Community Health Systems, Inc., Extended Term Loan B, 3.92%—3.96%, 1/25/17		48		48,166
ConvaTec, Inc., Term Loan, 5.75%, 12/22/16		678		678,876
DaVita, Inc.:
Term Loan B, 4.50%, 10/20/16		1,031		1,033,345
Term Loan B2, 4.00%, 9/02/19		720		716,515

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	53

Consolidated Schedule of Investments (continued)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Health Care Providers & Services (concluded)
Emergency Medical Services Corp., Term Loan, 5.25%, 5/25/18	USD	759	$	757,672
Harden Healthcare LLC:
Add on Term Loan A, 7.75%, 3/02/15		517		500,679
Term Loan A, 8.50%, 3/02/15		294		288,005
HCA, Inc.:
Extended Term Loan B3, 3.48%, 5/01/18		270		265,739
Tranche B-2 Term Loan, 3.71%, 3/31/17		368		362,671
inVentiv Health, Inc.:
Combined Term Loan, 6.50%, 8/04/16		365		339,483
Incremental Term Loan B-3, 6.75%, 5/15/18		510		475,981
Medpace, Inc., Term Loan, 6.50%—7.25%, 6/16/17		622		594,314
Sheridan Holdings, Inc., First Lien Term Loan, 6.00%, 6/29/18		345		345,286
US Renal Care, Inc., First Lien Term Loan, 6.24%—7.25%, 7/02/19		590		594,425
Vanguard Health Holding Co. II LLC (Vanguard Health Systems, Inc.), Term Loan B, 5.00%, 1/29/16		69		69,781

				7,070,938
Health Care Technology — 1.4%
IMS Health, Inc., Term Loan B, 4.50%, 8/25/17		634		635,550
Kinetic Concepts, Inc., Term Loan B, 7.00%, 5/04/18		1,055		1,064,228
MedAssets, Inc., Term Loan, 5.25%, 11/16/16		368		369,342

				2,069,120
Hotels, Restaurants & Leisure — 7.1%
Alpha D2 Ltd., Term Loan B, 5.75%, 4/28/17		713		716,921
Ameristar Casinos, Inc., Term Loan B, 4.00%, 4/16/18		637		637,870
Boyd Gaming Corp., Incremental Term Loan, 6.00%, 12/17/15		439		442,278
Caesars Entertainment Operating Co., Inc.:
Extended Term Loan B6, 5.49%, 1/26/18		105		92,301
Incremental Term Loan B4, 9.50%, 10/31/16		668		680,882
Term Loan B1, 3.24%, 1/28/15		133		126,349
Term Loan B3, 3.24%—3.46%, 1/28/15		2,720		2,579,499
DineEquity, Inc., Term Loan B, 4.25%—5.25%, 10/19/17		37		37,169
Dunkin’ Brands, Inc., Term Loan B2, 4.00%, 11/23/17		1,287		1,273,485
Golden Living, Term Loan, 5.00%, 5/04/18		166		158,891
OSI Restaurant Partners LLC:
Revolver, 2.49%—4.50%, 6/14/13		5		4,900
Term Loan B, 2.56%, 6/14/14		50		49,382
Sabre, Inc., Non Extended Initial Term Loan, 2.23%, 9/30/14		169		166,848
SeaWorld Parks & Entertainment, Inc., Term Loan B, 4.00%, 8/17/17		506		506,320
Six Flags Theme Parks, Inc., Term Loan B, 4.25%, 12/20/18		800		801,872
Station Casinos, Inc., Term Loan B1, 3.23%, 6/17/16		455		431,960
Twin River Worldwide Holdings, Inc., Term Loan, 8.50%, 11/05/15		375		376,550
Wendy’s International, Inc., Term Loan B, 4.75%, 5/15/19		1,235		1,240,508

				10,323,985
Household Products — 0.5%
Prestige Brands, Inc., Term Loan, 5.25%—6.25%, 1/31/19		676		681,455
Independent Power Producers & Energy Traders — 0.9%
The AES Corp., Term Loan, 4.25%, 6/01/18		988		989,969
Calpine Corp., Term Loan B, 4.50%, 4/02/18		245		245,338
GenOn Energy, Inc., Term Loan B, 6.00%, 12/01/17		140		141,004

				1,376,311


Floating Rate Loan Interests (b)	Par (000)		Value

Industrial Conglomerates — 1.9%
Sequa Corp.:
Incremental Term Loan, 6.25%, 12/03/14	USD	229	$	229,122
Term Loan, 3.69%—3.72%, 12/03/14		2,541		2,523,804

				2,752,926
Insurance — 0.7%
Asurion LLC, Term Loan (First Lien), 5.50%, 5/24/18		346		346,896
CNO Financial Group, Inc., Term Loan B, 6.25%, 9/30/16		731		732,639

				1,079,535
Internet Software & Services — 0.4%
Web.com Group, Inc., Term Loan B, 7.00%, 10/27/17		605		601,963
IT Services — 5.5%
Ceridian Corp., Extended Term Loan, 5.99%, 5/09/17		800		799,990
First Data Corp.:
2018 Term Loan B, 4.24%, 3/23/18		3,314		3,129,373
Non-Extended Term Loan B-1, 2.99%, 9/24/14		159		156,565
Non-Extended Term Loan B-3, 2.99%, 9/24/14		45		44,349
Genpact International, Inc., Term Loan B, 4.25%, 8/16/19		875		875,000
InfoGroup, Inc., Term Loan, 5.75%, 5/25/18		376		332,527
iPayment, Inc., Term Loan B, 5.75%, 5/08/17		358		357,500
Neustar, Inc., Term Loan B, 5.00%, 11/08/18		466		468,807
SunGard Data Systems, Inc. (Solar Capital Corp.), Term Loan, 3.86%—4.06%, 2/26/16		161		160,488
TransUnion LLC, Term Loan B, 5.50%, 2/12/18		1,720		1,731,384

				8,055,983
Leisure Equipment & Products — 0.8%
Eastman Kodak Co., DIP Term Loan B, 8.50%, 7/19/13		595		589,972
FGI Operating Company, LLC, Term Loan, 5.50%—6.50%, 4/19/19		595		596,862

				1,186,834
Machinery — 2.8%
Intelligrated, Inc., First Lien Term Loan, 6.75%, 7/30/18		500		495,000
Navistar International Corp., Term Loan B, 7.00%, 8/17/17		499		500,903
Rexnord Corp., Term Loan B, 5.00%, 4/02/18		373		374,591
Terex Corp.:
Term Loan, 6.00%, 4/28/17	EUR	69		86,949
Term Loan B, 5.50%, 4/28/17	USD	690		693,599
Tomkins LLC, Term Loan B, 4.25%, 9/29/16		1,282		1,285,281
Wabash National Corp., Term Loan B, 6.00%, 5/02/19		628		632,353

				4,068,676
Media — 16.4%
Acosta, Inc., Term Loan B, 5.75%, 3/01/18		270		270,835
Affinion Group, Inc., Term Loan B, 5.00%, 7/15/15		287		243,775
AMC Entertainment, Inc., Term Loan B3, 4.25%, 2/22/18		373		373,498
AMC Networks, Inc., Term Loan B, 4.00%, 12/31/18		891		890,448
Atlantic Broadband Finance LLC, 1st Lien Term Loan, 5.25%, 4/04/19		535		535,503
BBHI Acquisition LLC (FKA Bresnan Telecommunications Co. LLC), Term Loan B, 4.50%, 12/14/17		1,378		1,381,445
Capsugel Holdings US, Inc., Term Loan B, 4.75%, 8/01/18		664		665,146
Catalina Marketing Corp., Extended Term Loan B, 5.73%, 9/29/17		618		609,557
Cengage Learning Acquisitions, Inc.:
Non-Extended Term Loan, 2.49%, 7/03/14		185		170,637
Tranche 1 Incremental, 7.50%, 7/03/14		490		473,176

See Notes to Consolidated Financial Statements.



54	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Media (concluded)
Charter Communications Operating LLC:
Extended Term Loan C, 3.49%, 9/06/16	USD	891	$	888,894
Term Loan D, 4.00%, 5/15/19		347		346,676
Clarke American Corp., Term Facility B, 2.73%—2.96%, 6/30/14		106		94,971
Clear Channel Communications, Inc.:
Term Loan B, 3.88%, 1/28/16		1,003		776,623
Term Loan C, 3.88%, 1/28/16		182		138,507
Cumulus Media, Inc., First Lien Term Loan, 5.75%, 9/17/18		701		702,447
EMI Music Publishing Ltd., Term Loan B, 5.50%, 6/29/18		515		518,476
Gray Television, Inc., Term Loan B, 3.75%, 12/31/14		731		726,965
Houghton Mifflin Harcourt Publishing Co., DIP Term Loan B, 7.25%, 6/01/18		499		504,361
Hubbard Broadcasting, Term Loan B, 5.25%, 4/28/17		438		438,970
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		3,172		3,182,279
Interactive Data Corp., Term Loan B, 4.50%, 2/12/18		1,535		1,536,740
Kabel Deutschland GmbH, Term Loan F, 4.25%, 2/01/19		860		858,443
Lavena Holding 4 GmbH (Prosiebensat.1 Media AG), Term Loan B, 2.95%, 3/06/15	EUR	304		349,790
LIN Television Corp., Term Loan B, 5.00%, 12/21/18	USD	373		375,226
Newsday LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		1,325		1,332,181
Nielsen Finance LLC, Class B Term Loan, 3.99%, 5/02/16		724		726,271
Sinclair Television Group, Inc., Term Loan B, 4.00%, 10/28/16		640		639,696
Thomson Reuters (Healthcare), Inc., Term Loan B, 6.75%, 6/06/19		695		699,921
Univision Communications, Inc., Extended Term Loan, 4.48%, 3/31/17		986		952,754
UPC Broadband Holding BV, Term Loan U, 4.15%, 12/29/17	EUR	210		262,893
UPC Financing Partnership:
Term Loan, 4.75%, 12/29/17	USD	530		531,548
Term Loan T, 3.75%, 12/30/16		95		94,110
WC Luxco Sarl, Term Loan B3, 4.25%, 3/15/18		212		210,383
Weather Channel, Term Loan B, 4.25%, 2/13/17		962		965,597
WideOpenWest Finance LLC, First Lien Term Loan, 6.25%, 7/17/18		595		594,631

				24,063,373
Metals & Mining — 2.6%
Constellium Holding Co. BV, Term Loan B, 9.25%, 5/25/18		590		578,200
Novelis, Inc., Term Loan, 4.00%, 3/10/17		1,322		1,313,681
SunCoke Energy, Inc., Term Loan B, 4.00%, 7/26/18		495		492,526
Walter Energy, Inc., Term Loan B, 4.00%, 4/02/18		1,478		1,453,044

				3,837,451
Multiline Retail — 1.3%
99¢ Only Stores, Term Loan, 5.25%, 1/11/19		597		600,353
Dollar General Corp., Tranche B-2 Term Loan, 2.98%, 7/07/14		360		361,067
Hema Holding BV:
Term Loan B, 2.89%, 7/06/15	EUR	203		245,464
Term Loan C, 2.14%, 7/05/16		203		246,738
The Neiman Marcus Group, Inc., Term Loan, 4.75%, 5/16/18	USD	485		485,000

				1,938,622
Oil, Gas & Consumable Fuels — 2.3%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17		1,060		1,062,279
Everest Acquisition LLC, Term Loan B1, 5.00%, 4/24/18		755		756,888


Floating Rate Loan Interests (b)	Par (000)		Value

Oil, Gas & Consumable Fuels (concluded)
Gibson Energy ULC, Term Loan B, 4.75%, 6/15/18	USD	881	$	883,970
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		618		618,239

				3,321,376
Paper & Forest Products — 0.8%
Ainsworth Lumber Co. Ltd., Term Loan, 5.25%, 6/26/14		200		193,500
NewPage Corp., DIP Term Loan, 8.00%, 3/07/13		250		252,345
Verso Paper Finance Holdings LLC, Term Loan, 6.49%—7.24%, 2/01/13		1,520		760,203

				1,206,048
Pharmaceuticals — 4.1%
Aptalis Pharma, Inc., Term Loan B, 5.50%, 2/10/17		1,283		1,277,940
Pharmaceutical Product Development, Inc., Term Loan B, 6.25%, 12/05/18		1,593		1,610,294
Quintiles Transnational Corp., Term Loan B, 5.00%, 6/08/18		673		674,466
RPI Finance Trust:
Incremental Tranche 2, 4.00%, 11/09/18		110		109,840
Term Loan Tranche 2, 4.00%, 5/09/18		494		494,516
Valeant Pharmaceuticals International, Inc.:
Add-On Term Loan B, 4.75%, 2/13/19		678		679,310
Series A Tranche B, 4.75%, 2/13/19		495		496,148
Warner Chilcott Corp.:
Incremental Term Loan B-1, 4.25%, 3/15/18		117		116,207
Term Loan B-1, 4.25%, 3/15/18		308		306,012
Term Loan B-2, 4.25%, 3/15/18		154		153,006

				5,917,739
Professional Services — 1.4%
Booz Allen Hamilton, Inc., Term Loan B, 4.50%, 7/31/19		740		740,925
Emdeon, Inc., Term Loan B1, 5.00%, 11/02/18		931		931,544
ON Assignment, Inc., Term Loan B, 5.00%, 5/15/19		306		304,329

				1,976,798
Real Estate Investment Trusts (REITs) — 0.8%
iStar Financial, Inc.:
Term Loan A1, 5.00%, 6/28/13		1,185		1,186,350
Term Loan A2, 7.00%, 6/30/14		35		35,033

				1,221,383
Real Estate Management & Development — 1.6%
Mattamy Funding Partnership, Term Loan B, 2.69%, 4/11/13		225		221,802
Realogy Corp.:
Extended Letter of Credit Loan, 4.50%, 10/10/16		103		99,281
Extended Synthetic Letter of Credit, 3.25%, 10/10/13		29		26,904
Extended Term Loan, 4.48%, 10/10/16		1,971		1,902,900
Stockbridge SBE Holdings LLC, Term Loan B, 13.00%, 5/02/17		100		99,500

				2,350,387
Road & Rail — 0.7%
Avis Budget Car Rental LLC, Incremental Term Loan, 6.25%, 9/21/18		316		317,379
RailAmerica, Inc., Term Loan B, 4.00%, 3/01/19		509		508,410
Road Infrastructure Investment LLC, Term Loan B, 6.25%, 3/30/18		269		267,978

				1,093,767

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	55

Consolidated Schedule of Investments (continued)

BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(Percentages shown are based on Net Assets)



Floating Rate Loan Interests (b)	Par (000)		Value

Semiconductors & Semiconductor Equipment — 0.9%
Freescale Semiconductor, Inc., Extended Term Loan B, 4.50%, 12/01/16	USD	869	$	833,242
NXP BV, Term Loan A-2, 5.50%, 3/03/17		446		451,476

				1,284,718
Software — 3.7%
Blackboard, Inc., Term Loan B, 7.50%, 10/04/18		294		288,573
Infor US, Inc. (FKA Lawson Software, Inc.), Term Loan B, 6.25%, 4/05/18		2,040		2,060,857
Sophia, LP, Term Loan B, 6.25%, 7/19/18		738		744,240
SS&C Technologies, Inc.:
Term Loan B-1, 5.00%, 6/07/19		1,028		1,029,174
Term Loan B-2, 5.00%, 6/07/19		106		106,466
Vertafore, Inc., Term Loan B, 5.25%, 7/29/16		355		354,248
WaveDivision Holdings LLC, Term Loan B, 5.50%, 8/23/19		800		802,984

				5,386,542
Specialty Retail — 6.6%
Academy Ltd., Term Loan, 6.00%, 8/03/18		896		898,634
Bass Pro Group LLC, Term Loan, 5.25%, 6/13/17		644		648,582
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50%, 2/23/17		173		173,423
Claire’s Stores, Inc., Term Loan B, 2.98%—3.20%, 5/29/14		926		908,258
General Nutrition Centers, Inc., Term Loan B, 4.25%, 3/02/18		985		983,611
The Gymboree Corp., Term Loan, 5.00%, 2/23/18		146		141,494
Harbor Freight Tools USA, Inc., Term Loan B, 5.50%, 11/14/17		525		524,260
Jo-Ann Stores, Inc., Term Loan, 4.75%, 3/16/18		362		361,984
Michaels Stores, Inc.:
Extended Term Loan B3, 5.00%, 7/29/16		392		394,015
Term Loan B2, 5.00%, 7/29/16		701		704,503
Party City Holdings, Inc., Term Loan B, 5.75%, 7/26/19		975		979,465
PETCO Animal Supplies, Inc., Term Loan, 4.50%, 11/24/17		1,125		1,125,709
Things Remembered, Inc., Term Loan B, 8.00%, 5/24/18		360		352,800
Toys ‘R’ Us Delaware, Inc.:
Incremental Term Loan B2, 5.25%, 5/25/18		242		231,414
Term Loan, 6.00%, 9/01/16		300		294,271
Term Loan B3, 5.25%, 5/25/18		110		105,336
The Yankee Candle Co., Inc., Term Loan B, 5.25%, 4/02/19		728		731,000

				9,558,759
Textiles, Apparel & Luxury Goods — 1.2%
Ascend Performance Materials LLC, Term Loan B, 6.75%, 4/10/18		1,057		1,047,654
Wolverine Worldwide, Inc., Term Loan B, 6.75%, 6/26/19		660		664,112

				1,711,766
Wireless Telecommunication Services — 1.7%
Crown Castle International Corp., Term Loan B, 4.00%, 1/31/19		317		316,122
MetroPCS Wireless, Inc.:
Term Loan B-3, 4.00%, 3/16/18		146		145,501
Tranche B-2 Term Loan, 4.07%, 11/03/16		474		473,170
Vodafone Americas Finance 2, Inc. (g):
Term Loan, 6.88%, 8/11/15		1,211		1,259,443
Term Loan B, 6.25%, 7/11/16		309		315,562

				2,509,798
Total Floating Rate Loan Interests – 126.9%				184,945,380



Other Interests (i)	Beneficial Interest (000)			Value

Chemicals — 0.0%
Wellman Holdings, Inc., Litigation Trust Certificate		USD 2,000		$	20
Diversified Financial Services — 0.3%
J.G. Wentworth LLC Preferred Equity Interests (d)		—	(j)		365,704
Total Other Interests – 0.3%					365,724



Warrants (k)	Shares
Software — 0.0%
HMH Holdings/EduMedia (Issued/Exercisable 3/09/10, 19 Shares for 1 Warrant, Expires 6/22/19, Strike Price $42.27)		613			—
Total Long-Term Investments (Cost — $211,136,977) — 145.2%					211,542,876



Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (l)(m)		1,481,869			1,481,869
Total Short-Term Securities (Cost — $1,481,869) — 1.0%					1,481,869



Options Purchased	Contracts

Over-the-Counter Call Options — 0.0%
Marsico Parent Superholdco LLC, Strike Price USD 942.86, Expires 12/14/19, Broker Goldman Sachs Group, Inc.		11			—
Total Options Purchased (Cost — $10,755) — 0.0%					—
Total Investments (Cost — $212,629,601) — 146.2%					213,024,745
Liabilities in Excess of Other Assets — (46.2)%					(67,347,038	)

Net Assets — 100.0%				$	145,677,707

(a)

(b)

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

(c)

When-issued security. Unsettled when-issued transaction was as follows:


Counterparty	Value		Unrealized Appreciation
Credit Suisse Group AG	$	369,200		—

(d)

Non-income producing security.

