UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-21286

Name of Fund: BlackRock Credit Allocation Income Trust II, Inc. (PSY)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock
Credit Allocation Income Trust II, Inc., 55 East 52^nd Street, New York, NY 10055

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

Date of fiscal year end: 10/31/2011

Date of reporting period: 04/30/2011

Item 1 – Report to Stockholders

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April 30, 2011

Semi-Annual Report (Unaudited)

} BlackRock Credit Allocation Income Trust I, Inc. (PSW)

} BlackRock Credit Allocation Income Trust II, Inc. (PSY)

} BlackRock Credit Allocation Income Trust III (BPP)

} BlackRock Credit Allocation Income Trust IV (BTZ)

} BlackRock Floating Rate Income Trust (BGT)

Not FDIC Insured • No Bank Guarantee • May Lose Value

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Dear Shareholder

Time and again, we have seen how various global events and developing trends can have significant influence on financial markets. I hope you find
that the following review of recent market conditions provides additional perspective on the performance of your investments as you read this
shareholder report.

Over the past 12 months, we have seen a sluggish, stimulus-driven economic recovery at long last gain real traction, accelerate, and transition into a
consumption-driven expansion. For the most part, 2010 was plagued with widely fluctuating economic data, but as the year drew to a close, it became
clear that cyclical stimulus had beaten out structural problems as economic data releases generally became more positive and financial markets showed
signs of continuing improvement. Although the sovereign debt crisis in Europe and high inflation in developing markets that troubled the global economy
in 2010 remain challenges today, overall investor confidence has improved considerably. During the first four months of 2011, that confidence was shaken
by political turmoil in the Middle East/North Africa region, soaring prices of oil and other commodities, tremendous natural disasters in Japan and a
change in the ratings outlook for US debt. However, strong corporate earnings prevailed and financial markets resumed their course while the global
economy continued to garner strength.

Equity markets experienced uneven growth and high volatility in 2010, but ended the year with gains. Following a strong start to 2011, the series of confi-
dence-shaking events brought spurts of heightened volatility to markets worldwide, but was not enough to derail the bull market. Overall, global equities
posted strong returns over the past 12 months. Emerging market equities, which had outperformed developed markets earlier in the period, fell prey to
heightened inflationary pressures and underperformed developed markets later in the period. In the United States, strong corporate earnings and positive
signals from the labor market were sources of encouragement for equity investors, although the housing market did not budge from its slump. Early in
2011, the US Federal Reserve announced that it would continue its Treasury purchase program (“QE2”) through to completion and keep interest rates low
for an extended period. This compelled investors to continue buying riskier assets, furthering the trend of small cap stocks outperforming large caps.

While fixed income markets saw yields trend lower (pushing bond prices higher) through most of 2010, the abrupt reversal in investor sentiment and risk
tolerance in the fourth quarter drove yields sharply upward. Global credit markets were surprisingly resilient in the face of recent headwinds and yields
regained relative stability as the period came to a close. Yield curves globally remained steep by historical standards and higher-risk sectors continued
to outperform higher-quality assets. The tax-exempt municipal market enjoyed a powerful rally during the period of low yields in 2010, but when that
trend reversed, the market was dealt an additional blow as it became evident that the Build America Bond program would not be extended. Meanwhile,
municipal finance troubles raised credit concerns among investors and tax-exempt mutual funds experienced heavy outflows, resulting in wider spreads
and falling prices. The new year brought relief from these headwinds and a steady rebound in the tax-exempt municipal market.

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

 

While no one can peer into a crystal ball and eliminate the uncertainties presented by the economic landscape and financial markets, BlackRock can
offer investors the next best thing: partnership with the world’s largest asset management firm that delivers consistent long-term investment results with
fewer surprises. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most
recent issue of our award-winning Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives. As always, we thank
you for entrusting BlackRock with your investments, and we look forward to your continued partnership in the months and years ahead.

 

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Fund Summary as of April 30, 2011 BlackRock Credit Allocation Income Trust I, Inc.

Fund Overview

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

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

Portfolio Management Commentary

How did the Fund perform?
• For the six months ended April 30, 2011, the Fund returned (0.82)%
based on market price and 3.73% based on net asset value (“NAV”).
For the same period, the closed-end Lipper Corporate Debt Funds
(BBB-Rated) category posted an average return of (0.45)% based on
market price and 2.46% based on NAV. All returns reflect reinvestment
of dividends. The Fund's discount to NAV, which widened during the
period, accounts for the difference between performance based on
price and performance based on NAV. The following discussion relates
to performance based on NAV.

What factors influenced performance?
• The primary driver of the Fund’s positive performance was its allocation
to high yield corporate credit, as the sector broadly rallied during the
period on improving fundamentals and continued signs of economic
recovery in the United States. Also contributing positively was the
Fund’s allocation and security selection within investment grade corpo-
rate credit. In particular, an allocation to capital securities, including
trust preferreds and hybrid securities, had a positive impact due to a
technical rally in that space sparked by the favorable outcome of finan-
cial regulatory reform. Within the industrials sector, the Fund’s prefer-
ence for media cable and media non-cable as well as wireless names
boosted returns as these industries performed well during the period.
The Fund also benefited from reducing its portfolio duration (sensitivity
to interest rates) in the first half of the period, as interest rates rose fol-
lowing the announcement from the US Federal Reserve that it would
implement a second round of quantitative easing.

• Conversely, the Fund’s shorter duration bias hurt performance in the
later half of the period when interest rates turned lower on rising oil
prices and the disastrous earthquake in Japan. In addition, as the yield
curve steepened near the end of 2010 and into early 2011, the Fund’s
yield curve-flattening bias (fewer holdings of short-dated bonds in favor
of longer-dated bonds) detracted from performance. Lastly, the Fund’s
financials and utilities holdings had a negative impact as both sectors
underperformed for the six-month period.

Describe recent portfolio activity.
• During the six-month period, the Fund increased exposure to high yield
corporate credit in order to position itself to benefit from the positive
effects of an accommodative monetary policy fueling an economic
recovery and improving corporate fundamentals.

Describe Fund positioning at period end.
• The Fund maintained diversified exposure across investment grade
and high yield corporate credits with a quality bias toward lower-quality
investment grade issues. The Fund ended the period with a smaller
allocation to financials in favor of the industrials and utilities sectors,
and a relatively short duration bias.

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

 

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BlackRock Credit Allocation Income Trust I, Inc.

 

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

 

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

 

 

 

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Fund Summary as of April 30, 2011 BlackRock Credit Allocation Income Trust II, Inc.

Fund Overview

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

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

Portfolio Management Commentary

How did the Fund perform?
• For the six months ended April 30, 2011, the Fund returned 0.29%
based on market price and 3.73% based on NAV. For the same period,
the closed-end Lipper Corporate Debt Funds (BBB-Rated) category
posted an average return of (0.45)% based on market price and 2.46%
based on NAV. All returns reflect reinvestment of dividends. The Fund's
discount to NAV, which widened during the period, accounts for the dif-
ference between performance based on price and performance based
on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?
• The primary driver of the Fund’s positive performance was its allocation
to high yield corporate credit, as the sector broadly rallied during the
period on improving fundamentals and continued signs of economic
recovery in the United States. Also contributing positively was the
Fund’s allocation and security selection within investment grade corpo-
rate credit. In particular, an allocation to capital securities, including
trust preferreds and hybrid securities, had a positive impact due to a
technical rally in that space sparked by the favorable outcome of finan-
cial regulatory reform. Within the industrials sector, the Fund’s prefer-
ence for media cable and media non-cable as well as wireless names
boosted returns as these industries performed well during the period.
The Fund also benefited from reducing its portfolio duration (sensitivity
to interest rates) in the first half of the period, as interest rates rose fol-
lowing the announcement from the US Federal Reserve that it would
implement a second round of quantitative easing.

• Conversely, the Fund’s shorter duration bias hurt performance in the
later half of the period when interest rates turned lower on rising oil
prices and the disastrous earthquake in Japan. In addition, as the yield
curve steepened near the end of 2010 and into early 2011, the Fund’s
yield curve-flattening bias (fewer holdings of short-dated bonds in favor
of longer-dated bonds) detracted from performance. Lastly, the Fund’s
financials and utilities holdings had a negative impact as both sectors
underperformed for the six-month period.

Describe recent portfolio activity.
• During the six-month period, the Fund increased exposure to high yield
corporate credit in order to position itself to benefit from the positive
effects of an accommodative monetary policy fueling an economic
recovery and improving corporate fundamentals.

Describe Fund positioning at period end.
• The Fund maintained diversified exposure across investment grade and
high yield corporate credits with a quality bias toward lower-quality
investment grade issues. The Fund ended the period with a smaller allo-
cation to financials in favor of the industrials and utilities sectors, and a
relatively short duration bias.

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

 

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BlackRock Credit Allocation Income Trust II, Inc.

