UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
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: Donald C. Burke, Chief Executive Officer,
BlackRock Corporate High Yield Fund III, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 05/31/2008
Date of reporting period: 06/01/2007 - 11/30/2007
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock Corporate High Yield BLACKROCK
Fund III, Inc. (CYE)
SEMI-ANNUAL REPORT
NOVEMBER 30, 2007 | (UNAUDITED)
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
--------------------------------------------------------------------------------
A Letter to Shareholders ................................................. 3
Semi-Annual Report:
Fund Summary ............................................................. 4
Financial Statements:
Schedule of Investments .............................................. 5
Statement of Assets and Liabilities .................................. 11
Statement of Operations .............................................. 11
Statements of Changes in Net Assets .................................. 12
Statement of Cash Flows .............................................. 12
Financial Highlights ..................................................... 13
Notes to Financial Statements ............................................ 14
The Benefits and Risks of Leveraging ..................................... 17
Officers and Directors ................................................... 17
Additional Information ................................................... 18
2 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
A Letter to Shareholders
Dear Shareholder
The November reporting period was fairly tumultuous for financial markets,
culminating in mixed results for some of the major benchmark indexes:
Total Returns as of November 30, 2007 6-month 12-month
========================================================================================================
U.S. equities (S&P 500 Index) -2.33% + 7.72%
--------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) -8.82 - 1.17
--------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +2.82 +17.30
--------------------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers U.S. Aggregate Bond Index) +5.32 + 6.05
--------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +2.40 + 2.71
--------------------------------------------------------------------------------------------------------
High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Cap Index) -2.84 + 3.01
--------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for
illustrative purposes only. You cannot invest directly in an index.
Subprime mortgage woes dominated headlines for much of 2007, but intensified in
the summer and fall, spawning a widespread liquidity and credit crisis with
ramifications across global markets. The Federal Reserve Board (the "Fed")
stepped in to inject liquidity into the markets and bolster investor confidence,
cutting the federal funds rate by 0.50% in September, 0.25% in October and 0.25%
in December, which brought the target short-term interest rate to 4.25%. In
taking action, the central bankers, who had long deemed themselves inflation
fighters, were seeking to stem the fallout from the credit crunch and forestall
a wider economic unraveling.
Amid the volatility throughout 2007, equity markets displayed surprising
resilience. To some extent, the credit turmoil dampened corporate
merger-and-acquisition (M&A) activity, a key source of strength for equity
markets. Still, market fundamentals generally held firm, dividend payouts and
share buybacks continued, and valuations remained attractive. As the returns
indicate, the most recent six months were more trying, reflecting the slowing
U.S. economy, a troubled housing market and a more difficult corporate earnings
backdrop. Overall, large cap stocks outperformed small caps as investors grew
increasingly risk averse. International markets fared better than their U.S.
counterparts, benefiting from generally stronger economies.
In fixed income markets, mixed economic signals and the credit woes resulted in
a flight to quality. Investors shunned bonds associated with the housing and
credit markets in favor of higher-quality Treasury issues. The yield on 10-year
Treasury issues, which touched 5.30% in June (its highest level in five years),
fell to 3.97% by period-end, while prices correspondingly rose. Meanwhile, the
tax-exempt bond market has been challenged by a combination of record-setting
supply, economic uncertainty and concerns around the credit worthiness of bond
insurers. This brought municipal bond prices to relatively attractive levels
and, as such, demand generally held firm.
As you navigate market volatility, we encourage you to review your investment
goals with your financial professional and to make portfolio changes, as needed.
For more market insight and commentary from BlackRock investment professionals,
we invite you to visit www.blackrock.com/funds. As always, we thank you for
entrusting BlackRock with your investment assets, and we look forward to
continuing to serve you in the months and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
3
THIS PAGE NOT PART OF YOUR FUND REPORT
Fund Summary as of November 30, 2007
Investment Objective
BlackRock Corporate High Yield Fund III, Inc. (CYE) seeks to provide
shareholders with current income by investing primarily in a diversified
portfolio of fixed income securities that are rated in the lower rating
categories of the established rating services (Ba or lower by Moody's Investors
Service, Inc. or BB or lower by Standard & Poor's Corporation) or are unrated
securities of comparable quality.
Fund Information
Symbol on New York Stock Exchange ............................ CYE
Initial Offering Date ........................................ January 30, 1998
Yield on Closing Market Price as of November 30, 2007 ($7.19)* 10.01%
Current Monthly Distribution per share of Common Stock** ..... $.060
Current Annualized Distribution per share of Common Stock** .. $.720
Leverage as of November 30, 2007*** .......................... 24%
--------------------------------------------------------------------------------
* 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 is not constant and is subject to change. A portion of
the distribution may be deemed a tax return of capital or net realized
gain at fiscal year end.
*** As a percentage of managed assets, which is the total assets of the Fund
(including any assets attributable to any borrowing that may be
outstanding) minus the sum of accrued liabilities (other than debt
representing financial leverage).
The table below summarizes the changes in the Fund's market price and net asset
value per share:
--------------------------------------------------------------------------------
11/30/07 5/31/07 Change High Low
--------------------------------------------------------------------------------
Market Price ............ $7.19 $8.53 (15.71%) $8.73 $6.32
Net Asset Value ......... $8.13 $8.99 (9.57%) $9.00 $7.99
--------------------------------------------------------------------------------
The following charts show the Fund's portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Asset Mix 11/30/07 5/31/07
--------------------------------------------------------------------------------
Corporate Bonds ...................................... 92% 95%
Floating Rate Loan Interests ......................... 5 2
Common Stocks ........................................ 2 2
Preferred Stocks ..................................... 1 1
Warrants ............................................. --* --*
Options .............................................. --* --
Other Interests ...................................... --* --*
Rights ............................................... --* --
--------------------------------------------------------------------------------
* Amount is less than 1%.
Credit Quality Allocations*
Credit Rating 11/30/07 5/31/07
--------------------------------------------------------------------------------
BBB/Baa .............................................. 1% 1%
BB/Ba ................................................ 23 22
B/B .................................................. 49 55
CCC/Caa .............................................. 21 16
NR (Not Rated) ....................................... 3 3
Other ** ............................................. 3 3
--------------------------------------------------------------------------------
* Using the higher of S&P's or Moody's ratings.
** Includes portfolio holdings in common stocks, preferred stocks,
warrants, rights, options and other interests.