(e)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(f)

Convertible security.

(g)

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

(h)

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

(i)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(j)

Amount is less than $500.

(k)

See Notes to Consolidated Financial Statements.



56	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (continued)		BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)

(l)

Investments in issuers considered to be an affiliate of the Fund during the six months ended August 31, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:


Affiliate	Shares Held at February 29, 2012		Net Activity			Shares Held at August 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		2,382,746		(900,877	)		1,481,869	$	445

(m)

Represents the current yield as of report date.

Foreign currency exchange contracts as of August 31, 2012 were as follows:


Currency Purchased		Currency Sold		Counter party		Settle ment Date		Unrealized Depreciation
USD	768,036	CAD	780,000		UBS AG		10/17/12	$	(22,525)
USD	70,504	GBP	45,000		Citigroup, Inc.		10/17/12		(938)
USD	871,669	GBP	561,500		UBS AG		10/17/12		(19,778)
USD	2,150,404	EUR	1,754,000		Citigroup, Inc.		10/22/12		(56,915)
Total								$	(100,156)

Credit default swaps on traded indexes — buy protection outstanding as of August 31, 2012 were as follows:

Index

Pay
Fixed
Rate

Counterparty

Expiration
Date

Notional
Amount
(000)

Unrealized
Depreciation

Dow Jones CDX North

America High Yield

Index Series 18

5.00%

JPMorgan &

Chase Co.

6/20/17

1,906

(77,373

)

Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instrument. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

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

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of August 31, 2012:


	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—		—	$	3,851,124	$	3,851,124
Common Stocks	$	468,196	$	402,509		4,937		875,642
Corporate Bonds		—		19,548,395		1,956,611		21,505,006
Floating Rate Loan Interests		—		172,570,323		12,375,057		184,945,380
Other Interests		—		—		365,724		365,724
Warrants		—		—		—		—
Short-Term Securities		1,481,869		—		—		1,481,869

Total	$	1,950,065	$	192,521,227	$	18,553,453	$	213,024,745


	Level 1		Level 2			Level 3		Total
Derivative Financial Instruments¹
Liabilities:
Foreign currency exchange contracts		—	$	(100,156	)		—	$	(100,156	)
Interest rate contracts		—		(77,373	)		—		(77,373	)

Total		—	$	(177,529	)		—	$	(177,529	)

Derivative financial instruments are foreign currency exchange contracts and swaps, which are valued at the unrealized appreciation/depreciation on the instrument.


	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	3,216		—			—	$	3,216
Foreign currency at value		35,669		—			—		35,669
Liabilities:
Loan payable		—	$	(63,000,000	)		—		(63,000,000	)

Total	$	38,885	$	(63,000,000	)		—	$	(62,961,115	)

There were no transfers between Level 1 and Level 2 during the six months ended August 31, 2012.

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	57


Consolidated Schedule of Investments (concluded)		BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)


	Value		Valuation Techniques	Unobservable Inputs¹	Range of Unobservable Inputs	Weighted Average of Unobservable Inputs²
Assets:
Common Stocks	$	4,937	Market Comparable Companies	EBITDA Multiple	5.0x	5.0x
				Illiquidity Discount	20%	20%
				Proforma Revenue Increase	37%	37%
Corporate Bonds		1,608,081	Market Comparable Companies	EBITDA Multiple	5.0x	5.0x
				Illiquidity Discount	20%	20%
				Proforma Revenue Increase	37%	37%
Floating Rate Loan Interests		2,448,888	Market Comparable Companies	Illiquidity Discount	50%	50%
				Yield	9.65%	9.65%
			Cost	N/A³	—	—
Total⁴	$	4,061,906

A change to the unobservable inputs may result in a significant change to the value of the investment as follows:


Unobservable Input	Impact to Value if Input Increases		Impact to Value if Input Decreases
EBITDA Multiple		Increase		Decrease
Illiquidity Discount		Decrease		Increase
Proforma Revenue Increase		Increase		Decrease
Yield		Decrease		Increase

Unobservable inputs are weighted based on the value of the investments included in the range.

⁴

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


	Asset-Backed Securities			Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests		Total
Assets:
Opening balance, as of February 29, 2012	$	3,012,124		$	16,744		$	1,863,100		$	9,442,927		$	311,546	$	14,646,441
Transfers into Level 3⁵		—			—			—			2,698,968			—		2,698,968
Transfers out of Level 3⁶		—			—			—			(2,006,150	)		—		(2,006,150	)
Accrued discounts/premiums		20,211			—			32,997			(70,340	)		—		(17,132	)
Net realized gain (loss)		(45,594	)		(669,326	)		—			(278,193	)		—		(993,113	)
Net change in unrealized appreciation/depreciation⁷		169,049			657,525			(14,486	)		487,360			54,178		1,353,626
Purchases		2,776,459			—			75,000			3,992,590			—		6,844,049
Sales		(2,081,125	)		(6	)		—			(1,892,105	)		—		(3,973,236	)

Closing Balance, as of August 31, 2012	$	3,851,124		$	4,937		$	1,956,611		$	12,375,057		$	365,724	$	18,553,453

⁵

As of February 29, 2012, the Fund used observable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $2,698,968 transferred from Level 2 to Level 3 in the disclosure hierarchy.

⁶

As of February 29, 2012, the Fund used significant unobservable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $2,006,150 transferred from Level 3 to Level 2 in the disclosure hierarchy.

⁷


Consolidated Schedule of Investments		BlackRock Senior High Income Fund, Inc. (ARK)
August 31, 2012 (Unaudited)		(Percentages shown are based on Net Assets)


Asset-Backed Securities	Par (000)		Value

CSAM Funding, Series 2A, Class B1, 7.05%, 10/15/16 (a)	USD	500	$	505,200
Fraser Sullivan CLO Ltd., Series 2012-7A, Class C, 4.47%, 4/20/23 (a)(b)		405		359,883
Gannett Peak CLO Ltd., Series 2006-1X, Class A2, 0.81%, 10/27/20 (b)		495		417,038
Goldentree Loan Opportunities VI Ltd., Series 2012-6A, Class D, 4.66%, 4/17/22 (a)(b)		650		590,915
Greyrock CDO Ltd., Series 2005-1X, Class A2L, 0.85%, 11/15/17 (b)		1,025		906,817
Highbridge Loan Management Ltd., Series 2012-1A, Class C, 5.71%, 9/20/22 (a)(b)(c)		650		599,950
ING Investment Management, Series 2012-2A, Class D, 4.99%, 10/15/22 (a)(b)		675		601,837
LCM LP (a)(b):
Series 11A, Class D2, 4.41%, 4/19/22		700		612,500
Series 9A, Class E, 4.66%, 7/14/22		500		387,550
Symphony CLO Ltd. (a)(b):
Series 2012-9A, Class D, 4.71%, 4/16/22		525		467,880
Series 2012-10A, Class D, 5.69%, 7/23/23		650		601,250
Total Asset-Backed Securities – 2.5%				6,050,820


Common Stocks (d)	Shares
Chemicals — 0.0%
GEO Specialty Chemicals, Inc.		142,466		65,534
Containers & Packaging — 0.1%
Smurfit Kappa Plc		18,171		148,244
Metals & Mining — 0.1%
Euramax International		935		199,445
Paper & Forest Products — 0.5%
Ainsworth Lumber Co. Ltd.		547,756		1,200,257
Software — 0.3%
HMH Holdings/EduMedia		30,022		735,532
Total Common Stocks – 1.0%				2,349,012


Corporate Bonds	Par (000)
Aerospace & Defense — 0.5%
Huntington Ingalls Industries, Inc., 7.13%, 3/15/21	USD	425		460,063
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17		692		736,980

				1,197,043
Airlines — 0.2%
American Airlines Pass-Through Trust, Series 2011-2, Class A, 8.63%, 4/15/23		325		344,617
Delta Air Lines, Inc., Series 2009-1-B, 9.75%, 6/17/18		85		92,176

				436,793
Auto Components — 1.3%
Delphi Corp., 6.13%, 5/15/21		290		319,000
Icahn Enterprises LP:
7.75%, 1/15/16		110		115,500
8.00%, 1/15/18		2,065		2,199,225
Titan International, Inc., 7.88%, 10/01/17		490		513,275
Venture Holdings Co. LLC (d)(e):
12.00%, 7/01/49		700		—
Series B, 9.50%, 7/01/05		3,325		—

				3,147,000
Biotechnology — 0.0%
QHP Royalty Sub LLC, 10.25%, 3/15/15 (a)		24		23,903


Corporate Bonds	Par (000)		Value

Building Products — 0.4%
Building Materials Corp. of America (a):
7.00%, 2/15/20	USD	485	$	525,013
6.75%, 5/01/21		410		447,925

				972,938
Capital Markets — 0.6%
E*Trade Financial Corp., 12.50%, 11/30/17 (f)		935		1,067,069
KKR Group Finance Co. LLC, 6.38%, 9/29/20 (a)		280		316,946

				1,384,015
Chemicals — 4.4%
Ashland, Inc., 4.75%, 8/15/22 (a)		255		255,638
Celanese US Holdings LLC, 5.88%, 6/15/21		745		823,225
GEO Specialty Chemicals, Inc.:
7.50%, 3/31/15 (f)(g)		1,869		2,242,348
10.00%, 3/31/15		1,839		1,838,720
Hexion US Finance Corp., 6.63%, 4/15/20		470		474,700
Huntsman International LLC, 8.63%, 3/15/21		395		452,275
INEOS Finance Plc (a):
8.38%, 2/15/19		805		847,262
7.50%, 5/01/20		195		198,900
LyondellBasell Industries NV:
6.00%, 11/15/21		535		609,900
5.75%, 4/15/24		935		1,058,887
NOVA Chemicals Corp., 8.63%, 11/01/19		300		342,000
Orion Engineered Carbons Bondco GmbH, 9.63%, 6/15/18 (a)		400		422,000
Tronox Finance LLC, 6.38%, 8/15/20 (a)		1,075		1,085,750

				10,651,605
Commercial Banks — 0.6%
CIT Group, Inc.:
5.00%, 5/15/17		330		344,025
5.50%, 2/15/19 (a)		760		792,300
5.00%, 8/15/22		250		251,894

				1,388,219
Commercial Services & Supplies — 1.2%
ARAMARK Holdings Corp., 8.63%, 5/01/16 (a)(f)		330		337,841
AWAS Aviation Capital Ltd., 7.00%, 10/17/16 (a)		500		527,399
Brickman Group Holdings, Inc., 9.13%, 11/01/18 (a)		25		25,250
Clean Harbors, Inc., 5.25%, 8/01/20 (a)		226		231,933
Covanta Holding Corp., 6.38%, 10/01/22		420		459,216
The Geo Group, Inc., 7.75%, 10/15/17		450		487,687
Mead Products LLC/ACCO Brands Corp., 6.75%, 4/30/20 (a)		328		346,860
Mobile Mini, Inc., 7.88%, 12/01/20		335		359,287
West Corp., 8.63%, 10/01/18		165		167,475

				2,942,948
Communications Equipment — 0.4%
Hughes Satellite Systems Corp., 6.50%, 6/15/19		320		342,800
Zayo Group LLC/Zayo Capital, Inc., 8.13%, 1/01/20		700		743,750

				1,086,550
Construction Materials — 0.5%
HD Supply, Inc., 8.13%, 4/15/19 (a)		1,095		1,188,075
Consumer Finance — 0.2%
Ford Motor Credit Co. LLC:
7.00%, 4/15/15		140		155,845
6.63%, 8/15/17		300		344,875

				500,720
Containers & Packaging — 1.1%
Ardagh Packaging Finance Plc (a):
7.38%, 10/15/17		200		214,250
9.13%, 10/15/20		300		312,000

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	59

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Containers & Packaging (concluded)
Ball Corp., 6.75%, 9/15/20	USD	325	$	359,125
Berry Plastics Corp., 8.25%, 11/15/15		540		568,350
Crown Americas LLC, 6.25%, 2/01/21		535		591,175
Sealed Air Corp. (a):
8.13%, 9/15/19		405		450,562
8.38%, 9/15/21		80		90,000

				2,585,462
Distributors — 0.2%
VWR Funding, Inc., 7.25%, 9/15/17 (a)(c)		383		387,788
Diversified Consumer Services — 0.1%
ServiceMaster Co., 8.00%, 2/15/20		125		133,281
Diversified Financial Services — 3.1%
Ally Financial, Inc.:
8.30%, 2/12/15		3,670		4,073,700
8.00%, 11/01/31		230		271,975
8.00%, 11/01/31		370		439,188
CNG Holdings, Inc., 9.38%, 5/15/20 (a)		260		265,200
DPL, Inc., 7.25%, 10/15/21 (a)		95		108,300
Reynolds Group Issuer, Inc.:
7.13%, 4/15/19		560		603,400
9.88%, 8/15/19		965		1,020,487
6.88%, 2/15/21		500		541,250
8.25%, 2/15/21		100		98,250
WMG Acquisition Corp., 9.50%, 6/15/16		105		114,713

				7,536,463
Diversified Telecommunication Services — 1.4%
ITC Deltacom, Inc., 10.50%, 4/01/16		520		560,300
Level 3 Financing, Inc.:
4.47%, 2/15/15 (b)		1,295		1,282,050
8.13%, 7/01/19		1,130		1,183,675
7.00%, 6/01/20 (a)		244		242,780

				3,268,805
Electric Utilities — 0.1%
Mirant Mid Atlantic Pass Through Trust, Series B, 9.13%, 6/30/17		248		266,562
Electrical Equipment — 0.1%
Belden, Inc., 5.50%, 9/01/22 (a)		190		190,475
Energy Equipment & Services — 2.5%
Calfrac Holdings LP, 7.50%, 12/01/20 (a)		920		901,600
Compagnie Générale de Géophysique, Veritas, 6.50%, 6/01/21		1,105		1,150,581
FTS International Services LLC/FTS International Bonds Inc., 8.13%, 11/15/18 (a)		625		645,312
Gulfmark Offshore, Inc., 6.38%, 3/15/22 (a)		70		71,400
Hornbeck Offshore Services, Inc., 5.88%, 4/01/20		140		142,800
Key Energy Services, Inc., 6.75%, 3/01/21		380		386,650
MEG Energy Corp. (a):
6.50%, 3/15/21		490		515,725
6.38%, 1/30/23		165		172,013
Oil States International, Inc., 6.50%, 6/01/19		270		286,875
Peabody Energy Corp., 6.25%, 11/15/21 (a)		1,090		1,109,075
Precision Drilling Corp.:
6.63%, 11/15/20		65		68,250
6.50%, 12/15/21		445		467,250
				5,917,531
Food Products — 0.4%
Constellation Brands, Inc., 6.00%, 5/01/22		245		275,319
Post Holdings, Inc., 7.38%, 2/15/22 (a)		250		263,438
Smithfield Foods, Inc., 6.63%, 8/15/22		367		375,716

				914,473


Corporate Bonds	Par (000)		Value

Health Care Equipment & Supplies — 0.7%
Biomet, Inc., 6.50%, 8/01/20 (a)	USD	279	$	289,462
DJO Finance LLC:
10.88%, 11/15/14		150		156,562
8.75%, 3/15/18 (a)		115		122,188
7.75%, 4/15/18		30		27,450
Fresenius Medical Care US Finance II, Inc. (a):
5.63%, 7/31/19		360		384,750
5.88%, 1/31/22		340		361,250
Teleflex, Inc., 6.88%, 6/01/19		250		267,500

				1,609,162
Health Care Providers & Services — 3.2%
Aviv Healthcare Properties LP, 7.75%, 2/15/19		365		379,600
CHS/Community Health Systems, Inc.:
5.13%, 8/15/18		185		190,781
7.13%, 7/15/20		176		184,360
DaVita, Inc., 5.75%, 8/15/22		362		376,480
HCA, Inc.:
8.50%, 4/15/19		25		28,188
6.50%, 2/15/20		1,030		1,131,712
7.88%, 2/15/20		1,174		1,310,477
5.88%, 3/15/22		785		835,044
Hologic, Inc., 6.25%, 8/01/20 (a)		516		546,315
Omnicare, Inc., 7.75%, 6/01/20		695		766,238
Tenet Healthcare Corp.:
10.00%, 5/01/18		430		494,500
8.88%, 7/01/19		1,015		1,154,562
Vanguard Health Holding Co. II LLC, 7.75%, 2/01/19 (a)		300		312,750

				7,711,007
Health Care Technology — 0.8%
IMS Health, Inc., 12.50%, 3/01/18 (a)		1,730		2,032,750
Hotels, Restaurants & Leisure — 1.4%
Affinity Gaming LLC/Affinity Gaming Finance Corp., 9.00%, 5/15/18 (a)		125		127,187
Caesars Entertainment Operating Co., Inc.:
11.25%, 6/01/17		140		150,850
8.50%, 2/15/20 (a)		675		665,719
Caesars Operating Escrow LLC, 9.00%, 2/15/20 (a)		709		705,455
Carlson Wagonlit BV, 6.88%, 6/15/19 (a)		200		208,000
Choice Hotels International, Inc., 5.75%, 7/01/22		90		96,525
Diamond Resorts Corp., 12.00%, 8/15/18		540		574,425
Little Traverse Bay Bands of Odawa Indians, 9.00%, 8/31/20 (a)		282		256,620
Tropicana Entertainment LLC, 9.63%, 12/15/14 (d)(e)		220		—
Wynn Las Vegas LLC, 5.38%, 3/15/22 (a)		468		478,530

				3,263,311
Household Durables — 0.7%
Beazer Homes USA, Inc., 6.63%, 4/15/18 (a)		340		347,650
Libbey Glass, Inc., 6.88%, 5/15/20 (a)		90		95,962
Standard Pacific Corp., 8.38%, 1/15/21		1,120		1,248,800

				1,692,412
Independent Power Producers & Energy Traders — 3.5%
The AES Corp.:
7.75%, 10/15/15		155		175,150
9.75%, 4/15/16		674		805,430
7.38%, 7/01/21		70		80,150
Calpine Corp. (a):
7.25%, 10/15/17		350		374,500
7.50%, 2/15/21		190		210,900
Energy Future Holdings Corp., 10.00%, 1/15/20		775		854,438
Energy Future Intermediate Holding Co. LLC, 10.00%, 12/01/20		4,160		4,669,600
GenOn REMA LLC, 9.24%, 7/02/17		207		222,785

See Notes to Consolidated Financial Statements.