 

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

 

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

 

 

 

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Fund Summary as of April 30, 2011 BlackRock Credit Allocation Income Trust III

Fund Overview

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

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

Portfolio Management Commentary

How did the Fund perform?
• For the six months ended April 30, 2011, the Fund returned (1.30)%
based on market price and 3.95% based on NAV. For the same period,
the closed-end Lipper Corporate Debt Funds (BBB-Rated) category
posted an average return of (0.45)% based on market price and 2.46%
based on NAV. All returns reflect reinvestment of dividends. The Fund's
discount to NAV, which widened during the period, accounts for the dif-
ference between performance based on price and performance based
on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?
• The primary driver of the Fund’s positive performance was its allocation
to high yield corporate credit, as the sector broadly rallied during the
period on improving fundamentals and continued signs of economic
recovery in the United States. Also contributing positively was the
Fund’s allocation and security selection within investment grade corpo-
rate credit. In particular, an allocation to capital securities, including
trust preferreds and hybrid securities, had a positive impact due to a
technical rally in that space sparked by the favorable outcome of finan-
cial regulatory reform. Within the industrials sector, the Fund’s prefer-
ence for media cable and media non-cable as well as wireless names
boosted returns as these industries performed well during the period.
The Fund also benefited from reducing its portfolio duration (sensitivity
to interest rates) in the first half of the period, as interest rates rose fol-
lowing the announcement from the US Federal Reserve that it would
implement a second round of quantitative easing.

• Conversely, the Fund’s shorter duration bias hurt performance in the
later half of the period when interest rates turned lower on rising oil
prices and the disastrous earthquake in Japan. In addition, as the yield
curve steepened near the end of 2010 and into early 2011, the Fund’s
yield curve-flattening bias (fewer holdings of short-dated bonds in favor
of longer-dated bonds) detracted from performance. Lastly, the Fund’s
financials and utilities holdings had a negative impact as both sectors
underperformed for the six-month period.

Describe recent portfolio activity.
• During the six-month period, the Fund increased exposure to high yield
corporate credit in order to position itself to benefit from the positive
effects of an accommodative monetary policy fueling an economic
recovery and improving corporate fundamentals.

Describe Fund positioning at period end.
• The Fund maintained diversified exposure across investment grade and
high yield corporate credits with a quality bias toward lower-quality
investment grade issues. The Fund ended the period with a smaller
allocation to financials in favor of the industrials and utilities sectors,
and a relatively short duration bias.

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

 

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BlackRock Credit Allocation Income Trust III

 

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

 

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

 

 

 

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Fund Summary as of April 30, 2011 BlackRock Credit Allocation Income Trust IV

Fund Overview

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

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

Portfolio Management Commentary

How did the Fund perform?
• For the six months ended April 30, 2011, the Fund returned (1.74)%
based on market price and 3.15% based on NAV. For the same period,
the closed-end Lipper Corporate Debt Funds (BBB-Rated) category
posted an average return of (0.45)% based on market price and 2.46%
based on NAV. All returns reflect reinvestment of dividends. The Fund's
discount to NAV, which widened during the period, accounts for the dif-
ference between performance based on price and performance based
on NAV. The following discussion relates to performance based on NAV.

What factors influenced performance?
• The primary driver of the Fund’s positive performance was its allocation
to high yield corporate credit, as the sector broadly rallied during the
period on improving fundamentals and continued signs of economic
recovery in the United States. Also contributing positively was the
Fund’s allocation and security selection within investment grade corpo-
rate credit. In particular, an allocation to capital securities, including
trust preferreds and hybrid securities, had a positive impact due to a
technical rally in that space sparked by the favorable outcome of finan-
cial regulatory reform. Within the industrials sector, the Fund’s prefer-
ence for media cable and media non-cable as well as wireless names
boosted returns as these industries performed well during the period.
The Fund also benefited from reducing its portfolio duration (sensitivity
to interest rates) in the first half of the period, as interest rates rose fol-
lowing the announcement from the US Federal Reserve that it would
implement a second round of quantitative easing.

• Conversely, the Fund’s shorter duration bias hurt performance in the
later half of the period when interest rates turned lower on rising oil
prices and the disastrous earthquake in Japan. In addition, as the yield
curve steepened near the end of 2010 and into early 2011, the Fund’s
yield curve-flattening bias (fewer holdings of short-dated bonds in favor
of longer-dated bonds) detracted from performance. Lastly, the Fund’s
financials and utilities holdings had a negative impact as both sectors
underperformed for the six-month period.

Describe recent portfolio activity.
• During the six-month period, the Fund increased exposure to high yield
corporate credit in order to position itself to benefit from the positive
effects of an accommodative monetary policy fueling an economic
recovery and improving corporate fundamentals.

Describe Fund positioning at period end.
• The Fund maintained diversified exposure across investment grade
and high yield corporate credits with a quality bias toward lower-quality
investment grade issues. The Fund ended the period with a smaller
allocation to financials in favor of the industrials and utilities sectors,
and a relatively short duration bias.

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

 

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BlackRock Credit Allocation Income Trust IV

 

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

 

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

 

 

 

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Fund Summary as of April 30, 2011 BlackRock Floating Rate Income Trust

Fund Overview

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

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

Portfolio Management Commentary

How did the Fund perform?
• For the six months ended April 30, 2011, the Fund returned 12.37%
based on market price and 6.49% based on NAV. For the same period,
the closed-end Lipper Loan Participation Funds category posted an
average return of 11.45% based on market price and 6.56% based on
NAV. All returns reflect reinvestment of dividends. The Fund's premium
to NAV, which widened during the period, accounts for the difference
between performance based on price and performance based on NAV.
The following discussion relates to performance based on NAV.

What factors influenced performance?
• The main driver of positive performance for the period was the Fund’s
allocation (approximately 10% of the portfolio) to high yield bonds, as
the asset class outperformed Floating Rate Loan Interests (bank loans).
In addition, the Fund maintained its level of leverage at or above the
Lipper category average, which benefited the Fund’s performance rela-
tive to its peer group competitors that do not employ leverage, as would
be expected when markets are advancing.

• As a matter of investment style, the Fund holds a considerable alloca-
tion to foreign bonds (approximately 30% of the portfolio). Many of
those non-US issuers have investment grade credit quality ratings,
such as Gazprom (Russia), which underperformed the Fund’s high
yield bond holdings.

• The Fund uses foreign currency exchange contracts to manage currency
risk in the portfolio. The net effect of the contracts duing the period
was negative.

Describe recent portfolio activity.
• During the six-month period, the Fund decreased its exposure to higher-
quality high yield credits and increased exposure to high yield credits
with mid-range quality ratings as the economy gradually expanded and
a robust new-issue market provided greater access to attractive oppor-
tunities. Relative to its competitors, the Fund continues to maintain a
bias towards higher-quality and more liquid borrowers, sectors and loan
structures, particularly as loan prices generally are approaching par.

Describe Fund positioning at period end.
• At period end, the Fund held 85% of its total portfolio in bank loans
and 15% in fixed-rate bonds, primarily high yield, with the remainder
invested in a mix of convertible bonds, preferred securities, equities and
cash. The Fund ended the period with leverage at approximately 31% of
its total managed assets.

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

 

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BlackRock Floating Rate Income Trust

 

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

 

The following charts show the portfolio composition of the Fund’s long-term investments and credit quality allocations of the Fund’s long-term investments
excluding common stocks and floating rate loan interests:

 

 

 

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The Benefits and Risks of Leveraging

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

The Funds may utilize leverage by borrowing through a credit facility or
entering into reverse repurchase agreements. PSW, PSY, BPP, BTZ and BGT
had auction market preferred shares (“Preferred Shares”) issuances out-
standing during the six-month period ended April 30, 2011. In general, the
concept of leveraging is based on the premise that the cost of assets to
be obtained from leverage, which will be based on short-term interest
rates, will normally be lower than the income earned by each Fund on
its longer-term portfolio investments. To the extent that the total assets of
each Fund (including the assets obtained from leverage) are invested in
higher-yielding portfolio investments, each Fund’s Common Shareholders
will benefit from the incremental net income.

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

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

If short-term interest rates rise, narrowing the differential between short-
term and long-term interest rates, the incremental net income pickup on
the Common Shares will be reduced or eliminated completely. Furthermore,
if prevailing short-term interest rates rise above long-term interest rates of
6%, the yield curve has a negative slope. In this case, the Fund pays divi-
dends on the higher short-term interest rates whereas the Fund’s total
portfolio earns income based on lower long-term interest rates.