4 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Schedule of Investments as of November 30, 2007 (Unaudited) (in U.S. dollars)
Face
Amount Corporate Bonds Value
===================================================================================
Aerospace & Defense -- 4.7%
$1,947,000 Alliant Techsystems, Inc., 2.75%
due 9/15/2011 (b)(i) $ 2,626,016
1,425,000 DRS Technologies, Inc., 6.875%
due 11/01/2013 1,407,188
975,000 Esterline Technologies Corp., 7.75%
due 6/15/2013 992,062
615,000 Hawker Beechcraft Acquisition Co. LLC, 8.875%
due 4/01/2015 (g)(i) 593,335
L-3 Communications Corp.:
1,425,000 7.625% due 6/15/2012 1,462,406
1,625,000 5.875% due 1/15/2015 1,560,000
1,380,000 3% due 8/01/2035 (b)(i) 1,712,925
1,375,000 Series B, 6.375% due 10/15/2015 1,361,250
470,000 TransDigm, Inc., 7.75% due 7/15/2014 474,700
1,950,000 Vought Aircraft Industries, Inc., 8% due 7/15/2011 1,891,500
------------
14,081,382
===================================================================================
Airlines -- 0.5%
Continental Airlines, Inc. (m):
987,344 Series 1997-4-B, 6.90% due 7/02/2018 947,851
35,716 Series 1998-1-C, 6.541% due 9/15/2009 35,448
419,800 Series 2001-1-C, 7.033% due 12/15/2012 407,469
------------
1,390,768
===================================================================================
Auto Components -- 1.1%
1,235,000 Allison Transmission, 11.25%
due 11/01/2015 (g)(i) 1,155,387
The Goodyear Tire & Rubber Co.:
290,000 7.857% due 8/15/2011 295,800
692,000 8.625% due 12/01/2011 (i) 723,140
1,285,000 Lear Corp., 8.75% due 12/01/2016 1,182,200
------------
3,356,527
===================================================================================
Automobiles -- 0.4%
785,000 Ford Capital BV, 9.50% due 6/01/2010 739,862
700,000 Ford Motor Co., 8.90% due 1/15/2032 546,000
------------
1,285,862
===================================================================================
Beverages -- 0.5%
1,500,000 Constellation Brands, Inc., 8.125%
due 1/15/2012 1,492,500
===================================================================================
Biotechnology -- 0.4%
1,140,000 Angiotech Pharmaceuticals, Inc., 8.874%
due 12/01/2013 (d) 1,083,000
===================================================================================
Building Products -- 1.4%
Goodman Global Holding Co., Inc.:
699,000 8.36% due 6/15/2012 (d) 698,126
1,350,000 7.875% due 12/15/2012 1,383,750
500,000 Masonite International Corp., 11%
due 4/06/2015 398,750
1,970,000 Momentive Performance Materials, Inc., 11.50%
due 12/01/2016 (i) 1,748,375
------------
4,229,001
===================================================================================
Capital Markets -- 1.0%
1,520,000 E*Trade Financial Corp., 12.50% due 11/27/2017 1,476,571
1,073,000 Marsico Parent Co., LLC, 10.625%
due 1/15/2016 (i) 1,073,000
368,000 Marsico Parent Holdco., LLC, 12.50% due
7/15/2016 (g)(i) 368,000
245,000 Marsico Parent Superholdco, LLC, 14.50%
due 1/15/2018 (g)(i) 231,011
------------
3,148,582
===================================================================================
Chemicals -- 2.4%
880,000 American Pacific Corp., 9% due 2/01/2015 891,000
Hexion U.S. Finance Corp.:
625,000 9.369% due 11/15/2014 (d) 637,500
525,000 9.75% due 11/15/2014 564,375
820,000 Ineos Group Holdings Plc, 8.50%
due 2/15/2016 (i) 738,000
825,000 Innophos, Inc., 8.875% due 8/15/2014 820,875
455,000 Key Plastics LLC, 11.75% due 3/15/2013 (i) 364,000
1,700,000 MacDermid, Inc., 9.50% due 4/15/2017 (i) 1,542,750
675,000 NOVA Chemicals Corp., 7.863%
due 11/15/2013 (d) 648,000
724,000 Nalco Finance Holdings, Inc., 10.065%
due 2/01/2014 (a) 658,840
550,000 Terra Capital, Inc. Series B, 7% due 2/01/2017 543,125
------------
7,408,465
===================================================================================
Commercial Services & Supplies -- 5.5%
1,425,000 Ashtead Capital, Inc., 9% due 8/15/2016 (i) 1,254,000
3,000,000 Corrections Corp. of America, 7.50%
due 5/01/2011 3,037,500
570,000 DI Finance Series B, 9.50% due 2/15/2013 595,650
1,385,000 PNA Intermediate Holding Corp., 11.869%
due 2/15/2013 (d)(g)(i) 1,274,200
2,465,000 Quebecor World, Inc., 9.75% due 1/15/2015 (i) 1,959,675
Sally Holdings LLC:
210,000 9.25% due 11/15/2014 208,950
1,109,000 10.50% due 11/15/2016 1,103,455
700,000 US Investigations Services, Inc., 10.50%
due 11/01/2015 (i) 651,000
3,000,000 Waste Services, Inc., 9.50% due 4/15/2014 3,000,000
West Corp.:
750,000 9.50% due 10/15/2014 738,750
2,850,000 11% due 10/15/2016 2,850,000
------------
16,673,180
===================================================================================
Communications Equipment -- 1.4%
1,750,000 Dycom Industries, Inc., 8.125%
due 10/15/2015 1,745,625
2,585,000 Nortel Networks Ltd., 9.493%
due 7/15/2011 (d)(i) 2,513,913
------------
4,259,538
===================================================================================
Computers & Peripherals -- 0.4%
1,250,000 Viasystems, Inc., 10.50% due 1/15/2011 1,250,000
===================================================================================
Construction Materials -- 0.4%
420,000 Nortek, Inc., 8.50% due 9/01/2014 340,200
1,000,000 Texas Industries, Inc., 7.25% due 7/15/2013 970,000
------------
1,310,200
===================================================================================
Containers & Packaging -- 5.9%
Berry Plastics Holding Corp.:
1,370,000 8.875% due 9/15/2014 1,322,050
1,915,000 9.569% due 9/15/2014 (d) 1,838,400
2,200,000 Graham Packing Co., Inc., 9.875%
due 10/15/2014 2,018,500
Graphic Packaging International Corp.:
1,050,000 8.50% due 8/15/2011 1,034,250
640,000 9.50% due 8/15/2013 633,600
420,000 Impress Holdings B.V., 8.368%
due 9/15/2013 (d)(i) 407,400
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 5
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
===================================================================================
Containers & Packaging (concluded)
Owens-Brockway Glass Container, Inc.:
$2,637,000 8.875% due 2/15/2009 $ 2,646,889
1,000,000 8.25% due 5/15/2013 1,035,000
1,355,000 Packaging Dynamics Finance Corp., 10%
due 5/01/2016 (i) 1,233,050
1,200,000 Pregis Corp., 12.375% due 10/15/2013 1,296,000
2,000,000 Rock-Tenn Co., 8.20% due 8/15/2011 2,025,000
2,375,000 Smurfit-Stone Container Enterprises, Inc., 8%
due 3/15/2017 2,280,000
------------
17,770,139
===================================================================================
Diversified Consumer Services -- 0.9%
3,000,000 Service Corp. International, 7% due 6/15/2017 2,827,500
===================================================================================
Diversified Financial Services -- 0.8%
Ford Motor Credit Co. LLC:
435,000 7.993% due 1/13/2012 (d) 379,036
200,000 7.80% due 6/01/2012 178,245
GMAC LLC:
600,000 7.25% due 3/02/2011 531,416
50,000 8% due 11/01/2031 42,423
1,325,000 Leucadia National Corp., 8.125%
due 9/15/2015 1,318,375
------------
2,449,495
===================================================================================
Diversified Telecommunication Services -- 1.8%
350,000 Qwest Communications International, Inc.,
7.50% due 2/15/2014 347,375
Qwest Corp.:
1,550,000 8.944% due 6/15/2013 (d) 1,592,625
525,000 7.625% due 6/15/2015 535,500
3,000,000 Windstream Corp., 8.125% due 8/01/2013 3,086,250
------------
5,561,750
===================================================================================
Electric Utilities -- 2.4%
1,875,000 Edison Mission Energy, 7.50% due 6/15/2013 1,875,000
1,650,000 Mirant North America LLC, 7.375%
due 12/31/2013 1,654,125
420,000 NSG Holdings LLC, 7.75%
due 12/15/2025 (i)(m) 414,750
1,200,000 Sierra Pacific Resources, 8.625%
due 3/15/2014 1,278,002
2,006,967 Tenaska Alabama Partners LP, 7%
due 6/30/2021 (i)(m) 2,067,244
------------
7,289,121
===================================================================================
Electrical Equipment -- 0.6%
380,000 Belden, Inc., 7% due 3/15/2017 373,350
1,025,000 Coleman Cable, Inc., 9.875% due 10/01/2012 973,750
551,000 UCAR Finance, Inc., 10.25% due 2/15/2012 567,530
------------
1,914,630
===================================================================================
Electronic Equipment & Instruments -- 1.2% NXP BV:
1,315,000 7.993% due 10/15/2013 (d) 1,242,675
949,000 9.50% due 10/15/2015 863,590
1,565,000 Sanmina-SCI Corp., 8.125% due 3/01/2016 1,385,025