60	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Independent Power Producers & Energy Traders (concluded)
Laredo Petroleum, Inc.:
9.50%, 2/15/19	USD	495	$	561,825
7.38%, 5/01/22		185		198,875
QEP Resources, Inc., 5.38%, 10/01/22		178		182,450

				8,336,103
Industrial Conglomerates — 1.5%
Sequa Corp. (a):
11.75%, 12/01/15		1,430		1,501,500
13.50%, 12/01/15		1,930		2,045,776

				3,547,276
Insurance — 0.6%
CNO Financial Group, Inc., 9.00%, 1/15/18 (a)		851		930,781
Genworth Financial, Inc., 7.63%, 9/24/21		370		378,066
MPL 2 Acquisition Canco, Inc., 9.88%, 8/15/18 (a)		220		196,900

				1,505,747
IT Services — 1.1%
Ceridian Corp., 8.88%, 7/15/19 (a)		520		557,700
First Data Corp.:
7.38%, 6/15/19 (a)		445		459,462
6.75%, 11/01/20 (a)		460		456,550
8.25%, 1/15/21 (a)		651		645,304
12.63%, 1/15/21		288		291,600
SunGard Data Systems, Inc., 7.63%, 11/15/20		315		337,838

				2,748,454
Machinery — 0.9%
UR Financing Escrow Corp. (a):
5.75%, 7/15/18		462		488,565
7.38%, 5/15/20		300		318,000
7.63%, 4/15/22		1,245		1,344,600

				2,151,165
Media — 6.6%
AMC Networks, Inc., 7.75%, 7/15/21		190		215,175
Cengage Learning Acquisitions, Inc., 11.50%, 4/15/20 (a)		500		526,250
Checkout Holding Corp., 16.03%, 11/15/15 (a)(h)		570		347,700
Cinemark USA, Inc., 8.63%, 6/15/19		195		218,400
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/17		340		368,050
Series B, 9.25%, 12/15/17		4,301		4,671,961
Series B, 7.63%, 3/15/20		952		923,440
DISH DBS Corp., 5.88%, 7/15/22 (a)		795		800,963
Intelsat Jackson Holdings SA, 7.25%, 10/15/20 (a)		1,450		1,562,375
Interactive Data Corp., 10.25%, 8/01/18		810		913,275
Lamar Media Corp., 5.88%, 2/01/22		255		270,300
NAI Entertainment Holdings LLC, 8.25%, 12/15/17 (a)		476		530,740
Nielsen Finance LLC, 7.75%, 10/15/18		640		720,000
ProQuest LLC, 9.00%, 10/15/18 (a)		220		201,850
Unitymedia Hessen GmbH & Co. KG:
8.13%, 12/01/17 (a)		1,500		1,623,750
7.50%, 3/15/19		540		584,291
Virgin Media Secured Finance Plc, 6.50%, 1/15/18		1,250		1,362,500

				15,841,020
Metals & Mining — 1.4%
FMG Resources August 2006 Property Ltd. (a):
6.88%, 2/01/18		340		323,850
6.88%, 4/01/22		155		142,600
Global Brass and Copper, Inc., 9.50%, 6/01/19 (a)		255		268,388
Kaiser Aluminum Corp., 8.25%, 6/01/20 (a)		190		201,400
New Gold, Inc., 7.00%, 4/15/20 (a)		65		68,413
Novelis, Inc., 8.75%, 12/15/20		1,895		2,117,662
RathGibson, Inc., 11.25%, 2/15/14 (d)(e)		2,175		—


Corporate Bonds	Par (000)		Value

Metals & Mining (concluded)
Steel Dynamics, Inc., 6.38%, 8/15/22 (a)	USD	205	$	212,175

				3,334,488
Multiline Retail — 0.1%
Dollar General Corp., 4.13%, 7/15/17		127		132,080
Oil, Gas & Consumable Fuels — 6.7%
Access Midstream Partners LP, 6.13%, 7/15/22		415		430,562
Alpha Natural Resources, Inc.:
6.00%, 6/01/19 USD		245		220,500
6.25%, 6/01/21		180		161,100
Berry Petroleum Co., 6.38%, 9/15/22		180		191,700
Chaparral Energy, Inc., 7.63%, 11/15/22 (a)		115		121,613
Chesapeake Energy Corp.:
7.25%, 12/15/18		25		26,188
6.63%, 8/15/20		265		272,287
6.88%, 11/15/20		150		155,625
6.13%, 2/15/21		235		233,238
Coffeyville Resources LLC, 9.00%, 4/01/15 (a)		105		111,825
Concho Resources, Inc., 5.50%, 10/01/22		210		216,825
Consol Energy, Inc.:
8.25%, 4/01/20		1,110		1,196,025
6.38%, 3/01/21		230		227,700
Crosstex Energy LP:
8.88%, 2/15/18		55		58,713
7.13%, 6/01/22 (a)		195		194,025
Denbury Resources, Inc., 8.25%, 2/15/20		26		29,510
Energy XXI Gulf Coast, Inc., 7.75%, 6/15/19		665		706,562
EP Energy LLC/EP Energy Finance, Inc., 6.88%, 5/01/19 (a)		235		252,037
Hilcorp Energy I LP, 7.63%, 4/15/21 (a)		1,105		1,215,500
Holly Energy Partners LP, 6.50%, 3/01/20 (a)		80		83,600
Kodiak Oil & Gas Corp., 8.13%, 12/01/19 (a)		320		340,000
Linn Energy LLC:
6.25%, 11/01/19 (a)		1,460		1,441,750
8.63%, 4/15/20		190		205,200
7.75%, 2/01/21		485		505,612
MarkWest Energy Partners LP, 5.50%, 2/15/23		115		117,588
Newfield Exploration Co.:
5.75%, 1/30/22		135		147,825
5.63%, 7/01/24		630		683,550
Northern Oil and Gas, Inc., 8.00%, 6/01/20 (a)		265		270,300
Oasis Petroleum, Inc.:
7.25%, 2/01/19		135		142,425
6.50%, 11/01/21		155		158,100
Offshore Group Investments Ltd.:
11.50%, 8/01/15 (a)		425		469,625
11.50%, 8/01/15		440		486,200
OGX Petroleo e Gas Participacoes SA (a):
8.50%, 6/01/18		552		489,900
8.38%, 4/01/22		295		250,750
Pioneer Natural Resources Co., 7.20%, 1/15/28		570		724,093
Range Resources Corp.:
5.75%, 6/01/21		645		686,119
5.00%, 8/15/22		298		310,292
Sabine Pass Liquified Natural Gas LP, 7.50%, 11/30/16		540		577,800
Samson Investment Co., 9.75%, 2/15/20 (a)		40		41,200
SandRidge Energy, Inc.:
7.50%, 3/15/21		120		121,500
7.50%, 3/15/21 (a)		165		167,063
8.13%, 10/15/22 (a)		110		114,950
7.50%, 2/15/23 (a)		285		286,425
SESI LLC:
6.38%, 5/01/19		280		296,800
7.13%, 12/15/21		275		305,937

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	61

Consolidated Schedule of Investments
(continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Corporate Bonds	Par (000)		Value

Oil, Gas & Consumable Fuels (concluded)
SM Energy Co.:
6.50%, 11/15/21	USD	225	$	235,125
6.50%, 1/01/23 (a)		105		109,463
Targa Resources Partners LP, 6.88%, 2/01/21		190		204,250

				15,994,977
Paper & Forest Products — 0.3%
Clearwater Paper Corp., 10.63%, 6/15/16		365		407,888
Longview Fibre Paper & Packaging, Inc., 8.00%, 6/01/16 (a)		145		150,075
Sappi Papier Holding GmbH, 8.38%, 6/15/19 (a)		200		210,500

				768,463
Pharmaceuticals — 0.3%
Valeant Pharmaceuticals International (a):
6.50%, 7/15/16		380		400,900
7.25%, 7/15/22		350		361,375

				762,275
Real Estate Investment Trusts (REITs) — 0.4%
Felcor Lodging LP, 6.75%, 6/01/19		820		879,450
Real Estate Management & Development — 0.8%
Realogy Corp., 7.63%, 1/15/20 (a)		1,130		1,231,700
Shea Homes LP, 8.63%, 5/15/19		655		728,687

				1,960,387
Road & Rail — 1.1%
Florida East Coast Railway Corp., 8.13%, 2/01/17		200		210,000
The Hertz Corp.:
7.50%, 10/15/18		780		841,425
6.75%, 4/15/19		135		141,750
6.75%, 4/15/19 (a)		150		157,500
7.38%, 1/15/21		1,095		1,190,812

				2,541,487
Software — 0.8%
Infor US, Inc., 9.38%, 4/01/19 (a)		1,295		1,401,837
Nuance Communications, Inc., 5.38%, 8/15/20 (a)		605		618,613

				2,020,450
Specialty Retail — 0.5%
Claire’s Stores, Inc., 9.00%, 3/15/19 (a)		225		233,437
Penske Automotive Group, Inc., 5.75%, 10/01/22 (a)		260		265,200
QVC, Inc., 5.13%, 7/02/22 (a)		138		144,644
Sally Holdings LLC:
6.88%, 11/15/19		350		391,125
5.75%, 6/01/22		160		172,200

				1,206,606
Textiles, Apparel & Luxury Goods — 0.2%
Levi Strauss & Co., 6.88%, 5/01/22		140		145,250
PVH Corp., 7.75%, 11/15/23		215		250,840

				396,090
Trading Companies & Distributors — 0.4%
Doric Nimrod Air Finance Alpha Ltd. (a):
Series 2012-1, Class A, 5.13%, 11/30/24		440		446,600
Series 2012-1, Class B, 6.50%, 5/30/21		495		500,851

				947,451
Transportation Infrastructure — 0.1%
Aguila 3 SA, 7.88%, 1/31/18 (a)		176		185,460
Wireless Telecommunication Services — 3.6%
Cricket Communications, Inc., 7.75%, 5/15/16		1,770		1,867,350
Digicel Group Ltd. (a):
12.00%, 4/01/14		800		892,000
8.25%, 9/01/17		270		286,200


Corporate Bonds	Par (000)		Value

Wireless Telecommunication Services (concluded)
Digicel Group Ltd. (a) (concluded):
MetroPCS Wireless, Inc., 6.63%, 11/15/20	USD	460	$	476,100
SBA Telecommunications, Inc., 5.75%, 7/15/20 (a)		122		127,490
Sprint Capital Corp., 6.88%, 11/15/28		1,940		1,755,700
Sprint Nextel Corp. (a):
9.00%, 11/15/18		1,150		1,357,000
7.00%, 3/01/20		1,605		1,757,475

				8,519,315
Total Corporate Bonds – 57.0%				136,208,035



Floating Rate Loan Interests (b)
Aerospace & Defense — 0.3%
TransDigm, Inc.:
Add on Term Loan B2, 4.00%, 2/14/17		189		189,598
Term Loan B, 4.00%, 2/14/17		599		601,166

				790,764
Airlines — 0.4%
Delta Air Lines, Inc., Term Loan B, 5.50%, 4/20/17		1,004		1,010,996
US Airways Group, Inc., Term Loan, 2.74%, 3/21/14		55		53,144

				1,064,140
Auto Components — 1.7%
Autoparts Holdings Ltd.:
First Lien Term Loan, 6.50%, 7/28/17		859		841,342
Second Lien Term Loan, 10.50%, 1/29/18		900		783,000
Federal-Mogul Corp.:
Term Loan B, 2.17% - 2.18%, 12/29/14		791		754,390
Term Loan C, 2.17% - 2.18%, 12/28/15		150		143,197
The Goodyear Tire & Rubber Co., Term Loan (Second Lien), 4.75%, 4/30/19		1,110		1,105,838
Schaeffler AG, Term Loan C2, 6.00%, 1/27/17		395		396,153

				4,023,920
Biotechnology — 0.2%
Grifols, Inc., Term Loan B, 4.50%, 6/01/17		568		569,450
Building Products — 1.3%
Armstrong World Industries, Inc., Term Loan B, 4.00%, 3/09/18		588		586,183
CPG International, Inc., Term Loan B, 6.00%, 2/18/17		591		581,396
Goodman Global, Inc.:
Initial Term Loan (First Lien), 5.75%, 10/28/16		1,629		1,630,392
Term Loan (Second Lien), 9.00%, 10/30/17		382		386,831

				3,184,802
Capital Markets — 1.2%
American Capital Holdings, Term Loan, 5.50%, 7/19/16		491		492,841
HarbourVest Partners LLC, Term Loan B, 6.25%, 12/16/16		754		753,082
Nuveen Investments, Inc.:
Extended (First Lien), Term Loan, 5.95%—5.96%, 5/13/17		371		370,857
Extended Term Loan, 5.92%—5.96%, 5/12/17		1,004		1,007,198
Incremental Term Loan, 7.25%, 5/13/17		295		296,328

				2,920,306
Chemicals — 3.9%
American Rock Salt Holdings LLC, Term Loan, 5.50%, 4/25/17		1,180		1,145,841
Chemtura Corp., Exit Term Loan B, 5.50%, 8/27/16		800		802,336
Evergreen Acqco 1 LP, Term Loan B, 6.25%, 7/09/19		330		333,095
General Chemical Corp., Term Loan, 5.00%—5.75%, 10/06/15		503		500,788

See Notes to Consolidated Financial Statements.



62	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Chemicals (concluded)
INEOS US Finance LLC, 6 Year Term Loan, 6.50%, 5/04/18	USD	2,483	$	2,486,487
Nexeo Solutions LLC, Term Loan B, 5.00%, 9/08/17		864		840,845
PolyOne Corp., Term Loan, 5.00%, 12/20/17		348		349,295
PQ Corp., Term Loan B, 3.98%, 7/30/14		1,735		1,703,559
Styron Sarl LLC, Term Loan B, 8.00%, 8/02/17		318		296,107
Tronox Pigments (Netherlands) BV:
Delayed Draw Term Loan, 4.25%, 2/08/18		106		105,816
Term Loan B, 4.25%, 2/08/18		389		387,991
Univar, Inc., Term Loan B, 5.00%, 6/30/17		428		424,823

				9,376,983
Commercial Services & Supplies — 3.3%
ACCO Brands Corp., Term Loan B, 4.25%, 4/30/19		711		710,834
Altegrity, Inc., Tranche D Term Loan, 7.75%, 2/20/15		1,259		1,251,754
AWAS Finance Luxembourg 2012 SA, Term Loan, 5.75%, 7/16/18		160		160,000
AWAS Finance Luxembourg Sarl, Term Loan B, 5.25%, 6/10/16		562		561,992
Delos Aircraft, Inc., Term Loan B2, 4.75%, 4/12/16 USD		1,075		1,085,750
KAR Auction Services, Inc., Term Loan B, 5.00%, 5/19/17		1,236		1,235,797
Protection One, Inc., Term Loan, 5.75%, 3/21/19		509		513,812
Synagro Technologies, Inc., Term Loan B, 2.24%, 4/02/14		489		433,859
Volume Services America, Inc., Term Loan B, 10.50%—10.75%, 9/16/16		983		982,500
West Corp., Term Loan B6, 5.75%, 6/29/18		850		852,660

				7,788,958
Communications Equipment — 1.7%
Avaya, Inc.:
Extended Term Loan B3, 4.93%, 10/26/17		79		70,661
Term Loan B1, 3.18%, 10/24/14		1,047		1,004,823
CommScope, Inc., Term Loan, 4.25%, 1/12/18		825		824,687
Zayo Group, LLC, Term Loan B, 7.13%, 7/02/19		2,165		2,196,804

				4,096,975
Construction & Engineering — 0.9%
BakerCorp. International, Inc., Term Loan B, 4.75%, 6/01/18		679		675,762
Safway Services LLC, First Out Term Loan, 9.00%, 12/16/17		1,500		1,500,000

				2,175,762
Construction Materials — 1.1%
HD Supply, Inc., Senior Debt B, 7.25%, 10/12/17		2,460		2,513,308
Consumer Finance — 0.3%
Springleaf Financial Funding Co., Term Loan, 5.50%, 5/10/17		865		835,374
Containers & Packaging — 0.2%
Sealed Air Corp., Term Loan B, 4.75%, 10/03/18		452		453,947
Diversified Consumer Services — 2.1%
Coinmach Service Corp., Term Loan B, 3.33%, 11/20/14		2,154		2,066,634
Education Management LLC, Term Loan C3, 8.25%, 3/29/18		573		504,630
Laureate Education, Inc., Extended Term Loan, 5.25%, 6/18/18		987		962,334
ServiceMaster Co.:
Delayed Draw Term Loan, 2.74%, 7/24/14		83		82,529
Term Loan, 2.75% - 2.97%, 7/24/14 USD		834		828,771
Weight Watchers International, Inc., Term Loan F, 4.00%, 3/15/19		468		462,654

				4,907,552


Floating Rate Loan Interests (b)	Par (000)		Value

Diversified Financial Services — 1.5%
Residential Capital LLC, DIP Term Loan A1, 5.00%, 11/18/13	USD	1,075	$	1,077,687
Reynolds Group Holdings, Inc.:
Term Loan B, 6.50%, 2/09/18		449		451,922
Term Loan C, 6.50%, 8/09/18		2,083		2,109,095

				3,638,704
Diversified Telecommunication Services — 3.6%
Hawaiian Telcom Communications, Inc., Term Loan B, 7.00%, 2/28/17		870		880,875
Integra Telecom Holdings, Inc., Term Loan B, 9.25%, 4/15/15		907		892,903
Level 3 Financing, Inc.:
2016 Term Loan B, 4.75%, 2/01/16		730		731,460
2019 Term Loan B, 5.25%, 8/01/19		595		595,869
Term Loan B2, 5.75%, 9/03/18		2,050		2,055,412
Term Loan B3, 5.75%, 8/31/18		775		777,046
Telesat LLC, Term Loan B, 4.25%, 3/28/19		1,385		1,381,759
US Telepacific Corp., Term Loan B, 5.75%, 2/23/17		1,365		1,304,302

				8,619,626
Electronic Equipment, Instruments & Components — 0.4%
CDW LLC, Extended Term Loan, 4.00%, 7/14/17		431		425,419
Sensata Technologies Finance Co. LLC, Term Loan, 4.00%, 5/11/18		603		604,247

				1,029,666
Energy Equipment & Services — 2.2%
Dynegy Midwest Generation LLC, Coal Co. Term Loan, 9.25%, 8/04/16		859		891,213
Dynegy Power LLC, Gas Co. Term Loan, 9.25%, 8/04/16		1,572		1,646,026
MEG Energy Corp., Term Loan B, 4.00%, 3/16/18		1,548		1,550,049
Tervita Corp., Term Loan B, 3.23%, 11/14/14		1,200		1,177,201