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

The use of leverage may enhance opportunities for increased income to the
Funds and Common Shareholders, but as described above, it also creates
risks as short or long-term interest rates fluctuate. Leverage also will gener-
ally cause greater changes in the Funds’ NAVs, market prices and dividend
rates than comparable portfolios without leverage. If the income derived
from securities purchased with assets received from leverage exceeds the
cost of leverage, each Fund’s net income will be greater than if leverage had
not been used. Conversely, if the income from the securities purchased is
not sufficient to cover the cost of leverage, each Fund’s net income will be
less than if leverage had not been used, and therefore the amount available
for distribution to Common Shareholders will be reduced. Each Fund may be
required to sell portfolio securities at inopportune times or at distressed
values in order to comply with regulatory requirements applicable to the use
of leverage or as required by the terms of leverage instruments which may
cause a Fund to incur losses. The use of leverage may limit each Fund’s abil-
ity to invest in certain types of securities or use certain types of hedging
strategies. Each Fund will incur expenses in connection with the use of
leverage, all of which are borne by Common Shareholders and may reduce
income to the Common Shares.

Under the Investment Company Act of 1940, each Fund is permitted to bor-
row up to 33 ¹ / ₃ % of its total managed assets. Under normal circumstances,
each Fund anticipates that the total economic leverage from reverse repur-
chase agreements and credit facility borrowings will not exceed 33 ¹ / ₃ % of its
total managed assets at the time such leverage is incurred. As of April 30,
2011, the Funds had economic leverage from reverse repurchase agree-
ments and/or credit facility borrowings as a percentage of their total man-
aged assets as follows:

 

 

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Derivative Financial Instruments

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

 

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BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments April 30, 2011 (Unaudited)
(Percentages shown are based on Net Assets)

 

 

 

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BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

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BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

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BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2011, as computed for federal income tax purposes, were as follows:

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) All or a portion of security has been pledged as collateral in connection with open
reverse repurchase agreements.
(d) Security is perpetual in nature and has no stated maturity date.
(e) Represents a payment-in-kind security which may pay interest/dividends in
additional par/shares.
(f) Non-income producing security.

 

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BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments (continued)

 

 

 

 

• Credit default swaps on single-name issuer — sold protection outstanding as of
April 30, 2011 were as follows:

¹ Using S&P’s rating of the underlying securities.
² The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

 

---

BlackRock Credit Allocation Income Trust I, Inc. (PSW)
Schedule of Investments (concluded)

• Credit default swaps on traded indexes — sold protection outstanding as of April 30,
2011 were as follows:

¹ Using S&P’s rating of the underlying securities.
² The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

• Interest rate swaps outstanding as of April 30, 2011 were as follows:

^(a)Pays a fixed interest rate and receives floating rate.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments and derivative financial instruments. These inputs are summarized in
three broad levels for financial statement purposes as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments and
derivative financial instruments)
The inputs or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For information
about the Fund’s policy regarding valuation of investments and derivative financial
instruments and other significant accounting policies, please refer to Note 1 of the
Notes to Financial Statements.

The following tables summarize the inputs used as of April 30, 2011 in determining
the fair valuation of the Fund’s investments and derivative financial instruments:

 

¹ Derivative financial instruments are swaps, financial futures contracts, and
options. Financial futures contracts and swaps are valued at the unrealized
appreciation/depreciation on the instrument and options are shown at value.

 

---

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments April 30, 2011 (Unaudited)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2011, as computed for federal income tax purposes, were as follows:

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) All or a portion of security has been pledged as collateral in connection with open
reverse repurchase agreements.
(d) Security is perpetual in nature and has no stated maturity date.
(e) Represents a payment-in-kind security which may pay interest/dividends in
additional par/shares.
(f) Non-income producing security.

 

---

BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments (continued)

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

(h) Represents the current yield as of report date.

• For Fund compliance purposes, the Fund’s industry classifications refer to any one
or more of the industry sub-classifications used by one or more widely recognized
market indexes or rating group indexes, and/or as defined by Fund management.
These definitions may not apply for purposes of this report, which may combine
such industry sub-classifications for reporting ease.
• Reverse repurchase agreements outstanding as of April 30, 2011 were as follows:

• Reverse repurchase agreements outstanding as of April 30, 2011 were as follows
(concluded):

• Foreign currency exchange contracts as of April 30, 2011 were as follows:

• Financial futures contracts purchased as of April 30, 2011 were as follows:

 

 

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BlackRock Credit Allocation Income Trust II, Inc. (PSY)
Schedule of Investments (concluded)

• Financial futures contracts sold as of April 30, 2011 were as follows:

• Credit default swaps on single-name issuer — sold protection outstanding as of
April 30, 2011 were as follows:

¹ Using S&P’s rating of the underlying securities.
² The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

• Credit default swaps on traded indexes — sold protection outstanding as of April 30,
2011 were as follows:

³ Using S&P’s rating of the underlying securities.
⁴ The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

• Interest rate swaps outstanding as of April 30, 2011 were as follows:

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments and derivative financial instruments. These inputs are summarized in
three broad levels for financial statement purposes as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments and
derivative financial instruments)

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

The following tables summarize the inputs used as of April 30, 2011 in determining
the fair valuation of the Fund’s investments and derivative financial instruments:

 

¹ Derivative financial instruments are swaps, financial futures contracts,
foreign currency exchange contracts and options. Financial futures contracts,
foreign currency exchange contracts and swaps are valued at the unrealized
appreciation/depreciation on the instrument and options are shown at value.

See Notes to Financial Statements.

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments April 30, 2011 (Unaudited)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments (continued)

* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2011, as computed for federal income tax purposes, were as follows:

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) All or a portion of security has been pledged as collateral in connection with open
reverse repurchase agreements.
(d) Security is perpetual in nature and has no stated maturity date.
(e) Issuer filed for bankruptcy and/or is in default of interest payments.
(f) Non-income producing security.
(g) Represents a payment-in-kind security which may pay interest/dividends in
additional par/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, if any.
(i) Investments in companies considered to be an affiliate of the Fund during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

(j) Represents the current yield as of report date.
• For Fund compliance purposes, the Fund’s industry classifications refer to any one
or more of the industry sub-classifications used by one or more widely recognized
market indexes or rating group indexes, and/or as defined by Fund management.
These definitions may not apply for purposes of this report, which may combine
such industry sub-classifications for reporting ease.
• Reverse repurchase agreements outstanding as of April 30, 2011 were as follows:

 

• Reverse repurchase agreements outstanding as of April 30, 2011 were as follows
(concluded):

• Financial futures contracts purchased as of April 30, 2011 were as follows:

 

 

---

BlackRock Credit Allocation Income Trust III (BPP)
Schedule of Investments (concluded)

• Financial futures contracts sold as of April 30, 2011 were as follows:

• Credit default swaps on single-name issuer — buy protection outstanding as of
April 30, 2011 were as follows:

• Credit default swaps on single-name issuer — sold protection outstanding as of
April 30, 2011 were as follows:

¹ Using S&P’s rating of the underlying securities.
² The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

• Interest rate swaps outstanding as of April 30, 2011 were as follows:

^(a)Pays a fixed interest rate and receives floating rate.
^(b)Pays floating interest rate and receives fixed rate.

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments and derivative financial instruments. These inputs are summarized in
three broad levels for financial statement purposes as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices
for similar assets or liabilities in markets that are active, quoted prices for iden-
tical or similar assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the assets or liabilities (such as
interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit
risks and default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments and
derivative financial instruments)

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

The following tables summarize the inputs used as of April 30, 2011 in determining
the fair valuation of the Fund’s investments and derivative financial instruments:

 

¹ Derivative financial instruments are swaps, financial futures contracts, and
options. Financial futures contracts and swaps are valued at the unrealized
appreciation/depreciation on the instrument and options are shown at value.

 

---

BlackRock Credit Allocation Income Trust IV (BTZ)
Schedule of Investments April 30, 2011 (Unaudited)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

 

---

BlackRock Credit Allocation Income Trust IV (BTZ)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements

 

---

BlackRock Credit Allocation Income Trust IV (BTZ)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

Schedule of Investments (continued)
BlackRock Credit Allocation Income Trust IV (BTZ)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Credit Allocation Income Trust IV (BTZ)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2011, as computed for federal income tax purposes, were as follows:

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) All or a portion of security has been pledged as collateral in connection with open
reverse repurchase agreements.
(d) Security is perpetual in nature and has no stated maturity date.
(e) Represents a payment-in-kind security which may pay interest/dividends in
additional par/shares.
(f) Non-income producing security.
(g) Investments in companies considered to be an affiliate of the Fund during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

(h) Represents the current yield as of report date.

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

• Reverse repurchase agreements outstanding as of April 30, 2011 were as follows:

• Financial futures contracts purchased as of April 30, 2011 were as follows:

 

 

---

BlackRock Credit Allocation Income Trust IV (BTZ)
Schedule of Investments (concluded)

• Financial futures contracts sold as of April 30, 2011 were as follows:

• Credit default swaps on single-name issuer — sold protection outstanding as of
April 30, 2011 were as follows:

¹ Using S&P’s rating of the underlying securities.
² The maximum potential amount the Fund may pay should a negative event take
place as defined under the terms of agreement.