------------
3,491,290
===================================================================================
Energy Equipment & Services -- 1.9%
Compagnie Generale de Geophysique-Veritas:
215,000 7.50% due 5/15/2015 216,612
320,000 7.75% due 5/15/2017 321,600
720,000 North American Energy Partners, Inc., 8.75%
due 12/01/2011 723,600
2,000,000 Ocean RIG ASA, 9.24% due 4/04/2011 (d) 1,970,000
2,690,000 SemGroup LP, 8.75% due 11/15/2015 (i) 2,568,950
------------
5,800,762
===================================================================================
Food & Staples Retailing -- 1.8%
800,000 AmeriQual Group LLC, 9.50% due 4/01/2012 (i) 624,000
2,000,000 National Beef Packing Co. LLC, 10.50%
due 8/01/2011 1,935,000
Rite Aid Corp.:
570,000 9.375% due 12/15/2015 (i) 493,050
2,555,000 7.50% due 3/01/2017 2,299,500
------------
5,351,550
===================================================================================
Food Products -- 1.0%
3,024,000 Del Monte Corp., 8.625% due 12/15/2012 3,054,240
===================================================================================
Gas Utilities -- 0.5%
1,320,000 El Paso Performance-Linked Trust, 7.75%
due 7/15/2011 (i) 1,382,345
===================================================================================
Health Care Equipment & Supplies -- 1.9%
600,000 The Cooper Cos., Inc., 7.125% due 2/15/2015 582,000
5,300,000 ReAble Therapeutics Finance LLC, 10.875%
due 11/15/2014 (i) 5,101,250
------------
5,683,250
===================================================================================
Health Care Providers & Services -- 5.3%
1,020,000 Accellent, Inc., 10.50% due 12/01/2013 902,700
1,075,000 Community Health Systems, Inc. Series WI,
8.875% due 7/15/2015 1,085,750
Omnicare, Inc.:
725,000 6.75% due 12/15/2013 667,000
800,000 Series OCR, 3.25% due 12/15/2035 (b) 601,000
Tenet Healthcare Corp.:
4,215,000 6.50% due 6/01/2012 3,709,200
2,260,000 9.875% due 7/01/2014 2,130,050
3,000,000 US Oncology, Inc., 9% due 8/15/2012 2,955,000
1,550,000 United Surgical Partners International, Inc.,
8.875% due 5/01/2017 1,511,250
Universal Hospital Services, Inc. (i):
310,000 8.288% due 6/01/2015 (d) 305,350
330,000 8.50% due 6/01/2015 (g) 315,823
2,000,000 Vanguard Health Holding Co. II, LLC, 9%
due 10/01/2014 1,895,000
------------
16,078,123
===================================================================================
Hotels, Restaurants & Leisure -- 7.6%
American Real Estate Partners LP:
185,000 7.125% due 2/15/2013 172,975
1,265,000 7.125% due 2/15/2013 (i) 1,182,775
1,350,000 Caesars Entertainment, Inc., 7.875%
due 3/15/2010 1,377,000
785,000 French Lick Resorts & Casino LLC, 10.75%
due 4/15/2014 (i) 565,200
Galaxy Entertainment Finance Co. Ltd. (i):
300,000 10.409% due 12/15/2010 (d) 307,500
550,000 9.875% due 12/15/2012 577,500
2,000,000 Great Canadian Gaming Corp., 7.25%
due 2/15/2015 (i) 1,960,000
6 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
===================================================================================
Hotels, Restaurants & Leisure (concluded)
$ 595,000 Greektown Holdings, LLC, 10.75%
due 12/01/2013 (i) $ 580,125
1,550,000 Inn of the Mountain Gods Resort & Casino,
12% due 11/15/2010 1,621,687
245,000 Landry's Restaurants, Inc., 9.50%
due 12/15/2014 241,325
1,290,000 Little Traverse Bay Bands of Odawa Indians,
10.25% due 2/15/2014 (i) 1,302,900
2,025,000 Penn National Gaming, Inc., 6.875%
due 12/01/2011 2,019,938
1,340,000 Pinnacle Entertainment, Inc., 7.50%
due 6/15/2015 (i) 1,239,500
975,000 San Pasqual Casino, 8% due 9/15/2013 (i) 960,375
910,000 Shingle Springs Tribal Gaming Authority, 9.375%
due 6/15/2015 (i) 891,800
Station Casinos, Inc.:
1,225,000 6.50% due 2/01/2014 992,250
1,625,000 7.75% due 8/15/2016 1,527,500
410,000 6.625% due 3/15/2018 310,575
370,000 Travelport LLC, 9.749% due 9/01/2014 (d) 362,600
2,060,000 Tropicana Entertainment LLC Series WI, 9.625%
due 12/15/2014 1,431,700
1,800,000 Universal City Florida Holding Co. I, 9.661%
due 5/01/2010 (d) 1,818,000
400,000 Virgin River Casino Corp., 9% due 1/15/2012 348,000
1,200,000 Wynn Las Vegas LLC, 6.625% due 12/01/2014 1,164,000
------------
22,955,225
===================================================================================
Household Durables -- 1.3%
1,575,000 American Greetings Corp., 7.375%
due 6/01/2016 1,512,000
1,015,000 Jarden Corp., 7.50% due 5/01/2017 913,500
1,600,000 Standard-Pacific Corp., 9.25% due 4/15/2012 560,000
895,000 The Yankee Candle Company, Inc., 9.75%
due 2/15/2017 825,638
------------
3,811,138
===================================================================================
Household Products -- 0.2%
700,000 Church & Dwight Co., Inc., 6% due 12/15/2012 682,500
===================================================================================
IT Services -- 2.0%
1,720,000 First Data Corp., 9.875% due 9/24/2015 (i) 1,599,600
SunGard Data Systems, Inc.:
2,180,000 9.125% due 8/15/2013 2,218,150
2,105,000 10.25% due 8/15/2015 2,168,150
------------
5,985,900
===================================================================================
Independent Power Producers & Energy Traders -- 3.7%
1,309,000 The AES Corp., 8.75% due 5/15/2013 (i) 1,361,360
3,000,000 Energy Future Holding Corp., 11.25% due
11/01/2017 (g)(i) 2,902,070
NRG Energy, Inc.:
1,625,000 7.25% due 2/01/2014 1,588,437
1,475,000 7.375% due 2/01/2016 1,445,500
Texas Competitive Electric Holdings Co. LLC (i):
3,200,000 10.25% due 11/01/2015 3,080,000
960,000 10.50% due 11/01/2016 (g) 904,800
------------
11,282,167
===================================================================================
Insurance -- 0.7%
1,700,000 Alliant Holdings I, Inc., 11% due 5/01/2015 (i) 1,615,000
680,000 USI Holdings Corp., 8.744%
due 11/15/2014 (d)(i) 608,600
------------
2,223,600
===================================================================================
Leisure Equipment & Products -- 0.5%
1,750,000 Quiksilver, Inc., 6.875% due 4/15/2015 1,553,125
===================================================================================
Machinery -- 1.9%
1,280,000 AGY Holding Corp., 11% due 11/15/2014 (i) 1,235,200
555,000 Accuride Corp., 8.50% due 2/01/2015 477,300
RBS Global, Inc.:
470,000 9.50% due 8/01/2014 465,300
755,000 11.75% due 8/01/2016 755,000
560,000 8.875% due 9/01/2016 543,200
2,230,000 Terex Corp., 8% due 11/15/2017 2,241,150
------------
5,717,150
===================================================================================
Marine -- 1.3%
1,472,000 Navios Maritime Holdings, Inc., 9.50%
due 12/15/2014 1,512,480
2,325,000 Teekay Shipping Corp., 8.875% due 7/15/2011 2,447,063
------------
3,959,543
===================================================================================
Media -- 18.6%
1,340,000 Affinion Group, Inc., 11.50% due 10/15/2015 1,336,650
1,850,000 Allbritton Communications Co., 7.75%
due 12/15/2012 1,831,500
225,000 American Media Operations, Inc. Series B,
10.25% due 5/01/2009 200,250
1,125,000 Barrington Broadcasting Group LLC, 10.50%
due 8/15/2014 1,141,875
510,000 Bonten Media Acquisition Co., 9%
due 6/01/2015 (g)(i) 428,150
2,000,000 CMP Susquehanna Corp., 9.875%
due 5/15/2014 1,680,000
2,275,000 CSC Holdings, Inc. Series B, 7.625%
due 4/01/2011 2,229,500
Cablevision Systems Corp., Series B:
520,000 9.644% due 4/01/2009 (d) 527,800
475,000 8% due 4/15/2012 452,437
1,600,000 Cadmus Communications Corp., 8.375%
due 6/15/2014 1,456,000
4,985,000 Charter Communications Holdings I, LLC, 11%
due 10/01/2015 4,333,588
2,920,000 Charter Communications Holdings II, LLC,
10.25% due 9/15/2010 2,883,500
1,367,000 Dex Media West LLC, 9.875% due 8/15/2013 1,419,971
1,975,000 Echostar DBS Corp., 7.125% due 2/01/2016 2,056,469
Harland Clarke Holdings Corp.:
420,000 9.50% due 5/15/2015 361,200
350,000 9.619% due 5/15/2015 (d) 294,000
2,010,000 Idearc, Inc., 8% due 11/15/2016 1,879,350
Intelsat Bermuda Ltd.:
240,000 11.409% due 6/15/2013 (d) 246,300
680,000 8.886% due 1/15/2015 (d) 680,850
700,000 11.25% due 6/15/2016 724,500
1,125,000 Intelsat Corp., 9% due 6/15/2016 1,141,875
2,150,000 Intelsat Subsidiary Holding Co. Ltd., 8.625%
due 1/15/2015 2,166,125
1,113,000 Liberty Media Corp., 0.75% due 3/30/2023 (b) 1,181,171
2,425,000 Mediacom LLC, 9.50% due 1/15/2013 2,255,250
280,000 Network Communications, Inc., 10.75%
due 12/01/2013 280,000