				5,264,489
Food & Staples Retailing — 0.4%
Pilot Travel Centers LLC, Term Loan B2, 4.25%, 8/07/19		455		456,138
US Foods, Inc. (FKA U.S. Foodservice, Inc.), Extended Term Loan B, 5.75%, 3/31/17		547		528,400

				984,538
Food Products — 2.0%
Advance Pierre Foods, Term Loan (First Lien), 7.00%, 9/30/16		2,272		2,282,078
Del Monte Foods Co., Term Loan, 4.50%, 3/08/18		1,006		992,585
Pinnacle Foods Finance LLC:
Extended Term Loan B, 3.75%, 10/03/16		119		117,732
Term Loan E, 4.75%, 10/17/18		731		727,943
Solvest Ltd. (Dole):
Term Loan B-2, 5.00% - 6.00%, 7/06/18		203		202,956
Term Loan C-2, 5.00% - 6.00%, 7/06/18		363		363,185

				4,686,479
Health Care Equipment & Supplies — 3.3%
Bausch & Lomb, Inc., Term Loan B, 5.25%, 5/17/19		1,135		1,138,780
Biomet, Inc., Term Loan B, 3.00%—3.47%, 3/25/15		200		199,476
BSN Medical Acquisition Holding GmbH, Term Loan B, 6.00%, 7/27/19		720		721,800
DJO Finance LLC:
Extended Term Loan B2, 5.23%, 11/01/16		356		355,369
Term Loan B3, 6.25%, 9/15/17		1,232		1,232,935
Hologic, Inc., Term Loan B, 4.50%, 8/01/19		1,895		1,906,503
Hupah Finance, Inc., Term Loan B, 6.25%, 1/21/19		673		675,837
Iasis Healthcare LLC, Term Loan, 5.00%, 5/03/18		365		359,222
Immucor, Inc., Term Loan B, 7.25%, 8/17/18		973		976,297
LHP Hospital Group, Inc., Term Loan, 9.00%, 7/03/18		400		403,000

				7,969,219

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	63

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Health Care Providers & Services — 3.0%
ConvaTec, Inc., Term Loan, 5.75%, 12/22/16	USD	1,068	$	1,069,737
DaVita, Inc.:
Term Loan B, 4.50%, 10/20/16		1,084		1,086,209
Term Loan B2, 9/02/19		590		587,144
Emergency Medical Services Corp., Term Loan, 5.25%, 5/25/18		399		398,426
Harden Healthcare LLC:
Add on Term Loan A, 7.75%, 3/02/15		1,033		1,001,359
Term Loan A, 8.50%, 3/02/15		294		288,005
HCA, Inc., Extended Term Loan B3, 3.48%, 5/01/18		550		541,321
inVentiv Health, Inc.:
Combined Term Loan, 6.50%, 8/04/16		95		88,366
Incremental Term Loan B-3, 6.75%, 5/15/18		619		576,761
Medpace, Inc., Term Loan, 6.50%—7.25%, 6/16/17		1,005		960,045
Sheridan Holdings, Inc., First Lien Term Loan, 6.00%, 6/29/18		180		180,149
US Renal Care, Inc., First Lien Term Loan, 6.25%—7.25%, 7/02/19		480		483,600

				7,261,122
Health Care Technology — 0.9%
IMS Health, Inc., Term Loan B, 4.50%, 8/25/17		1,026		1,028,476
Kinetic Concepts, Inc., Term Loan B, 7.00%, 5/04/18		697		702,302
MedAssets, Inc., Term Loan, 5.25%, 11/16/16		475		476,183

				2,206,961
Hotels, Restaurants & Leisure — 3.8%
Alpha D2 Ltd., Term Loan B, 5.75%, 4/28/17		584		586,572
Caesars Entertainment Operating Co., Inc.:
Extended Term Loan B6, 5.49%, 1/26/18		175		153,835
Incremental Term Loan B4, 9.50%, 10/31/16		727		741,266
Term Loan B1, 3.24%, 1/28/15		536		508,505
Term Loan B3, 3.24% - 3.46%, 1/28/15		2,935		2,782,898
Drumm Investors LLC, Term Loan, 5.00%, 5/04/18		141		134,748
Dunkin’ Brands, Inc., Term Loan B2, 4.00%, 11/23/17		1,615		1,597,801
OSI Restaurant Partners LLC:
Revolver, 2.49% - 4.50%, 6/14/13		8		8,018
Term Loan B, 2.56%, 6/14/14		81		80,807
Sabre, Inc., Non Extended Initial Term Loan, 2.23%, 9/30/14		197		195,180
SeaWorld Parks & Entertainment, Inc., Term Loan B, 4.00%, 8/17/17		897		897,825
Six Flags Theme Parks, Inc., Term Loan B, 4.25%, 12/20/18		420		420,983
Wendy’s International, Inc., Term Loan B, 4.75%, 5/15/19		1,010		1,014,505

				9,122,943
Household Products — 0.3%
Prestige Brands, Inc., Term Loan, 5.25%—6.25%, 1/31/19		702		707,333
Independent Power Producers & Energy Traders — 0.6%
The AES Corp., Term Loan, 4.25%, 6/01/18		938		940,470
Calpine Corp., Term Loan B, 4.50%, 4/02/18		405		405,559
GenOn Energy, Inc., Term Loan B, 6.00%, 12/01/17		160		161,147

				1,507,176
Industrial Conglomerates — 1.1%
Sequa Corp.:
Incremental Term Loan, 6.25%, 12/03/14		303		304,234
Term Loan, 3.69% - 3.72%, 12/03/14		1,225		1,216,446
Tomkins Plc, Term Loan B, 4.25%, 9/29/16		1,023		1,026,061

				2,546,741
Insurance — 0.2%
Asurion LLC, Term Loan (First Lien), 5.50%, 5/24/18		564		565,488


Floating Rate Loan Interests (b)	Par (000)		Value

Internet Software & Services — 0.3%
Web.com Group, Inc., Term Loan B, 7.00%, 10/27/17	USD	600	$	597,186
IT Services — 3.9%
Ceridian Corp., Extended Term Loan, 5.99%, 5/09/17		833		833,075
First Data Corp.:
Extended 2018 Term Loan B, 4.24%, 3/23/18		3,949		3,728,115
Non-Extended Term Loan B-1, 2.99%, 9/24/14		116		114,791
Non-Extended Term Loan B-3, 2.99%, 9/24/14		81		79,864
Genpact International, Inc., Term Loan B, 4.25%, 8/16/19		520		520,000
InfoGroup, Inc., Term Loan, 5.75%, 5/25/18		473		418,593
iPayment, Inc., Term Loan B, 5.75%, 5/08/17		511		511,000
Neustar, Inc., Term Loan B, 5.00%, 11/08/18		769		773,034
SunGard Data Systems, Inc. (Solar Capital Corp.), Term Loan B, 3.86%—4.06%, 2/26/16		287		286,827
TransUnion LLC, Term Loan B, 5.50%, 2/12/18		1,940		1,952,609

				9,217,908
Leisure Equipment & Products — 0.5%
Eastman Kodak Co., DIP Term Loan B, 8.50%, 7/19/13		726		719,712
FGI Operating Company, LLC, Term Loan, 5.50%—6.50%, 4/19/19		360		361,127

				1,080,839
Machinery — 1.5%
Intelligrated, Inc., First Lien Term Loan, 6.75%, 7/30/18		400		396,000
Navistar International Corp., Term Loan B, 7.00%, 8/17/17		387		388,739
Rexnord Corp., Term Loan B, 5.00%, 4/02/18		543		545,385
Terex Corp., Term Loan B, 5.50%, 4/28/17		1,127		1,132,832
Wabash National Corp., Term Loan B, 6.00%, 5/02/19		1,022		1,028,828

				3,491,784
Media — 10.3%
Acosta, Inc., Term Loan B, 5.75%, 3/01/18		305		306,117
Affinion Group, Inc., Term Loan B, 5.00%, 7/15/15		264		224,360
AMC Networks, Inc., Term Loan B, 4.00%, 12/31/18		715		714,501
Capsugel Holdings US, Inc., Term Loan B, 4.75%, 8/01/18		759		760,167
Cengage Learning Acquisitions, Inc.:
Non-Extended Term Loan, 2.49%, 7/03/14		193		177,340
Tranche 1 Incremental, 7.50%, 7/03/14		663		639,392
Charter Communications Operating LLC:
Extended Term Loan C, 3.49%, 9/06/16		1,628		1,624,182
Term Loan D, 4.00%, 5/15/19		634		633,445
Cumulus Media, Inc., First Lien Term Loan, 5.75%, 9/17/18		1,149		1,150,817
EMI Music Publishing Ltd., Term Loan B, 5.50%, 6/29/18		370		372,498
Gray Television, Inc., Term Loan B, 3.75%, 12/31/14		866		861,562
Houghton Mifflin Harcourt Publishing Co., DIP Term Loan B, 7.25%, 6/01/18		808		817,065
Hubbard Broadcasting, Term Loan B, 5.25%, 4/28/17		526		526,764
Intelsat Jackson Holdings SA, Tranche B Term Loan, 5.25%, 4/02/18		5,346		5,363,174
Interactive Data Corp., Term Loan B, 4.50%, 2/12/18		891		892,301
Kabel Deutschland GmbH, Term Loan F, 4.25%, 2/01/19		1,200		1,197,828
Newsday LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		3,250		3,267,615
Nielsen Finance LLC, Class C Term Loan, 3.49%, 5/02/16		223		222,449
Sinclair Television Group, Inc., Term Loan B, 4.00%, 10/28/16		1,109		1,108,197
Thomson Reuters (Healthcare), Inc., Term Loan B, 6.75%, 6/06/19		560		563,965
Univision Communications, Inc., Extended Term Loan, 4.48%, 3/31/17		1,252		1,210,644
UPC Financing Partnership:
Term Loan, 4.75%, 12/29/17		350		351,022

See Notes to Consolidated Financial Statements.



64	SEMI-ANNUAL REPORT	AUGUST 31, 2012

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)		Value

Media (concluded)
UPC Financing Partnership (concluded) :
Term Loan T, 3.75%, 12/30/16	USD	425	$	420,970
WC Luxco Sarl, Term Loan B3, 4.25%, 3/15/18		264		262,979
Weather Channel, Term Loan B, 4.25%, 2/13/17		629		631,361
WideOpenWest Finance LLC, First Lien Term Loan, 6.25%, 7/17/18		345		344,786

				24,645,501
Metals & Mining — 2.0%
Constellium Holding Co BV, Term Loan B, 9.25%, 5/25/18		485		475,300
Novelis, Inc.:
Incremental Term Loan B2, 4.00%, 3/10/17		890		884,079
Term Loan, 4.00%, 3/10/17		1,100		1,093,571
SunCoke Energy, Inc., Term Loan B, 4.00%, 7/26/18		842		837,294
Walter Energy, Inc., Term Loan B, 4.00%, 4/02/18		1,555		1,529,237

				4,819,481
Multiline Retail — 0.3%
99¢ Only Stores, Term Loan, 5.25%, 1/11/19		791		795,468
Oil, Gas & Consumable Fuels — 1.5%
Chesapeake Energy Corp., Unsecured Term Loan, 8.50%, 12/01/17		1,245		1,247,677
Everest Acquisition LLC, Term Loan B1, 5.00%, 4/24/18		645		646,613
Gibson Energy ULC, Term Loan B, 4.75%, 6/15/18		697		699,867
Obsidian Natural Gas Trust, Term Loan, 7.00%, 11/02/15		953		952,872

				3,547,029
Paper & Forest Products — 0.3%
Ainsworth Lumber Co. Ltd., Term Loan, 5.25%, 6/26/14		330		319,275
NewPage Corp., DIP Term Loan, 8.00%, 3/07/13		350		353,283

				672,558
Pharmaceuticals — 2.3%
Aptalis Pharma, Inc., Term Loan B, 5.50%, 2/10/17		936		932,241
Pharmaceutical Product Development, Inc., Term Loan B, 6.25%, 12/05/18		1,588		1,605,239
Quintiles Transnational Corp., Term Loan B, 5.00%, 6/08/18		698		699,262
RPI Finance Trust:
Incremental Tranche 2, 4.00%, 11/09/18		170		169,753
Term Loan Tranche 2, 4.00%, 5/09/18		443		443,703
Valeant Pharmaceuticals International, Inc.:
Add-On Term Loan B, 4.75%, 2/13/19		728		729,864
Series A Tranche B, 4.75%, 2/13/19		270		270,627
Warner Chilcott Corp.:
Incremental Term Loan B-1, 4.25%, 3/15/18		146		145,259
Term Loan B-1, 4.25%, 3/15/18		385		382,515
Term Loan B-2, 4.25%, 3/15/18		192		191,257

				5,569,720
Professional Services — 0.9%
Booz Allen Hamilton, Inc., Term Loan B, 4.50%, 7/31/19		605		605,756
Emdeon, Inc., Term Loan B1, 5.00%, 11/02/18		1,318		1,318,135
ON Assignment, Inc., Term Loan B, 5.00%, 5/15/19		225		223,492

				2,147,383
Real Estate Investment Trusts (REITs) — 0.8%
iStar Financial, Inc.:
Term Loan A1, 5.00%, 6/28/13		1,932		1,933,396
Term Loan A2, 7.00%, 6/30/14		80		80,075

				2,013,471
Real Estate Management & Development — 1.4%
Realogy Corp.:
Extended Letter of Credit Loan, 4.50%, 10/10/16		1,157		1,116,685


Floating Rate Loan Interests (b)	Par (000)		Value

Real Estate Management & Development (concluded)
Realogy Corp. (concluded):
Extended Term Loan, 4.49%, 10/10/16	USD	2,133	$	2,058,978
Stockbridge SBE Holdings LLC, Term Loan B, 13.00%, 5/02/17		160		159,200

				3,334,863
Road & Rail — 0.7%
Avis Budget Car Rental LLC, Incremental Term Loan, 6.25%, 9/21/18		324		325,880
RailAmerica, Inc., Term Loan B, 4.00%, 3/01/19		828		827,412
Road Infrastructure Investment LLC, Term Loan B, 6.25%, 3/30/18		439		436,705

				1,589,997
Semiconductors & Semiconductor Equipment — 0.6%
Freescale Semiconductor, Inc., Extended Term Loan B, 4.50%, 12/01/16		852		817,800
NXP BV, Term Loan A-2, 5.50%, 3/03/17		506		511,834

				1,329,634
Software — 1.9%
Blackboard, Inc., Term Loan B, 7.50%, 10/04/18		323		317,920
Infor US, Inc. (FKA Lawson Software, Inc.), Term Loan B, 6.25%, 4/05/18		1,915		1,934,888
Sophia, LP, Term Loan B, 6.25%, 7/19/18		648		653,724
SS&C Technologies, Inc.:
Term Loan B-1, 5.00%, 6/07/19		833		833,986
Term Loan B-2, 5.00%, 6/07/19		86		86,274
WaveDivision Holdings LLC, Term Loan B, 5.50%, 8/23/19		660		662,462

				4,489,254
Specialty Retail — 4.0%
Academy Ltd., Term Loan, 6.00%, 8/03/18		995		998,482
Bass Pro Group LLC, Term Loan, 5.25%, 6/13/17		434		436,985
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50%, 2/23/17		357		357,294
Claire’s Stores, Inc., Term Loan B, 2.98%—3.20%, 5/29/14		602		590,281
General Nutrition Centers, Inc., Term Loan B, 4.25%, 3/02/18		1,155		1,153,371
Harbor Freight Tools USA, Inc., Term Loan B, 5.50%, 11/14/17		425		424,401
Jo-Ann Stores, Inc., Term Loan, 4.75%, 3/16/18		387		386,440
Michaels Stores, Inc.:
Extended Term Loan B3, 5.00%, 7/29/16		239		240,261
Term Loan B2, 5.00%, 7/29/16		959		963,487
Party City Holdings, Inc., Term Loan B, 5.75%, 7/26/19		800		803,664
PETCO Animal Supplies, Inc., Term Loan, 4.50%, 11/24/17		1,504		1,505,248
Things Remembered, Inc., Term Loan B, 8.00%, 5/24/18		580		568,400
Toys ‘R’ Us Delaware, Inc.:
Incremental Term Loan B2, 5.25%, 5/25/18		161		154,435
Term Loan, 6.00%, 9/01/16		306		300,118
Term Loan B3, 5.25%, 5/25/18		125		119,700
The Yankee Candle Co., Inc., Term Loan B, 5.25%, 4/02/19		554		555,761

				9,558,328
Textiles, Apparel & Luxury Goods — 0.5%
Ascend Performance Materials LLC, Term Loan B, 6.75%, 4/10/18		753		746,206
Wolverine Worldwide, Inc., Term Loan B, 6.75%, 6/26/19		535		538,333

				1,284,539

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	65

Consolidated Schedule of Investments (continued)

BlackRock Senior High Income Fund, Inc. (ARK)

(Percentages shown are based on Net Assets)


Floating Rate Loan Interests (b)	Par (000)			Value

Wireless Telecommunication Services — 1.6%
Crown Castle International Corp., Term Loan B, 4.00%, 1/31/19	USD	124		$	123,510
MetroPCS Wireless, Inc., Term Loan B-3, 4.00%, 3/16/18		566			563,503
Vodafone Americas Finance 2, Inc., Term Loan, 6.88%, 8/11/15 (f)		3,046			3,167,528

					3,854,541
Total Floating Rate Loan Interests – 77.2%					184,852,210


Other Interests (i)	Beneficial Interest (000)

Auto Components — 0.0%
Intermet Liquidating Trust Class A (d)		320			—
Diversified Financial Services — 0.4%
J.G.Wentworth LLC Preferred Equity Interests (d)		—	(j)		1,162,154
Media — 0.0%
Adelphia Preferred Escrow (d)		3			—
Adelphia Recovery Trust Series ACC-6B INT (d)		250			1,250

					1,250
Total Other Interests – 0.4%					1,163,404


Preferred Securities	Shares
Preferred Stocks — 0.1%
Diversified Financial Services — 0.1%
Ally Financial, Inc., 7.00% (a)		290			264,072


Trust Preferreds — 0.2%
Diversified Financial Services — 0.2%
GMAC Capital Trust I, Series 2, 8.13%, 2/15/40 (b)		22,630			559,251
Total Preferred Securities – 0.3%					823,323


Warrants (k)
Media — 0.1%
Charter Communications, Inc. (Issued/Exercisable 11/30/09, 1 Share for 1 Warrant, Expires 11/30/14, Strike Price $51.28)		6,862			198,655
Software — 0.0%
HMH Holdings/EduMedia (Issued/Exercisable 3/09/10, 19 Shares for 1 Warrant, Expires 6/22/19, Strike Price $42.27)		982			—
Total Warrants – 0.1%					198,655
Total Long-Term Investments (Cost — $333,510,383) — 138.5%					331,645,459



Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (l)(m)		1,682,598	$	1,682,598
Total Short-Term Securities (Cost — $1,682,598) — 0.7%				1,682,598
Total Investments (Cost — $335,192,981) — 139.2%				333,328,057
Liabilities in Excess of Other Assets — (39.2)%				(93,874,866	)

Net Assets — 100.0%			$	239,453,191

(a)

(b)

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

(c)

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


Counterparty	Value		Unrealized Appreciation
Credit Suisse Group AG	$	599,950		—
Goldman Sachs Group, Inc.	$	387,788	$	4,788

(d)

Non-income producing security.