• Interest rate swaps outstanding as of April 30, 2011 were as follows:

^(a)Pays a fixed interest rate and receives floating rate.
^(b)Pays floating interest rate and receives fixed rate.

The following tables summarize the inputs used as of April 30, 2011 in determining
the fair valuation of the Fund’s investments and derivative financial instruments:

 

¹ Derivative financial instruments are swaps, financial futures contracts and
options. Swaps and financial futures contracts are valued at the unrealized
appreciation/depreciation on the instrument and options are shown at value.

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments April 30, 2011 (Unaudited)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

See Notes to Financial Statements.

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

 

 

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

* The cost and unrealized appreciation (depreciation) of investments as of April 30,
2011, as computed for federal income tax purposes, were as follows:

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration to qualified
institutional investors.
(b) Variable rate security. Rate shown is as of report date.
(c) Non-income producing security.
(d) Convertible security.
(e) Represents a zero-coupon bond. Rate shown reflects the current yield as of
report date.
(f) Issuer filed for bankruptcy and/or is in default of interest payments.
(g) Represents a payment-in-kind security which may pay interest/dividends in
additional par/shares.
(h) Other interests represent beneficial interest in liquidation trusts and other reorgani-
zation entities and are non-income producing.
(i) Amount is less than $1,000.
(j) The investment is held by a wholly owned taxable subsidiary of the Fund.
(k) Warrants entitle the Fund to purchase a predetermined number of shares of com-
mon stock and are non-income producing. The purchase price and number of
shares are subject to adjustment under certain conditions until the expiration date,
if any.
(l) Investments in companies considered to be an affiliate of the Fund during the
period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as
amended, were as follows:

(m) Represents the current yield as of report date.

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

• Foreign currency exchange contracts as of April 30, 2011 were as follows:

• Fair Value Measurements — Various inputs are used in determining the fair value of
investments and derivative financial instruments. These inputs are summarized in
three broad levels for financial statement purposes as follows:
• Level 1 — price quotations in active markets/exchanges for identical assets
and liabilities
• Level 2 — other observable inputs (including, but not limited to: quoted prices for
similar assets or liabilities in markets that are active, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than
quoted prices that are observable for the assets or liabilities (such as interest
rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and
default rates) or other market-corroborated inputs)
• Level 3 — unobservable inputs based on the best information available in the
circumstances, to the extent observable inputs are not available (including the
Fund’s own assumptions used in determining the fair value of investments and
derivative financial instruments)

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

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (continued)

The following tables summarize the inputs used as of April 30, 2011 in determining
the fair valuation of the Fund’s investments and derivative financial instruments:

 

¹ Derivative financial instruments are foreign currency exchange contracts and
options. Foreign currency exchange contracts are shown at the unrealized
appreciation/depreciation on the instrument and options are shown at value.

 

---

BlackRock Floating Rate Income Trust (BGT)
Schedule of Investments (concluded)

The following tables are a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

¹ Included in the related net change in unrealized appreciation/depreciation in the Statements of Operations. The change in unrealized appreciation/depreciation on investments
still held at April 30, 2011 was $1,246,867.
² The Fund’s policy is to recognize transfers in and transfers out as of the beginning of the period of the event or the change in circumstances that caused the transfer.

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

³ Issuances represent upfront cash received on certain derivative financial
instruments.
⁴ Settlements represent periodic contractual cash flows and/or cash flows to
terminate certain derivative financial instruments.
⁵ The Fund’s policy is to recognize transfers in and transfers out as of the
beginning of the period of the event or the change in circumstances that
caused the transfer.

A reconciliation of Level 3 investments and derivatives is presented when the Fund
had a significant amount of Level 3 investments and derivatives at the beginning
and/or end of the period in relation to net assets.

 

---

 

 

---

¹ See Note 8 of the Notes to the Financial Statements for details of short-term borrowings.

 

---

 

 

---

 

 

---

 

 

---

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

 

---

¹ Based on average shares outstanding.
² A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.
³ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns.
Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Includes proceeds from a settlement of litigation which impacted the Fund. Not including these proceeds the Fund’s total return would have been 24.54%.
⁶ Do not reflect the effect of dividends to Preferred Shareholders.
⁷ Annualized.

See Notes to Financial Statements.

54 SEMI-ANNUAL REPORT APRIL 30, 2011

---

¹ Based on average shares outstanding.
² A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.
³ Amount is less than $(0.01) per share.
⁴ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns.
Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁵ Aggregate total investment return.
⁶ Includes proceeds from a settlement of litigation which impacted the Fund. Not including these proceeds the Fund’s total return would have been 25.37%.
⁷ Do not reflect the effect of dividends to Preferred Shareholders.
⁸ Annualized.

 

---

¹ Based on average shares outstanding.
² Amount is less than $(0.01) per share.
³ A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.
⁴ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns.
Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁵ Aggregate total investment return.
⁶ Do not reflect the effect of dividends to Preferred Shareholders.
⁷ Annualized.

 

---

¹ Commencement of operations.
² Net asset value, beginning of period, reflects a deduction of $1.12 per share sales charge from initial offering price of $25.00 per share.
³ Based on average shares outstanding.
⁴ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns.
Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁵ Aggregate total investment return.
⁶ Do not reflect the effect of dividends to Preferred Shareholders.
⁷ Annualized.

 

---

¹ Based on average shares outstanding.
² Amount is less than $(0.01) per share.
³ Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns.
Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Do not reflect the effect of dividends to Preferred Shareholders.
⁶ Annualized.

 

---

Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Credit Allocation Income Trust I, Inc. (“PSW”) and BlackRock
Credit Allocation Income Trust II, Inc. (“PSY”) are registered as diversified,
closed-end management investment companies under the Investment
Company Act of 1940, as amended (the “1940 Act”). BlackRock Credit
Allocation Income Trust III (“BPP”), BlackRock Credit Allocation Income Trust
IV (“BTZ”) and BlackRock Floating Rate Income Trust (“BGT”) are registered
as non-diversified, closed-end management investment companies under
the 1940 Act. PSW and PSY are organized as Maryland corporations. BPP,
BTZ and BGT are organized as Delaware statutory trusts. PSW, PSY, BPP, BTZ
and BGT are collectively referred to as the “Funds” or individually as the
“Fund.” The Funds’ financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America
(“US GAAP”), which may require management to make estimates and
assumptions that affect the reported amounts and disclosure in the finan-
cial statements. Actual results could differ from these estimates. The Board
of Directors and Board of Trustees of the Funds, as applicable, are referred
to throughout this report as the “Board of Directors” or the “Board.” The
Funds determine and make available for publication the net asset values
of their Common Shares on a daily basis.

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

Valuation: US GAAP defines fair value as the price the Funds would receive
to sell an asset or pay to transfer a liability in an orderly transaction
between market participants at the measurement date. The Funds fair value
their financial instruments at market value using independent dealers or
pricing services under policies approved by the Board. Floating rate
loan interests are valued at the mean of the bid prices from one or more
brokers or dealers as obtained from a pricing service. In determining the
value of a particular investment, pricing services may use certain informa-
tion with respect to transactions in such investments, quotations from
dealers, pricing matrixes, market transactions in comparable investments,
various relationships observed in the market between investments and
calculated yield measures. Financial futures contracts traded on exchanges
are valued at their last sale price. Swap agreements are valued utilizing
quotes received daily by the Funds’ pricing service or through brokers,
which are derived using daily swap curves and models that incorporate a
number of market data factors, such as discounted cash flows and trades
and values of the underlying reference instruments. Investments in open-
end investment companies are valued at net asset value each business
day. Short-term securities with remaining maturities of 60 days or less may
be valued at amortized cost, which approximates fair value.

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

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

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

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

Generally, trading in foreign instruments is substantially completed
each day at various times prior to the close of business on the NYSE.
Occasionally, events affecting the values of such instruments may occur
between the foreign market close and the close of business on the NYSE
that may not be reflected in the computation of each Fund’s net assets.
If events (for example, a company announcement, market volatility or a
natural disaster) occur during such periods that are expected to materially
affect the value of such instruments, those instruments may be Fair Value
Assets and be valued at their fair value, as determined in good faith by
the investment advisor using a pricing service and/or policies approved
by the Board. Each business day, the Funds use a pricing service to assist
with the valuation of certain foreign exchange-traded equity securities
and foreign exchange-traded and OTC options (the “Systematic Fair Value
Price”). Using current market factors, the Systematic Fair Value Price is
designed to value such foreign securities and foreign options at fair value
as of the close of business on the NYSE, which follows the close of the
local markets.

Foreign Currency Transactions: The Funds’ books and records are main-
tained in US dollars. Purchases and sales of investment securities are
recorded at the rates of exchange prevailing on the date the transactions
are entered into. Generally, when the US dollar rises in value against a
foreign currency, the Funds’ investments denominated in that currency will

 

---

Notes to Financial Statements (continued)

lose value because its currency is worth fewer US dollars; the opposite
effect occurs if the US dollar falls in relative value.