3,000,000 Nielsen Finance LLC, 10% due 8/01/2014 3,052,500
2,193,000 PanAmSat Corp., 9% due 8/15/2014 2,225,895
2,975,000 Paxson Communications Corp., 8.493%
due 1/15/2012 (d)(i) 2,922,938
808,850 ProtoStar I Ltd., 12.50% due 10/15/2012 (b)(d)(i) 849,293
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 7
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
===================================================================================
Media (concluded)
$ 950,000 Quebecor Media, Inc., 7.75% due 3/15/2016 $ 885,875
R.H. Donnelley Corp.:
800,000 8.875% due 10/15/2017 (i) 754,000
1,400,000 Series A-2, 6.875% due 1/15/2013 1,277,500
735,000 Series A-3, 8.875% due 1/15/2016 694,575
1,232,000 Rainbow National Services LLC, 10.375%
due 9/01/2014 (i) 1,330,560
2,475,000 Salem Communications Corp., 7.75%
due 12/15/2010 2,462,625
696,000 Sinclair Broadcast Group, Inc., 8%
due 3/15/2012 709,920
500,000 Sirius Satellite Radio, Inc., 9.625%
due 8/01/2013 483,750
3,970,000 TL Acquisitions, Inc., 10.50% due 1/15/2015 (i) 3,870,750
800,000 Windstream Regatta Holdings, Inc., 11%
due 12/01/2017 (i) 808,000
1,125,000 Young Broadcasting, Inc., 10% due 3/01/2011 900,000
------------
56,416,492
===================================================================================
Metals & Mining -- 4.8%
2,300,000 Aleris International, Inc., 9% due 12/15/2014 (g) 1,881,290
200,000 Blaze Recycling & Metals LLC, 10.875%
due 7/15/2012 (i) 183,000
FMG Finance Pty Ltd. (i):
535,000 10% due 9/01/2013 588,500
770,000 10.625% due 9/01/2016 885,500
1,975,000 Foundation PA Coal Co., 7.25% due 8/01/2014 1,900,937
Freeport-McMoRan Copper & Gold, Inc.:
1,150,000 8.394% due 4/01/2015 (d) 1,170,125
3,465,000 8.375% due 4/01/2017 3,742,200
1,018,000 Indalex Holding Corp. Series B, 11.50%
due 2/01/2014 928,925
1,975,000 Novelis, Inc., 7.25% due 2/15/2015 1,841,688
Ryerson, Inc. (i):
400,000 12.574% due 11/01/2014 (d) 385,000
670,000 12% due 11/01/2015 657,438
520,000 Steel Dynamics, Inc., 7.375%
due 11/01/2012 (i) 516,100
------------
14,680,703
===================================================================================
Multi-Utilities -- 0.7%
1,327,000 CenterPoint Energy, Inc. Series B, 3.75%
due 5/15/2023 (b) 2,118,224
===================================================================================
Multiline Retail -- 0.3%
875,000 Neiman Marcus Group, Inc., 9%
due 10/15/2015 (g) 897,327
===================================================================================
Oil, Gas & Consumable Fuels -- 5.0%
510,000 Berry Petroleum Co., 8.25% due 11/01/2016 516,375
1,550,000 Chaparral Energy, Inc., 8.50% due 12/01/2015 1,371,750
1,710,000 Compton Petroleum Finance Corp., 7.625%
due 12/01/2013 1,598,850
695,000 Copano Energy LLC, 8.125% due 3/01/2016 695,000
2,494,504 Corral Finans AB, 6.743% due 4/15/2010 (g)(i) 2,496,578
2,800,000 EXCO Resources, Inc., 7.25% due 1/15/2011 2,723,000
2,000,000 Encore Acquisition Co., 6.25% due 4/15/2014 1,850,000
1,220,000 Forest Oil Corp., 7.25% due 6/15/2019 (i) 1,207,800
380,000 KCS Energy, Inc., 7.125% due 4/01/2012 365,750
1,725,000 OPTI Canada, Inc., 8.25% due 12/15/2014 (i) 1,699,125
780,000 Sabine Pass LNG LP, 7.50% due 11/30/2016 737,100
------------
15,261,328
===================================================================================
Paper & Forest Products -- 4.3%
Abitibi-Consolidated, Inc.:
2,000,000 9.194% due 6/15/2011 (d) 1,582,500
515,000 6% due 6/20/2013 352,775
195,000 8.85% due 8/01/2030 138,450
1,000,000 Ainsworth Lumber Co. Ltd., 8.948%
due 10/01/2010 (d) 700,000
840,000 Bowater Canada Finance Corp., 7.95%
due 11/15/2011 657,300
2,825,000 Bowater, Inc., 8.694% due 3/15/2010 (d) 2,486,000
2,750,000 Domtar Corp., 7.125% due 8/15/2015 2,653,750
NewPage Corp.:
1,450,000 11.161% due 5/01/2012 (d) 1,522,500
1,180,000 12% due 5/01/2013 1,233,100
885,000 Norske Skog Canada Ltd. Series D, 8.625%
due 6/15/2011 734,550
1,035,000 Verso Paper Holdings LLC Series B, 9.125%
due 8/01/2014 1,028,531
------------
13,089,456
===================================================================================
Personal Products -- 0.5%
1,400,000 Chattem, Inc., 7% due 3/01/2014 1,358,000
===================================================================================
Pharmaceuticals -- 0.9%
2,000,000 Elan Finance Plc, 8.869% due 11/15/2011 (d) 1,960,000
930,000 PTS Acquisition Corp., 9.50%
due 4/15/2015 (g)(i) 846,300
------------
2,806,300
===================================================================================
Real Estate Investment Trusts (REITs) -- 0.4%
1,175,000 FelCor Lodging LP, 8.50% due 6/01/2011 1,236,687
===================================================================================
Real Estate Management & Development -- 2.2%
3,025,000 Forest City Enterprises, Inc., 7.625%
due 6/01/2015 2,941,812
Realogy Corp. (i):
1,510,000 10.50% due 4/15/2014 1,136,275
2,390,000 11% due 4/15/2014 (g) 1,667,025
1,610,000 12.375% due 4/15/2015 1,054,550
------------
6,799,662
===================================================================================
Road & Rail -- 1.4%
Avis Budget Car Rental LLC:
2,800,000 7.369% due 5/15/2014 (d) 2,590,000
600,000 7.625% due 5/15/2014 576,000
241,000 Britannia Bulk Plc, 11% due 12/01/2011 249,736
1,400,000 St. Acquisition Corp., 12.50% due 5/15/2017 (i) 742,000
------------
4,157,736
===================================================================================
Semiconductors & Semiconductor Equipment -- 1.8%
Amkor Technology, Inc.:
280,000 7.75% due 5/15/2013 263,200
1,530,000 9.25% due 6/01/2016 1,533,825
3,020,000 Freescale Semiconductor, Inc., 9.125%
due 12/15/2014 (g) 2,634,950
1,215,000 Spansion, Inc., 8.249% due 6/01/2013 (d)(i) 1,105,650
------------
5,537,625
===================================================================================
Software -- 0.2%
637,406 BMS Holdings, Inc., 12.40%
due 2/15/2012 (d)(g)(i) 591,742
===================================================================================
Specialty Retail -- 4.3%
350,000 Asbury Automotive Group, Inc., 7.625%
due 3/15/2017 316,750
8 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Schedule of Investments (continued) (in U.S. dollars)
Face
Amount Corporate Bonds Value
===================================================================================
Specialty Retail -- (concluded)
AutoNation, Inc.:
$2,875,000 7.243% due 4/15/2013 (d) $ 2,702,500
775,000 7% due 4/15/2014 732,375
310,000 Beverages & More, Inc., 9.25%
due 3/01/2012 (i) 313,875
865,000 Buffets, Inc., 12.50% due 11/01/2014 413,037
General Nutrition Centers, Inc.:
1,760,000 10.009% due 3/15/2014 (g) 1,672,000
1,420,000 10.75% due 3/15/2015 1,370,300
900,000 Group 1 Automotive, Inc., 2.25%
due 6/15/2036 (b)(k) 634,500
Michaels Stores, Inc.:
1,700,000 10% due 11/01/2014 1,674,500
2,110,000 11.375% due 11/01/2016 2,009,775
1,110,000 United Auto Group, Inc., 7.75%
due 12/15/2016 1,054,500
------------
12,894,112
===================================================================================
Textiles, Apparel & Luxury Goods -- 0.6%
2,000,000 Levi Strauss & Co., 8.875% due 4/01/2016 1,950,000
===================================================================================
Wireless Telecommunication Services -- 6.3%
1,650,000 Centennial Cellular Operating Co. LLC, 10.125%
due 6/15/2013 1,724,250
1,370,000 Centennial Communications Corp., 10.981%
due 1/01/2013 (d) 1,400,825
Cricket Communications, Inc.:
670,000 9.375% due 11/01/2014 623,100
1,610,000 9.375% due 11/01/2014 (i) 1,497,300
Digicel Group Ltd. (i):
850,000 8.875% due 1/15/2015 760,750
2,283,000 9.125% due 1/15/2015 (g) 2,043,285
1,200,000 Dobson Communications Corp., 9.493%
due 10/15/2012 (d) 1,224,000
620,000 iPCS, Inc., 7.036% due 5/01/2013 (d) 576,600
3,680,000 MetroPCS Wireless, Inc., 9.25%
due 11/01/2014 3,486,800
2,400,000 Nordic Telephone Co. Holdings ApS, 8.875%
due 5/01/2016 (i) 2,436,000
Orascom Telecom Finance SCA:
210,000 7.875% due 2/08/2014 193,200
380,000 7.875% due 2/08/2014 (i) 349,600
2,600,000 Rural Cellular Corp., 8.25% due 3/15/2012 2,697,500
------------
19,013,210
-----------------------------------------------------------------------------------
Total Corporate Bonds
(Cost -- $373,090,097) -- 117.6% 356,602,152
===================================================================================
===================================================================================