(e)

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

(f)

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

(g)

Convertible security.

(h)

Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.

(i)

Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(j)

Amount is less than $500.

(k)

(l)

Investments in issuers considered to be an affiliate of the Fund during the six months ended August 31, 2012, for purposes of Section 2(a)(3) of the 1940 Act, were as follows:


Affiliate	Shares Held at February 29, 2012		Net Activity		Shares Held at August 31, 2012		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		—		1,682,598		1,682,598	$	824

(m)

Represents the current yield as of report date.

Foreign currency exchange contracts as of August 31, 2012 were as follows:

Currency Purchased

Currency Sold

Counterparty

Settlement
Date

Unrealized
Depreciation

USD 350,301

CAD 356,000

UBS AG

10/17/12

$ (10,520)

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

See Notes to Consolidated Financial Statements.



66	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Consolidated Schedule of Investments (continued)		BlackRock Senior High Income Fund, Inc. (ARK)

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of August 31, 2012:


	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—		—	$	6,050,820	$	6,050,820
Common Stocks	$	1,200,257	$	1,083,221		65,534		2,349,012
Corporate Bonds		—		131,870,347		4,337,688		136,208,035
Floating Rate Loan interests		—		168,593,728		16,258,482		184,852,210
Other Interests .		1,250		—		1,162,154		1,163,404
Preferred Securities		559,251		264,072		—		823,323
Warrants		198,655		—		—		198,655
Short-Term Securities		1,682,598		—		—		1,682,598

Total	$	3,642,011	$	301,811,368	$	27,874,678	$	333,328,057


	Level 1		Level 2			Level 3		Total
Derivative Financial Instruments¹
Liabilities:
Foreign currency exchange contracts		—	$	(10,520	)		—	$	(10,520	)

Derivative financial instruments are foreign currency exchange contracts, which are valued at the unrealized appreciation/depreciation on the instrument.


	Level 1		Level 2			Level 3		Total
Assets:
Cash	$	45,726		—			—	$	45,726
Foreign currency at value		4,613		—			—		4,613
Liabilities:
Loan payable		—	$	(90,000,000	)		—		(90,000,000	)

Total	$	50,339	$	(90,000,000	)		—	$	(89,949,661	)

There were no transfers between Level 1 and Level 2 during the six months ended August 31, 2012.


	Value		Valuation Techniques	Unobservable Inputs²	Range of Unobservable Inputs	Weighted Average of Unobservable Inputs³
Assets:
Common Stocks	$	65,534	Market Comparable Companies	EBITDA Multiple	5.0x	5.0x
				Illiquidity Discount	20%	20%
				Proforma Revenue Increase	37%	37%
Corporate Bonds		4,081,068	Market Comparable Companies	EBITDA Multiple	5.0x	5.0x
				Illiquidity Discount	20%	20%
				Proforma Revenue Increase	37%	37%
Floating Rate Loan Interests		2,789,634	Market Comparable Companies	Yield	9.65%	9.65%
			Cost	N/A⁴	—	—

Total⁵	$	6,935,966

A change to the unobservable input may result in a significant change to the value of the investment as follows:


Unobservable Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
EBITDA Multiple	Increase	Decrease
Illiquidity Discount	Decrease	Increase
Proforma Revenue Increase	Increase	Decrease
Yield	Decrease	Increase

Unobservable inputs are weighted based on the value of the investments included in the range.

⁴

See Notes to Consolidated Financial Statements.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	67


Consolidated Schedule of Investments (concluded)		BlackRock Senior High Income Fund, Inc. (ARK)

include, but is not limited to, observations of the trading multiples of public companies considered comparable to the private companies being valued, financial or operational information released by the company, and/or news or corporate events that affect the investment. Valuations may be adjusted to account for company-specific issues, the lack of liquidity inherent in a nonpublic investment and the fact that comparable public companies are not identical to the investments being fair valued by the Fund.

⁵

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


	Asset-Backed Securities			Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests		Total
Assets:
Opening balance, as of February 29, 2012	$	3,022,303		$	355,574		$	4,310,541		$	12,348,294		$	989,983	$	21,026,695
Transfers into Level 3¹		—			—			—			3,211,500			—		3,211,500
Transfers out of Level 3²		—			(271,121	)		—			(2,137,449	)		—		(2,408,570	)
Accrued discounts/premiums		24,160			—			90,639			15,615			—		130,414
Net realized gain (loss)		(37,006	)		(749,636	)		—			(542,731	)		—		(1,329,373	)
Net change in unrealized appreciation/depreciation³		52,930			730,727			(63,492	)		643,691			172,171		1,536,027
Purchases		4,266,328			—			—			4,483,515			—		8,749,843
Sales		(1,277,895	)		(10	)		—			(1,763,953	)		—		(3,041,858	)

Closing Balance, as of August 31, 2012	$	6,050,820		$	65,534		$	4,337,688		$	16,258,482		$	1,162,154	$	27,874,678

As of February 29, 2012, the Fund used observable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $3,211,500 transferred from Level 2 to Level 3 in the disclosure hierarchy.

As of February 29, 2012, the Fund used significant unobservable inputs in determining the value of certain investments. As of August 31, 2012, the Fund used observable inputs in determining the value of the same investments. As a result, investments with a beginning of period value of $2,408,570 transferred from Level 3 to Level 2 in the disclosure hierarchy.


Consolidated Statements of Assets and Liabilities


August 31, 2012 (Unaudited)	BlackRock Corporate High Yield Fund, Inc. (COY)			BlackRock Corporate High Yield Fund III, Inc. (CYE)			BlackRock Debt Strategies Fund, Inc. (DSU)			BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)			BlackRock Senior High Income Fund, Inc. (ARK)

Assets
Investments at value — unaffiliated¹	$	351,637,724		$	392,159,838		$	651,485,518		$	211,542,876		$	331,645,459
Investments at value — affiliated²		—			—			2,038,105			1,481,869			1,682,598
Cash		1,506,487			1,293,481			102,956			3,216			45,726
Cash pledged as collateral for financial futures contracts		432,000			533,000			—			—			—
Foreign currency at value³		260,020			229,653			290,567			35,669			4,613
Interest receivable		5,466,353			5,936,415			7,118,896			1,405,980			3,471,376
Investments sold receivable		834,514			949,059			608,206			1,479,036			116,571
Unrealized appreciation on swaps		817,408			878,971			—			—			—
Swap premiums paid		241,702			257,845			—			111,598			—
Swaps receivable		121,004			128,266			—			—			—
Cash pledged as collateral for swaps		—			100,000			—			—			—
Unrealized appreciation on foreign currency exchange contracts		26,257			39,584			5,454			—			—
Dividends receivable		1,658			2,605			—			—			—
Income receivable — affiliated		192			52			—			—			—
Prepaid expenses		6,732			5,387			59,165			3,050			21,952
Other assets		—			—			250,171			—			—

Total assets		361,352,051			402,514,156			661,959,038			216,063,294			336,988,295


Liabilities
Loan payable		98,000,000			115,000,000			195,000,000			63,000,000			90,000,000
Investments purchased payable		2,684,955			3,032,322			11,954,974			6,655,533			7,154,861
Unrealized depreciation on foreign currency exchange contracts		700,255			704,331			614,672			100,156			10,520
Investment advisory fees payable		148,557			198,429			324,299			129,451			137,229
Swap premiums received		337,187			367,270			—			—			—
Cash received as collateral for swaps		600,000			400,000			—			—			—
Interest expense payable		74,986			87,693			146,205			47,367			69,005
Unrealized depreciation on swaps		63,595			63,322			—			77,373			—
Swaps payable		51,381			56,973			—			20,116			—
Officer’s and Directors’ fees payable		22			787			121,733			373			48
Variation margin payable		43,200			46,800			—			—			—
Income dividends payable		—			—			—			34,420			—
Reorganization costs payable		—			—			—			211,906			—
Other accrued expenses payable		156,694			129,676			361,343			108,892			163,441

Total liabilities		102,860,832			120,087,603			208,523,226			70,385,587			97,535,104

Net Assets	$	258,491,219		$	282,426,553		$	453,435,812		$	145,677,707		$	239,453,191


Net Assets Consist of
Paid-in capital⁴	$	305,876,835		$	325,806,245		$	780,812,152		$	199,606,403		$	349,736,558
Undistributed net investment income		4,579,687			4,285,366			4,571,751			836,044			3,584,526
Accumulated net realized loss		(58,133,836	)		(55,506,353	)		(286,673,125	)		(54,983,006	)		(111,992,264	)
Net unrealized appreciation/depreciation		6,168,533			7,841,295			(45,274,966	)		218,266			(1,875,629	)

Net Assets	$	258,491,219		$	282,426,553		$	453,435,812		$	145,677,707		$	239,453,191

Net asset value per share	$	7.40		$	7.54		$	4.19		$	13.77		$	4.22

¹Investments at cost — unaffiliated	$	345,031,246		$	383,906,031		$	696,154,128		$	211,147,732		$	333,510,383

²Investments at cost — affiliated		—			—		$	2,038,105		$	1,481,869		$	1,682,598

³ Foreign currency at cost	$	257,736		$	228,997		$	289,801		$	35,165		$	4,798

⁴ Shares outstanding, 200 million shares authorized, par value $0.10 per share		34,929,683			37,479,992			108,217,078			10,577,054			56,753,905


Consolidated Statements of Operations


Six Months Ended August 31, 2012 (Unaudited)	BlackRock Corporate High Yield Fund, Inc. (COY)			BlackRock Corporate High Yield Fund III, Inc. (CYE)			BlackRock Debt Strategies Fund, Inc. (DSU)			BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)			BlackRock Senior High Income Fund, Inc. (ARK)

Investment Income
Interest	$	12,226,709		$	13,861,447		$	21,109,820		$	6,075,771		$	10,640,855
Dividends — unaffiliated		313,326			356,651			6,754			—			10,226
Dividends — affiliated		1,117			444			2,031			445			824

Total income		12,541,152			14,218,542			21,118,605			6,076,216			10,651,905


Expenses
Investment advisory		851,047			1,147,064			1,842,968			728,021			786,760
Professional		115,409			100,393			165,613			103,289			130,839
Borrowing costs¹		62,285			68,007			110,465			35,734			58,015
Reorganization		—			—			—			211,906			—
Accounting services		40,951			43,970			52,284			19,820			32,640
Transfer agent		30,394			27,174			49,194			9,329			43,297
Custodian		16,721			42,476			22,853			48,628			14,420
Printing		21,438			22,972			26,904			12,442			18,288
Officer and Directors		11,690			11,782			27,846			6,658			11,433
Registration		9,692			9,781			18,261			7,698			15,226
Miscellaneous		41,014			36,473			22,831			8,296			15,239

Total expenses excluding interest expense		1,200,641			1,510,092			2,339,219			1,191,821			1,126,157
Interest expense		404,883			492,495			781,283			230,719			365,892

Total expenses		1,605,524			2,002,587			3,120,502			1,422,540			1,492,049
Less fees waived by Manager		(599	)		(219	)		(594	)		(229	)		(418	)

Total expenses after fees waived		1,604,925			2,002,368			3,119,908			1,422,311			1,491,631

Net investment income		10,936,227			12,216,174			17,998,697			4,653,905			9,160,274


Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		1,767,638			1,499,915			(4,754,160	)		(239,457	)		340,950
Financial futures contracts		(42,138	)		(31,386	)		—			—			—
Foreign currency transactions		915,515			857,140			674,153			81,522			(4,502	)
Options written		220,356			228,248			—			—			—
Swaps		288,725			278,324			(397,040	)		(23,603	)		(299,946	)

		3,150,096			2,832,241			(4,477,047	)		(181,538	)		36,502

Net change in unrealized appreciation/depreciation on:
Investments		77,343			963,949			10,439,561	²		2,065,067			3,058,482
Financial futures contracts		(264,271	)		(306,694	)		—			—			—
Foreign currency translations		227,833			264,618			130,959			40,040			2,160
Options written		(61,310	)		(65,050	)		—			—			—
Swaps		388,724			445,690			—			(77,373	)		—

		368,319			1,302,513			10,570,520			2,027,734			3,060,642

Total realized and unrealized gain		3,518,415			4,134,754			6,093,473			1,846,196			3,097,144

Net Increase in Net Assets Resulting from Operations	$	14,454,642		$	16,350,928		$	24,092,170		$	6,500,101		$	12,257,418

See Note 6 of the Notes to Consolidated Financial Statements for details of short-term borrowings.

Net of income tax of $146,090.


Consolidated Statements of Changes in Net Assets


	BlackRock Corporate High Yield Fund, Inc. (COY)						BlackRock Corporate High Yield Fund III, Inc. (CYE)
Increase (Decrease) in Net Assets:	Six Months Ended August 31, 2012 (Unaudited)			Year Ended February 29, 2012			Six Months Ended August 31, 2012 (Unaudited)			Year Ended February 29, 2012

Operations
Net investment income	$	10,936,227		$	21,422,864		$	12,216,174		$	23,646,017
Net realized gain		3,150,096			3,093,487			2,832,241			4,144,308
Net change in unrealized appreciation/depreciation		368,319			(7,679,396	)		1,302,513			(9,736,485	)

Net increase in net assets resulting from operations		14,454,642			16,836,955			16,350,928			18,053,840


Dividends to Shareholders From
Net investment income		(10,675,371	)		(21,290,884	)		(11,625,094	)		(23,502,064	)


Capital Share Transactions
Reinvestment of dividends		536,186			720,465			514,097			376,319


Net Assets
Total increase (decrease) in net assets		4,315,457			(3,733,464	)		5,239,931			(5,071,905	)
Beginning of period		254,175,762			257,909,226			277,186,622			282,258,527

End of period	$	258,491,219		$	254,175,762		$	282,426,553		$	277,186,622

Undistributed net investment income	$	4,579,687		$	4,318,831		$	4,285,366		$	3,694,286


	BlackRock Debt Strategies Fund, Inc. (DSU)						BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)
Increase (Decrease) in Net Assets:	Six Months Ended August 31, 2012 (Unaudited)			Year Ended February 29, 2012			Six Months Ended August 31, 2012 (Unaudited)			Year Ended February 29, 2012

Operations
Net investment income	$	17,998,697		$	35,437,438		$	4,653,905		$	9,426,886
Net realized loss		(4,477,047	)		(7,630,186	)		(181,538	)		(1,448,947	)
Net change in unrealized appreciation/depreciation		10,570,520			(9,094,003	)		2,027,734			(3,642,963	)

Net increase in net assets resulting from operations		24,092,170			18,713,249			6,500,101			4,334,976


Dividends to Shareholders From
Net investment income		(17,508,136	)		(34,943,170	)		(4,632,551	)		(9,323,747	)


Capital Share Transactions
Reinvestment of dividends		1,027,543			806,965			37,206			210,036


Net Assets
Total increase (decrease) in net assets		7,611,577			(15,422,956	)		1,904,756			(4,778,735	)
Beginning of period		445,824,235			461,247,191			143,772,951			148,551,686

End of period	$	453,435,812		$	445,824,235		$	145,677,707		$	143,772,951

Undistributed net investment income	$	4,571,751		$	4,081,190		$	836,044		$	814,690


Consolidated Statements of Changes in Net Assets


	BlackRock Senior High Income Fund, Inc. (ARK)
Increase (Decrease) in Net Assets:	Six Months Ended August 31, 2012 (Unaudited)			Year Ended February 29, 2012

Operations
Net investment income	$	9,160,274		$	18,248,158
Net realized gain (loss)		36,502			(4,845,458	)
Net change in unrealized appreciation/depreciation		3,060,642			1,670,108

Net increase in net assets resulting from operations		12,257,418			15,072,808


Dividends to Shareholders From
Net investment income		(8,504,020	)		(18,750,192	)


Capital Share Transactions
Reinvestment of dividends		383,295			233,462


Net Assets
Total increase (decrease) in net assets		4,136,693			(3,443,922	)
Beginning of period		235,316,498			238,760,420

End of period	$	239,453,191		$	235,316,498

Undistributed net investment income	$	3,584,526		$	2,928,272


Consolidated Statements of Cash Flows


Six Months Ended August 31, 2012	BlackRock Corporate High Yield Fund, Inc. (COY)			BlackRock Corporate High Yield Fund III, Inc. (CYE)			BlackRock Debt Strategies Fund, Inc. (DSU)			BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)			BlackRock Senior High Income Fund, Inc. (ARK)

Cash Used for Operating Activities
Net increase in net assets resulting from operations	$	14,454,642		$	16,350,928		$	24,092,170		$	6,500,101		$	12,257,418
Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities:
Increase in interest receivable		(730,358	)		(386,972	)		(1,291,798	)		(216,294	)		(532,191	)
Increase in swaps receivable		(19,910	)		(25,966	)		—			—			—
(Increase) decrease in income receivable — affiliated		(192	)		(41	)		56,752			—			188
Decrease in dividends receivable — unaffiliated		8,079			18,294			—			—			—
Decrease in cash pledged as collateral for financial futures contracts		130,000			43,000			—			—			—
Decrease in cash pledged as collateral in connection with swaps		500,000			—			—			—			—
Decrease in other assets		48,396			6,507			261,913			—			—
Decrease in variation margin receivable		40,950			42,000			—			—			—
Increase in investment advisory fees payable		24,948			29,941			60,845			21,215			20,971
Increase in cash received as collateral for swaps		600,000			400,000			—			—			—
Increase (decrease) in interest expense payable		16,554			(38,403	)		(59,958	)		(18,928	)		(31,246	)
Increase (decrease) in other accrued expenses payable		(88,956	)		(47,749	)		34,937			(17,727	)		30,558
Increase (decrease) in prepaid expenses		19,615			19,407			(35,822	)		13,879			7,052
Decrease in deferred income		—			(79,400	)		(123,185	)		(4,161	)		(65,666	)
Increase in variation margin payable		43,200			46,800			—			—			—
Increase in swaps payable		40,830			45,423			—			20,116			—
Increase in reorganization costs payable		—			—			—			211,906			—
Increase (decrease) in Officer’s and Directors’ fees payable		(684	)		(1,888	)		9,242			92			(150	)
Net periodic and termination payment of swaps		423,387			468,869			(382,012	)		(119,901	)		(288,732	)
Net realized and unrealized loss on investments		(2,585,832	)		(3,246,225	)		(5,415,870	)		(1,764,674	)		(3,101,646	)
Amortization of premium and accretion of discount on investments and swaps		(86,982	)		(161,621	)		(1,335,321	)		(492,893	)		(403,624	)
Premiums received from options written		232,496			239,254			—			—			—
Premiums paid on closing options written		(89,037	)		(92,087	)		—			—			—
Proceeds from sales of long-term investments		113,318,568			134,267,991			203,600,279			56,729,490			103,488,452
Purchases of long-term investments		(147,916,930	)		(164,312,531	)		(260,007,490	)		(79,374,510	)		(127,585,887	)
Net proceeds from sales of short-term securities		2,264,805			—			7,271,735			900,877			3,438,425