The Funds report realized currency gains (losses) on foreign currency
related transactions as components of net realized gain (loss) for financial
reporting purposes, whereas such components are treated as ordinary
income for federal income tax purposes.

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

Capital Trusts: The Funds may invest in capital trusts. These securities are
typically issued by corporations, generally in the form of interest-bearing
notes with preferred securities characteristics, or by an affiliated business
trust of a corporation, generally in the form of beneficial interests in
subordinated debentures or similarly structured securities. The securities
can be structured as either fixed or adjustable coupon securities that can
have either a perpetual or stated maturity date. Dividends can be deferred
without creating an event of default or acceleration, although maturity
cannot take place unless all cumulative payment obligations have been
met. The deferral of payments does not affect the purchase or sale of
these securities in the open market. Payments on these securities are
treated as interest rather than dividends for federal income tax purposes.
These securities generally are rated below that of the issuing company’s
senior debt securities.

Preferred Stock: The Funds may invest in preferred stocks. Preferred stock
has a preference over common stock in liquidation (and generally in receiv-
ing dividends as well) but is subordinated to the liabilities of the issuer in
all respects. As a general rule, the market value of preferred stock with a
fixed dividend rate and no conversion element varies inversely with interest
rates and perceived credit risk, while the market price of convertible pre-
ferred stock generally also reflects some element of conversion value.
Because preferred stock is junior to debt securities and other obligations
of the issuer, deterioration in the credit quality of the issuer will cause
greater changes in the value of a preferred stock than in a more senior
debt security with similar stated yield characteristics. Unlike interest pay-
ments on debt securities, preferred stock dividends are payable only if
declared by the issuer’s board of directors. Preferred stock also may be
subject to optional or mandatory redemption provisions.

Floating Rate Loan Interests: The Funds may invest in floating rate loan
interests. The floating rate loan interests the Funds hold are typically
issued to companies (the “borrower”) by banks, other financial institutions,
and privately and publicly offered corporations (the “lender”). Floating rate
loan interests are generally non-investment grade, often involve borrowers
whose financial condition is troubled or uncertain and companies that
are highly levered. The Funds may invest in obligations of borrowers who
are in bankruptcy proceedings. Floating rate loan interests may include
fully funded term loans or revolving lines of credit. Floating rate loan
interests are typically senior in the corporate capital structure of the
borrower. Floating rate loan interests generally pay interest at rates that
are periodically determined by reference to a base lending rate plus a
premium. The base lending rates are generally the lending rate offered by
one or more European banks, such as LIBOR (London Inter Bank Offered
Rate), the prime rate offered by one or more US banks or the certificate of
deposit rate. Floating rate loan interests may involve foreign borrowers, and
investments may be denominated in foreign currencies. The Funds consider
these investments to be investments in debt securities for purposes of
their investment policies.

When a Fund buys a floating rate loan interest it may receive a facility
fee and when it sells a floating rate loan interest it may pay a facility fee.
On an ongoing basis, the Funds may receive a commitment fee based on
the undrawn portion of the underlying line of credit amount of a floating
rate loan interest. The Funds earn and/or pays facility and other fees on
floating rate loan interests, which are shown as facility and other fees in
the Statements of Operations. Facility and commitment fees are typically
amortized to income over the term of the loan or term of the commitment,
respectively. Consent and amendment fees are recorded to income as
earned. Prepayment penalty fees, which may be received by the Funds
upon the prepayment of a floating rate loan interest by a borrower, are
recorded as realized gains. The Funds may invest in multiple series or
tranches of a loan. A different series or tranche may have varying terms
and carry different associated risks.

Floating rate loan interests are usually freely callable at the borrower’s
option. The Funds may invest in such loans in the form of participations
in loans (“Participations”) or assignments (“Assignments”) of all or a
portion of loans from third parties. Participations typically will result in the
Funds having a contractual relationship only with the lender, not with the
borrower. The Funds will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
Participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing Participations, the Funds generally
will have no right to enforce compliance by the borrower with the terms of
the loan agreement, nor any rights of offset against the borrower, and the
Funds may not benefit directly from any collateral supporting the loan
in which it has purchased the Participation. As a result, the Funds will
assume the credit risk of both the borrower and the lender that is selling
the Participation. The Funds’ investment in loan participation interests
involves the risk of insolvency of the financial intermediaries who are
parties to the transactions. In the event of the insolvency of the lender
selling the Participation, the Funds may be treated as general creditors of
the lender and may not benefit from any offset between the lender and
the borrower. Assignments typically result in the Funds having a direct
contractual relationship with the borrower, and the Funds may enforce
compliance by the borrower with the terms of the loan agreement.

Reverse Repurchase Agreements: The Funds may enter into reverse
repurchase agreements with qualified third party broker-dealers. In a
reverse repurchase agreement, the Funds sell securities to a bank or
broker-dealer and agrees to repurchase the same securities at a mutually
agreed upon date and price. Certain agreements have no stated maturity
and can be terminated by either party at any time. Interest on the value of

 

---

Notes to Financial Statements (continued)

the reverse repurchase agreements issued and outstanding is based upon
competitive market rates determined at the time of issuance. The Funds
may utilize reverse repurchase agreements when it is anticipated that the
interest income to be earned from the investment of the proceeds of the
transaction is greater than the interest expense of the transaction. Reverse
repurchase agreements involve leverage risk and also the risk that the
market value of the securities that the Funds are obligated to repurchase
under the agreement may decline below the repurchase price. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the Funds’ use of the proceeds of the
agreement may be restricted while the other party, or its trustee or receiver,
determines whether or not to enforce the Funds’ obligation to repurchase
the securities.

Defensive Positions: PSW, PSY, BPP and BTZ Fund may vary its investment
policies for temporary defensive purposes during periods in which the
investment advisor believes that conditions in the securities markets or
other economic, financial or political conditions warrant. Under such
conditions, the Funds for temporary defensive purposes may invest up to
100% of its total assets in, as applicable and described in each Fund’s
prospectus, US government securities, certificates of deposit, repurchase
agreements that involve purchases of debt securities, bankers’ acceptances
and other bank obligations, commercial paper, money market funds and/or
other debt securities deemed by the investment advisor to be consistent
with a defensive posture, or may hold its assets in cash.

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

Investment Transactions and Investment Income: For financial reporting
purposes, investment transactions are recorded on the dates the trans-
actions are entered into (the trade dates). Realized gains and losses on
investment transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend dates. Dividends from
foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Funds are informed of the ex-dividend
date. Under the applicable foreign tax laws, a withholding tax at various
rates may be imposed on capital gains, dividends and interest. Upon
notification from issuers, some of the dividend income received from a
real estate investment trust may be redesignated as a reduction of cost
of the related investment and/or realized gain. Interest income, including
amortization and accretion of premiums and discounts on debt securities,
is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are
declared and paid daily. Distributions of capital gains are recorded on
the ex-dividend dates. If the total dividends and distributions made in any
tax year exceeds net investment income and accumulated realized capital
gains, a portion of the total distribution may be treated as a tax return of
capital. The amount and timing of dividends and distributions are deter-
mined in accordance with federal income tax regulations, which may differ
from US GAAP. Dividends and distributions to Preferred Shareholders were
accrued and determined as described in Note 6.

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

BGT has a wholly owned taxable subsidiary organized as a limited liability
company (the “Taxable Subsidiary”) which holds one of the investments
listed in the Schedule of Investments. The Taxable Subsidiary enables the
Fund to hold an investment that is organized as an operating partnership
while still satisfying Regulated Investment Company tax requirements.
Income earned on the investment held by the Taxable Subsidiary is
taxable to such subsidiary. An income tax provision for all income,
including realized and unrealized gains, if any, of the Taxable Subsidiary is
reflected in the value of the investment held by the Taxable Subsidiary.

Each Fund files US federal and various state and local tax returns. No
income tax returns are currently under examination. The statute of limita-
tions on PSW’s and PSY’s US federal tax returns remains open for the four
years ended October 31, 2010. The statute of limitations on BPP’s and
BGT’s US federal tax returns remains open for the year ended December
31, 2007, the period ended October 31, 2008 and the two years ended
October 31, 2010. The statute of limitations on BTZ’s US Federal tax
returns remains open for the three years ended October 31, 2010 and
the period ended October 31, 2007. The statutes of limitations on the
Funds’ state and local tax returns may remain open for an additional year
depending upon the jurisdiction. There are no uncertain tax positions that
require recognition of a tax liability.

Deferred Compensation and BlackRock Closed-End Share Equivalent
Investment Plan: Under the deferred compensation plan approved by each
Fund’s Board, independent Directors (“Independent Directors”) may defer
a portion of their annual complex-wide compensation. Deferred amounts
earn an approximate return as though equivalent dollar amounts had been
invested in common shares of certain other BlackRock Closed-End Funds
selected by the Independent Directors. This has approximately the same
economic effect for the Independent Directors as if the Independent
Directors had invested the deferred amounts directly in certain other
BlackRock Closed-End Funds.