Floating Rate Loan Interests (l)
===================================================================================
Chemicals -- 0.4%
2,830,000 Wellman, Inc. Second Lien Term Loan, 11.661%
due 2/10/2010 1,238,125
===================================================================================
Containers & Packaging -- 0.3%
869,116 Berry Plastics Corp. Term Loan B, 12.244%
due 6/15/2014 738,749
===================================================================================
Health Care Providers & Services -- 0.5%
1,539,215 Rotech Healthcare, Inc. Term Loan B, 10.832%
due 9/26/2011 1,446,862
===================================================================================
Hotels, Restaurants & Leisure -- 0.8%
2,550,012 Travelport, Inc. Term Loan, 12.198%
due 3/22/2012 2,380,011
===================================================================================
Household Products -- 0.2%
Spectrum Brands, Inc.:
24,970 Letter of Credit, 4.566% due 4/15/2013 24,083
498,274 Term Loan B-1, 8.665% - 9.249%
due 4/15/2013 480,585
------------
504,668
===================================================================================
Independent Power Producers & Energy Traders -- 1.3%
TXU Corp.:
3,500,000 Term Loan 3, 8.622% due 10/10/2014 3,439,545
500,000 Term Loan B 2, 8.396% due 10/14/2029 490,625
------------
3,930,170
===================================================================================
Machinery -- 0.1%
372,697 Rexnord Corp. Payment In Kind Term Loan,
12.58% due 3/02/2013 327,973
===================================================================================
Media -- 1.4%
400,000 Affinion Group, Inc. Term Loan, 11.678%
due 3/01/2012 380,000
2,700,000 Catalina Marketing Group Term Loan, 8.981%
due 10/09/2017 2,524,500
1,500,000 New Vision First Lien Term Loan, 11.63%
due 10/26/2014 1,455,000
------------
4,359,500
===================================================================================
Oil, Gas & Consumable Fuels -- 0.3%
1,000,000 SandRidge Energy, Inc. Term Loan, 8.625%
due 3/01/2015 997,500
===================================================================================
Paper & Forest Products -- 0.6%
1,960,000 Verso Paper Holdings LLC Term Loan B,
11.161% due 2/01/2013 1,869,350
===================================================================================
Specialty Retail -- 0.2%
797,985 Michaels Stores, Inc. Term Loan B,
6.938% - 7.625% due 10/31/2013 731,063
-----------------------------------------------------------------------------------
Total Floating Rate Loan Interests
(Cost -- $20,652,393) -- 6.1% 18,523,971
===================================================================================
===================================================================================
Shares
Held Common Stocks
===================================================================================
Communications Equipment -- 0.9%
82,907 Loral Space & Communications Ltd. (c) 2,838,736
===================================================================================
Electrical Equipment -- 0.3%
70,784 Medis Technologies Ltd. (c) 903,912
===================================================================================
Paper & Forest Products -- 0.1%
203,785 Western Forest Products, Inc. (c) 285,313
===================================================================================
Semiconductors & Semiconductor Equipment -- 1.1%
98,040 Cypress Semiconductor Corp. (c) 3,256,889
-----------------------------------------------------------------------------------
Total Common Stocks
(Cost -- $8,251,141) -- 2.4% 7,284,850
===================================================================================
===================================================================================
Preferred Stocks
===================================================================================
Capital Markets -- 0.0%
72 Marsico Parent Superholdco, LLC (i) 67,886
===================================================================================
Oil, Gas & Consumable Fuels -- 0.8%
43 EXCO Resources, Inc., 7% (b) 473,000
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 9
Schedule of Investments (concluded) (in U.S. dollars)
Shares
Held Preferred Stocks Value
===================================================================================
Oil, Gas & Consumable Fuels (concluded)
175 EXCO Resources, Inc., 11% $ 1,925,000
------------
2,398,000
-----------------------------------------------------------------------------------
Total Preferred Stocks
(Cost -- $2,247,885) -- 0.8% 2,465,886
===================================================================================
===================================================================================
Warrants (h)
===================================================================================
Health Care Providers & Services -- 0.0%
32,042 HealthSouth Corp. (expires 1/16/2014) 25,634
===================================================================================
Paper & Forest Products -- 0.0%
700 MDP Acquisitions Plc (expires 10/01/2013) 90,699
===================================================================================
Wireless Telecommunication Services -- 0.2%
825 American Tower Corp. (expires 8/01/2008) 526,350
-----------------------------------------------------------------------------------
Total Warrants
(Cost -- $53,675) -- 0.2% 642,683
===================================================================================
===================================================================================
Rights
===================================================================================
Electrical Equipment -- 0.0%
7,078 Medis Technologies Ltd. (n) 0
-----------------------------------------------------------------------------------
Total Rights -- (Cost -- $0) -- 0.0% 0
===================================================================================
===================================================================================
Beneficial
Interest Other Interests (e) Value
===================================================================================
Media -- 0.0%
$ 750,000 Adelphia Escrow $ 75
940,601 Adelphia Recovery Trust 94
-----------------------------------------------------------------------------------
Total Other Interests (Cost -- $3,075) -- 0.0% 169
===================================================================================
===================================================================================
Short-Term Securities
===================================================================================
3,743,377 BlackRock Liquidity Series, LLC
Cash Sweep Series, 4.75% (f)(j) 3,743,377
-----------------------------------------------------------------------------------
Total Short-Term Securities
(Cost -- $3,743,377) -- 1.3% 3,743,377
===================================================================================
===================================================================================
Number of
Contracts Options Purchased
===================================================================================
Call Options Purchased -- 0.0%
19 Marsico Parent Superholdco, LLC,
expiring December 2019 at $1,000 (i) 18,578
-----------------------------------------------------------------------------------
Total Options Purchased
(Premiums Paid -- $18,578) -- 0.0% 18,578
===================================================================================
Total Investments (Cost -- $408,060,221*) -- 128.4% 389,281,666
Liabilities in Excess of Other Assets -- (28.4%) (86,033,390)
------------
Net Assets -- 100.0% $303,248,276
============
* The cost and unrealized appreciation (depreciation) of investments as of
November 30, 2007, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 408,463,677
=============
Gross unrealized appreciation .......................... $ 5,883,266
Gross unrealized depreciation .......................... (25,065,277)
-------------
Net unrealized depreciation ............................ $ (19,182,011)
=============
(a) Represents a step bond; the interest rate shown reflects the effective
yield at the time of purchase.
(b) Convertible security.
(c) Non-income producing security.
(d) Floating rate security.