Cash used for operating activities		(19,352,411	)		(16,414,469	)		(33,263,583	)		(17,611,412	)		(12,766,078	)


Cash Provided by Financing Activities
Cash receipts from borrowings		80,000,000			73,000,000			126,000,000			48,000,000			67,000,000
Cash payments on borrowings		(49,000,000	)		(44,000,000	)		(76,000,000	)		(26,000,000	)		(46,000,000	)
Cash dividends paid to shareholders		(10,139,185	)		(11,110,997	)		(16,480,593	)		(4,598,832	)		(8,198,982	)
Decrease in bank overdraft		—			(193,858	)		—			—			—

Cash provided by financing activities		20,860,815			17,695,145			33,519,407			17,401,168			12,801,018


Cash Impact from Foreign Exchange Fluctuations
Cash impact from foreign exchange fluctuations		(600	)		(1,384	)		(75	)		(2,231	)		(229	)


Cash and Foreign Currency
Net increase (decrease) in cash and foreign currency		1,507,804			1,279,292			255,749			(212,475	)		34,711
Cash and foreign currency at beginning of period		258,703			243,842			137,774			251,360			15,628

Cash and foreign currency at end of period	$	1,766,507		$	1,523,134		$	393,523		$	38,885		$	50,339


Cash Flow Information
Cash paid during the period for interest	$	388,329		$	530,898		$	841,241		$	249,647		$	397,138


Non-cash Financing Activities
Capital shares issued in reinvestment of dividends	$	536,186		$	514,097		$	1,027,543		$	37,206		$	383,295

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


Financial Highlights		BlackRock Corporate High Yield Fund, Inc. (COY)


	Six Months Ended August 31, 2012 (Unaudited)¹			Year Ended February 29, 2012¹			Year Ended February 28,						Period June 1, 2008 to February 28, 2009			Year Ended May 31,
	Six Months Ended August 31, 2012 (Unaudited)¹			Year Ended February 29, 2012¹			2011			2010			Period June 1, 2008 to February 28, 2009			2008			2007

Per Share Operating Performance
Net asset value, beginning of period	$	7.29		$	7.42		$	6.64		$	4.19		$	7.74		$	9.07		$	8.52

Net investment income²		0.31			0.62			0.65			0.65			0.50			0.75			0.73
Net realized and unrealized gain (loss)		0.11			(0.14	)		0.74			2.53			(3.50	)		(1.32	)		0.49

Net increase (decrease) from investment operations		0.42			0.48			1.39			3.18			(3.00	)		(0.57	)		1.22

Dividends from net investment income		(0.31	)		(0.61	)		(0.61	)		(0.73	)		(0.55	)		(0.76	)		(0.67	)

Net asset value, end of period	$	7.40		$	7.29		$	7.42		$	6.64		$	4.19		$	7.74		$	9.07

Market price, end of period	$	7.89		$	7.76		$	7.03		$	6.88		$	3.91		$	7.28		$	8.47


Total Investment Return³
Based on net asset value		5.85%	⁴		7.15%			22.11%			79.91%			(38.98)%	⁴		(5.49)%			15.60%

Based on market price		6.02%	⁴		20.39%			11.66%			99.76%			(39.46)%	⁴		(4.81)%			23.96%


Ratios to Average Net Assets
Total expenses		1.26%	⁵		1.15%			1.18%			1.18%			2.29%	⁵		2.33%			3.25%

Total expenses after fees waived and paid indirectly		1.26%	⁵		1.15%			1.18%			1.18%	⁵		2.29%	⁵		2.33%			3.25%

Total expenses after fees waived and paid indirectly and excluding interest expense		0.94%	^5,6		0.90%			0.89%			0.92%			1.17%	⁵		0.83%			0.91%

Net investment income		8.61%	⁵		8.67%			9.28%			11.36%			11.45%	⁵		9.15%			8.36%


Supplemental Data
Net assets applicable, end of period (000)	$	258,491		$	254,176		$	257,909		$	230,593		$	144,800		$	267,698		$	313,821

Borrowings outstanding, end of period (000)	$	98,000		$	67,000		$	63,000		$	72,000		$	38,700		$	64,700		$	126,200

Average borrowings outstanding, during the period (000)	$	85,924		$	63,281		$	55,304		$	42,184		$	59,553		$	81,598		$	125,974

Portfolio turnover		32%			71%			83%			85%			37%			38%			62%

Asset coverage, end of period (000)	$	3,638		$	4,794		$	5,094		$	4,203		$	4,742		$	5,138		$	3,487

Consolidated Financial Highlights.

Based on average shares outstanding.

Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. 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

Annualized.

⁶

For the period ended August 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense and borrowing costs was 0.90%.


Financial Highlights		BlackRock Corporate High Yield Fund III, Inc. (CYE)


	Six Months Ended August 31, 2012 (Unaudited)¹			Year Ended February 29, 2012¹			Year Ended February 28,						Period June 1, 2008 to February 28, 2009			Year Ended May 31,
	Six Months Ended August 31, 2012 (Unaudited)¹			Year Ended February 29, 2012¹			2011			2010			Period June 1, 2008 to February 28, 2009			2008			2007

Per Share Operating Performance
Net asset value, beginning of period	$	7.41		$	7.56		$	6.69		$	4.05		$	7.62		$	8.99		$	8.46

Net investment income²		0.33			0.63			0.65			0.64			0.50			0.73			0.71
Net realized and unrealized gain (loss)		0.11			(0.15	)		0.83			2.68			(3.51	)		(1.33	)		0.49

Net increase (decrease) from investment operations		0.44			0.48			1.48			3.32			(3.01	)		(0.60	)		1.20

Dividends from net investment income		(0.31	)		(0.63	)		(0.61	)		(0.68	)		(0.56	)		(0.77	)		(0.67	)

Net asset value, end of period	$	7.54		$	7.41		$	7.56		$	6.69		$	4.05		$	7.62		$	8.99

Market price, end of period	$	8.11		$	7.75		$	7.14		$	6.67		$	3.57		$	7.03		$	8.53


Total Investment Return³
Based on net asset value		6.10%	⁴		7.11%			23.50%			86.65%			(39.69)%	⁴		(5.69)%			15.51%

Based on market price		9.12%	⁴		18.62%			16.99%			111.12%			(42.38)%	⁴		(8.30)%			25.98%


Ratios to Average Net Assets
Total expenses		1.44%	⁵		1.38%			1.37%			1.34%			2.45%	⁵		2.47%			3.38%

Total expenses after fees waived and paid indirectly		1.44%	⁵		1.38%			1.37%			1.33%			2.45%	⁵		2.47%			3.38%

Total expenses after fees waived and paid indirectly and excluding interest expense		1.09%	^5,6		1.08%			1.03%			1.04%			1.29%	⁵		0.96%			1.04%

Net investment income		8.81%	⁵		8.76%			9.15%			11.35%			11.80%	⁵		9.01%			8.25%


Supplemental Data
Net assets, end of period (000)	$	282,427		$	277,187		$	282,259		$	249,721		$	151,261		$	284,361		$	335,479

Borrowings outstanding, end of period (000)	$	115,000		$	86,000		$	91,000		$	76,000		$	44,200		$	71,700		$	129,700

Average borrowings outstanding, during the period (000)	$	104,775		$	83,997		$	69,937		$	49,196		$	65,500		$	88,466		$	134,704

Portfolio turnover		33%			70%			89%			89%			37%			38%			62%

Asset coverage, end of period (000)	$	3,456		$	4,223		$	4,102		$	4,286		$	4,422		$	4,966		$	3,587

Consolidated Financial Highlights.

Based on average shares outstanding.

⁴

Aggregate total investment return.

⁵

Annualized.

⁶

For the period ended August 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense and borrowing costs was 1.04%.


Financial Highlights		BlackRock Debt Strategies Fund, Inc. (DSU)


	Six Months Ended August 31, 2012¹ (Unaudited)			Year Ended February 29, 2012¹			Year Ended February 28,									Year Ended February 29, 2008
	Six Months Ended August 31, 2012¹ (Unaudited)			Year Ended February 29, 2012¹			2011			2010			2009			Year Ended February 29, 2008

Per Share Operating Performance
Net asset value, beginning of period	$	4.13		$	4.28		$	3.89		$	2.35		$	5.57		$	7.01

Net investment income²		0.17			0.33			0.33			0.39			0.52			0.66
Net realized and unrealized gain (loss)		0.05			(0.16	)		0.40			1.55			(3.12	)		(1.43	)

Net increase (decrease) from investment operations		0.22			0.17			0.73			1.94			(2.60	)		(0.77	)

Dividends and distributions from:
Net investment income		(0.16	)		(0.32	)		(0.33	)		(0.39	)		(0.62	)		(0.67	)
Tax return of capital		—			—			(0.01	)		(0.01	)		—			—

Total dividends and distributions		(0.16	)		(0.32	)		(0.34	)		(0.40	)		(0.62	)		(0.67	)

Net asset value, end of period	$	4.19		$	4.13		$	4.28		$	3.89		$	2.35		$	5.57

Market price, end of period	$	4.37		$	4.13		$	4.05		$	3.91		$	2.07		$	5.43


Total Investment Return³
Based on net asset value		5.51%	⁴		4.53%			19.92%			87.82%			(50.19)%			(11.72)%

Based on market price		10.04%	⁴		10.47%			12.90%			114.32%			(54.99)%			(17.13)%


Ratios to Average Net Assets
Total expenses		1.39%	⁵		1.37%			1.27%			1.23%			2.42%			3.13%

Total expenses after fees waived		1.39%	⁵		1.37%			1.27%			1.23%			2.42%			3.13%

Total expenses after fees waived and excluding interest expense		1.04%	^5,6		1.06%			1.02%			1.02%			1.20%			0.99%

Net investment income		8.04%	⁵		8.06%			8.22%			12.16%			11.79%			9.90%


Supplemental Data
Net assets, end of period (000)	$	453,436		$	445,824		$	461,247		$	419,222		$	252,080		$	594,204

Borrowings outstanding, end of period (000)	$	195,000		$	145,000		$	117,000		$	67,000		$	90,000		$	199,000

Average borrowings outstanding, during the period (000)	$	165,842		$	142,596		$	89,362		$	58,574		$	163,286		$	272,846

Portfolio turnover		31%			59%			81%			86%			44%			51%

Asset coverage, end of period (000)	$	3,325		$	4,075		$	4,942		$	7,257		$	3,801		$	3,986

Consolidated Financial Highlights.

Based on average shares outstanding.

Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of sales charges and include the reinvestment of dividends and distributions.

⁴

Aggregate total investment return.

⁵

Annualized.

⁶

For the period ended August 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense and borrowing costs was 1.00%.


Financial Highlights		BlackRock Floating Rate Income Strategies Fund II, Inc. (FRB)


	Six Months Ended August 31, 2012¹			Year Ended February 29, 2012¹			Year Ended February 28,									Year Ended February 29, 2008
	Six Months Ended August 31, 2012¹			Year Ended February 29, 2012¹			2011			2010			2009			Year Ended February 29, 2008

Per Share Operating Performance
Net asset value, beginning of period	$	13.60		$	14.07		$	13.16		$	8.92		$	16.06		$	19.28

Net investment income²		0.43			0.89			0.87			0.86			1.37			1.55
Net realized and unrealized gain (loss)		0.18			(0.48	)		0.94			4.44			(6.98	)		(3.27	)

Net increase (decrease) from investment operations		0.61			0.41			1.81			5.30			(5.61	)		(1.72	)

Dividends and distributions from:
Net investment income		(0.44	)		(0.88	)		(0.83	)		(0.98	)		(1.53	)		(1.50	)
Tax return of capital		—			—			(0.07	)		(0.08	)		—			—

Total dividends and distributions		(0.44	)		(0.88	)		(0.90	)		(1.06	)		(1.53	)		(1.50	)

Net asset value, end of period	$	13.77		$	13.60		$	14.07		$	13.16		$	8.92		$	16.06

Market price, end of period	$	13.62		$	13.21		$	14.22		$	15.01		$	8.28		$	14.75


Total Investment Return³
Based on net asset value		4.59%	⁴		3.41%			14.20%			62.08%			(36.46)%			(8.98)%

Based on market price		6.50%	⁴		(0.61)%			1.19%			99.15%			(35.78)%			(12.88)%


Ratios to Average Net Assets
Total expenses		1.82%	⁵		1.68%			1.56%			1.50%			2.48%			2.78%

Total expenses after fees waived and paid indirectly		1.82%	⁵		1.68%			1.56%			1.50%			2.48%			2.78%

Total expenses after fees waived and paid indirectly and excluding interest expense		1.50%	^5,6		1.36%			1.30%			1.27%			1.38%			1.20%

Net investment income		6.56%	⁵		6.61%			6.48%			7.40%			10.08%			8.39%


Supplemental Data
Net assets, end of period (000)	$	145,678		$	143,773		$	148,552		$	138,371		$	93,656		$	168,553

Borrowings outstanding, end of period (000)	$	63,000		$	41,000		$	36,000		$	24,000		$	26,000		$	50,000

Average borrowings outstanding, during the period (000)	$	48,951		$	48,292		$	29,101		$	22,225		$	45,165		$	55,269

Portfolio turnover		26%			57%			100%			92%			47%			65%

Asset coverage, end of period (000)	$	3,312		$	4,507		$	5,126		$	6,765		$	4,602		$	4,371

Consolidated Financial Highlights.

Based on average shares outstanding.

Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of sales charges and include the reinvestment of dividends and distributions.

⁴

Aggregate total investment return.

⁵

Annualized. Certain non-recurring expenses have been included in the ratio but not annualized. If these expenses were annualized, the ratio of total expenses, total expenses after fees waiver and paid indirectly, total expenses after fees waived and paid indirectly and excluding interest expense and net investment income would have been 1.96%, 1.96%, 1.64% and 6.41%, respectively.

⁶

For the period ended August 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense and borrowing costs was 1.45%.


Financial Highlights		BlackRock Senior High Income Fund, Inc. (ARK)


	Six Months Ended August 31, 2012¹ (Unaudited)			Year Ended February 29, 2012¹			Year Ended February 28,									Year Ended February 29, 2008
	Six Months Ended August 31, 2012¹ (Unaudited)			Year Ended February 29, 2012¹			2011			2010			2009			Year Ended February 29, 2008

Per Share Operating Performance
Net asset value, beginning of period	$	4.15		$	4.22		$	3.91		$	2.54		$	5.04		$	6.17

Net investment income²		0.16			0.32			0.32			0.36			0.41			0.54
Net realized and unrealized gain (loss)		0.06			(0.06	)		0.32			1.31			(2.43	)		(1.11	)

Net increase (decrease) from investment operations		0.22			0.26			0.64			1.67			(2.02	)		(0.57	)

Dividends and distributions from:
Net investment income		(0.15	)		(0.33	)		(0.33	)		(0.30	)		(0.43	)		(0.56	)
Tax return of capital		—			—			—			—			(0.05	)		—

Total dividends and distributions		(0.15	)		(0.33	)		(0.33	)		(0.30	)		(0.48	)		(0.56	)

Net asset value, end of period	$	4.22		$	4.15		$	4.22		$	3.91		$	2.54		$	5.04

Market price, end of period	$	4.43		$	4.06		$	4.18		$	3.94		$	2.21		$	4.91


Total Investment Return³
Based on net asset value		5.41%	⁴		6.86%			17.13%			68.90%			(42.15)%			(9.76)%

Based on market price		13.11%	⁴		5.54%			15.13%			95.61%			(48.33)%			(16.94)%


Ratios to Average Net Assets
Total expenses		1.26%	⁵		1.21%			1.13%			1.13%			2.24%			2.70%

Total expenses after fees waived		1.26%	⁵		1.21%			1.13%			1.13%			2.24%			2.70%

Total expenses after fees waived and excluding interest expense		0.95%	^5,6		0.94%			0.90%			0.93%			1.05%			0.86%

Net investment income		7.74%	⁵		7.84%			7.83%			10.70%			9.96%			9.16%


Supplemental Data
Net assets, end of period (000)	$	239,453		$	235,316		$	238,760		$	221,173		$	143,643		$	284,692

Borrowings outstanding, end of period (000)	$	90,000		$	69,000		$	50,000		$	43,000		$	47,000		$	91,500

Average borrowings outstanding, during the period (000)	$	77,679		$	66,806		$	41,405		$	29,978		$	79,422		$	109,978

Portfolio turnover		31%			60%			83%			80%			49%			48%

Asset coverage, end of period (000)	$	3,661		$	4,410		$	5,775		$	6,144		$	4,056		$	4,112

Consolidated Financial Highlights.

Based on average shares outstanding.

Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where applicable, total investment returns exclude the effects of sales charges and include the reinvestment of dividends and distributions.

⁴

Aggregate total investment return.

⁵

Annualized.

⁶

For the period ended August 31, 2012, the total expense ratio after fees waived and paid indirectly and excluding interest expense and borrowing costs was 0.90%.


Notes to Consolidated Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Corporate High Yield Fund, Inc. (“COY”), BlackRock Corporate High Yield Fund III, Inc. (“CYE”), BlackRock Debt Strategies Fund, Inc. (“DSU”) and BlackRock Floating Rate Income Strategies Fund II, Inc. (“FRB”) are registered under the 1940 Act, as diversified, closed-end management investment companies. BlackRock Senior High Income Fund, Inc. (“ARK”) is registered under the 1940 Act, as a non-diversified, closed-end management investment company. COY, CYE, DSU, FRB and ARK are referred to collectively as the “Funds” or individually as a “Fund”. The Funds are organized as Maryland corporations. The Funds’ financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Boards of Directors of the Funds are collectively referred to throughout this report as the “Board of Directors” or the “Board”, and the directors thereof are collectively referred to throughout this report as “Directors”. The Funds determine, and make available for publication the NAVs of their Common Shares on a daily basis.

Reorganization: On May 23, 2012, the Board approved a plan of reorganization whereby BlackRock Floating Rate Income Strategies Fund, Inc. (“FRA”) will acquire all of the assets and all of the liabilities of FRB in exchange for newly issued shares of FRA in a merger transaction.

