BlackRock Multi-Sector Income Trust

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: 811-22774

Name of Fund: BlackRock Multi-Sector Income Trust (BIT)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Multi-Sector Income             Trust, 55 East 52nd Street, New York, NY 10055

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

Date of fiscal year end: 10/31/2014

Date of reporting period: 10/31/2014


Item 1 – Report to Stockholders


OCTOBER 31, 2014

 

 

ANNUAL REPORT

 

    LOGO

 

BlackRock Credit Allocation Income Trust (BTZ)

BlackRock Floating Rate Income Trust (BGT)

BlackRock Multi-Sector Income Trust (BIT)

 

Not FDIC Insured • May Lose Value • No Bank Guarantee


Table of Contents     

 

     Page  

Shareholder Letter

    3   

Annual Report:

 

Trust Summaries

    4   

The Benefits and Risks of Leveraging

    10   

Derivative Financial Instruments

    10   
Financial Statements:  

Schedules of Investments

    11   

Statements of Assets and Liabilities

    52   

Statements of Operations

    53   

Statements of Changes in Net Assets

    54   

Statements of Cash Flows

    56   

Financial Highlights

    57   

Notes to Financial Statements

    60   

Report of Independent Registered Public Accounting Firm

    76   

Important Tax Information

    76   

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreement

    77   

Automatic Dividend Reinvestment Plan

    81   

Officers and Trustees

    82   

Additional Information

    85   

 

                
2    ANNUAL REPORT    OCTOBER 31, 2014   


Shareholder Letter

 

Dear Shareholder,

The final months of 2013 were generally positive for most risk assets such as equities and high yield bonds even as investors were grappling with uncertainty as to when and by how much the U.S. Federal Reserve would begin to gradually reduce (or “taper”) its asset purchase programs. Higher quality bonds and emerging market investments, however, struggled as Fed tapering became increasingly imminent. When the central bank ultimately announced its tapering plans in mid-December, equity investors reacted positively, as this action signaled the Fed’s perception of real improvement in the economy.

Most asset classes moved higher in the first half of 2014 despite the pull back in Fed stimulus. The year got off to a rocky start, however, as a number of developing economies showed signs of stress and U.S. economic data weakened. Equities declined in January while bond markets found renewed strength from investors seeking relatively safer assets. Although these headwinds persisted, equities were back on the rise in February as investors were assuaged by increasing evidence that the soft patch in U.S. data was temporary and weather-related, and forecasts pointed to growth picking up later in the year.

In the months that followed, interest rates trended lower and bond prices climbed higher in the modest growth environment. Financial markets exhibited a remarkably low level of volatility despite rising tensions in Russia and Ukraine and signs of decelerating growth in China. Equity markets were resilient as investors focused on signs of improvement in the U.S. recovery, stronger corporate earnings, increased merger-and-acquisition activity and, perhaps most importantly, reassurance from the Fed that no changes to short-term interest rates were on the horizon.

In the ongoing low-yield environment, income-seeking investors moved into equities, pushing major indices to record levels. However, as stock prices continued to rise, investors became wary of high valuations and began shedding the stocks that had experienced significant price appreciation in 2013, particularly growth and momentum names. The broad rotation into cheaper valuations resulted in the strongest performers of 2013 struggling most in 2014, and vice versa. Especially hard hit were U.S. small cap and European stocks, where earnings growth had not kept pace with market gains. In contrast, emerging markets benefited from the trend after having suffered heavy selling pressure in early 2014.

Volatility ticked up in the middle of the summer. Markets came under pressure in July as geopolitical turmoil intensified in Gaza, Iraq and Ukraine and financial troubles boiled over in Argentina and Portugal. Investors regained some confidence in August, allowing markets to rebound briefly amid renewed comfort that the Fed would continue to keep rates low and hopes that the European Central Bank would increase stimulus. However, markets swiftly reversed in September as improving U.S. economic indicators raised concerns that the Fed would increase short-term interest rates sooner than previously anticipated. Global credit markets tightened as the U.S. dollar strengthened, ultimately putting a strain on investor flows. High valuations combined with impending rate hikes stoked increasing volatility in financial markets. Escalating geopolitical risks further fueled the fire. The U.S. renewed its involvement in Iraq and the European Union imposed additional sanctions against Russia, while Scottish voters contemplated separating from the United Kingdom.

U.S. risk assets made a comeback in October while other developed markets continued their descent. This divergence in market performance moved in tandem with economic momentum and central bank policy. As the U.S. economy continued to strengthen, the need for monetary policy accommodation diminished. Meanwhile, economies in other parts of the developed world decelerated and central banks in Europe and Japan implemented aggressive measures to stimulate growth.

U.S. large cap stocks were the strongest performers for the six- and 12-month periods ended October 31, 2014. U.S. small caps experienced significantly higher volatility than large caps, but nonetheless generated positive returns. International developed market equities broadly declined while emerging markets posted modest gains. Most fixed income assets produced positive results as rates generally fell. Tax-exempt municipal bonds benefited from a favorable supply-and-demand environment. Short-term interest rates remained near zero, keeping yields on money market securities close to historic lows.

At BlackRock, we believe investors need to think globally, extend their scope across a broad array of asset classes and be prepared to move freely as market conditions change over time. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

 

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

 

LOGO

U.S. financial markets generally outperformed other parts of the world given stronger economic growth and corporate earnings, the continuation of low interest rates and the appeal of relative stability amid rising geopolitical uncertainty.

Rob Kapito

President, BlackRock Advisors, LLC

 

Total Returns as of October 31, 2014  
    6-month     12-month  

U.S. large cap equities (S&P 500® Index)

    8.22     17.27

U.S. small cap equities
(Russell 2000® Index)

    4.83        8.06   

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

    (4.83     (0.60

Emerging market equities (MSCI Emerging
Markets Index)

    3.74        0.64   

3-month Treasury bills
(BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)

    0.02        0.05   

U.S. Treasury securities
(BofA Merrill Lynch 10-Year U.S. Treasury Index)

    4.29        5.21   

U.S. investment-grade
bonds (Barclays
U.S. Aggregate Bond Index)

    2.35        4.14   

Tax-exempt municipal
bonds (S&P Municipal
Bond Index)

    3.54        7.94   

U.S. high yield bonds

(Barclays U.S.
Corporate High Yield 2%
Issuer Capped Index)

    1.05        5.82   
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


Trust Summary as of October 31, 2014    BlackRock Credit Allocation Income Trust

 

Trust Overview

BlackRock Credit Allocation Income Trust’s (BTZ) (the “Trust”) investment objective is to provide current income, current gains and capital appreciation. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in credit-related securities, including, but not limited to, investment grade corporate bonds, high yield bonds (commonly referred to as “junk” bonds), bank loans, preferred securities or convertible bonds or derivatives with economic characteristics similar to these credit-related securities. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 12.18% based on market price and 10.11% based on NAV. For the same period, the closed-end Lipper Corporate BBB-Rated Debt Trusts (Leveraged) category posted an average return of 7.60% based on market price and 7.97% based on NAV. All returns reflect reinvestment of dividends and/or distributions. The Trust’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?

 

Ÿ  

The Trust’s favorable view on credit (corporate debt) prompted the Trust to maintain leverage near the high end of the permissible range, which aided performance at a time of positive market performance. A preference for companies generating cash flows sourced from the U.S. market also proved beneficial, as did holding large allocations to the higher-yielding credit sectors such as high yield bonds, subordinated financials and lower-quality investment grade bonds. The Trust’s security selection in the industrials sector, along with its preference for capital trust securities in the financial sector, helped performance within the investment grade space. A yield curve-flattening bias further aided performance in March of 2014, as longer-term rates declined more than short-term rates.

 

Ÿ  

There were no material detractors from the Trust’s performance during the period.

Describe recent portfolio activity.

 

Ÿ  

The Trust’s allocations to investment grade credit, high yield bonds and bank capital securities stayed largely unchanged based on the investment advisor’s continued positive outlook for corporate credit. Within the investment grade space, the Trust continued to favor financials and capital trust securities over industrials given the rising event risk in the industrial sector. The Trust modestly reduced leverage and tactically adjusted its duration positioning during the period. The Trust also looked for opportunities to increase its liquidity and overall credit quality where appropriate.

Describe portfolio positioning at period end.

 

Ÿ  

As of period end, the Trust maintained its allocations to high yield debt and financials, with a preference for capital trust securities, and it retained a bias toward companies with U.S.-sourced cash flows.

 

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.

 

Trust Information     

Symbol on New York Stock Exchange (“NYSE”)

  BTZ

Initial Offering Date

  December 27, 2006

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($13.54)1

  7.13%

Current Monthly Distribution per Common Share2

  $0.0805

Current Annualized Distribution per Common Share2

  $0.9660

Economic Leverage as of October 31, 20143

  31%

 

  1   

Current Distribution Rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

Represents reverse repurchase agreements as a percentage of total managed assets, which is the total assets of the Trust (including any assets attributable to any borrowings) minus the sum of liabilities (other than borrowings representing financial leverage). For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 10.

 

                
4    ANNUAL REPORT    OCTOBER 31, 2014   


     BlackRock Credit Allocation Income Trust

 

 

Market Price and Net Asset Value Per Share Summary

 

           
      10/31/14      10/31/13      Change      High      Low  

Market Price

     $13.54         $12.97         4.39%         $13.83         $12.51   

Net Asset Value

     $15.36         $14.99         2.47%         $15.64         $14.75   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments
Portfolio Composition   10/31/14     10/31/13  

Corporate Bonds

    78     84

Preferred Securities

    16        14   

Asset-Backed Securities

    3        1   

U.S. Treasury Obligations

    1          

Municipal Bonds

    1        1   

Foreign Agency Obligations

    1          
Credit Quality Allocation1   10/31/14     10/31/132  

AAA/Aaa3

    2       

AA/Aa

    2        3

A

    17        17   

BBB/Baa

    45        44   

BB/Ba

    21        21   

B

    9        12   

CCC/Caa

    2        1   

N/R

    2        2   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s (“S&P”) or Moody’s Investors Service (“Moody’s”) if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

Information has been revised to conform to current year presentation.