(e) "Other interests" represent beneficial interest in liquidation trusts and
other reorganization entities and are non-income producing.
(f) Represents the current yield as of November 30, 2007.
(g) Represents a pay-in-kind security which may pay interest/dividends in
additional face/shares.
(h) 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.
(i) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(j) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Interest
Affiliate Activity Income
--------------------------------------------------------------------------
BlackRock Liquidity Series LLC,
Cash Sweep Series $2,173,671 $107,827
--------------------------------------------------------------------------
(k) Represents a step bond.
(l) Floating rate loan interests in which the Fund invests generally pay
interest at rates that are periodically determined by reference to a base
lending rate plus a premium. The base lending rates are generally (i) the
lending rate offered by one or more major European banks, such as LIBOR
(London InterBank Offered Rate), (ii) the prime rate offered by one or
more major U.S. banks or (iii) the certificate of deposit rate.
(m) Subject to principal paydowns.
(n) The rights may be exercised until January 7, 2008.
o For Fund compliance purposes, the Fund's industry classifications refer to
any one or more of the industry sub-classifications used by one or more
widely recognized market indexes or ratings group indexes, and/or as
defined by Fund management. This definition may not apply for purposes of
this report which may combine industry sub-classifications for reporting
ease. Industries are shown as a percent of net assets.
o Swaps outstanding as of November 30, 2007 were as follows:
------------------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
------------------------------------------------------------------------------------
Sold credit default protection on Ford Motor
Company and receive 3.80%
Broker, JPMorgan Chase
Expires March 2010 $3,000,000 $(111,486)
Sold credit default protection on Ford Motor
Company and receive 3.80%
Broker, UBS Warburg
Expires March 2010 $1,000,000 (37,162)
Sold credit default protection on Ford Motor
Company and receive 5.00%
Broker, Goldman Sachs & Co.
Expires June 2010 $4,000,000 (68,517)
------------------------------------------------------------------------------------
Total $(217,165)
==========
See Notes to Financial Statements.
10 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Statement of Assets and Liabilities
As of November 30, 2007 (Unaudited)
===============================================================================
Assets
-------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost -- $404,298,266) .......................... $ 385,519,711
Investments in affiliated securities, at value
(identified cost -- $3,743,377) ............................ 3,743,377
Options purchased, at value (premiums paid -- $18,578) ....... 18,578
Cash ......................................................... 100,000
Receivables:
Interest ................................................... 8,407,687
Securities sold ............................................ 3,872,300
Swaps ...................................................... 72,359
Dividends .................................................. 13,331
Prepaid expenses and other assets ............................ 65,163
-------------
Total assets ................................................. 401,812,506
-------------
===============================================================================
Liabilities
-------------------------------------------------------------------------------
Loans ........................................................ 93,700,000
Unrealized depreciation on swaps ............................. 217,165
Payables:
Securities purchased ....................................... 4,123,674
Investment adviser ......................................... 206,419
Dividends to shareholders .................................. 119,069
Interest on loans .......................................... 107,918
Other affiliates ........................................... 2,257
Accrued expenses and other liabilities ....................... 87,728
-------------
Total liabilities ............................................ 98,564,230
-------------
===============================================================================
Net Assets
-------------------------------------------------------------------------------
Net Assets ................................................... $ 303,248,276
=============
===============================================================================
Capital
-------------------------------------------------------------------------------
Common Stock, $.10 par value, 200,000,000 shares authorized .. $ 3,731,650
Paid-in capital in excess of par ............................. 540,794,598
Undistributed investment income -- net ....................... 4,991,406
Accumulated realized capital losses -- net ................... (227,273,658)
Unrealized depreciation -- net ............................... (18,995,720)
-------------
Total -- Equivalent to $8.13 per share based on 37,316,497
shares of capital stock outstanding (market price -- $7.19) $ 303,248,276
=============
See Notes to Financial Statements.
Statement of Operations
For the Six Months Ended November 30, 2007 (Unaudited)
===============================================================================
Investment Income
-------------------------------------------------------------------------------
Interest (including $107,827 from affiliates) ................ $ 17,859,296
Dividends .................................................... 228,739
Other ........................................................ 23,101
-------------
Total income ................................................. 18,111,136
-------------
===============================================================================
Expenses
-------------------------------------------------------------------------------
Loan interest expense ........................................ 2,794,745
Investment advisory fees ..................................... 1,250,889
Borrowing costs .............................................. 87,219
Accounting services .......................................... 48,520
Professional fees ............................................ 37,663
Printing and shareholder reports ............................. 22,628
Pricing services ............................................. 19,101
Transfer agent fees .......................................... 14,175
Custodian fees ............................................... 11,297
Directors' fees and expenses ................................. 10,033
Listing fees ................................................. 6,714
Other ........................................................ 14,130
-------------
Total expenses ............................................... 4,317,114
-------------
Investment income -- net ..................................... 13,794,022
-------------
===============================================================================
Realized & Unrealized Gain (Loss) -- Net
-------------------------------------------------------------------------------
Realized gain (loss) on:
Investments -- net ......................................... (957,235)
Swaps -- net ............................................... 196,044
-------------
Total realized loss -- net ................................... (761,191)
-------------
Change in unrealized appreciation/depreciation on:
Investments -- net ......................................... (31,387,902)
Swaps -- net ............................................... (442,187)
-------------
Total change in unrealized appreciation/depreciation -- net .. (31,830,089)
-------------
Total realized and unrealized loss -- net .................... (32,591,280)
-------------
Net Decrease in Net Assets Resulting from Operations ......... $ (18,797,258)
=============
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 11
Statements of Changes in Net Assets
For the Six
Months Ended For the
November 30, Year Ended
2007 May 31,
Increase (Decrease) in Net Assets: (Unaudited) 2007
==================================================================================================
Operations
--------------------------------------------------------------------------------------------------
Investment income -- net ...................................... $ 13,794,022 $ 26,588,403
Realized gain (loss) -- net ................................... (761,191) 4,716,076
Change in unrealized appreciation/depreciation -- net ......... (31,830,089) 13,552,867
-------------------------------
Net increase (decrease) in net assets resulting from operations (18,797,258) 44,857,346
-------------------------------
==================================================================================================
Dividends to Shareholders
--------------------------------------------------------------------------------------------------
Dividends to shareholders from investment income -- net ....... (13,433,939) (25,076,686)
-------------------------------
==================================================================================================
Net Assets
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ....................... (32,231,197) 19,780,660
Beginning of period ........................................... 335,479,473 315,698,813
-------------------------------
End of period* ................................................ $ 303,248,276 $ 335,479,473
===============================
* Undistributed investment income -- net .................. $ 4,991,406 $ 4,631,323
===============================
See Notes to Financial Statements.
Statement of Cash Flows
For the Six Months Ended November 30, 2007 (Unaudited)
==================================================================================================
Cash Provided by Operating Activities
--------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations ............................ $ (18,797,258)
Adjustments to reconcile net decrease in net assets resulting
from operations to net cash provided by operating activities:
Decrease in receivables ..................................................... 1,063,879
Decrease in other liabilities ............................................... (116,654)
Realized and unrealized loss -- net ......................................... 32,999,747
Amortization of premium and discount ........................................ (31,303)
Proceeds from sales and paydowns of long-term securities ........................ 110,193,868
Purchases of long-term securities ............................................... (74,387,643)
Net purchases of short-term securities .......................................... (2,171,886)
-------------
Cash provided by operating activities ........................................... 48,752,750
-------------
==================================================================================================
Cash Used for Financing Activities
--------------------------------------------------------------------------------------------------
Cash receipts from borrowings ................................................... 33,000,000
Cash payments on borrowings ..................................................... (69,000,000)
Dividends paid to shareholders .................................................. (13,440,929)
-------------
Cash used for financing activities .............................................. (49,440,929)
-------------
==================================================================================================
Cash
--------------------------------------------------------------------------------------------------
Net decrease in cash ............................................................ (688,179)
Cash at beginning of period ..................................................... 788,179
-------------
Cash at end of period ........................................................... $ 100,000
=============
==================================================================================================
Cash Flow Information
--------------------------------------------------------------------------------------------------
Cash paid for interest .......................................................... $ 2,825,819
=============
See Notes to Financial Statements.