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

Basis of Consolidation: The accompanying consolidated financial statements include the accounts of BLK COY (Luxembourg) Investments, S.a.r.l. and BLK CYE (Luxembourg) Investments, S.a.r.l. (the “Luxembourg Subsidiaries”) and DSU JGW SPV, LLC, DSU (S-Martin) SPV, LLC, FRB JGW SPV, LLC and ARK JGW SPV, LLC (the “US Subsidiaries”), all of which are wholly owned taxable subsidiaries of each Fund. The US Subsidiaries enable the Funds to hold investments that are organized as an operating partnership and still satisfy Regulated Investment Company (“RIC”) tax requirements. Income earned and gains realized on the investments held by the US Subsidiaries are taxable to such subsidiaries. The Luxembourg Subsidiaries hold shares of private Canadian companies. These shares are held in the Luxembourg Subsidiaries in order to realize benefits under the Double Tax Avoidance Convention between Canada and Luxembourg, the result of which is gains on the sale of such shares will not be subject to capital gains taxes in Canada. Income earned on the investments held by the Luxembourg Subsidiaries may be taxable to such subsidiaries in Luxembourg. An income tax provision for all income, including realized and unrealized gains, if any, is reflected as either a reduction in investment income or as component of realized and unrealized gain (loss) on the Consolidated Statements of Operations. The Funds may invest up to 25% of their total assets in the US Subsidiary. Intercompany accounts and transactions have been eliminated. Both the US and Luxembourg Subsidiaries are subject to the same investment policies and restrictions that apply to the Funds.

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

The Funds value their bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more brokers or dealers as obtained from a pricing service. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures. Asset-backed 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. Swap agreements are valued utilizing quotes received daily by the Funds’ pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Investments in open-end registered investment companies are valued at NAV 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 (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid 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



SEMI-ANNUAL REPORT	AUGUST 31, 2012	79


Notes to Consolidated Financial Statements (continued)

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

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

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

The Funds do not isolate the portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in foreign currency exchange rates on investments are not segregated on the Consolidated Statements of Operations from the effects of changes in market prices of those investments but are included as a component of net realized and unrealized gain (loss) from investments. The Funds report realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed Securities: The Funds may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the Fund 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.

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

Capital Trusts: The Funds may invest in capital trusts. These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been



80	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Notes to Consolidated Financial Statements (continued)

met. The deferral of payments does not affect the purchase or sale of these securities in the open market. Payments on these securities are treated as interest rather than dividends for federal income tax purposes. These securities generally are rated below that of the issuing company’s senior debt securities.

Preferred Stock: The Funds may invest in preferred stocks. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

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

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

Floating rate loan interests are usually freely callable at the borrower’s option. The Funds may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in the Funds having a contractual relationship only with the lender, not with the borrower. The Funds will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, the Funds generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower, and the Funds may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Funds will assume the credit risk of both the borrower and the lender that is selling the Participation. The Funds’ investment in loan participation interests involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, the Funds may be treated as general creditors of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Funds having a direct contractual relationship with the borrower and the Funds may enforce compliance by the borrower with the terms of the loan agreement.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Funds either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts, foreign currency exchange contracts or swaps), or certain borrowings (e.g., loan payable), the Funds will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on their books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party to such transactions 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. Dividend income is recorded on the ex-dividend dates. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of lost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis. Consent fees are compensation for agreeing to changes in the terms of debt instruments and are included in interest income in the Consolidated Statements of Operations.

Dividends and Distributions: Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The portion of dividends and distributions that exceed a Fund’s current and accumulated earnings and profits, which are measured on a tax basis, may be treated as a tax return of capital. Distributions in



SEMI-ANNUAL REPORT	AUGUST 31, 2012	81


Notes to Consolidated Financial Statements (continued)

excess of a Fund’s taxable income and net capital gains, but not in excess of a Fund’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. Capital losses carried forward from years beginning before 2011 do not reduce earnings and profits, even if such carried forward losses offset current year realized gains. The character and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

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

Each 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 Funds’ US federal tax returns remains open for each of the following periods:

Four Years Ended

Three Years Ended

Period Ended

COY

—

February 29, 2012

February 28, 2009

CYE

—

February 29, 2012

February 28, 2009

DSU

February 29, 2012

—

FRB

February 29, 2012

—

ARK

February 29, 2012

—

The statutes of limitations on each Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

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

Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan: Under the deferred compensation plan approved by each Fund’s Board, independent Directors (“Independent Directors”) may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain other BlackRock Closed-End Funds selected by the Independent Directors. This has approximately the same economic effect for the Independent Directors as if the Independent Directors had invested the deferred amounts directly in certain other BlackRock Closed-End Funds.

The deferred compensation plan is not funded and obligations there under represent general unsecured claims against the general assets of each Fund. Prior to March 31, 2012, each Fund elected to invest in

common shares of certain other BlackRock Closed-End Funds selected by the Independent Directors in order to match its deferred compensation obligations, and dividends and distributions received from the BlackRock Closed-End Fund investments through March 31, 2012 are included in income — affiliated in the Consolidated Statements of Operations.

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

The Funds have an arrangement with the custodians whereby fees may be reduced by credits earned on uninvested cash balances, which, if applicable, are shown as fees paid indirectly in the Consolidated Statements 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 Funds engage in various portfolio investment strategies using derivative contracts both to increase the returns of the Funds and/or to economically hedge, or protect, their exposure to certain risks such as credit risk, equity risk, interest rate risk, 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 market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Funds’ 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 Funds bear the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Funds do not give rise to counterparty credit risk, as options written obligate the Funds to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

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



82	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Notes to Consolidated Financial Statements (continued)

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

Financial Futures Contracts: The Funds purchase or sell financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in value of equity securities (equity risk). Financial futures contracts are agreements between the Funds and the counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Pursuant to the contract, the Funds agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Funds as unrealized appreciation or depreciation. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

Foreign Currency Exchange Contracts: The Funds enter 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 Funds, help to manage the overall exposure to the currencies, in which some of the investments held by the Funds are denominated. The contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that the counterparty to the contract does not perform its obligations under the agreement.

Options: The Funds purchase and write call and put options to increase or decrease their exposure to underlying instruments (including equity risk 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 (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised), the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. When the Funds purchase (writes) an option, an amount equal to

the premium paid (received) by the Funds 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 Fund enters into a closing transaction), the Funds realize 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 Funds write a call option, such option is “covered,” meaning that the Funds holds the underlying instrument subject to being called by the option counterparty. When the Funds write a put option, such option is covered by cash in an amount sufficient to cover the obligation.

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

Swaps: The Funds enter into swap agreements, in which the fund and a counterparty agree to either make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be executed on a registered financial and commodities exchange (“centrally cleared swaps”). In a centrally cleared swap, the Funds typically enter into an agreement with a counterparty; however, performance is guaranteed by the central clearinghouse reducing or eliminating the Fund’s exposure to the credit risk of the counterparty. These payments received or made by the Funds are recorded in the Consolidated Statements 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. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swaps, if any, is recorded as a receivable or payable for variation margin in the Consolidated Statements of Assets and Liabilities. When the swap is terminated, the Funds will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Funds’ basis in the contract, if any. Generally, the basis of the contracts is the premium received or paid. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Consolidated Statements 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 Funds enter into credit default swaps to manage their exposure to the market or certain sectors of the market, to



SEMI-ANNUAL REPORT	AUGUST 31, 2012	83


Notes to Consolidated Financial Statements (continued)

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

the index or receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Funds will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

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


Derivative Financial Instruments Categorized by Risk Exposure:
Fair Values of Derivative Financial Instruments as of August 31, 2012
	Asset Derivatives
								COY			CYE			DSU
	Consolidated Statements of Assets and Liabilities Location							Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts							$	26,257		$	39,584		$	5,454
Credit contracts	Unrealized appreciation on swaps								817,408			878,971			—
Equity contracts	Investments at value-unaffiliated¹								—			—			—
Total								$	843,665		$	918,555		$	5,454

	Liability Derivatives
		COY			CYE			DSU			FRB			ARK
	Consolidated Statements of Assets and Liabilities Location	Value
Foreign currency exchange contracts	Unrealized depreciation on foreign currency exchange contracts	$	(700,255	)	$	(704,331	)	$	(614,672	)	$	(100,156	)	$	(10,520	)
Credit contracts	Unrealized depreciation on swaps		(63,595	)		(63,322	)		—			(77,373	)		—
Equity contracts	Net unrealized appreciation/depreciation²; Options written at value		(522,208	)		(565,522	)		—			—			—
Total		$	(1,286,058	)	$	(1,331,175	)	$	(614,672	)	$	(177,529	)	$	(10,520	)

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

Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Consolidated Schedules of Investments. Only current day’s variation margin is reported within the Consolidated Statements of Assets and Liabilities.



84	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Notes to Consolidated Financial Statements (continued)


The Effect of Derivative Financial Instruments in the Consolidated Statements of Operations Six Months Ended August 31, 2012
	Net Realized Gain (Loss) From
	COY			CYE			DSU			FRB			ARK
Interest rate contracts:
Options¹	$	15,600		$	17,025			—			—			—
Foreign currency exchange contracts:
Foreign currency transactions		309,490			128,641		$	218,317		$	36,754		$	(4,502	)
Credit contracts:
Swaps		288,725			278,324			(397,040	)		(23,603	)		(299,946	)
Equity contracts:
Financial futures contracts		(42,138	)		(31,386	)		—			—
Options¹		86,316			67,779			—			—
Total	$	657,993		$	460,383		$	(178,723	)	$	13,151		$	(304,448	)

	Net Change in Unrealized Appreciation/Depreciation on
	COY			CYE			DSU			FRB			ARK
Foreign currency exchange contracts:
Foreign currency translations	$	232,445		$	266,261		$	140,807		$	45,270		$	2,389
Credit contracts:
Swaps		388,724			445,690			—			(77,373	)		—
Equity contracts:
Financial futures contracts		(264,271	)		(306,694	)		—			—			—
Options¹		161,711			172,474			—			—			—
Total	$	518,609		$	577,731		$	140,807		$	(32,103	)	$	2,389

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

For the six months ended August 31, 2012, the average quarterly balances of outstanding derivative financial instruments were as follows:


	COY		CYE		DSU		FRB		ARK
Financial futures contracts:
Average number of contracts sold		99		105		—		—		—
Average notional value of contracts sold	$	6,706,740	$	7,121,078		—		—		—
Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		12		11		11		5		1
Average number of contracts-US dollars sold		3		4		3		1		—
Average US dollar amounts purchased	$	28,517,195	$	28,856,948	$	25,280,693	$	4,522,528	$	367,191
Average US dollar amounts sold	$	1,340,117	$	1,676,355	$	853,865	$	421,964		—
Options:
Average number of option contracts purchased		387		417		—		11		—
Average number of option contracts written		370		398		—		—		—
Average notional value of option contracts purchased	$	4,900,029	$	5,264,914		—	$	10,371		—
Average notional value of option contracts written	$	4,514,000	$	4,849,500		—		—		—
Average number of swaption contracts written		1		1		—		—		—
Average notional value of swaption contracts written	$	520,000	$	567,500		—		—		—
Credit default swaps:
Average number of contracts-buy protection		10		10		—		1		—
Average number of contracts-sell protection		18		17		1		—		1
Average notional value-buy protection	$	2,639,000	$	2,868,000		—	$	952,875		—
Average notional value-sell protection	$	11,372,500	$	12,062,500	$	6,275,000		—	$	4,725,000

3. Investment Advisory Agreement and Other Transactions with Affiliates:

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

Each Fund entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Funds’ investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund.

For such services, each Fund pays the Manager a monthly fee based on a percentage of each Fund’s average daily net assets, plus the proceeds of any outstanding borrowings used for leverage, at the following annual rates:


COY	0.50	%
CYE	0.60	%
DSU	0.60	%
FRB	0.75	%
ARK	0.50	%



SEMI-ANNUAL REPORT	AUGUST 31, 2012	85


Notes to Consolidated Financial Statements (continued)

The Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees each Fund pays to the Manager indirectly through its investment in affiliated money market funds. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with each Fund’s investment in other affiliated investment companies, if any. These amounts are included in fees waived by Manager in the Consolidated Statements of Operations.

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

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 each Fund to the Manager.

Certain officers and/or Directors of the Funds are officers and/or directors of BlackRock or its affiliates. The Funds reimburse the Manager for a portion of the compensation paid to the Funds’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns and excluding short-term securities for the six months ended August 31, 2012 were as follows:


	Purchases		Sales
COY	$	131,743,078	$	107,133,105
CYE	$	146,959,026	$	124,866,799
DSU	$	242,442,068	$	192,210,235
FRB	$	77,190,994	$	51,661,009
ARK	$	118,910,270	$	97,687,572

Transactions in options written for the six months ended August 31, 2012, were as follows:


	Puts
	COY									CYE
	Contracts			Notional (000)			Premiums Received			Contracts			Notional (000)			Premiums Received
Outstanding options, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . .		1,075			—		$	76,897			1,140			—		$	81,580
Options written . . . . . . . . . . . . . . . . . . .		3,240		$	1,040,000			232,496			3,295		$	1,135,000			239,254
Options exercised. . . . . . . . . . . . . . . . .		—			—			—			—			—			—
Options expired. . . . . . . . . . . . . . . . . . .		—			(1,040,000	)		(15,600	)		—			(1,135,000	)		(17,024	)
Options closed. . . . . . . . . . . . . . . . . .		(4,315	)		—			(293,793	)		(4,435	)		—			(303,810	)
Outstanding options, end of period		—			—			—			—			—			—

5. Income Tax Information:

As of February 29, 2012, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:


Expires	COY		CYE		DSU		FRB		ARK
2013		—		—	$	21,126,025		—		—
2014		—		—		20,233,987	$	100,800	$	4,906,362
2015		—		—		3,578,574		1,315,945		1,585,622
2016	$	454,146		—		—		—		—
2017		23,362,415	$	22,687,878		56,690,782		12,168,927		27,675,242
2018		36,323,237		33,834,777		148,062,952		38,830,450		60,685,648
2019		—		—		16,301,990		—		9,564,345
No expiration date¹		—		—		13,051,575		1,757,611		6,629,052

Total	$	60,139,798	$	56,522,655	$	279,045,885	$	54,173,733	$	111,046,271

Must be utilized prior to losses subject to expiration.

As of August 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


	COY			CYE			DSU			FRB			ARK
Tax cost	$	345,918,965		$	384,865,720		$	693,627,700		$	212,077,769		$	333,309,001

Gross unrealized appreciation		20,064,817			22,497,565			21,556,686			3,967,961			10,904,854
Gross unrealized depreciation		(14,346,058	)		(15,203,447	)		(61,660,763	)		(3,020,985	)		(10,885,798	)

Net unrealized appreciation (depreciation)	$	5,718,759		$	7,294,118		$	(40,104,077	)	$	946,976		$	19,056



86	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Notes to Consolidated Financial Statements (continued)

6. Borrowings:

On March 3, 2011, the Funds renewed their senior committed secured, 364-day revolving line of credit and a separate security agreement (the “SSB Agreement”) with State Street Bank and Trust Company (“SSB”). The Funds have granted a security interest in substantially all of their assets to SSB. The SSB Agreement allows for the following maximum commitment amounts:


	Commitment Amounts
COY	$	126,600,000
CYE	$	138,000,000
DSU	$	224,500,000
FRB	$	72,500,000
ARK	$	117,500,000

Advances are made by SSB to the Funds, at the Fund’s option of (a) the higher of (i) 0.80% above the Fed Funds rate and (ii) 0.80% above the Overnight LIBOR or (b) 0.80% above 7-day, 30-day, 60-day or 90-day LIBOR.

Effective March 2, 2012, the SSB Agreement was renewed for an additional 364 days. The SSB Agreement allows for the following maximum commitment amounts:


	Commitment Amounts
COY	$	126,600,000
CYE	$	138,000,000
DSU	$	224,500,000
FRB	$	72,500,000
ARK	$	117,500,000

Advances will be made by SSB to the Funds, at the Funds’ option of (a) the higher of (i) 0.75% above the Fed Funds rate and (ii) 0.75% above the overnight LIBOR or (b) 0.75% above 7-day, 30-day, 60-day or 90-day LIBOR.

In addition, the Funds pay a facility fee and a commitment fee based upon SSB’s total commitment to the Funds. The fees associated with each of the agreements are included in the Statements of Operations as borrowing costs. Advances to the Funds as of August 31, 2012 are shown in the Consolidated Statements of Assets and Liabilities as loan payable. Based on the short-term nature of the borrowings under the line of credit and the variable interest rate, the carrying amount of the borrowings approximates fair value.

The Funds may not declare dividends or make other distributions on shares or purchase any such shares if, at the time of the declaration, distribution or purchase, asset coverage with respect to the outstanding short-term borrowings is less than 300%.

For the six months ended August 31, 2012, the daily weighted average interest rates for the Funds with loans under the revolving credit agreements were as follows:


	Annualized Daily Weighted Average Interest Rate
COY		0.93	%
CYE		0.92	%
DSU		0.94	%
FRB		0.93	%
ARK		0.93	%

7. Commitments:

The Funds may invest in floating rate loan interests. In connection with these investments, the Funds may also enter into bridge loan commitments (“commitments”). Bridge loan commitments may obligate the Funds to furnish temporary financing to a borrower until permanent financing can be arranged. As of August 31, 2012, the Funds had outstanding bridge loan commitments as follows:


	Commitment Amounts
COY	$	600,000
CYE	$	660,000
DSU	$	845,000

In connection with these commitments, the Funds earn a commitment fee, typically set as a percentage of the commitment amount. Such fee income, which is included in interest income in the Consolidated Statements of Operations, is recognized ratably over the commitment period. Commitment fees received in advance and unrecognized are recorded on the Consolidated Statements of Assets and Liabilities as deferred income.

8. Market and Credit Risk:

In the normal course of business, the Funds invest in securities and enter 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 Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Funds; 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 Funds may be exposed to counterparty credit risk, or the risk that an entity with which the Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. The Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Funds’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Funds’ Consolidated Statements of Assets and Liabilities, less any collateral held by the Funds.