The deferred compensation plan is not funded and obligations there-under
represent general unsecured claims against the general assets of each
Fund. Each Fund may, however, elect to invest in common shares of certain
other BlackRock Closed-End Funds selected by the Independent Directors

 

---

Notes to Financial Statements (continued)

in order to match its deferred compensation obligations. Investments to
cover each Fund’s deferred compensation liability, if any, are included in
other assets in the Statements of Assets and Liabilities. Dividends and
distributions from the BlackRock Closed-End Fund investments under the
plan are included in income — affiliated in the Statements of Operations.

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

2. Derivative Financial Instruments:

The Funds engage in various portfolio investment strategies using derivative
contracts both to increase the returns of the Funds and to economically
hedge, or protect, their exposure to certain risks such as credit risk, equity
risk, interest rate risk, foreign currency exchange rate risk or other risk
(commodity price risk and inflation risk). These contracts may be trans-
acted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavor-
able change in the market rates or values of the underlying instrument or
if the counterparty does not perform under the contract. The Funds’ maxi-
mum risk of loss from counterparty credit risk on OTC derivatives is gener-
ally the aggregate unrealized gain netted against any collateral pledged
by/posted to the counterparty. For OTC options purchased, the Funds
bear the risk of loss in the amount of the premiums paid plus the positive
change in market values net of any collateral received on the options
should the counterparty fail to perform under the contracts. Options written
by the Funds do not give rise to counterparty credit risk, as options written
obligate the Funds to perform and not the counterparty. Counterparty
risk related to exchange-traded financial futures contracts and options is
deemed to be minimal due to the protection against defaults provided by
the exchange on which these contracts trade.

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

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

Financial Futures Contracts: The Funds purchase or sell financial futures
contracts and options on financial futures contracts to gain exposure to,
or economically hedge against, changes in interest rates (interest rate risk),
changes in the value of equity securities (equity risk) or foreign currencies
(foreign currency exchange rate risk). Financial futures contracts are agree-
ments between the Funds and the counterparty to buy or sell a specific
quantity of an underlying instrument at a specified price and at a specified
date. Depending on the terms of the particular contract, futures contracts
are settled either through physical delivery of the underlying instrument on
the settlement date of by payment of a cash settlement amount on settle-
ment date. Pursuant to the contract, the Funds agree to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as margin variation
and are recorded by the Funds as unrealized appreciation or depreciation.
When the contract is closed, the Funds record a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The use of financial
futures contracts involves the risk of an imperfect correlation in the move-
ments in the price of financial futures contracts, interest rates and the
underlying assets.

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

Options: The Funds purchase and write call and put options to increase
or decrease their exposure to underlying instruments (including equity
risk, interest rate risk and/or commodity price risk) and/or, in the case of
options written, to generate gains from options premiums. A call option
gives the purchaser of the option the right (but not the obligation) to
buy, and obligates the seller to sell (when the option is exercised), the
underlying instrument at the exercise price at any time or at a specified
time during the option period. A put option gives the holder the right to sell
and obligates the writer to buy the underlying instrument at the exercise

 

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Notes to Financial Statements (continued)

price at any time or at a specified time during the option period. When the
Funds purchase (writes) an option, an amount equal to the premium paid
(received) by the Funds is reflected as an asset (liability). The amount of
the asset (liability) is subsequently marked-to-market to reflect the current
market value of the option purchased (written). When an instrument is pur-
chased or sold through an exercise of an option, the related premium paid
(or received) is added to (or deducted from) the basis of the instrument
acquired or deducted from (or added to) the proceeds of the instrument
sold. When an option expires (or the Funds enter into a closing transac-
tion), the Funds realize a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premiums received or paid). When the
Funds write a call option, such option is “covered,” meaning that the Funds
holds the underlying instrument subject to being called by the option
counterparty. When the Funds write a put option, such option is covered
by cash in an amount sufficient to cover the obligation.

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

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

• Credit default swaps — The Funds enter into credit default swaps to
manage their exposure to the market or certain sectors of the market,
to reduce its risk exposure to defaults of corporate and/or sovereign
issuers or to create exposure to corporate and/or sovereign issuers to
which they are not otherwise exposed (credit risk). The Funds enter into
credit default swap agreements to provide a measure of protection
against the default of an issuer (as buyer of protection) and/or gain
credit exposure to an issuer to which it is not otherwise exposed (as
seller of protection). The Funds may either buy or sell (write) credit
default swaps on single-name issuers (corporate or sovereign), a
combination or basket of single-name issuers or traded indexes.
Credit default swaps on single-name issuers are agreements in which
the buyer pays fixed periodic payments to the seller in consideration
for a guarantee from the seller to make a specific payment should a
negative credit event take place with respect to the referenced entity
(e.g., bankruptcy, failure to pay, obligation accelerators, repudiation,
moratorium or restructuring). Credit default swaps on traded indexes
are agreements in which the buyer pays fixed periodic payments to the
seller in consideration for a guarantee from the seller to make a spe-
cific payment should a write-down, principal or interest shortfall or
default of all or individual underlying securities included in the index
occurs. As a buyer, if an underlying credit event occurs, the Funds will
either receive from the seller an amount equal to the notional amount
of the swap and deliver the referenced security or underlying securities
comprising the index or receive a net settlement of cash equal to the
notional amount of the swap less the recovery value of the security or
underlying securities comprising the index. As a seller (writer), if an
underlying credit event occurs, the Funds will either pay the buyer an
amount equal to the notional amount of the swap and take delivery of
the referenced security or underlying securities comprising the index or
pay a net settlement of cash equal to the notional amount of the swap
less the recovery value of the security or underlying securities
comprising the index.

* Includes options purchased at value as reported in the Schedule of Investments.
** Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only the current day's margin variation
is reported within the Statements of Assets and Liabilities.

 

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Notes to Financial Statements (continued)

 

 

* Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedules of Investments. Only the current day's margin variation is reported within
the Statements of Assets and Liabilities.
** Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

 

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Notes to Financial Statements (continued)

For the six months ended April 30, 2011, the average quarterly balance of outstanding derivative financial instruments was as follows:

 

3. Investment Advisory Agreement and Other Transactions
with Affiliates:

As of April 30, 2011, the PNC Financial Services Group, Inc. (“PNC”), Bank
of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) were
the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the own-
ership structure, PNC is an affiliate of the Funds for 1940 Act purposes, but
BAC and Barclays are not.

Each Fund entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the “Manager”), the Funds’ investment advisor, an indirect,
wholly owned subsidiary of BlackRock, to provide investment advisory and
administration services. The Manager is responsible for the management
of each Fund’s portfolio and provides the necessary personnel, facilities,
equipment and certain other services necessary to the operations of each
Fund. For such services, each Fund pays the Manager a monthly fee at the
following annual rates of each Fund’s average daily (weekly for BPP, BTZ
and BGT) net assets (including any assets attributable to borrowings or to
the proceeds from the issuance of Preferred Shares) as follows:

 

Average daily net assets is the average daily value of each Fund’s total
assets minus the sum of its accured liabilities (other than borrowings
representing financial leverage). Average weekly net assets is the average
weekly value of each Fund’s total assets minus the sum of its liabilities
(other than borrowings representing financial leverage).

The Manager has voluntarily agreed to waive a portion of the investment
advisory fees or other expenses on BGT as a percentage of its average
weekly net assets (including any assets attributable to borrowings or to
the proceeds from the issuance of Preferred Shares) minus the sum of
liabilities (other than borrowings representing financial leverage) as follows:
0.10% for the period September 1, 2010 to August 31, 2011 and 0.05%
for the period September 1, 2011 to August 31, 2012. For the six months
ended April 30, 2011, the Manager waived $231,540, which is included in
fees waived by advisor in the Statements of Operations

The Manager voluntarily agreed to waive its advisory fees by the amount
of investment advisory fees each Fund pays to the Manager indirectly
through its investment in affiliated money market funds, however the
Manager does not waive its investment advisory fees by the amount of
investment advisory fees paid through each Fund’s investment in other
affiliated investment companies, if any. These amounts are included in
fees waived by advisor in the Statements of Operations. For the six months
ended April 30, 2011, the amounts waived were as follows:

 

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

 

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Notes to Financial Statements (continued)

For the period November 1, 2010 through December 31, 2010, the Funds
reimbursed the Manager for certain accounting services, which are
included in accounting services in the Statements of Operations. The
reimbursements were as follows:

 

Effective January 1, 2011, the Funds no longer reimburse the Manager for
accounting services.