 

  3   

Includes U.S. Government Sponsored Agency Securities and/or U.S. Treasury Obligations, which were deemed AAA by the investment advisor.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    5


Trust Summary as of October 31, 2014    BlackRock Floating Rate Income Trust

 

Trust Overview

BlackRock Floating Rate Income Trust’s (BGT) (the “Trust”) primary investment objective is to provide a high level of current income. The Trust’s secondary investment objective is to seek the preservation of capital. The Trust seeks to achieve its investment objectives by investing primarily, under normal conditions, at least 80% of its assets in floating and variable rate instruments of U.S. and non-U.S. issuers, including a substantial portion of its assets in global floating and variable rate securities including senior secured floating rate loans made to corporate and other business entities. Under normal market conditions, the Trust expects that the average effective duration of its portfolio will be no more than 1.5 years. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned (0.89)% based on market price and 4.60% based on NAV. For the same period, the closed-end Lipper Loan Participation Funds category posted an average return of (2.08)% based on market price and 4.07% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount 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?

 

Ÿ  

Exposure to floating rate loan interests (i.e. bank loans) rated in the B- and CCC quality range contributed positively to results. On an industry level, positioning in the gaming, retailers and wirelines sectors aided performance. Tactical exposure to fixed rate high yield corporate bonds also helped results given the outperformance of the asset class relative to bank loans during the period.

 

Ÿ  

Conversely, positioning in loan assets within the electric utility and media & entertainment sectors detracted from performance. Exposure to credit default swaps on individual names within the gaming sector also dampened returns.

Describe recent portfolio activity.

 

Ÿ  

Throughout the 12-month period, the Trust maintained its focus on the higher quality segments of the loan market in terms of loan structure, liquidity and overall credit quality. The Trust modestly decreased its exposure to fixed-coupon high yield bonds and modestly increased its exposure to CCC-rated loans during the period. Loan prices declined towards the end of the period, presenting improved risk/reward profiles and more attractive entry points for purchases. The Trust continued to concentrate its investments in strong companies with stable cash flows and backed by high quality assets.

Describe portfolio positioning at period end.

 

Ÿ  

At period end, the Trust held 93% of its total portfolio in floating rate loan interests (bank loans), with the remainder in corporate bonds, common stocks and convertible bonds. The Trust’s highest-conviction holdings included Level 3 Financing, Inc., Reynolds Group Issuer, Inc. and Alliance Boots Holdings Ltd.

 

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.

 

Trust Information

Symbol on NYSE

   BGT

Initial Offering Date

   August 30, 2004

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($13.18)1

   5.95%

Current Monthly Distribution per Common Share2

   $0.0653

Current Annualized Distribution per Common Share2

   $0.7836

Economic Leverage as of October 31, 20143

   30%

 

  1   

Current Distribution Rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

Represents bank borrowings outstanding as a percentage of total managed assets, which is the total assets of the Trust (including any assets attributable to any borrowings) minus the sum of liabilities (other than borrowings representing financial leverage). For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 10.

 

                
6    ANNUAL REPORT    OCTOBER 31, 2014   


     BlackRock Floating Rate Income Trust

 

 

Market Price and Net Asset Value Per Share Summary                              

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 13.18       $ 14.12         (6.66 )%    $ 14.47       $ 13.06   

Net Asset Value

   $ 14.57       $ 14.79         (1.49 )%    $ 14.92       $ 14.29   

 

Market Price and Net Asset Value History For the Past Five Years

 

LOGO

 

Overview of the Trust’s Long-Term Investments

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

Portfolio Composition    10/31/14     10/31/13  

Floating Rate Loan Interests

     93     83

Corporate Bonds

     4        13   

Asset-Backed Securities

     2        3   

Common Stocks

     1        1   

 

Credit Quality Allocation1    10/31/14     10/31/132  

BBB/Baa

     7     7

BB/Ba

     38        36   

B

     43        49   

CCC/Caa

     4        3   

N/R

     8        5   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

Information has been revised to conform to current year presentation.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    7


Trust Summary as of October 31, 2014    BlackRock Multi-Sector Income Trust

 

Trust Overview

BlackRock Multi-Sector Income Trust’s (BIT) (the “Trust”) primary investment objective is to seek high current income, with a secondary objective of capital appreciation. The Trust seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its assets in loan and debt instruments and other investments with similar economic characteristics. The Trust may invest directly in such securities or synthetically through the use of derivatives.

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

 

Portfolio Management Commentary

 

How did the Trust perform?

 

Ÿ  

For the 12-month period ended October 31, 2014, the Trust returned 12.91% based on market price and 13.40% based on NAV. For the same period, the closed-end Lipper General Bond Funds category posted an average return of 8.97% based on market price and 9.49% based on NAV. All returns reflect reinvestment of dividends. The Trust’s discount 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?

 

Ÿ  

The largest contributions to the Trust’s positive performance came from exposure to high yield corporate bonds and asset-backed securities (“ABS”), in particular positions in home equity ABS. The Trust’s holdings in non-agency mortgage-backed securities (“MBS”) and capital securities also contributed to returns. Other positive contributions came from the Trust’s positions in commercial mortgage-backed securities (“CMBS”) and exposure to non-U.S. dollar securities.

 

Ÿ  

The main detractor from the Trust’s performance was its modest use of derivative strategies, in particular interest rate futures.

Describe recent portfolio activity.

 

Ÿ  

To help balance the Trust’s inherent bias towards a longer duration (sensitivity to interest rate movements) and significant concentration in high yield corporate bonds, the allocation to non-agency MBS and CMBS was increased during the second half of the reporting period. This was based on continued improvement in the real estate market and favorable supply/demand dynamics, particularly within the CMBS sector.

 

Ÿ  

The Trust maintained a high level of leverage throughout the period in order to maximize its income generation potential. Given the low yield environment over the period, the Trust’s distribution yield remained stable.

Describe portfolio positioning at period end.

 

Ÿ  

As of period end, the Trust was positioned to benefit from a continuation of a positive market environment for risk assets, with a high exposure to spread sectors such as high yield debt, as well as non-agency MBS and asset-backed securities.

 

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.

 

Trust Information     

Symbol on NYSE

  BIT

Initial Offering Date

  February 27, 2013

Current Distribution Rate on Closing Market Price as of October 31, 2014 ($17.79)1

  7.87%

Current Monthly Distribution per Common Share2

  $0.1167

Current Annualized Distribution per Common Share2

  $1.4004

Economic Leverage as of October 31, 20143

  48%

 

  1   

Current Distribution Rate on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. The current distribution rate consists of income, net realized gains and/or a return of capital. See the financial highlights for the actual sources and character of distributions. Past performance does not guarantee future results.

 

  2   

The distribution rate is not constant and is subject to change. A portion of the distribution may be deemed a return of capital or net realized gain.

 

  3   

Represents reverse repurchase agreements as a percentage of total managed assets, which is the total assets of the Trust (including any assets attributable to any borrowings) minus the sum of liabilities (other than borrowings representing financial leverage). For a discussion of leveraging techniques utilized by the Trust, please see The Benefits and Risks of Leveraging on page 10.

 

                
8    ANNUAL REPORT    OCTOBER 31, 2014   


     BlackRock Multi-Sector Income Trust

 

 

Market Price and Net Asset Value Per Share Summary                              

 

      10/31/14      10/31/13      Change     High      Low  

Market Price

   $ 17.79       $ 17.04         4.40   $ 18.67       $ 16.39   

Net Asset Value

   $ 19.87       $ 18.95         4.85   $ 20.35       $ 18.81   

 

Market Price and Net Asset Value History Since Inception

 

LOGO

 

  1   

Commencement of operations.

 

Overview of the Trust’s Long-Term Investments
Portfolio Composition   10/31/14     10/31/13  

Corporate Bonds

    35     42

Non-Agency Mortgage-Backed Securities

    29        25   

Asset-Backed Securities

    16        18   

Preferred Securities

    14        9   

Floating Rate Loan Interests

    5        5   

Foreign Agency Obligations

    1        1   

 

Credit Quality Allocation1   10/31/14     10/31/132  

AAA/Aaa

           1

AA/Aa

           1   

A

    3     4   

BBB/Baa

    18        18   

BB/Ba

    25        23   

B

    17        20   

CCC/Caa

    21        22   

CC/Ca

    5        2   

D

           2   

N/R

    11        7   

 

  1   

For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P’s or Moody’s if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

 

  2   

Information has been revised to conform to current year presentation.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    9


The Benefits and Risks of Leveraging     

 

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

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which will be based on short-term interest rates, will normally be lower than the income earned by a Trust on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of each Trust (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Trust’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.

To illustrate these concepts, assume a Trust’s capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Trust’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by the Trust with the proceeds from leverage earn income based on longer-term interest rates. In this case, the Trust’s financing cost of leverage is significantly lower than the income earned on the Trust’s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.

However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Trust’s return on assets purchased with leverage proceeds, income to shareholders will be lower than if the Trust had not used leverage. Furthermore, the value of the Trust’s 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 value of the Trust’s obligations under its leverage arrangement generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Trust’s NAVs positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that a Trust’s intended leveraging strategy will be successful.

Leverage also will generally cause greater changes in the Trusts’ NAVs, market prices and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the net asset value and market price of a Trust’s shares than if the Trust were not leveraged. In addition, the Trust may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Trust to incur losses. The use of leverage may limit the Trust’s ability to invest in certain types of securities or use certain types of hedging strategies. The Trust will incur expenses in connection with the use of leverage, all of which are borne by shareholders and may reduce income to the shares.

Each Trust may utilize leverage through a credit facility or reverse repurchase agreements as described in the Notes to Financial Statements.

Under the Investment Company Act of 1940, as amended (the “1940 Act”), each Trust is permitted to issue debt up to 33 1/3% of their total managed assets. A Trust may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act. In addition, a Trust may also be subject to certain asset coverage, leverage or portfolio composition requirements imposed by its credit facility, which may be more stringent than those imposed by the 1940 Act.