9. Capital Share Transactions:

Each Fund is authorized to issue 200 million shares, par value $0.10 per share, all of which were initially classified as Common Shares. The Board is authorized, however, to reclassify any unissued shares without approval of Common Shareholders.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	87


Notes to Financial Statements (concluded)

For the six months ended August 31, 2012 and the year ended February 29, 2012, shares issued and outstanding increased by the following amounts as a result of dividend reinvestment:


	Six Months Ended August 31, 2012		Year Ended February 29, 2012
COY		73,542		102,019
CYE		69,544		53,550
DSU		249,632		195,440
FRB		2,727		15,006
ARK		92,132		55,454

10. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Funds’ financial statements was completed through the date the financial statements were issued and the following items were noted:

Each Fund paid a net investment income dividend on September 28, 2012 to Common Shareholders of record on September 14, 2012 as follows:


	Common Dividend Per Share
COY	$	0.0510
CYE	$	0.0525
DSU	$	0.0270
FRB	$	0.0730
ARK	$	0.0250

Additionally, the Funds declared a net investment income dividend on October 1, 2012 payable to Common Shareholders of record on October 15, 2012 as follows:


	Common Dividend Per Share
COY	$	0.0510
CYE	$	0.0525
DSU	$	0.0270
ARK	$	0.0250

At a shareholder meeting on September 13, 2012, FRB’s and FRA’s shareholders approved the plan of reorganization discussed in Note 1. The reorganization took place on October 5, 2012. In connection with the reorganization, FRB paid a special income distribution of $0.1610 per share on September 26, 2012 to shareholders of record as of September 24, 2012.



88	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors (each, a “Board,” collectively, the “Boards,” and the members of which are referred to as “Board Members”) of BlackRock Corporate High Yield Fund, Inc. (“COY”), BlackRock Corporate High Yield Fund III, Inc. (“CYE”), BlackRock Debt Strategies Fund, Inc. (“DSU”), BlackRock Floating Rate Income Strategies Fund II, Inc. (“FRB”) and BlackRock Senior High Income Fund, Inc. (“ARK” and together with COY, CYE, DSU, and FRB, each a “Fund,” and, collectively, the “Funds”) met on April 26, 2012 and May 22-23, 2012 to consider the approval of each Fund’s investment advisory agreement (each, an “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board of each Fund also considered the approval of the sub-advisory agreement (each, a “Sub-Advisory Agreement”) among the Manager, BlackRock Financial Management, Inc. (the “Sub-Advisor”), and its Fund. 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.”

Activities and Composition of the Board

Each Board consists of eleven individuals, nine of whom are not “interested persons” of such Fund as defined in the Investment Company Act of 1940 (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Funds 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. Each Board has established six standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee, an Executive Committee, and a Leverage Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee and the Leverage Committee, each of which also has one interested Board Member).

The Agreements

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

The Boards, acting directly and through their respective committees, considered at each of their meetings, and from time to time as appropriate, factors that are relevant to their annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Funds and their shareholders. Among the matters the Boards 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 their peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by the Funds for services such as call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to the Funds; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Funds’ investment objectives, policies and restrictions; (e) the Funds’ compliance with their Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Boards; (i) execution quality of portfolio transactions; (j) BlackRock’s implementation of the Funds’ valuation and liquidity procedures; (k) an analysis of management fees ratios for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

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

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 26, 2012 meeting, the Boards requested and received materials specifically relating to the Agreements. The Boards are engaged in a process with its independent legal counsel and BlackRock to review periodically the nature and scope of the information provided to better assist their deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of the Funds as compared with a peer group of funds as determined by Lipper and, with respect to DSU, FRB and ARK, a customized peer group selected by BlackRock (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as



SEMI-ANNUAL REPORT	AUGUST 31, 2012	89


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

institutional clients and open-end funds, under similar investment mandates, as applicable; (d) the existence, impact and sharing of potential economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock and (f) if applicable, a comparison of management fees to similar BlackRock closed-end funds, as classified by Lipper.

At an in-person meeting held on April 26, 2012, the Boards reviewed materials relating to their consideration of the Agreements. As a result of the discussions that occurred during the April 26, 2012 meeting, and as a culmination of the Boards’ year-long deliberative process, the Boards presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 22-23, 2012 Board meeting.

At an in-person meeting held on May 22-23, 2012, each Board, including all the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund, and the Sub-Advisory Agreement among the Manager, the Sub-Advisor, and its Fund, each for a one-year term ending June 30, 2013. In approving the continuation of the Agreements, the Boards considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Funds 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 Funds; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with the Funds; and (f) other factors deemed relevant by the Board Members.

The Boards also considered other matters they deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to securities lending, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Funds and advice from independent legal counsel with respect to the review process and materials submitted for the Boards’ review. The Boards noted the willingness of BlackRock personnel to engage in open, candid discussions with the Boards. The Boards 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 Boards, 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 Funds. Throughout the year, the Boards compared Fund performance to the performance of a comparable group of closed-end funds and/or the performance of a relevant benchmark, if any. The Boards met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. Each Board also reviewed the materials provided by its Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Boards considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and their Funds’ portfolio management teams, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance,

BlackRock’s credit analysis capabilities, BlackRock’s risk analysis and oversight capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Boards engaged in a review of BlackRock’s compensation structure with respect to their Funds’ portfolio management teams and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Boards considered the quality of the administrative and non-investment advisory services provided to the Funds. BlackRock and its affiliates provide the Funds with certain services (in addition to any such services provided to the Funds by third parties) and officers and other personnel as are necessary for the operations of the Funds. In particular, BlackRock and its affiliates provide the Funds with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus and the statement of additional information in connection with the initial public offering and periodic shareholder reports; (ii) preparing communications with analysts to support secondary market trading of the Funds; (iii) assisting with daily accounting and pricing; (iv) preparing periodic filings with regulators and stock exchanges; (v) overseeing and coordinating the activities of other service providers; (vi) organizing Board meetings and preparing the materials for such Board meetings; (vii) providing legal and compliance support; and (viii) performing other administrative functions necessary for the operation of the Funds, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Boards 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 Funds and BlackRock: The Boards, including the Independent Board Members, also reviewed and considered the performance history of their Funds. In preparation for the April 26, 2012 meeting, the Boards worked with its independent legal counsel, BlackRock and Lipper to develop a template for, and was provided with reports independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Boards 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 their review, each Board received and reviewed information regarding the investment performance, based on net asset value (NAV), of its Fund as compared to funds in that Fund’s applicable Lipper category, and with respect to DSU, FRB and ARK, a customized peer group selected by BlackRock. The Boards were provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review their methodology. Each Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of its Fund throughout the year.

The Board of COY noted that, in general, COY performed better than its Peers in that COY’s performance was at or above the median of its Lipper Performance Universe in each of the one-, three- and five-year periods reported.



90	SEMI-ANNUAL REPORT	AUGUST 31, 2012


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

The Board of CYE noted that, in general, CYE performed better than its Peers in that CYE’s performance was at or above the median of its Lipper Performance Universe in the three- and five-year periods reported, although performance for the one-year period reported was below the median. The Board of CYE and BlackRock reviewed and discussed the reasons for CYE’s underperformance during the one-year period and will monitor closely CYE’s performance in the coming year.

The Board of DSU noted that, in general, DSU performed better than its Peers in that DSU’s performance was at or above the median of its Customized Lipper Peer Group in two of the one-, three- and five-year periods reported. Based on its discussions with BlackRock and the Board’s review of DSU’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, DSU’s Board noted that DSU’s investment performance as compared to its Customized Lipper Peer Group provided a more meaningful comparison of DSU’s relative performance.

The Board pf FRB noted that FRB performed below the median of its Customized Lipper Peer Group in each of the one-, three- and five-year periods reported. Based on its discussions with BlackRock and the Board’s review of FRB’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board of FRB noted that FRB’s investment performance as compared to its Customized Lipper Peer Group provided a more meaningful comparison of FRB’s relative performance. The Board of FRB and BlackRock reviewed and discussed the reasons for FRB’s underperformance during these periods compared with its Peers. FRB’s Board was informed that, among other things, the two major factors impacting performance during the one- and three-year periods were leverage and general investment style. On average, FRB has tended to run lower leverage than FRB’s competitors and the investment style leads to overweight positions to higher-quality assets. The two years following the financial crisis in 2008 witnessed a significant rally in lower credit quality assets. The overweight to higher quality assets and below average leverage were the primary drivers to the underperformance for the three-year period.

The Board of ARK noted that ARK performed below the median of its Customized Lipper Peer Group in the three- and five-year periods reported, but that ARK performed at or above the median of its Customized Lipper Peer Group in the one-year period reported. Based on its discussions with BlackRock and the Board’s review of ARK’s investment performance compared to its Lipper Peer Group, the methodology used by Lipper to select peer funds, and other relevant information provided by BlackRock, the Board of ARK noted that ARK’s investment performance as compared to its Customized Lipper Peer Group provided a more meaningful comparison of ARK’s relative performance. The Board of ARK and BlackRock reviewed and discussed the reasons for ARK’s underperformance during the three- and five-year periods compared with its Peers. ARK’s Board was informed that, among other things, ARK’s underperformance over the three-year period is largely a result of less leverage versus its Customized Lipper Peer Group. The high yield and bank loan markets posted record returns in 2009 and 2010’s bull market, which is

why running less leverage than the peer group on average produced a lag. ARK’s five-year period underperformance can be attributed to 2008; returns in both the high yield and bank loans markets were down substantially.

The Boards of FRB and ARK and BlackRock discussed BlackRock’s strategy for improving the Funds’ performance and BlackRock’s commitment to providing the resources necessary to assist the Funds’ portfolio managers and to improve the Funds’ performance.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Funds: Each Board, including the Independent Board Members, reviewed its Fund’s contractual management fee rate compared with the other funds in its Lipper category. It also compared the Fund’s total expense ratio, as well as actual management fee rate, to those of other funds in its Lipper category. The Boards 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 Boards received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Funds. The Boards were also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Funds. The Boards reviewed BlackRock’s profitability with respect to the Funds and other funds the Boards currently oversee for the year ended December 31, 2011 compared to available aggregate profitability data provided for the years ended December 31, 2010, and December 31, 2009. The Boards reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Boards 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 Boards 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 Boards noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Boards considered BlackRock’s overall operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising closed-end funds, among other product types. In addition, the Boards considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. The Boards considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Boards considered the cost of the services provided to the Funds by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management of the Funds and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Boards reviewed BlackRock’s



SEMI-ANNUAL REPORT	AUGUST 31, 2012	91


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

methodology in allocating its costs to the management of the Funds. The Boards also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Boards.

The Board of each of COY, CYE, DSU, FRB and ARK noted that its respective Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers.

D. Economies of Scale: Each Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of its Fund increase. Each Board also considered the extent to which its Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Fund.

Based on the Boards’ review and consideration of the issue, the Boards concluded that most closed-end funds do not have fund level breakpoints because closed-end funds generally do not experience substantial growth after the initial public offering. They are typically priced at scale at a fund’s inception. The Boards noted that only one closed-end fund in the Fund Complex has breakpoints in its advisory fee structure.

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

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

The Boards noted the competitive nature of the closed-end fund marketplace, and that shareholders are able to sell their Fund shares in the secondary market if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

Each Board, including all the Independent Board Members, unanimously approved the continuation of the Advisory Agreement between the Manager and its Fund for a one-year term ending June 30, 2013, and the Sub-Advisory Agreement among the Manager, the Sub-Advisor, and its Fund for a one-year term ending June 30, 2013. Based upon its evaluation of all of the aforementioned factors in their totality, the Boards, including the Independent Board Members, were satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Funds and their shareholders. In arriving at their decision to approve the Agreements, the Boards 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 these determinations. The contractual fee arrangements for the Funds reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.



92	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Officers and Directors

Richard E. Cavanagh, Chairman of the Board and Director

Karen P. Robards, Vice Chairperson of the Board, Chairperson of the Audit Committee and Director

Paul L. Audet, Director

Michael J. Castellano, Director and Member of the Audit Committee

Frank J. Fabozzi, Director and Member of the Audit Committee

Kathleen F. Feldstein, Director

James T. Flynn, Director and Member of the Audit Committee

Henry Gabbay, Director

Jerrold B. Harris, Director

R. Glenn Hubbard, Director

W. Carl Kester, Director and Member of the Audit Committee

John M. Perlowski, President and Chief Executive Officer

Anne Ackerley, Vice President

Brendan Kyne, Vice President

Robert W. Crothers, Vice President¹

Neal Andrews, Chief Financial Officer

Jay Fife, Treasurer

Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer

Janey Ahn, Secretary²

Effective May 22, 2012, Robert W. Crothers became Vice President of the Funds.

Effective May 22, 2012, Ira P. Shapiro resigned as Secretary of the Funds and Janey Ahn became Secretary of the Funds.

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisor

BlackRock Financial Management, Inc.

New York, NY 10055

Custodians

JPMorgan Chase Bank, N.A.³

New York, NY 10017

State Street Bank and Trust Company⁴

Boston, MA 02110

The Bank of New York Mellon⁵

New York, NY 10286

Transfer Agent

Computershare Trust Company, N.A.

Canton, MA 02021

Accounting Agent

State Street Bank and Trust Company

Boston, MA 02110

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

New York, NY 10036

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston,MA 02116

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

For COY.

⁴

For CYE and FRB.

⁵

For DSU and ARK.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	93


Additional Information

Proxy Results

The Annual Meeting of Shareholders was held on July 27, 2012 for shareholders of record on May 31, 2012 to elect director nominees for each Fund. There were no broker non-votes with regard to any of the Funds.


	Paul L. Audet						Michael J. Castellano						Richard E. Cavanagh
	Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain
COY		31,934,050		1,000,367		0		31,881,351		1,053,066		0		31,937,831		996,586		0
CYE		34,239,474		1,051,994		0		34,260,909		1,030,559		0		34,338,410		953,058		0
DSU		98,873,904		2,240,266		0		97,768,080		2,346,090		0		98,730,425		2,383,745		0
FRB		9,595,670		283,003		0		9,590,212		288,461		0		9,580,472		298,201		0
ARK		52,424,466		762,485		0		52,425,135		761,816		0		52,426,588		760,363		0
	Frank J. Fabozzi						Kathleen F. Feldstein						James T. Flynn
	Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain
COY		31,922,017		1,012,400		0		31,816,329		1,118,088		0		31,877,262		1,057,155		0
CYE		34,349,629		941,839		0		34,170,136		1,121,332		0		34,198,897		1,092,571		0
DSU		98,823,345		2,290,825		0		98,704,927		2,409,243		0		98,693,714		2,420,456		0
FRB		9,587,487		291,186		0		9,571,166		307,507		0		9,582,638		296,035		0
ARK		52,424,956		761,995		0		52,406,990		779,961		0		52,404,817		782,134		0
	Henry Gabbay						Jerrold B. Harris						R. Glenn Hubbard
	Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain
COY		31,928,105		1,006,312		0		31,919,855		1,014,562		0		31,886,183		1,048,234		0
CYE		34,283,460		1,008,008		0		34,319,212		972,256		0		34,291,049		1,000,419		0
DSU		98,855,469		2,258,701		0		98,676,596		2,437,574		0		98,847,227		2,266,943		0
FRB		9,590,522		288,151		0		9,587,269		291,404		0		9,580,697		297,976		0
ARK		52,423,697		763,254		0		52,418,439		768,512		0		52,422,588		764,363		0
	W. Carl Kester						Karen P. Robards
	Votes For		Votes Withheld		Abstain		Votes For		Votes Withheld		Abstain
COY		31,958,391		976,026		0		31,907,694		1,026,723		0
CYE		34,287,134		1,004,334		0		34,318,274		973,194		0
DSU		98,902,576		2,211,594		0		98,859,778		2,254,392		0
FRB		9,580,697		297,976		0		9,588,881		289,792		0
ARK		52,425,843		761,108		0		52,424,324		762,627		0



94	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Additional Information (continued)

Dividend Policy

Each Funds’ dividend policy is to distribute all or a portion of their net investment income to its shareholders on a monthly basis. In order to provide shareholders with a more stable level of dividend distributions, the Funds may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result,

the dividends paid by the Funds for any particular month may be more or less than the amount of net investment income earned by the Funds during such month. The Funds’ current accumulated but undistributed net investment income, if any, is disclosed in the Statements of Assets and Liabilities, which comprises part of the financial information included in this report.



SEMI-ANNUAL REPORT	AUGUST 31, 2012	95


Additional Information (continued)

General Information

The Funds do not make available copies of their Statements of Additional Information because the Funds’ shares are not continuously offered, which means that the Statement of Additional Information of each Fund has not been updated after completion of the respective Fund’s offerings and the information contained in each Fund’s Statement of Additional Information may have become outdated.

During the period, there were no material changes in the Funds’investment objectives or policies or to the Funds’ charters or by-laws that would delay or prevent a change of control of the Funds that were not approved by shareholders or in the principal risk factors associated with investment in the Funds. There have been no changes in the persons who are primarily responsible for the day-to-day management of the Funds’ portfolios.

Quarterly performance, semi-annual and annual reports and other information regarding the Funds may be found on BlackRock’s website, which can be accessed at http://www.blackrock.com. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.

Electronic Delivery

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

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

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

Householding

The Funds will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder

documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on how to access documents on the SEC’s website without charge may be obtained by calling (800) SEC-0330. The Funds’ 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 Funds use 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 Funds voted proxies relating to securities held in the Funds’ 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.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds on a monthly basis on its website in the “Closed-end Funds” section of http://www.blackrock.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Funds. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Funds and does not, and is not intended to, incorporate BlackRock’s website in this report.



96	SEMI-ANNUAL REPORT	AUGUST 31, 2012


Additional Information (continued)

Section 19(a) Notices

These reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and sources for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regulations. Each Fund will provide a Form 1099-DIV each calendar year that will explain the character of these dividends and distributions for federal income tax purposes.


August 31, 2012
	Total Fiscal Year-to-Date Cumulative Distributions by Character								Percent of Fiscal Year-to-Date Cumulative Distributions by Character
	Net Investment Income		Net Realized Capital Gains		Return of Capital		Total Per Common Share		Net Investment Income			Net Realized Capital Gains			Return of Capital			Total Per Common Share
ARK	$	0.150000		—		—	$	0.150000		100	%		0	%		0	%		100	%
CYE	$	0.310500		—		—	$	0.310500		100	%		0	%		0	%		100	%



SEMI-ANNUAL REPORT	AUGUST 31, 2012	97


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.



98	SEMI-ANNUAL REPORT	AUGUST 31, 2012

This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. The Funds have leveraged their Common Shares, which creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated and are subject to change.

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Item 2 –		Code of Ethics – Not Applicable to this semi-annual report

Item 3 –		Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 –		Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 –		Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

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 to this semi-annual report

Item 8 –		Portfolio Managers of Closed-End Management Investment Companies
		(a) Not Applicable to this semi-annual report
		(b) As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR.

Item 9 –		Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable

Item 10 –		Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

Item 11 –		Controls and Procedures

		(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.

		(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

		(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

		(a)(2) – Certifications – Attached hereto

		(a)(3) – Not Applicable

		(b) – Certifications – Attached hereto

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


BlackRock Corporate High Yield Fund III, Inc.

By:		/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Corporate High Yield Fund III, Inc.

Date: November 5, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of 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 Corporate High Yield Fund III, Inc.

Date: November 5, 2012

By:		/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Corporate High Yield Fund III, Inc.

Date: November 5, 2012