Certain officers and/or directors of the Funds are officers and/or directors
of BlackRock or its affiliates. The Funds reimburse the Manager for com-
pensation paid to the Funds’ Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns and payups,
excluding short-term securities and US government securities for the six
months ended April 30, 2011, were as follows:

 

Purchases and sales of US government securities for the six months ended
April 30, 2011, were as follows:

 

5. Commitments:

The Funds may invest in floating rate loan interests. In connection with
these investments, the Funds may also enter into unfunded loan commit-
ments (“commitments”). Commitments may obligate the Funds to furnish
temporary financing to a borrower until permanent financing can be
arranged. In connection with these commitments, the Funds earn a com-
mitment fee, typically set as a percentage of the commitment amount.
Such fee income, which is classified in the Statements of Operations as
facility and other fees, is recognized ratably over the commitment period.
Unfunded loan commitments are marked-to-market daily, and any unreal-
ized appreciation or depreciation is included in the Statements of Assets of

Liabilities and Statements of Operations. As of April 30, 2011, BGT had the
following unfunded loan commitments:

 

6. Concentration, Market and Credit Risk:

PSW, PSY, BPP and BTZ invest a significant portion of each of their assets
in securities in the financials sector and BGT invests a significant portion of
its assets in the media sector. Please see the Schedules of Investments for
these securities. Changes in economic conditions affecting the financials
and media sectors would have a greater impact on the Funds and could
affect the value, income and/or liquidity of positions in such securities.

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

7. Capital Share Transactions:

PSW and PSY are each authorized to issue 200 million of $0.10 par value
shares, all of which were initially classified as Common Shares. Each Board
is authorized, however, to reclassify any unissued shares without approval
of Common Shareholders. The Boards of PSW and PSY reclassified 5,460
and 22,000 unissued Common Shares as $0.10 par value Preferred
Shares, respectively, none of which are outstanding. There are an unlimited
number of $0.001 par value shares authorized for BPP, BTZ and BGT, which
may be issued as either Common Shares or Preferred Shares.

 

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Notes to Financial Statements (continued)

Common Shares

As of April 30, 2011, the shares owned by an affiliate of the Manager of
the Funds were as follows:

 

For the six months ended April 30, 2011, shares issued and outstanding
increased by the following amounts as a result of dividend reinvestment:

 

Shares issued and outstanding for the six months ended April 30, 2011
and the year ended October 31, 2010 remained constant for PSW, PSY,
BPP and BTZ, respectively.

Preferred Shares

The Preferred Shares were redeemable at the option of each Fund, in
whole or in part, on any dividend payment date at their liquidation prefer-
ence per share plus any accumulated and unpaid dividends whether or not
declared. The Preferred Shares were also subject to mandatory redemption
at their liquidation preference plus any accumulated and unpaid dividends,
whether or not declared, if certain requirements relating to the composition
of the assets and liabilities of a Fund, as set forth in each Fund’s Articles
Supplementary/Statement of Preferences and/or Certificate of Designation
(the “Governing Instrument”) were not satisfied.

The holders of Preferred Shares had voting rights equal to the holders of
Common Shares (one vote per share) and would vote together with holders
of Common Shares (one vote per share) as a single class. However, the
holders of Preferred Shares, voting as a separate class, were also entitled
to elect two Directors for each Fund. In addition, the 1940 Act requires that
along with approval by shareholders that might otherwise be required, the
approval of the holders of a majority of any outstanding Preferred Shares,
voting separately as a class would be required to (a) adopt any plan of
reorganization that would adversely affect the Preferred Shares, (b) change
a Fund’s sub-classification as a closed-end investment company or change
its fundamental investment restrictions or (c) change its business so as to
cease to be an investment company.

Dividends on seven-day and 28-day Preferred Shares were cumulative
at a rate which is reset every seven or 28 days, respectively, based on the
results of an auction. If the Preferred Shares failed to clear the auction on
an auction date, each Fund was required to pay the maximum applicable
rate on the Preferred Shares to holders of such shares for successive divi-
dend periods until such time as the shares were successfully auctioned.

The maximum applicable rate on the Preferred Shares at the last auction
date was as follows: for PSW, PSY and BGT, the higher of 125% times or
1.25% plus the Telerate/BBA LIBOR rate; or BPP 150% of the interest
equivalent of the 30-day commercial paper rate and for BTZ, the higher of
150% times or 1.25% plus the Telerate/BBA LIBOR rate. The low, high and
average dividend rates for the six months ended April 30, 2011, were as
follows:

 

Since February 13, 2008, the Preferred Shares of the Funds failed to clear
any of their auctions. As a result, the Preferred Shares dividend rates were
reset to the maximum applicable rate, which ranged from 0.35% to 1.94%.
A failed auction is not an event of default for the Funds but it has a nega-
tive impact on the liquidity of Preferred Shares. A failed auction occurs
when there are more sellers of a Fund’s auction rate preferred shares
than buyers.

The Funds paid commissions of 0.15% on the aggregate principal amount
of all shares that failed to clear their auctions and 0.25% on the aggregate
principal amount of all shares that successfully cleared their auctions.
Certain broker dealers had individually agreed to reduce commissions for
failed auctions.

 

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Notes to Financial Statements (continued)

During the six months ended April 30, 2011, the Funds announced the
following redemptions of Preferred Shares at a price of $25,000 per share
plus any accrued and unpaid dividends through the redemption date:

 

All of the Funds, except BGT, financed the Preferred Share redemptions
with cash received from reverse repurchase agreements. BGT financed the
Preferred Share redemption with cash received from a loan.

8. Borrowings:

BGT entered into a senior committed secured, 364-day revolving line of
credit and a separate security agreement (the “SSB Agreement”) with State
Street Bank and Trust Company (“SSB”). The SSB Agreement provides the
Fund with a maximum commitment of $172.2 million. The Fund has
granted a security interest in substantially all of its assets to SSB.

Advances are made by SSB to the Fund, at the Fund’s option of (a) the
higher of (i) 0.8% above the Fed Effective Rate and (ii) 0.8% above the
Overnight LIBOR or (b) 0.8% above 7-day, 30-day, 60-day or 90-day LIBOR.
In addition, the Fund pays a facility fee and a commitment fee based upon
SSB’s total commitment to the Fund. The fees associated with each of the
agreements are included in the Statements of Operations as borrowing
costs. Advances to the Fund as of April 30, 2011 are shown in the
Statements of Assets and Liabilities as loan payable. The SSB Agreement
was renewed for 364 days under substantially the same terms effective
March 3, 2011. The commitment amount was increased from $134 million
to $172.2 million. For the six months ended April 30, 2011, the daily
weighted average interest rate was 1.14%.

BGT may not declare dividends or make other distributions on shares or
purchase any such shares if, at the time of the declaration, distribution
or purchase, asset coverage with respect to the outstanding short-term
borrowings is less than 300%.

For the six months ended April 30, 2011, the daily weighted average inter-
est rates for Funds with reverse repurchase agreements were as follows:

 

 

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Notes to Financial Statements (concluded)

9. Income Tax Information:

As of October 31, 2010, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

 

Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after October 31, 2011 will not
be subject to expiration. In addition, these losses must be utilized prior to the losses incurred in pre-enactment taxable years.

10. Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the
Funds’ financial statements was completed through the date the financial
statements were issued and the following items were noted:

Each Fund will pay a net investment income dividend on May 31, 2011 to
Common Shareholders of record on May 16, 2011 as follows:

 

Each Fund will pay a net investment income dividend on June 30, 2011 to
Common Shareholders of record on June 15, 2011 as follows:

 

 

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Officers and Directors

Richard E. Cavanagh, Chair of the Board and Director
Karen P. Robards, Vice Chair of the Board,
Chair of the Audit Committee and Director
Michael Castellano, Director and Member of the Audit Committee
Richard S. Davis, Director
Frank J. Fabozzi, Director and Member of the Audit Committee
Kathleen F. Feldstein, Director
James T. Flynn, Director and Member of the Audit Committee
Henry Gabbay, Director
Jerrold B. Harris, Director
R. Glenn Hubbard, Director
W. Carl Kester, Director and Member of the Audit Committee
John M. Perlowski, President and Chief Executive Officer
Anne Ackerley, Vice President
Brendan Kyne, Vice President
Neal Andrews, Chief Financial Officer
Jay Fife, Treasurer
Brian Kindelan, Chief Compliance Officer
Ira P. Shapiro, Secretary

Investment Advisor
BlackRock Advisors, LLC
Wilmington, DE 19809

Sub-Advisor
BlackRock Financial Management, Inc.
New York, NY 10022

Custodians
State Street Bank and Trust Company
Boston, MA 02111

Transfer Agent
Common Shares
Computershare Trust Company, N.A.
Canton, MA 02021

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

Address of the Funds
100 Bellevue Parkway
Wilmington, DE 19809

Effective November 10, 2010, Ira P. Shapiro became Secretary of the Funds.

Effective February 11, 2011, John M. Perlowski became President and Chief Executive Officer of the Funds.

Effective April 14, 2011, Michael Castellano became a Director of the Funds and a Member of the Audit Committee.