If a Trust segregates or designates on its books and records cash or liquid assets having values not less than the value of the Trust’s obligations under the reverse repurchase agreement (including accrued interest), then such transaction will not be considered a senior security and will not be subject to the foregoing limitations and requirements under the 1940 Act.

 

Derivative Financial Instruments     

 

The Trusts may invest in various derivative financial instruments which may constitute forms of economic leverage. Such derivative financial instruments are used to obtain exposure to a security, index and/or market without owning or taking physical custody of securities or to hedge market, equity, credit, interest rate 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 Trusts’ 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 Trust to sell or purchase portfolio investments at inopportune times or for distressed values, may limit the amount of appreciation a Trust can realize on an investment, may result in lower distributions paid to shareholders or may cause a Trust to hold an investment that it might otherwise sell. The Trusts’ investments in these instruments are discussed in detail in the Notes to Financial Statements.

 

                
10    ANNUAL REPORT    OCTOBER 31, 2014   


Schedule of Investments October 31, 2014

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Asset-Backed Securities (a)           Par  
(000)
    Value  

ACAS CLO Ltd., Series 2014-1A, Class C, 3.13%, 7/18/26 (b)

     USD        750      $ 712,343   

Adams Mill CLO Ltd., Series 2014-1A, Class D1, 3.70%, 7/15/26 (b)

       1,250        1,182,875   

ALM XIV Ltd., Series 2014-14A (b):

      

Class B, 3.18%, 7/28/26

       5,000        4,807,082   

Class C, 3.68%, 7/28/26

       5,000        4,596,620   

Apidos CLO XVII, Series 2014-17A, Class B, 3.08%, 4/17/26 (b)

       1,000        961,730   

Apidos CLO XVIII, Series 2014-18A, Class C, 3.88%, 7/22/26 (b)

       1,800        1,687,645   

Atlas Senior Loan Fund V Ltd., Series 2014-1A (b):

      

Class C, 3.25%, 7/16/26

       1,000        956,238   

Class D, 3.70%, 7/16/26

       2,000        1,800,025   

Atlas Senior Loan Fund VI Ltd., Series 2014-6A, Class D, 3.96%, 10/15/26 (b)

       3,000        2,737,938   

Atrium CDO Corp., Series 5A, Class A4, 0.62%, 7/20/20 (b)

       9,000        8,599,601   

Babson CLO Ltd., Series 2014-3A (b)(c):

      

Class C1, 3.23%, 1/15/26

       1,500        1,461,750   

Class D1, 3.73%, 1/15/26

       1,000        941,400   

Battalion CLO VII Ltd., Series 2014-7A, Class C,
4.13%, 10/17/26 (b)(c)

       1,000        943,100   

Benefit Street Partners CLO V Ltd.,
Series 2014-VA, Class D, 3.55%, 10/20/26 (b)

       1,500        1,413,750   

BlueMountain CLO Ltd., Series 2011-1A, Class D, 4.23%, 8/16/22 (b)

       2,000        1,994,817   

CIFC Funding Ltd., Series 2014-3A (b):

      

Class C1, 2.95%, 7/22/26

       1,500        1,425,287   

Class D, 3.55%, 7/22/26

       1,400        1,271,262   

Dryden 34 Senior Loan Fund, Series 2014-34A, Class C, 3.09%, 10/15/26 (b)

       750        722,444   

Galaxy CLO Ltd., Series 2014-18A, Class C1, 3.23%, 10/15/26 (b)

       1,750        1,696,280   

GoldenTree Loan Opportunities IX Ltd.,
Series 2014-9A, Class D,
3.82%, 10/29/26 (b)(c)

       1,000        942,500   

Jamestown CLO Ltd., Series 2014-4A, Class C, 3.73%, 7/15/26 (b)

       3,250        2,999,614   

Limerock CLO III LLC, Series 2014-3A, Class C, 3.83%, 10/20/26 (b)(c)

       1,000        935,625   

Madison Park Funding Ltd. (b):

      

Series 2012-10A, Class D, 4.48%, 1/20/25

       3,000        2,975,959   

Series 2012-8AR, Class CR, 3.03%, 4/22/22

       1,350        1,339,902   

Series 2012-8AR, Class DR, 4.08%, 4/22/22

       1,500        1,472,820   

Series 2014-14A, Class D, 3.83%, 7/20/26

       2,000        1,891,185   

Octagon Investment Partners XX Ltd.,
Series 2014-1A (b):

      

Class C, 3.04%, 8/12/26

       1,000        953,133   

Class D, 3.89%, 8/12/26

       900        838,933   

Octagon Loan Funding Ltd., Series 2014-1A, Class D, 3.85%, 11/18/26 (b)

       1,500        1,397,489   

OZLM VII Ltd., Series 2014-7A, Class C, 3.86%, 7/17/26 (b)

       1,500        1,377,170   

OZLM VIII Ltd., Series 2014-8A (b):

      

Class B, 3.28%, 10/17/26

       900        863,970   

Class C, 3.78%, 10/17/26

       850        775,429   

Regatta IV Funding Ltd., Series 2014-1A (b):

      

Class C, 3.18%, 7/25/26

       1,500        1,442,005   

Class D, 3.77%, 7/25/26

       1,000        913,614   

 

Asset-Backed Securities (a)           Par  
(000)
    Value  

Regatta V Funding Ltd., Series 2014-1A (b)(c):

      

Class B, 3.23%, 10/25/26

     USD        1,000      $ 967,820   

Class C, 3.68%, 10/25/26

       1,000        925,390   

Silver Spring CLO Ltd., Series 2014-1A, Class D, 3.72%, 10/15/26 (b)

       750        677,334   

SLM Student Loan Trust, Series 2004-B, Class A2, 0.43%, 6/15/21

       2,973        2,957,725   

Symphony CLO XV Ltd., Series 2014-15A (b)(c):

      

Class C, 3.43%, 10/17/26

       1,500        1,456,800   

Class D, 3.98%, 10/17/26

       1,000        941,300   

Venture CLO Ltd. (b):

      

Series 2013-13A, Class D, 3.78%, 6/10/25

       800        734,539   

Series 2014-18A, Class C, 3.39%, 10/15/26

       800        771,429   

Voya CLO Ltd., Series 2014-3A, Class C, 3.83%, 7/25/26 (b)

       1,250        1,166,949   

WhiteHorse IX Ltd., Series 2014-9A, Class C, 2.92%, 7/17/26 (b)

             1,500        1,406,728   
Total Asset-Backed Securities — 4.4%                      73,037,549   
      
                          
Corporate Bonds                      

Aerospace & Defense — 0.7%

      

B/E Aerospace, Inc., 5.25%, 4/01/22

       1,306        1,452,925   

Huntington Ingalls Industries, Inc.:

      

6.88%, 3/15/18

       1,430        1,494,350   

7.13%, 3/15/21

       2,000        2,150,000   

LSB Industries, Inc., 7.75%, 8/01/19

       315        336,168   

TransDigm, Inc.:

      

6.00%, 7/15/22

       4,585        4,636,581   

6.50%, 7/15/24

       2,140        2,204,200   
      

 

 

 
                       12,274,224   

Air Freight & Logistics — 0.1%

      

XPO Logistics, Inc., 7.88%, 9/01/19 (b)

             1,115        1,167,963   

Airlines — 0.9%

      

Continental Airlines Pass-Through Trust:

      

Series 2009-2, Class B, 9.25%, 11/10/18

       2,755        3,113,017   

Series 2012-3, Class C, 6.13%, 4/29/18

       2,040        2,152,200   

Delta Air Lines Pass-Through Trust, Series 2002-1, Class G-1, 6.72%, 7/02/24

       3,357        3,877,502   

United Airlines Pass-Through Trust, Series 2014-1, Class B, 4.75%, 10/11/23

       4,200        4,184,250   

Virgin Australia Trust, Series 2013-1, Class B, 6.00%, 4/23/22 (b)

       1,694        1,753,488   
      

 

 

 
                       15,080,457   

Auto Components — 1.4%

      

Delphi Corp., 6.13%, 5/15/21

       870        946,125   

Icahn Enterprises LP/Icahn Enterprises Finance Corp.:

      

3.50%, 3/15/17

       265        263,675   

4.88%, 3/15/19

       3,950        4,019,125   

6.00%, 8/01/20

       3,108        3,263,400   

5.88%, 2/01/22

       3,816        3,920,940   

Schaeffler Finance BV, 4.75%, 5/15/21 (b)

       2,470        2,463,825   

Schaeffler Holding Finance BV (b)(d):

      

6.25%, (6.25% Cash) 11/15/19

       1,112        1,150,920   

6.75%, (6.75% Cash) 11/15/22

       2,417        2,568,063   

 

Portfolio Abbreviations

 

ADS    American Depositary Shares      COP    Certificates of Participation    OTC    Over-the-Counter
ARB    Airport Revenue Bonds      DIP    Debtor-In-Possession    PIK    Payment-In-Kind
ARC    Auction Rate Certificates      EUR    Euro    RB    Revenue Bonds
BRL    Brazilian Real      GBP    British Pound    REMIC    Real Estate Mortgage Investment Conduit
BROIS    Brazilian Overnight Indexed Swap      LIBOR    London Interbank Offered Rate    USD    U.S. Dollar
CAD    Canadian Dollar      MXIBOR    Mexican Interbank Offered Rate    ZAR    South African Rand
CLO    Collateralized Loan Obligation      MXN    Mexican Peso      

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    11


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Auto Components (concluded)

      

TRW Automotive, Inc. (b):

      

4.50%, 3/01/21

     USD        2,400      $ 2,412,000   

4.45%, 12/01/23

       2,600        2,600,000   
      

 

 

 
                       23,608,073   

Automobiles — 0.6%

      

Chrysler Group LLC/CG Co-Issuer, Inc., 8.25%, 6/15/21

       2,272        2,538,960   

Ford Motor Co., 7.45%, 7/16/31

       3,660        4,901,907   

General Motors Co.:

      

4.88%, 10/02/23

       1,875        2,008,594   

6.25%, 10/02/43

       940        1,118,600   
      

 

 

 
                       10,568,061   

Banks — 5.4%

      