12 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Financial Highlights
For the Six
Months Ended For the Year Ended
The following per share data and ratios November 30, May 31,
have been derived from information 2007 ----------------------------------------------------------------
provided in the financial statements. (Unaudited) 2007 2006 2005 2004 2003
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ........... $ 8.99 $ 8.46 $ 8.46 $ 8.43 $ 7.86 $ 7.68
-------------------------------------------------------------------------------
Investment income -- net** ..................... .37 .71 .72 .85 .88 .92
Realized and unrealized gain (loss) -- net ..... (.87) .49 .02 .07 .58 .17
-------------------------------------------------------------------------------
Total from investment operations ............... (.50) 1.20 .74 .92 1.46 1.09
-------------------------------------------------------------------------------
Less dividends from investment income -- net ... (.36) (.67) (.74) (.89) (.89) (.91)
-------------------------------------------------------------------------------
Recovery of previously expensed offering costs
resulting from issuance of Common Stock ...... -- -- -- -- --+ --
-------------------------------------------------------------------------------
Net asset value, end of period ................. $ 8.13 $ 8.99 $ 8.46 $ 8.46 $ 8.43 $ 7.86
===============================================================================
Market price per share, end of period .......... $ 7.19 $ 8.53 $ 7.36 $ 8.38 $ 7.97 $ 8.36
===============================================================================
===================================================================================================================================
Total Investment Return***
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ............. (5.17%)@ 15.51% 9.78% 11.24% 19.33% 16.46%
===============================================================================
Based on market price per share ................ (11.61%)@ 25.98% (3.59%) 16.55% 6.07% 15.73%
===============================================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Expenses, excluding interest expense ........... .95%* 1.04% 1.00% .99% 1.01% 1.04%
===============================================================================
Expenses ....................................... 2.70%* 3.38% 2.49% 1.81% 1.51% 1.59%
===============================================================================
Investment income -- net ....................... 8.63%* 8.25% 8.45% 9.71% 10.48% 13.35%
===============================================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Amount of borrowings outstanding, end of period
(in thousands) ............................... $ 93,700 $129,700 $141,000 $107,800 $109,600 $ 98,800
===============================================================================
Average amount of borrowings outstanding during
the period (in thousands) .................... $ 97,051 $134,704 $109,144 $112,501 $112,297 $ 75,558
===============================================================================
Average amount of borrowings outstanding per
share during the period** .................... $ 2.60 $ 3.61 $ 2.93 $ 3.02 $ 3.03 $ 2.07
===============================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) ....... $303,248 $335,479 $315,699 $315,626 $313,583 $289,820
===============================================================================
Portfolio turnover ............................. 18% 62% 56% 55% 83% 77%
===============================================================================
* Annualized.
** Based on average shares outstanding.
*** Total investment returns based on market value, which can be significantly
greater or lesser than net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
+ Amount is less than $.01 per share.
@ Aggregate total investment return.
See Notes to Financial Statements.
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 13
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies:
BlackRock Corporate High Yield Fund III, Inc., (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. All such adjustments are of a normal,
recurring nature. The Fund determines and makes available for publication the
net asset value of its Common Stock on a daily basis. The Fund's Common Stock
shares are listed on the New York Stock Exchange ("NYSE") under the symbol CYE.
The following is a summary of significant accounting policies followed by the
Fund.
(a) Valuation of investments -- Debt securities are traded primarily in the
over-the-counter ("OTC") markets and are valued at the last available bid price
in the OTC market or on the basis of values obtained by a pricing service.
Floating rate loan interests are valued at the mean between the last available
bid and asked prices from one or more brokers or dealers as obtained by a
pricing service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Directors. Such valuations and procedures will
be reviewed periodically by the Board of Directors of the Fund. Financial
futures contracts and options thereon, which are traded on exchanges, are valued
at their closing prices as of the close of such exchanges. Effective September
4, 2007, 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 and
previously were valued at the last sales price as of the close of options
trading on applicable exchanges. Options traded in the OTC market are valued at
the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued based upon quoted fair valuations
received daily by the Fund from a pricing service or counterparty. Valuation of
short-term investment vehicles is generally based on the net asset value of the
underlying investment vehicle or amortized cost. Repurchase agreements are
valued at cost plus accrued interest. Investments in open-end investment
companies are valued at their net asset value each business day. Securities and
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of the Board of
Directors of the Fund.
Equity securities held by the Fund that are traded on stock exchanges or the
NASDAQ Global Market are valued at the last sale price or official close price
on the exchange, as of the close of business on the day the securities are being
valued or, lacking any sales, at the last available bid price for long
positions, and at the last available asked price for short positions. In cases
where equity securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market by or under the
authority of the Board of Directors of the Fund. Long positions traded in the
OTC markets, NASDAQ Capital Market or Bulletin Board are valued at the last
available bid price obtained from one or more dealers or pricing services
approved by the Board of Directors of the Fund. Short positions traded in the
OTC markets are valued at the last available asked price. Portfolio securities
that are traded both in the OTC markets and on a stock exchange are valued
according to the broadest and most representative market.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of business on the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates will generally be
determined as of the close of business on the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of business on the
NYSE that may not be reflected in the computation of the Fund's net asset value.
If events (for example, a company announcement, market volatility or a natural
disaster) occur during such periods that are expected to materially affect the
value of such securities, those securities will be valued at their fair value as
determined in good faith by the Fund's Board of Directors or by BlackRock
Advisors, LLC (the "Manager"), an indirect, wholly owned subsidiary of
BlackRock, Inc., using a pricing service and/or procedures approved by the
Fund's Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise due to changes in the value of the contract due to an
unfavorable change in the price of the underlying security, or index, or if the
counterparty does not perform under the contract. The counterparty for certain
instruments may pledge cash or securities as collateral.
o Options -- The Fund may write and purchase call and put options. When the
Fund writes an option, an amount equal to the premium received by the Fund
is reflected as an asset and an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is added
to (or deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain
or loss on the option to the extent of the premiums received or paid (or
gain or loss to the extent the cost of the closing transaction exceeds the
premium paid or received).
Written and purchased options are non-income producing investments.
14 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
Notes to Financial Statements (continued)
o Financial futures contracts -- The Fund may purchase or sell financial
futures contracts and options on such financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits, and maintains as
collateral, such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
o Swaps -- The Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a predetermined credit event. The
net periodic payments may be based on a fixed or variable interest rate;
the change in market value of a specified security, basket of securities,
or index; or the return generated by a security. These periodic payments
received or made by the Fund are recorded in the accompanying Statement of
Operations as realized gains or losses, respectively. Gains or losses are
also realized upon termination of the swap agreements. Swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). Risks include changes in the returns of the
underlying instruments, failure of the counterparties to perform under the
contracts' terms and the possible lack of liquidity with respect to the
swap agreements.
(c) Foreign currency transactions -- Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies to U.S. dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments. The
Fund invests in foreign securities, which may involve a number of risk factors
and special considerations not present with investments in securities of U.S.
corporations.
(d) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(e) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(f) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) Securities lending -- The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. The market value of
the loaned securities is determined at the close of business of the Fund and any
additional required collateral is delivered to the Fund on the next business
day. Where the Fund receives securities as collateral for the loaned securities,
it collects a fee from the borrower. The Fund typically receives the income on
the loaned securities but does not receive the income on the collateral. Where
the Fund receives cash collateral, it may invest such collateral and retain the
amount earned on such investment, net of any amount rebated to the borrower.
Loans of securities are terminable at any time and the borrower, after notice,
is required to return borrowed securities within five business days. The Fund
may pay reasonable finder's, lending agent, administrative and custodial fees in
connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any other
reason, the Fund could experience delays and costs in gaining access to the
collateral. The Fund also could suffer a loss where the value of the collateral
falls below the market value of the borrowed securities, in the event of
borrower default or in the event of losses on investments made with cash
collateral.
(h) Recent accounting pronouncements -- Effective June 29, 2007, the Fund
implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- an interpretation of FASB
Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition
threshold a tax position must meet in connection with accounting for
uncertainties in income tax positions taken or expected to be taken by an
entity, including investment companies, before being measured and recognized in
the financial statements. Management has evaluated the application of FIN 48 to
the Fund, and has determined that the adoption of FIN 48 does not have a
material impact on the Fund's financial statements. The Fund files U.S. and
various state tax returns. No income tax returns are currently under
examination. The statute of limitations on the Fund's tax returns remains open
for the years ended May 31, 2004 through May 31, 2007.
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 15
Notes to Financial Statements (concluded)
In September 2006, Statement of Financial Accounting Standards No. 157, "Fair
Value Measurements" ("FAS 157"), was issued and is effective for fiscal years
beginning after November 15, 2007. FAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. At this time, management is evaluating the implications of FAS 157
and its impact on the Fund's financial statements, if any, has not been
determined.