PSW, PSY, BPP and BTZ are managed by a team of investment professionals.
Effective June 1, 2011, Jeffrey Cucunato, Mitchell S. Garfin, CFA and Stephan Bassas
are the Funds’ co-portfolio managers responsible for the day-to-day management of
each Fund’s portfolio and the selection of their investments.

 

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Additional Information

Dividend Policy

The Funds’ dividend policy is to distribute all or a portion of their net
investment income to their shareholders on a monthly basis. In order to
provide shareholders with a more stable level of dividend distributions, the
Funds may at times pay out less than the entire amount of net investment
income earned in any particular month and may at times in any particular
month pay out such accumulated but undistributed income in addition to
net investment income earned in that month. As a result, the dividends paid
by the Funds for any particular month may be more or less than the
amount of net investment income earned by the Funds during such month.
The Funds’ current accumulated but undistributed net investment income, if
any, is disclosed in the Statements of Assets and Liabilities, which com-
prises part of the financial information included in this report.

General Information

On July 29, 2010, the Manager announced that a derivative complaint
had been filed by shareholders of PSY and BTZ on July 27, 2010 in the
Supreme Court of the State of New York, New York County. The complaint
names the Manager, BlackRock, Inc. and certain of the directors, officers
and portfolio managers of PSY and BTZ as defendants. The complaint
alleges, among other things, that the parties named in the complaint
breached fiduciary duties owed to PSY and BTZ and their Common
Shareholders by redeeming auction-market preferred shares, auction
rate preferred securities, auction preferred shares and auction rate securi-
ties (collectively, “AMPS”) at their liquidation preference. The complaint
seeks unspecified damages for losses purportedly suffered by PSY and
BTZ as a result of the prior redemptions and injunctive relief preventing
PSY and BTZ from redeeming AMPS at their liquidation preference in the
future. The Manager, BlackRock, Inc. and the other parties named in the
complaint believe that the claims asserted in the complaint are without
merit and intend to vigorously defend themselves in the litigation.

On November 15, 2010, the Manager announced the intention to redeem
all of the outstanding AMPS issued by five of its taxable closed-end funds:
PSW, PSY, BPP, BTZ, and BGT. All such outstanding AMPS were subsequently
redeemed. The redemptions encompass all remaining taxable AMPS issued
by BlackRock closed-end funds and total approximately $569 million. The
AMPS were redeemed with available cash or proceeds from reverse repur-
chase agreement financing or a credit facility on a fund-by-fund basis and,
in each case, the refinancing resulted in a lower cost of financing for each
fund under then-existing market conditions.

In exchange for the shareholder plaintiff's agreement to withdraw a
previously filed motion for preliminary injunction enjoining any further
redemptions of AMPS, each of these funds agreed to provide the plaintiffs
in those actions with 30 days prior notice of any additional redemptions.

On November 24, 2010, the Manager announced that counsel for the
plaintiffs filed a motion for a preliminary injunction enjoining PSY and BTZ
from redeeming outstanding AMPS pending final resolution of the underly-
ing shareholder derivative suit. The Manager announced that it intends to
vigorously oppose the motion and completed the redemption of AMPS by
PSY and BTZ as previously announced, although the redemption dates for
BTZ and PSY were conditioned upon the absence of any legal impediments
to completing the redemptions as scheduled.

The Funds do not make available copies of their Statements of Additional
Information because the Funds’ shares are not continuously offered, which
means that the Statement of Additional Information of each Fund has not
been updated after completion of the respective Fund’s offerings and the
information contained in each Fund’s Statement of Additional Information
may have become outdated.

During the period, there were no material changes in the Funds’ investment
objectives or policies or to the Funds’ charter or by-laws that would delay or
prevent a change of control of the Funds that were not approved by share-
holders or in the principal risk factors associated with investment in the
Funds. Other than as disclosed on page 70, there have been no changes in
the persons who are primarily responsible for the day-to-day management
of the Funds’ portfolio.

Quarterly performance, semi-annual and annual reports and other informa-
tion regarding the Funds may be found on BlackRock’s website, which can
be accessed at http://www.blackrock.com. This reference to BlackRock’s
website is intended to allow investors public access to information regard-
ing the Funds and does not, and is not intended to, incorporate BlackRock’s
website into this report.

 

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Additional Information (continued)

General Information (concluded)

Electronic Delivery

Electronic copies of most financial reports are available on the Funds’ web-
sites or shareholders can sign up for e-mail notifications of quarterly state-
ments, annual and semi-annual reports by enrolling in the Funds’ electronic
delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks
or Brokerages:

Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.

Householding

The Funds will mail only one copy of shareholder documents, including
annual and semi-annual reports and proxy statements, to shareholders
with multiple accounts at the same address. This practice is commonly
called “householding” and is intended to reduce expenses and eliminate
duplicate mailings of shareholder documents. Mailings of your shareholder
documents may be householded indefinitely unless you instruct us other-
wise. If you do not want the mailing of these documents to be combined
with those for other members of your household, please contact the Funds
at (800) 441-7762.

Availability of Quarterly Schedule of Investments

Each Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. Each Fund’s
Forms N-Q are available on the SEC’s website at http://www.sec.gov and

may also be reviewed and copied at the SEC’s Public Reference Room in
Washington, DC. Information on how to access documents on the SEC’s
website without charge may be obtained by calling (800) SEC-0330. Each
Fund’s Forms N-Q may also be obtained upon request and without charge
by calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling (800) 441-7762;
(2) at http://www.blackrock.com; and (3) on the SEC’s website at
http://www.sec.gov.

Availability of Proxy Voting Record

Information about how each Fund voted proxies relating to securities
held in each Fund’s portfolio during the most recent 12-month period
ended June 30 is available upon request and without charge (1) at
http://www.blackrock.com or by calling (800) 441-7762 and (2) on
the SEC’s website at http://www.sec.gov.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Funds
on a monthly basis on its website in the “Closed-end Funds” section of
http://www.blackrock.com. Investors and others are advised to periodically
check the website for updated performance information and the release of
other material information about the Funds.

 

---

Additional Information (continued)

Section 19(a) Notices

These reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and sources
for tax reporting purposes will depend upon each Fund’s investment experience during the year and may be subject to changes based on the tax regula-
tions. Each Fund will provide a Form 1099-DIV each calendar year that will explain the character of these dividends and distributions for federal income
tax purposes.

 

PSW, PSY, BPP and BTZ Fund estimates that it has distributed more than the amount of earned income and net realized gains; therefore, a portion of the
distribution may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in a Fund is returned to
the shareholder. A return of capital does not necessarily reflect a Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.

 

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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 safe-
guarding their non-public personal information. The following information is
provided to help you understand what personal information BlackRock col-
lects, 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 applica-
tions, forms or other documents; (ii) information about your transactions
with us, our affiliates, or others; (iii) information we receive from a consumer
reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These non-affiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.

We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to non-public personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the non-public personal information of its Clients, including pro-
cedures relating to the proper storage and disposal of such information.

 

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This report is transmitted to shareholders only. It is not a prospectus. Past performance results shown in this report should not be

considered a representation of future performance. The Funds leverage their Common Shares, which creates risk for Common

Shareholders, including the likelihood of greater volatility of net asset value and market price of Common Shares, and the risk that

fluctuations in short-term interest rates may reduce the Common Shares’ yield. Statements and other information herein are as dated

and are subject to change.

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Item 2 – Code of Ethics – Not Applicable to this semi-annual report

Item 3 – Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 – Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 – Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

Item 6 – Investments
(a) The registrant’s Schedule of Investments is included as part of the Report to
Stockholders filed under Item 1 of this Form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since
the previous Form N-CSR filing.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies – Not Applicable to this semi-annual report

Item 8 – Portfolio Managers of Closed-End Management Investment Companies
(a) Not Applicable to this semi-annual report
(b) As of the date of this filing, there have been no changes in any of the portfolio managers
identified in the most recent annual report on Form N-CSR.

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers – Not Applicable

Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material
changes to these procedures.

Item 11 – Controls and Procedures

(a) – The registrant’s principal executive and principal financial officers, or persons
performing similar functions, have concluded that the registrant’s disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this
report based on the evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as
amended.

(b) – There were no changes in the registrant’s internal control over financial reporting (as
defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter
of the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits attached hereto

(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) – Certifications – Attached hereto

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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 Credit Allocation Income Trust II, Inc.

By: /S/ John M. Perlowski
John M. Perlowski
Chief Executive Officer (principal executive officer) of
BlackRock Credit Allocation Income Trust II, Inc.

Date: July 5, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

By: /S/ John M. Perlowski
John M. Perlowski
Chief Executive Officer (principal executive officer) of
BlackRock Credit Allocation Income Trust II, Inc.

Date: July 5, 2011

By: /S/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Credit Allocation Income Trust II, Inc.

Date: July 5, 2011

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