Associated Banc-Corp, 5.13%, 3/28/16 (e)

       7,430        7,825,521   

CIT Group, Inc.:

      

4.25%, 8/15/17

       4,600        4,726,500   

5.25%, 3/15/18

       4,030        4,251,650   

6.63%, 4/01/18 (b)

       335        366,825   

5.50%, 2/15/19 (b)

       5,147        5,491,206   

City National Corp., 5.25%, 9/15/20 (e)

       2,900        3,230,295   

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.95%, 11/09/22 (e)

       3,775        3,837,299   

Credit Suisse AG, 6.50%, 8/08/23 (b)

       12,000        13,230,000   

Credit Suisse Group AG, 7.50% (a)(b)(f)

       3,250        3,454,100   

Discover Bank, 8.70%, 11/18/19

       748        928,940   

Fifth Third Bancorp, 5.10% (a)(f)

       5,000        4,725,000   

HSBC Finance Corp., 6.68%, 1/15/21 (e)

       5,150        6,069,187   

Regions Financial Corp., 5.75%, 6/15/15

       6,110        6,284,251   

Royal Bank of Scotland Group PLC, 6.00%, 12/19/23

       10,080        10,848,802   

Santander Holdings USA, Inc., 3.00%, 9/24/15

       3,750        3,813,304   

Wells Fargo & Co. (e):

      

3.45%, 2/13/23

       2,325        2,321,608   

4.13%, 8/15/23

       4,000        4,172,008   

5.61%, 1/15/44

       4,119        4,718,595   
      

 

 

 
                       90,295,091   

Building Products — 0.3%

      

Building Materials Corp. of America (b):

      

6.75%, 5/01/21

       2,700        2,895,750   

5.38%, 11/15/24 (c)

       1,965        1,969,913   
      

 

 

 
                       4,865,663   

Cable Television Services — 0.1%

  

SBA Communications Corp., 4.88%, 7/15/22 (b)

             1,445        1,423,144   

Capital Markets — 2.9%

      

The Goldman Sachs Group, Inc. (e):

      

6.25%, 9/01/17

       625        700,564   

7.50%, 2/15/19

       5,165        6,167,191   

5.25%, 7/27/21

       1,175        1,309,922   

5.75%, 1/24/22

       5,500        6,336,176   

6.25%, 2/01/41

       15,000        18,587,355   

Morgan Stanley (e):

      

5.63%, 9/23/19

       6,770        7,668,880   

5.50%, 7/28/21

       2,695        3,072,780   

UBS AG, 5.88%, 7/15/16 (e)

       3,450        3,721,163   
      

 

 

 
                       47,564,031   

Chemicals — 1.9%

      

Ashland, Inc., 3.88%, 4/15/18

       1,745        1,773,356   

Axalta Coating Systems US Holdings, Inc./Axalta Coating Systems Dutch Holding BV, 7.38%, 5/01/21 (b)

       617        667,903   

Axiall Corp., 4.88%, 5/15/23

       367        355,990   

Basell Finance Co. BV, 8.10%, 3/15/27 (b)

       6,000        8,044,020   

 

Corporate Bonds           Par  
(000)
    Value  

Chemicals (concluded)

      

Celanese US Holdings LLC, 5.88%, 6/15/21

     USD        2,615      $ 2,837,275   

CF Industries, Inc., 5.38%, 3/15/44

       2,500        2,659,200   

Chemtura Corp., 5.75%, 7/15/21

       632        630,420   

Eagle Spinco, Inc., 4.63%, 2/15/21

       2,370        2,298,900   

Huntsman International LLC:

      

4.88%, 11/15/20

       775        780,812   

8.63%, 3/15/21

       2,000        2,180,000   

5.13%, 11/15/22 (b)(c)

       2,495        2,510,594   

Ineos Finance PLC, 8.38%, 2/15/19 (b)

       255        273,488   

NOVA Chemicals Corp. (b):

      

5.25%, 8/01/23

       2,277        2,379,465   

5.00%, 5/01/25

       905        934,412   

Rockwood Specialties Group, Inc., 4.63%, 10/15/20

       3,275        3,419,100   
      

 

 

 
                       31,744,935   

Commercial Services & Supplies — 3.0%

  

ADS Waste Holdings, Inc., 8.25%, 10/01/20

       1,003        1,050,642   

Aviation Capital Group Corp. (b):

      

7.13%, 10/15/20 (e)

       31,000        35,632,578   

6.75%, 4/06/21

       7,850        8,949,000   

Brand Energy & Infrastructure Services, Inc., 8.50%, 12/01/21 (b)

       591        588,784   

Covanta Holding Corp., 6.38%, 10/01/22

       2,245        2,390,925   

Mobile Mini, Inc., 7.88%, 12/01/20

       930        1,002,075   
      

 

 

 
                       49,614,004   

Communications Equipment — 0.8%

  

Brocade Communications Systems, Inc., 6.88%, 1/15/20

       8,695        9,021,062   

CommScope, Inc. (b):

      

5.00%, 6/15/21

       527        525,683   

5.50%, 6/15/24

       564        570,345   

Zayo Group LLC/Zayo Capital, Inc., 8.13%, 1/01/20

       2,400        2,562,000   
      

 

 

 
                       12,679,090   

Construction & Engineering — 0.3%

  

AECOM Technology Corp. (b):

      

5.75%, 10/15/22

       473        497,833   

5.88%, 10/15/24

       2,311        2,443,882   

BlueLine Rental Finance Corp.,
7.00%, 2/01/19 (b)

       413        434,683   

Safway Group Holding LLC/Safway Finance Corp., 7.00%, 5/15/18 (b)

       673        694,872   

Weekley Homes LLC/Weekley Finance Corp., 6.00%, 2/01/23

       825        808,500   
      

 

 

 
                       4,879,770   

Construction Materials — 1.1%

  

Allegion US Holding Co., Inc., 5.75%, 10/01/21

       1,907        1,997,583   

HD Supply, Inc.:

      

8.13%, 4/15/19

       7,300        7,884,000   

11.00%, 4/15/20

       2,740        3,144,150   

7.50%, 7/15/20

       2,905        3,093,825   

Vulcan Materials Co., 7.00%, 6/15/18

       1,380        1,535,250   
      

 

 

 
                       17,654,808   

Consumer Finance — 3.4%

  

Ally Financial, Inc.:

      

8.30%, 2/12/15

       5,290        5,375,963   

8.00%, 11/01/31

       6,078        7,734,771   

Capital One Bank USA NA, 3.38%, 2/15/23 (e)

       11,610        11,497,894   

Countrywide Financial Corp., 6.25%, 5/15/16 (e)

       8,069        8,667,994   

Discover Financial Services, 3.85%, 11/21/22

       3,252        3,290,165   

Experian Finance PLC, 2.38%, 6/15/17 (b)(e)

       2,550        2,593,531   

 

See Notes to Financial Statements.

 

                
12    ANNUAL REPORT    OCTOBER 31, 2014   


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Consumer Finance (concluded)

  

Navient Corp.:

      

3.88%, 9/10/15

     USD        5,000      $ 5,050,000   

6.25%, 1/25/16

       11,620        12,084,800   
      

 

 

 
                       56,295,118   

Containers & Packaging — 1.2%

  

Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc., 6.25%, 1/31/19 (b)

       906        912,795   

Ball Corp., 6.75%, 9/15/20

       7,360        7,709,600   

Beverage Packaging Holdings Luxembourg II SA, 5.63%, 12/15/16 (b)

       3,944        3,953,860   

Crown Americas LLC/Crown Americas Capital Corp. III, 6.25%, 2/01/21

       3,128        3,292,220   

Pactiv LLC, 7.95%, 12/15/25

       163        170,742   

Sealed Air Corp. (b):

      

6.50%, 12/01/20

       2,330        2,563,000   

8.38%, 9/15/21

       700        792,750   
      

 

 

 
                       19,394,967   

Diversified Consumer Services — 0.3%

  

Service Corp. International, 4.50%, 11/15/20

             4,382        4,294,360   

Diversified Financial Services — 10.1%

      

Aircastle Ltd., 6.25%, 12/01/19

       3,937        4,192,905   

Bank of America Corp. (e):

      

3.75%, 7/12/16

       5,525        5,767,415   

5.00%, 5/13/21

       17,100        18,930,743   

5.70%, 1/24/22

       2,590        2,981,794   

4.00%, 4/01/24

       6,975        7,207,058   

Bank of America NA, 5.30%, 3/15/17 (e)

       13,440        14,573,274   

Barclays PLC, 4.38%, 9/11/24

       2,100        2,037,105   

Citigroup, Inc. (e):

      

4.45%, 1/10/17

       4,800        5,109,672   

8.50%, 5/22/19

       464        582,190   

6.68%, 9/13/43

       4,125        5,245,156   

Ford Motor Credit Co. LLC:

      

8.00%, 12/15/16

       4,000        4,533,240   

5.88%, 8/02/21

       9,420        10,887,269   

General Motors Financial Co., Inc.:

      

6.75%, 6/01/18

       1,700        1,931,625   

4.38%, 9/25/21

       2,260        2,367,576   

4.25%, 5/15/23

       1,681        1,731,430   

ING Bank NV, 5.00%, 6/09/21 (b)(e)

       8,000        9,028,232   

Intesa Sanpaolo SpA, 3.13%, 1/15/16

       5,450        5,564,483   

Jefferies Finance LLC/JFIN Co-Issuer Corp., 7.38%, 4/01/20 (b)

       2,105        2,094,475   

Jefferies Group LLC, 5.13%, 1/20/23

       1,850        1,960,419   

LeasePlan Corp. NV, 3.00%, 10/23/17 (b)(e)

       6,775        6,974,083   

Leucadia National Corp., 5.50%, 10/18/23

       4,000        4,189,888   

Lloyds Banking Group PLC, 4.50%, 11/04/24 (c)

       6,875        6,880,521   

Moody’s Corp., 6.06%, 9/07/17

       20,000        20,965,760   

Resparcs Funding LP I, 8.00% (f)(g)(h)

       4,000        1,520,000   

Reynolds Group Issuer, Inc.:

      

9.00%, 4/15/19

       370        386,650   

7.88%, 8/15/19

       2,480        2,656,700   

9.88%, 8/15/19

       493        535,521   

5.75%, 10/15/20

       4,620        4,804,800   

6.88%, 2/15/21

       105        111,563   

8.25%, 2/15/21

       1,836        1,973,700   

Royal Bank of Scotland Group PLC:

      

6.13%, 12/15/22

       425        460,070   

6.10%, 6/10/23

       2,500        2,702,840   

5.13%, 5/28/24

       5,250        5,319,174   
      

 

 

 
                       166,207,331   

 

Corporate Bonds           Par  
(000)
    Value  

Diversified Telecommunication Services — 5.5%

  

AT&T, Inc.:

      

6.30%, 1/15/38 (e)

     USD        12,000      $ 14,500,044   

4.30%, 12/15/42

       265        247,158   

4.35%, 6/15/45

       367        342,557   

CenturyLink, Inc.:

      

5.63%, 4/01/20

       1,375        1,457,500   

6.45%, 6/15/21

       285        312,075   

Frontier Communications Corp.:

      

6.25%, 9/15/21

       980        1,012,463   

7.63%, 4/15/24

       2,400        2,580,000   

Level 3 Financing, Inc.:

      

8.13%, 7/01/19

       11,171        11,952,970   

8.63%, 7/15/20

       2,240        2,464,000   

Telefonica Emisiones SAU, 3.19%, 4/27/18

       6,550        6,798,664   

Verizon Communications, Inc. (e):

      

5.15%, 9/15/23

       8,775        9,827,017   

6.40%, 9/15/33

       9,475        11,541,157   

7.35%, 4/01/39

       7,825        10,549,642   

6.55%, 9/15/43

       13,225        16,671,514   

Windstream Corp.:

      

7.75%, 10/15/20

       430        457,950   

6.38%, 8/01/23

       80        80,600   
      

 

 

 
                       90,795,311   

Electric Utilities — 3.8%

      

CMS Energy Corp., 5.05%, 3/15/22

       9,900        11,092,386   

Duke Energy Corp., 3.55%, 9/15/21 (e)

       3,650        3,799,077   

Great Plains Energy, Inc., 5.29%, 6/15/22 (i)

       5,550        6,377,144   

Midland Cogeneration Venture LP, 5.25%, 3/15/25 (b)

       4,935        5,089,742   

Mirant Mid-Atlantic Pass-Through Trust:

      

Series B, 9.13%, 6/30/17

       1,039        1,117,000   

Series C, 10.06%, 12/30/28

       1,568        1,724,404   

NiSource Finance Corp., 6.80%, 1/15/19

       3,075        3,634,788   

Oncor Electric Delivery Co. LLC (e):

      

4.10%, 6/01/22

       4,150        4,462,943   

5.30%, 6/01/42

       2,750        3,291,689   

Progress Energy, Inc., 7.00%, 10/30/31 (e)

       12,000        16,085,436   

Puget Energy, Inc.:

      

6.00%, 9/01/21

       275        319,301   

5.63%, 7/15/22

       5,550        6,408,047   
      

 

 

 
                       63,401,957   

Electrical Equipment — 0.1%

      

GrafTech International Ltd., 6.38%, 11/15/20

             2,385        2,224,251   

Electronic Equipment, Instruments & Components — 0.4%

  

Jabil Circuit, Inc., 8.25%, 3/15/18

       2,600        3,009,500   

Nielsen Finance LLC/Nielsen Finance Co., 5.00%, 4/15/22 (b)

       475        482,125   

Sanmina Corp., 4.38%, 6/01/19 (b)

       1,415        1,416,769   

WireCo WorldGroup, Inc., 9.50%, 5/15/17

       1,605        1,637,100   
      

 

 

 
                       6,545,494   

Energy Equipment & Services — 1.5%

      

Atwood Oceanics, Inc., 6.50%, 2/01/20

       375        376,875   

Energy Transfer Partners LP, 5.20%, 2/01/22

       10,200        11,160,881   

Ensco PLC, 4.50%, 10/01/24

       2,930        2,967,319   

Genesis Energy LP/Genesis Energy Finance Corp., 5.75%, 2/15/21

       293        294,465   

Transocean, Inc.:

      

2.50%, 10/15/17

       1,300        1,284,386   

6.50%, 11/15/20

       3,795        3,903,480   

6.38%, 12/15/21

       4,655        4,891,739   

6.80%, 3/15/38

       720        674,460   
      

 

 

 
                       25,553,605   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    13


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Food & Staples Retailing — 0.7%

      

HJ Heinz Finance Co., 7.13%, 8/01/39 (b)

     USD        4,415      $ 4,889,612   

Rite Aid Corp., 6.75%, 6/15/21

       1,170        1,248,975   

Wal-Mart Stores, Inc., 5.25%, 9/01/35 (e)

       5,150        6,085,508   
      

 

 

 
                       12,224,095   

Food Products — 1.6%

      

Barry Callebaut Services NV, 5.50%, 6/15/23 (b)

       2,600        2,730,260   

Kellogg Co., Series B, 7.45%, 4/01/31 (e)

       5,000        6,552,850   

Kraft Foods Group, Inc., 5.00%, 6/04/42

       5,000        5,334,610   

Mondelez International, Inc.:

      

6.50%, 8/11/17

       4,450        5,020,428   

6.13%, 8/23/18

       4,840        5,587,068   

Smithfield Foods, Inc., 5.88%, 8/01/21 (b)

       715        757,900   
      

 

 

 
                       25,983,116   

Gas Utilities — 0.2%

      

Targa Resources Partners LP/Targa Resources Partners Finance Corp.:

      

7.88%, 10/15/18

       2,355        2,455,088   

6.88%, 2/01/21

       1,265        1,359,875   
      

 

 

 
                       3,814,963   

Health Care Equipment & Supplies — 0.1%

      

Teleflex, Inc., 6.88%, 6/01/19

             1,660        1,780,350   

Health Care Providers & Services — 3.8%

      

Acadia Healthcare Co., Inc., 5.13%, 7/01/22

       435        431,738   

Amsurg Corp., 5.63%, 7/15/22 (b)

       1,856        1,923,048   

Aviv Healthcare Properties LP/Aviv Healthcare Capital Corp., 7.75%, 2/15/19

       1,550        1,627,500   

CHS/Community Health Systems, Inc.:

      

5.13%, 8/15/18

       1,620        1,684,800   

6.88%, 2/01/22

       1,111        1,197,102   

DaVita HealthCare Partners, Inc., 5.13%, 7/15/24

       1,990        2,029,800   

HCA Holdings, Inc., 7.75%, 5/15/21

       4,549        4,901,547   

HCA, Inc.:

      

3.75%, 3/15/19

       4,364        4,374,910   

6.50%, 2/15/20

       10,421        11,632,441   

5.88%, 3/15/22

       340        373,150   

4.75%, 5/01/23

       676        686,985   

Tenet Healthcare Corp.:

      

6.25%, 11/01/18

       736        799,480   

4.75%, 6/01/20

       1,450        1,482,625   

6.00%, 10/01/20

       3,645        3,918,375   

4.50%, 4/01/21

       73        73,183   

4.38%, 10/01/21

       7,335        7,289,156   

8.13%, 4/01/22

       4,907        5,624,649   

UnitedHealth Group, Inc., 6.88%, 2/15/38 (e)

       10,000        13,707,510   
      

 

 

 
                       63,757,999   

Health Care Technology — 0.4%

      

Amgen, Inc., 5.15%, 11/15/41 (e)

             6,500        6,971,198   

Hotels, Restaurants & Leisure — 0.6%

      

Caesars Entertainment Operating Co., Inc., 9.00%, 2/15/20

       5,243        3,939,375   

CDW LLC/CDW Finance Corp., 6.00%, 8/15/22

       1,380        1,455,900   

New Red Finance, Inc., 6.00%, 4/01/22 (b)

       2,215        2,245,456   

Six Flags Entertainment Corp.,
5.25%, 1/15/21 (b)

       1,718        1,726,590   
      

 

 

 
                       9,367,321   

Household Durables — 1.3%

      

Beazer Homes USA, Inc., 6.63%, 4/15/18

       2,330        2,429,025   

Brookfield Residential Properties, Inc./Brookfield Residential US Corp., 6.13%, 7/01/22 (b)

       1,647        1,749,938   

K. Hovnanian Enterprises, Inc., 7.25%, 10/15/20 (b)

       3,675        3,867,937   
Corporate Bonds           Par  
(000)
    Value  

Household Durables (concluded)

      

KB Home, 7.25%, 6/15/18

     USD        1,990      $ 2,154,175   

Standard Pacific Corp., 8.38%, 1/15/21

       3,015        3,520,012   

Taylor Morrison Communities, Inc./Monarch Communities, Inc., 5.25%, 4/15/21 (b)

       1,537        1,547,959   

United Rentals North America, Inc.:

      

7.38%, 5/15/20

       2,025        2,197,125   

7.63%, 4/15/22

       1,853        2,066,095   

Tri Pointe Holdings, Inc. (b):

      

4.38%, 6/15/19

       920        915,400   

5.88%, 6/15/24

       625        637,500   
      

 

 

 
                       21,085,166   

Household Products — 0.1%

      

Spectrum Brands, Inc.:

      

6.38%, 11/15/20

       810        858,600   

6.63%, 11/15/22

       1,110        1,190,475   
      

 

 

 
                       2,049,075   

Independent Power and Renewable Electricity Producers — 0.7%

  

Baytex Energy Corp. (b):

      

5.13%, 6/01/21

       435        424,125   

5.63%, 6/01/24

       155        149,575   

Calpine Corp.:

      

6.00%, 1/15/22 (b)

       878        946,045   

5.38%, 1/15/23

       2,333        2,356,330   

5.88%, 1/15/24 (b)

       823        884,725   

5.75%, 1/15/25

       1,770        1,792,125   

Dynegy Finance I, Inc./Dynegy Finance II, Inc., 6.75%, 11/01/19 (b)