In addition, in February 2007, Statement of Financial Accounting Standards No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("FAS 159"), was issued and is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provisions of FAS 157. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. FAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. At this time, management is evaluating
the implications of FAS 159 and its impact on the Fund's financial statements,
if any, has not been determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with the Manager.
Merrill Lynch & Co., Inc. ("Merrill Lynch") and The PNC Financial Services
Group, Inc. are the principal owners of BlackRock, Inc.
The Manager is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Fund. For such services, the Fund
pays a monthly fee at an annual rate of .60% of the Fund's average daily net
assets plus the proceeds of any outstanding principal borrowed. In addition, the
Manager has entered into a sub-advisory agreement with BlackRock Financial
Management, Inc., an affiliate of the Manager, under which the Manager pays the
sub-adviser for services it provides a monthly fee at an annual rate equal to a
percentage of the management fee paid by the Fund to the Manager.
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to Merrill Lynch, Pierce,
Fenner & Smith Incorporated, a wholly owned subsidiary of Merrill Lynch, or its
affiliates. Pursuant to that order, the Fund has retained BlackRock Investment
Management, LLC ("BIM"), an affiliate of the Manager, as the securities lending
agent for a fee based on a share of the returns on investment of cash
collateral. BIM may, on behalf of the Fund, invest cash collateral received by
the Fund for such loans, among other things, in a private investment company
managed by the Manager or in registered money market funds advised by the
Manager or its affiliates.
For the six months ended November 30, 2007, the Fund reimbursed the Manager
$2,876 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales (including paydowns) of investments, excluding short-term
securities, for the six months ended November 30, 2007 were $73,213,875 and
$110,552,300, respectively.
4. Capital Share Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, par value
$.10, all of which were initially classified as Common Stock. The Board of
Directors is authorized, however, to reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.
5. Short-Term Borrowings:
On May 18, 2007, the Fund renewed its revolving credit and security agreement
funded by a commercial paper asset securitization program with Citicorp North
America, Inc. ("Citicorp") as agent, certain secondary backstop lenders, and
certain asset securitization conduits as lenders (the "Lenders"). The agreement
was renewed for one year and has a maximum limit of $160,000,000. Under the
Citicorp program, the conduits will fund advances to the Fund through the
issuance of highly rated commercial paper. As security for its obligations to
the Lenders under the revolving securitization facility, the Fund has granted a
security interest in substantially all of its assets to and in favor of the
Lenders. The interest rate on the Fund's borrowings is based on the interest
rate carried by the commercial paper plus a program fee. The Fund pays
additional borrowing costs including a backstop commitment fee.
For the six months ended November 30, 2007, the average amount borrowed was
approximately $97,051,000, and the daily weighted average interest rate was
5.68%.
6. Capital Loss Carryforward:
On May 31, 2007, the Fund had a net capital loss carryforward of $226,665,964,
of which $18,095,581 expires in 2008, $34,200,029 expires in 2009, $52,918,036
expires in 2010, $119,513,437 expires in 2011 and $1,938,881 expires in 2012.
This amount will be available to offset like amounts of any future taxable
gains.
7. Subsequent Event:
The Fund paid an ordinary income dividend in the amount of $.060000 per share on
December 18, 2007 to shareholders of record on December 13, 2007.
16 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
The Benefits and Risks of Leveraging
BlackRock Corporate High Yield Fund III, Inc. utilizes leverage through
borrowings or issuance of short-term debt securities or shares of Preferred
Stock. The concept of leveraging is based on the premise that the cost of assets
to be obtained from leverage will be based on short-term interest rates, which
normally will be lower than the income earned by the Fund on its longer-term
portfolio investments. Since the total assets of the Fund (including the assets
obtained from leverage) are invested in higher-yielding portfolio investments,
the Fund's Common Stock shareholders are the beneficiaries of the incremental
yield.
Leverage creates risks for holders of Common Stock including the likelihood of
greater net asset value and market price volatility. In addition, there is the
risk that fluctuations in interest rates on borrowings (or in the dividend rates
on any Preferred Stock, if the Fund were to issue Preferred Stock) may reduce
the Common Stock's yield and negatively impact its net asset value and market
price. If the income derived from securities purchased with assets received from
leverage exceeds the cost of leverage, the Fund's net income will be greater
than if leverage had not been used. Conversely, if the income from the
securities purchased is not sufficient to cover the cost of leverage, the Fund's
net income will be less than if leverage had not been used, and therefore the
amount available for distribution to Common Stock shareholders will be reduced.
Officers and Directors
G. Nicholas Beckwith, III, Director
Richard E. Cavanagh, Director
Richard S. Davis, Director
Kent Dixon, Director
Frank J. Fabozzi, Director
Kathleen F. Feldstein, Director
James T. Flynn, Director
Henry Gabbay, Director
Jerrold B. Harris, Director
R. Glenn Hubbard, Director
W. Carl Kester, Director
Karen P. Robards, Director
Robert S. Salomon, Jr., Director
Roscoe S. Suddarth, Advisory Board Member
Donald C. Burke, Fund President and Chief Executive Officer
Anne F. Ackerley, Vice President
Howard Surloff, Secretary
Brian P. Kindelan, Chief Compliance Officer
Neal J. Andrews, Chief Financial Officer
Jay M. Fife, Treasurer
Custodian
State Street Bank and Trust Company
Boston, MA 02101
Transfer Agent
Computershare Trust Company, N.A.
Providence, RI 02940-3010
Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 17
Additional Information
Proxy Results
During the six-month period ended November 30, 2007, the shareholders of
BlackRock Corporate High Yield Fund III, Inc. voted on the following proposal,
which was approved at an annual shareholders' meeting on August 16, 2007. This
proposal was part of the reorganization of the Fund's Board of Directors that
took effect on November 1, 2007. A description of the proposal and number of
shares voted are as follows:
----------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
----------------------------------------------------------------------------------------------
To elect the Fund's Directors: G. Nicholas Beckwith, III 26,796,937 1,035,585
Richard E. Cavanagh 26,827,403 1,005,119
Richard S. Davis 26,832,637 999,885
Kent Dixon 26,815,721 1,016,801
Frank J. Fabozzi 26,827,637 1,004,885
Kathleen F. Feldstein 26,852,924 979,598
James T. Flynn 26,827,047 1,005,475
Henry Gabbay 26,828,335 1,004,187
Jerrold B. Harris 26,796,841 1,035,681
R. Glenn Hubbard 26,819,603 1,012,919
W. Carl Kester 26,831,737 1,000,785
Karen P. Robards 26,861,464 971,058
Robert S. Salomon, Jr. 26,813,157 1,019,365
----------------------------------------------------------------------------------------------
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
Electronic copies of most financial reports are available on the Fund's Web
site. Shareholders can sign up for e-mail notifications of quarterly statements
and annual and semi-annual reports by enrolling in the Fund's electronic
delivery program.
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisers, banks or brokerages may offer this service.
18 BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007
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 Web sites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
BLACKROCK CORPORATE HIGH YIELD FUND III, INC. NOVEMBER 30, 2007 19
This report, including the financial information herein, is transmitted to
shareholders of BlackRock Corporate High Yield Fund III, Inc. for their
information. It is not a prospectus. The Fund has leveraged its Common Stock to
provide Common Stock shareholders with a potentially higher rate of return.
Leverage creates risk for Common Stock shareholders, including the likelihood of
greater volatility of net asset value and market price of Common Stock shares,
and the risk that fluctuations in short-term interest rates may reduce the
Common Stock's yield. Past performance results shown in this report should not
be considered a representation of future performance. Statements and other
information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available (1) at www.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock Corporate High Yield Fund III, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#COYIII-11/07
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 - Schedule of Investments - The registrant's Schedule of Investments
is included as part of the Report to Stockholders filed under Item 1
of this form.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the Board recommended by shareholders when a vacancy
becomes available. Shareholders who wish to recommend a nominee
should send nominations which include biographical information and
set forth the qualifications of the proposed nominee to the
registrant's Secretary. There have been no material changes to these
procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities and Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Corporate High Yield Fund III, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer of
BlackRock Corporate High Yield Fund III, Inc.
Date: January 16, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke,
Chief Executive Officer (principal executive officer) of
BlackRock Corporate High Yield Fund III, Inc.
Date: January 16, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews,
Chief Financial Officer (principal financial officer) of
BlackRock Corporate High Yield Fund III, Inc.
Date: January 16, 2008