       2,195        2,271,825   

NRG REMA LLC, 9.68%, 7/02/26

       1,130        1,220,400   

QEP Resources, Inc., 5.38%, 10/01/22

       1,927        1,898,095   
      

 

 

 
                       11,943,245   

Insurance — 5.8%

      

A-S Co-Issuer Subsidiary, Inc./A-S Merger Sub LLC, 7.88%, 12/15/20 (b)

       1,204        1,240,120   

American International Group, Inc., 6.40%, 12/15/20 (e)

       8,710        10,401,046   

Aon Corp., 5.00%, 9/30/20 (e)

       7,700        8,638,468   

Aon PLC, 4.25%, 12/12/42 (e)

       6,500        6,036,069   

Forethought Financial Group, Inc., 8.63%, 4/15/21 (b)

       3,400        3,874,946   

Genworth Holdings, Inc., 7.63%, 9/24/21

       2,880        3,510,467   

Manulife Financial Corp., 4.90%, 9/17/20 (e)

       10,425        11,454,312   

MPL 2 Acquisition Canco, Inc.,
9.88%, 8/15/18 (b)

       1,455        1,560,488   

The Northwestern Mutual Life Insurance Co., 6.06%, 3/30/40 (b)(e)

       12,000        14,904,924   

Principal Financial Group, Inc., 8.88%, 5/15/19 (e)

       2,825        3,584,668   

Prudential Financial, Inc., 6.63%, 12/01/37 (e)

       10,000        12,842,540   

XLIT Ltd., 5.75%, 10/01/21 (e)

       10,085        11,589,884   

ZFS Finance USA Trust II, 6.45%, 12/15/65 (a)(b)(e)

       6,800        7,242,000   
      

 

 

 
                       96,879,932   

IT Services — 1.4%

  

Ceridian LLC, 8.88%, 7/15/19 (b)

       12,085        13,353,925   

Ceridian LLC/Comdata, Inc.,
8.13%, 11/15/17 (b)

       1,455        1,455,000   

Epicor Software Corp., 8.63%, 5/01/19

       2,400        2,553,000   

First Data Corp. (b):

      

7.38%, 6/15/19

       2,905        3,079,300   

6.75%, 11/01/20

       1,768        1,891,760   

8.25%, 1/15/21

       250        271,250   
      

 

 

 
                       22,604,235   

 

See Notes to Financial Statements.

 

                
14    ANNUAL REPORT    OCTOBER 31, 2014   


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Life Sciences Tools & Services — 0.8%

  

Life Technologies Corp., 6.00%, 3/01/20 (e)

     USD        12,000      $ 13,854,768   

Media — 6.4%

  

21st Century Fox America, Inc., 6.15%, 3/01/37 (e)

       9,575        11,691,898   

A&E Television Networks LLC, 3.11%, 8/22/19

       5,000        5,022,500   

AMC Networks, Inc.:

      

7.75%, 7/15/21

       1,330        1,449,700   

4.75%, 12/15/22

       685        679,862   

CBS Outdoor Americas Capital LLC/CBS Outdoor Americas Capital Corp. (b):

      

5.25%, 2/15/22

       249        257,093   

5.63%, 2/15/24

       122        127,185   

CCOH Safari LLC (c):

      

5.50%, 12/01/22

       2,093        2,113,930   

5.75%, 12/01/24

       3,075        3,092,297   

Cinemark USA, Inc., 5.13%, 12/15/22

       349        349,000   

Clear Channel Worldwide Holdings, Inc., 6.50%, 11/15/22

       10,205        10,548,385   

COX Communications, Inc.,
8.38%, 3/01/39 (b)(e)

       5,000        7,149,145   

CSC Holdings LLC, 8.63%, 2/15/19

       4,005        4,700,869   

DIRECTV Holdings LLC/DIRECTV Financing Co., Inc., 5.00%, 3/01/21 (e)

       8,575        9,441,478   

Gray Television, Inc., 7.50%, 10/01/20

       713        745,976   

Grupo Televisa SAB, 5.00%, 5/13/45

       3,345        3,328,944   

Intelsat Jackson Holdings SA:

      

7.25%, 4/01/19

       710        745,500   

5.50%, 8/01/23

       2,909        2,916,272   

The Interpublic Group of Cos., Inc., 3.75%, 2/15/23

       6,025        6,001,430   

Level 3 Escrow II, Inc., 5.38%, 8/15/22 (b)

       2,250        2,289,375   

Live Nation Entertainment, Inc., 7.00%, 9/01/20 (b)

       463        491,938   

NAI Entertainment Holdings/NAI Entertainment Holdings Finance Corp., 5.00%, 8/01/18 (b)

       1,471        1,507,775   

Numericable Group SA, 6.00%, 5/15/22 (b)

       9,000        9,202,500   

Sinclair Television Group, Inc.,
5.63%, 8/01/24 (b)

       657        648,788   

Sirius XM Radio, Inc., 4.25%, 5/15/20 (b)

       2,300        2,287,062   

Time Warner Cable, Inc., 6.55%, 5/01/37

       3,519        4,428,000   

Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH (b):

      

7.50%, 3/15/19

       3,530        3,715,325   

5.50%, 1/15/23

       1,000        1,042,500   

Univision Communications, Inc.,
5.13%, 5/15/23 (b)

       4,793        5,056,615   

Virgin Media Secured Finance PLC, 5.38%, 4/15/21 (b)

       1,394        1,446,275   

VTR Finance BV, 6.88%, 1/15/24 (b)

       4,020        4,221,000   
      

 

 

 
                       106,698,617   

Metals & Mining — 2.9%

  

Alcoa, Inc., 5.13%, 10/01/24

       2,451        2,587,562   

AngloGold Ashanti Holdings PLC, 5.13%, 8/01/22

       5,000        4,737,770   

ArcelorMittal, 6.13%, 6/01/18

       2,575        2,755,250   

Commercial Metals Co., 4.88%, 5/15/23

       2,194        2,139,150   

Constellium NV:

      

4.63%, 5/15/21

     EUR        490        607,903   

5.75%, 5/15/24 (b)

     USD        1,178        1,166,220   

Freeport-McMoRan Corp., 7.13%, 11/01/27

       8,500        10,084,596   

Freeport-McMoRan, Inc. (e):

      

3.55%, 3/01/22

       4,700        4,593,005   

3.88%, 3/15/23

       8,900        8,796,386   

Novelis, Inc., 8.75%, 12/15/20

       3,285        3,584,756   

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

       1,020        971,550   
Corporate Bonds           Par  
(000)
    Value  

Metals & Mining (concluded)

  

Steel Dynamics, Inc.:

      

5.13%, 10/01/21 (b)

     USD        1,105      $ 1,143,675   

6.38%, 8/15/22

       1,430        1,555,125   

5.25%, 4/15/23

       163        171,150   

Wise Metals Group LLC/Wise Alloys Finance Corp.,
8.75%, 12/15/18 (b)

       2,785        3,007,800   
      

 

 

 
                       47,901,898   

Multi-Utilities — 1.9%

      

CenterPoint Energy, Inc.:

      

5.95%, 2/01/17 (e)

       9,000        9,923,796   

6.50%, 5/01/18

       9,675        11,132,084   

Dominion Resources, Inc., 8.88%, 1/15/19 (e)

       8,000        10,075,328   
      

 

 

 
                       31,131,208   

Multiline Retail — 0.4%

      

Dollar General Corp., 3.25%, 4/15/23

       2,500        2,244,825   

Dufry Finance SCA, 5.50%, 10/15/20 (b)

       3,460        3,529,546   
      

 

 

 
                       5,774,371   

Offshore Drilling & Other Services — 0.0%

      

Sensata Technologies BV, 5.63%, 11/01/24 (b)

             695        733,659   

Oil, Gas & Consumable Fuels — 17.0%

      

Access Midstream Partners LP/ACMP Finance Corp.:

      

5.88%, 4/15/21

       2,657        2,809,777   

6.13%, 7/15/22

       1,668        1,813,950   

4.88%, 5/15/23

       343        358,435   

Anadarko Petroleum Corp., 6.38%, 9/15/17

       75        84,674   

Antero Resources Finance Corp.,
5.38%, 11/01/21

       649        658,735   

Athlon Holdings LP/Athlon Finance Corp.,
7.38%, 4/15/21

       656        718,320   

Berry Petroleum Co., 6.38%, 9/15/22

       3,207        2,982,510   

Bonanza Creek Energy, Inc.:

      

6.75%, 4/15/21

       1,145        1,147,863   

5.75%, 2/01/23

       1,555        1,485,025   

California Resources Corp., 6.00%, 11/15/24 (b)

       2,345        2,391,900   

Chesapeake Energy Corp.:

      

6.63%, 8/15/20

       3,171        3,575,302   

6.88%, 11/15/20

       493        563,253   

6.13%, 2/15/21

       1,857        2,061,270   

5.75%, 3/15/23

       1,974        2,161,530   

Cimarex Energy Co., 4.38%, 6/01/24

       527        535,564   

Concho Resources, Inc.:

      

5.50%, 10/01/22

       226        238,430   

5.50%, 4/01/23

       1,995        2,109,712   

CONSOL Energy, Inc., 5.88%, 4/15/22 (b)

       6,131        6,222,965   

Continental Resources, Inc.:

      

5.00%, 9/15/22

       11,232        11,905,920   

4.50%, 4/15/23

       469        491,270   

DCP Midstream LLC, 4.75%, 9/30/21 (b)

       1,074        1,156,537   

DCP Midstream Operating LP, 3.88%, 3/15/23

       2,690        2,692,776   

Denbury Resources, Inc.:

      

5.50%, 5/01/22

       845        832,325   

4.63%, 7/15/23

       1,727        1,595,316   

El Paso LLC:

      

7.80%, 8/01/31

       197        242,310   

7.75%, 1/15/32

       4,586        5,732,500   

El Paso Natural Gas Co. LLC, 8.63%, 1/15/22

       2,345        3,011,953   

El Paso Pipeline Partners Operating Co. LLC,
6.50%, 4/01/20

       5,075        5,805,658   

Enbridge Energy Partners LP, 9.88%, 3/01/19

       6,000        7,762,188   

Energy Transfer Equity LP, 5.88%, 1/15/24

       3,913        4,108,650   

Energy XXI Gulf Coast, Inc.:

      

7.75%, 6/15/19

       616        554,400   

6.88%, 3/15/24 (b)

       449        354,710   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    15


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Oil, Gas & Consumable Fuels (continued)

      

Enterprise Products Operating LLC,
Series N, 6.50%, 1/31/19 (e)

     USD        12,000      $ 14,044,596   

EP Energy LLC/Everest Acquisition Finance, Inc.,
Series WI, 6.88%, 5/01/19

       2,693        2,800,720   

Hilcorp Energy I LP/Hilcorp Finance Co.,
5.00%, 12/01/24 (b)

       5,105        4,900,800   

Kinder Morgan Energy Partners LP:

      

6.85%, 2/15/20 (e)

       12,000        14,124,384   

4.25%, 9/01/24

       2,170        2,160,459   

5.40%, 9/01/44

       3,615        3,541,109   

Kinder Morgan, Inc. (b):

      

5.00%, 2/15/21

       496        523,280   

5.63%, 11/15/23

       504        554,400   

Kodiak Oil & Gas Corp., 5.50%, 2/01/22

       540        550,800   

Laredo Petroleum, Inc., 7.38%, 5/01/22

       231        240,240   

Linn Energy LLC/Linn Energy Finance Corp.:

      

6.25%, 11/01/19

       1,047        963,240   

8.63%, 4/15/20

       1,797        1,801,493   

7.75%, 2/01/21

       475        465,500   

Marathon Petroleum Corp., 3.50%, 3/01/16

       4,600        4,747,844   

MarkWest Energy Partners LP/MarkWest Energy Finance Corp., 6.25%, 6/15/22

       1,369        1,475,098   

MEG Energy Corp. (b):

      

6.50%, 3/15/21

       3,839        3,800,610   

7.00%, 3/31/24

       3,598        3,615,990   

Memorial Production Partners LP/Memorial Production Finance Corp., 7.63%, 5/01/21

       885        857,344   

Midcontinent Express Pipeline LLC,
6.70%, 9/15/19 (b)

       3,500        3,898,125   

Nexen, Inc., 6.40%, 5/15/37 (e)

       4,615        5,749,713   

NGPL PipeCo LLC, 9.63%, 6/01/19 (b)

       902        960,630   

Oasis Petroleum, Inc.:

      

7.25%, 2/01/19

       915        942,450   

6.50%, 11/01/21

       1,025        1,050,625   

ONEOK Partners LP, 8.63%, 3/01/19 (e)

       10,000        12,383,420   

Pacific Drilling SA, 5.38%, 6/01/20 (b)

       1,537        1,374,654   

PDC Energy, Inc., 7.75%, 10/15/22

       1,225        1,286,520   

Peabody Energy Corp.:

      

6.00%, 11/15/18

       2,527        2,444,872   

6.25%, 11/15/21 (e)

       1,483        1,404,216   

Penn Virginia Resource Partners LP/Penn Virginia Resource Finance Corp. II, 8.38%, 6/01/20

       2,221        2,454,205   

Petrobras International Finance Co. SA (e):

      

3.88%, 1/27/16

       12,550        12,792,817   

5.38%, 1/27/21

       3,385        3,465,766   

Petroleos Mexicanos (e):

      

3.50%, 1/30/23

       5,000        4,839,500   

4.88%, 1/18/24

       2,000        2,115,000   

Petroleum Geo-Services ASA,
7.38%, 12/15/18 (b)

       3,980        3,860,600   

Pioneer Natural Resources Co., 6.88%, 5/01/18

       1,665        1,908,809   

Premier Oil PLC, 5.11%, 6/09/18

       11,500        11,931,250   

Range Resources Corp.:

      

6.75%, 8/01/20

       1,760        1,861,200   

5.00%, 8/15/22

       32        33,560   

5.00%, 3/15/23

       75        78,375   

Regency Energy Partners LP/Regency Energy Finance Corp., 4.50%, 11/01/23

       4,351        4,318,367   

RKI Exploration & Production LLC/RKI Finance Corp., 8.50%, 8/01/21 (b)

       704        688,160   

Rockies Express Pipeline LLC,
6.88%, 4/15/40 (b)

       580        643,800   

Rosetta Resources, Inc., 5.63%, 5/01/21

       3,448        3,344,560   

RSP Permian, Inc., 6.63%, 10/01/22 (b)

       789        786,870   

Ruby Pipeline LLC, 6.00%, 4/01/22 (b)

       10,000        11,086,680   

Sabine Pass Liquefaction LLC (b):

      

5.63%, 4/15/23

       7,393        7,651,755   

5.75%, 5/15/24

       2,869        2,965,829   
Corporate Bonds           Par  
(000)
    Value  

Oil, Gas & Consumable Fuels (concluded)

      

Sabine Pass LNG LP, 7.50%, 11/30/16

     USD        5,965      $ 6,397,462   

Sanchez Energy Corp., 6.13%, 1/15/23 (b)

       1,141        1,086,803   

SandRidge Energy, Inc.:

      

8.75%, 1/15/20

       114        105,450   

7.50%, 2/15/23

       1,291        1,148,990   

Seventy Seven Energy, Inc., 6.50%, 7/15/22 (b)

       526        494,440   

SM Energy Co., 6.50%, 1/01/23

       322        332,465   

Summit Midstream Holdings LLC/Summit Midstream Finance Corp., 7.50%, 7/01/21

       1,614        1,751,190   

Tesoro Logistics LP/Tesoro Logistics Finance Corp.,
6.25%, 10/15/22 (b)

       1,519        1,572,165   

Ultra Petroleum Corp., 5.75%, 12/15/18 (b)

       293        290,070   

Western Gas Partners LP, 5.38%, 6/01/21

       5,125        5,728,976   

Whiting Petroleum Corp.:

      

5.00%, 3/15/19

       3,550        3,674,250   

5.75%, 3/15/21

       2,341        2,469,755   

The Williams Cos., Inc.:

      

3.70%, 1/15/23

       5,000        4,703,585   

4.55%, 6/24/24

       830        813,161   

8.75%, 3/15/32

       2,478        3,156,028   

5.75%, 6/24/44

       685        654,023   

WPX Energy, Inc., 5.25%, 9/15/24

       856        834,600   
      

 

 

 
                       282,869,376   

Paper & Forest Products — 2.3%

      

Ainsworth Lumber Co. Ltd., 7.50%, 12/15/17 (b)

       1,473        1,524,555   

Clearwater Paper Corp., 4.50%, 2/01/23

       532        518,700   

International Paper Co. (e):

      

7.50%, 8/15/21

       9,675        12,104,189   

8.70%, 6/15/38

       4,000        5,897,640   

7.30%, 11/15/39

       10,000        13,106,760   

Louisiana-Pacific Corp., 7.50%, 6/01/20

       2,130        2,279,100   

Mercer International, Inc., 9.50%, 12/01/17

       2,900        3,045,000   
      

 

 

 
                       38,475,944   

Pharmaceuticals — 2.4%

      

AbbVie, Inc., 2.90%, 11/06/22 (e)

       5,675        5,520,413   

Endo Finance LLC/Endo Finco, Inc. (b):

      

7.00%, 12/15/20

       241        254,255   

7.25%, 1/15/22

       499        532,683   

Forest Laboratories, Inc. (b):

      

4.38%, 2/01/19

       2,924        3,062,770   

5.00%, 12/15/21

       1,631        1,747,703   

Grifols Worldwide Operations, Ltd., 5.25%, 4/01/22 (b)

       1,613        1,653,325   

Mallinckrodt International Finance SA, 5.75%, 8/01/22 (b)

       2,130        2,231,175   

Merck & Co., Inc., 6.50%, 12/01/33 (e)

       6,420        8,841,598   

Mylan, Inc., 6.00%, 11/15/18 (b)

       3,250        3,348,296   

Salix Pharmaceuticals, Ltd., 6.00%, 1/15/21 (b)

       697        754,503   

Valeant Pharmaceuticals International (b):

      

6.75%, 8/15/18

       6,955        7,398,381   

6.38%, 10/15/20

       2,355        2,416,819   

5.63%, 12/01/21

       1,615        1,598,850   
      

 

 

 
                       39,360,771   

Professional Services — 0.5%

      

Ceridian HCM Holding, Inc., 11.00%, 3/15/21 (b)

       2,158        2,433,145   

The Dun & Bradstreet Corp., 3.25%, 12/01/17

       5,750        5,962,100   
      

 

 

 
                       8,395,245   

Real Estate Investment Trusts (REITs) — 2.9%

      

ARC Properties Operating Partnership LP/Clark Acquisition LLC, 4.60%, 2/06/24

       5,000        4,863,785   

AvalonBay Communities, Inc.,
6.10%, 3/15/20 (e)

       10,000        11,703,130   

 

See Notes to Financial Statements.

 

                
16    ANNUAL REPORT    OCTOBER 31, 2014   


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

Corporate Bonds           Par  
(000)
    Value  

Real Estate Investment Trusts (REITs) (concluded)

  

   

DDR Corp.:

      

4.75%, 4/15/18

     USD        2,140      $ 2,313,486   

7.88%, 9/01/20

       2,650        3,289,967   

ERP Operating LP, 5.75%, 6/15/17 (e)

       10,000        11,118,650   

Felcor Lodging LP, 5.63%, 3/01/23

       999        996,502   

HCP, Inc., 5.38%, 2/01/21 (e)

       3,450        3,856,996   

Host Hotels & Resorts LP, Series D, 3.75%, 10/15/23

       3,600        3,564,871   

iStar Financial, Inc.:

      

4.00%, 11/01/17

       825        817,163   

5.00%, 7/01/19

       580        577,100   

Rayonier AM Products, Inc., 5.50%, 6/01/24 (b)

       128        120,960   

UDR, Inc., 4.25%, 6/01/18

       5,225        5,611,258   
      

 

 

 
                       48,833,868   

Real Estate Management & Development — 0.7%

  

   

Lennar Corp., 4.75%, 11/15/22

       1,805        1,777,925   

Northwest Florida Timber Finance LLC, 4.75%, 3/04/29 (b)(e)

       4,485        4,477,824   

Realogy Corp., 7.63%, 1/15/20 (b)(e)

       2,085        2,262,225   

Realogy Group LLC/Realogy Co-Issuer Corp., 4.50%, 4/15/19 (b)

       1,147        1,149,868   

Shea Homes LP/Shea Homes Funding Corp., 8.63%, 5/15/19

       1,625        1,730,625   
      

 

 

 
                       11,398,467   

Road & Rail — 1.5%

      

The Hertz Corp.:

      

4.25%, 4/01/18

       983        983,000   

6.75%, 4/15/19

       1,167        1,216,597   

5.88%, 10/15/20

       925        931,938   

7.38%, 1/15/21

       310        327,825   

Norfolk Southern Corp., 6.00%, 3/15/05 (e)

       17,200        21,009,473   
      

 

 

 
                       24,468,833   

Semiconductors & Semiconductor Equipment — 0.7%

  

KLA-Tencor Corp., 6.90%, 5/01/18 (e)

       5,515        6,385,212   

Micron Technology, Inc., 5.50%, 2/01/25 (b)

       3,590        3,634,875   

NXP BV/NXP Funding LLC, 5.75%, 2/15/21 (b)

       1,655        1,746,025   
      

 

 

 
                       11,766,112   

Software — 0.4%

  

Infor US, Inc., 9.38%, 4/01/19

       2,190        2,381,625   

Nuance Communications, Inc., 5.38%, 8/15/20 (b)

       4,435        4,457,175   
      

 

 

 
                       6,838,800   

Specialty Retail — 1.0%

  

AutoNation, Inc., 6.75%, 4/15/18

       6,125        6,959,654   

L Brands, Inc., 7.00%, 5/01/20

       3,050        3,461,750   

QVC, Inc., 7.38%, 10/15/20 (b)

       355        375,412   

VF Corp., 5.95%, 11/01/17 (e)

       5,000        5,686,880   
      

 

 

 
                       16,483,696   

Textiles Apparel & Shoes — 0.1%

  

Springs Industries, Inc., 6.25%, 6/01/21

             1,674        1,642,613   

Textiles, Apparel & Luxury Goods — 0.1%

  

The William Carter Co., 5.25%, 8/15/21

             1,406        1,448,180   

Thrifts & Mortgage Finance — 0.1%

  

Radian Group, Inc., 5.50%, 6/01/19

             1,378        1,412,450   

Tobacco — 2.0%

  

Altria Group, Inc., 10.20%, 2/06/39 (e)

       13,392        22,943,563   

Lorillard Tobacco Co., 3.50%, 8/04/16

       8,375        8,684,732   

Reynolds American, Inc.:

      

3.25%, 11/01/22

       970        947,272   

4.85%, 9/15/23

       1,120        1,207,733   
      

 

 

 
                       33,783,300   
Corporate Bonds           Par  
(000)
    Value  

Trading Companies & Distributors — 0.4%

  

Doric Nimrod Air Alpha 2013-1 Pass-Through Trust (b):

      

6.13%, 11/30/21

     USD        3,713      $ 3,954,463   

5.25%, 5/30/25

       2,871        3,021,680   
      

 

 

 
                       6,976,143   

Transportation Infrastructure — 0.9%

  

CEVA Group PLC (b):

      

4.00%, 5/01/18

       3,310        3,061,750   

7.00%, 3/01/21

       1,067        1,037,658   

Penske Truck Leasing Co. LP/PTL Finance Corp., 4.88%, 7/11/22 (b)

       10,500        11,361,882   
      

 

 

 
                       15,461,290   

Wireless Telecommunication Services — 5.4%

  

America Movil SAB de CV (e):

      

2.38%, 9/08/16

       12,495        12,792,256   

3.13%, 7/16/22

       1,275        1,253,185   

American Tower Corp.:

      

4.50%, 1/15/18

       6,500        6,938,100   

5.05%, 9/01/20

       500        544,915   

5.90%, 11/01/21 (e)

       3,770        4,249,480   

Crown Castle International Corp., 5.25%, 1/15/23

       1,880        1,924,650   

Crown Castle Towers LLC (b):

      

5.50%, 1/15/37

       4,000        4,255,472   

4.17%, 8/15/37

       3,000        3,148,170   

6.11%, 1/15/40

       4,555        5,262,688   

Digicel Group Ltd. (b):

      

8.25%, 9/30/20

       2,615        2,732,675   

7.13%, 4/01/22

       825        829,125   

Digicel Ltd., 6.00%, 4/15/21 (b)

       1,285        1,297,850   

SBA Tower Trust, 5.10%, 4/15/42 (b)

       13,975        14,817,720   

Sprint Communications, Inc. (b):

      

9.00%, 11/15/18

       5,290        6,222,362   

7.00%, 3/01/20

       9,302        10,376,381   

Sprint Corp. (b):

      

7.88%, 9/15/23

       1,815        1,964,737   

7.13%, 6/15/24

       1,625        1,669,688   

T-Mobile USA, Inc.:

      

6.63%, 4/28/21

       2,680        2,824,050   

6.73%, 4/28/22

       2,495        2,638,462   

6.00%, 3/01/23

       580        597,400   

6.84%, 4/28/23

       1,405        1,485,788   

6.38%, 3/01/25

       1,845        1,895,738   
      

 

 

 
                       89,720,892   
Total Corporate Bonds — 113.3%                1,882,022,904   
      
                          
Foreign Agency Obligations                      

Brazilian Government International Bond, 5.00%, 1/27/45

       5,000        4,900,000   

Indonesia Government International Bond, 5.88%, 1/15/24 (b)

       4,400        5,005,000   

Mexico Government International Bond, 4.75%, 3/08/44

             2,300        2,335,650   
Total Foreign Agency Obligations — 0.7%                12,240,650   
      
                          
Municipal Bonds  

City of Chicago Illinois, Refunding ARB, O’Hare International Airport, General 3rd Lien, Build America Bonds, Series B, 6.85%, 1/01/38

       5,000        5,612,150   

Metropolitan Transportation Authority, RB, Build America Bonds, Series B-1, 6.55%, 11/15/31

             10,000        12,791,100   
Total Municipal Bonds — 1.1%                18,403,250   

 

See Notes to Financial Statements.

 

                
   ANNUAL REPORT    OCTOBER 31, 2014    17


Schedule of Investments (continued)

  

BlackRock Credit Allocation Income Trust (BTZ)

(Percentages shown are based on Net Assets)

 

U.S. Government Sponsored Agency Securities           Par  
(000)
    Value  

Agency Obligations — 0.2%

      

Fannie Mae, 0.00%, 10/09/19 (e)(j)

     USD        3,945      $ 3,536,314   
      
                          
U.S. Treasury Obligations  

U.S. Treasury Bond, 3.38%, 5/15/44 (e)

       8,650        9,176,430   

U.S. Treasury Notes (e):

      

1.50%, 5/31/19

       1,898        1,894,441   

1.63%, 6/30/19

       750        752,402   

1.63%, 7/31/19

       1,235        1,237,991   

2.38%, 8/15/24

             9,315        9,351,385   
Total U.S. Treasury Obligations — 1.3%                22,412,649   
      
                          
Preferred Securities                      
Capital Trusts                      

Banks — 2.8%

      

BNP Paribas SA, 7.20% (a)(b)(e)(f)

       5,000        5,765,650   

Credit Agricole SA, 8.38% (a)(b)(f)

       5,000        5,793,750   

Fifth Third Bancorp, Series J, 4.90% (a)(f)

       2,035        2,001,626   

HSBC Capital Funding LP, 10.18% (a)(b)(e)(f)

       11,835        17,663,737   

HSBC Holdings PLC, 5.63% (a)(f)

       4,655        4,730,644   

M&T Capital Trust II, 8.28%, 6/01/27

       4,540        4,622,542   

Nordea Bank AB, 6.13% (a)(b)(f)

       5,540        5,551,634   

Wells Fargo & Co., Series S, 5.90% (a)(f)

       1,090        1,120,629   
      

 

 

 
                       47,250,212   

Capital Markets — 1.6%

      

Ameriprise Financial, Inc., 7.52%, 6/01/66 (a)(e)

       3,000        3,232,500   

The Goldman Sachs Group, Inc.,
Series L, 5.70% (a)(e)(f)

       2,950        3,016,375   

Morgan Stanley, Series H, 5.45% (a)(f)

       2,200        2,210,314   

State Street Capital Trust IV, 1.23%, 6/15/37 (a)

       20,845        17,770,362   
      

 

 

 
                       26,229,551   

Diversified Financial Services — 3.7%

      

Bank of America Corp. (a)(f):

      

Series K, 8.00%

       2,420        2,604,525   

Series U, 5.20%

       6,685        6,200,337   

Barclays PLC, 6.63% (a)(f)

       4,885        4,674,945   

Citigroup, Inc., 5.90% (a)(f)

       2,210        2,198,950   

General Electric Capital Corp. (a)(e)(f):

      

Series B, 6.25%

       9,100        9,953,489   

Series C, 5.25%

       1,200        1,203,000   

JPMorgan Chase & Co. (a)(f)

      

Series 1, 7.90%

       3,650        3,955,688   

Series Q, 5.15%

       4,000        3,790,000   

Series R, 6.00%

       14,130        14,006,362   

Series S, 6.75%

       7,775        8,191,740   

Societe Generale SA, 6.00% (a)(b)(f)

       4,470        4,212,975   
      

 

 

 
                       60,992,011   

Electric Utilities — 0.5%

      

PPL Capital Funding, Inc., Series A,
6.70%, 3/30/67 (a)

             8,300        8,414,125   

Insurance — 7.3%

      

ACE Capital Trust II, 9.70%, 4/01/30 (e)

       7,000        10,290,000   

AIG Life Holdings, Inc., 8.50%, 7/01/30

       500        658,750   

The Allstate Corp., 6.50%, 5/15/67 (a)