- --------------------------------------------------------------------------------
THE BLACKROCK INCOME TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
June 1, 1995
Dear Shareholder:
The fixed income markets experienced both extremely bearish and bullish
sentiment during the semi-annual period between November 1, 1994 and April 30,
1995. Closed-end bond funds responded to the broader markets with similar
volatility and hit all-time low stock prices during the fourth quarter of 1994.
These low levels of stock valuation were further eroded by an unusually high
degree of tax-related selling; however, closed-end bond funds have staged a
resounding rebound during the first five months of 1995. The U.S. economy
appears to have responded to the Fed's vigilance toward inflation with low
absolute levels of inflation and moderate rates of growth. This scenario is
suggestive of a "soft landing" for the economy, which has sparked a significant
Treasury market rally and resulted in overall strength in most fixed income
markets.
BlackRock Financial Management, Inc. your Trust's investment adviser, is
pleased to report that its acquisition by PNC Bank, N.A. ("PNC") was officially
completed on February 28, 1995. PNC is a commercial bank whose principal office
is in Pittsburgh, Pennsylvania and is wholly-owned by PNC Bank Corp., a bank
holding company. The merger was structured to assure continuity of performance
and service through stability of our organization. BlackRock retains its name
and continues to operate out of its New York office. All members of BlackRock's
management team have signed long-term employment contracts and will continue to
be responsible for managing BlackRock's business so that shareholders will
notice no changes in the management of the Trust.
You will note several enhancements to the Trust's semi-annual report
designed to improve the report's usefulness to you. The letter to shareholders
which reviews the markets and Trust's investment strategy over the semi-annual
period is provided by the Trust's portfolio managers. In addition, we have
included an investment summary section which provides a synopsis of the Trust's
investment objectives and guidelines and reviews its investment strategy. We
appreciate your investment in The BlackRock Income Trust Inc. and look forward
to continuing to serve your financial needs.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
June 1, 1995
Dear Shareholder:
Characterized by large swings in interest rates across the yield curve, the
semi-annual period between November 1, 1994 and April 30, 1995 provided a
challenging investment environment for fixed income products including The
BlackRock Income Trust Inc. (BKT or the "Trust"). In contrast to the year-long
increase in interest rates in 1994, the fixed income markets have rallied
sharply in 1995. The bond market rally, which has caused interest rates to
decline as prices have increased, has been caused largely by modest inflationary
data and the perception that the Federal Reserve's proactive attempts to contain
inflation and provide a "soft landing" for the economy (modest economic growth
with little or no inflation) may have been successful.
During the final months of 1994, investor demand for closed-end bond funds
dropped to all-time low levels as seen through the large percentage of funds
trading at discounts to their net asset values. Closed-end bond funds fell
victim to a lack of demand stemming from fears of rising inflation and
historically high levels of year-end tax selling. As a result, the prices of
most closed-end bond funds, including BKT, dropped to historically low levels.
Investors who endured the market slump and opted to "Hold" or acquire more
shares of the Trust during these tumultuous markets witnessed a substantial
increase in both net asset value (NAV) and share price during the first few
months of 1995 as the market environment for fixed income securities improved
considerably.
Over the period, the Trust's NAV ranged from $7.25 to $7.49 and ended the
period at $7.49 per share, an increase of 3.31% since the beginning of the
fiscal period. At the beginning of the fiscal period, BKT was trading at a stock
price of $6.375 while at the end of this fiscal period (April 30) the Trust
closed at $6.875. During what was considered the height of tax-selling season,
the Trust's stock price declined to an all time low of $5.875 per share (as of
November 16). As of the date of this letter, the Trust's shares were trading at
a price of $7.25 per share, which is a 5.72% discount to its net asset value of
$7.69 per share. The current annual dividend per share is $0.75, which is
equivalent to 10.34% on the current stock price.
BKT is an actively managed closed-end bond fund whose investment objective
is to provide high current monthly income consistent with the preservation of
capital. The Trust invests primarily in U.S. Government securities, securities
backed by government agencies (such as mortgage-backed securities), privately
issued mortgage-backed securities, commercial mortgage-backed securities and
asset-backed securities.
The Fixed Income Markets
During the past four months, interest rates across all parts of the yield
curve have declined substantially, contrasting sharply with the substantial
increases in interest rates that occurred through most of 1994. Coming off the
worst twelve month period ever for fixed income securities since systematic
record keeping began nearly seventy years ago, the bond market has rallied
significantly since the beginning of 1995 as yields across the curve have fallen
dramatically. The yield of the 10-year Treasury (the Treasury Note that most
closely reflects the interest rate sensitivity of the Trust) has fallen over 150
basis points (or 1.5 percentage points) since October 31, 1994. On June 1, 1995
the yield of the 10-year Treasury Note was 6.19%.
Although the recent market rally has afforded fixed income investors an
opportunity to recoup losses suffered through most of 1994, BlackRock remains
cautiously optimistic concerning the near-term future of the bond market.
Investor sentiment clearly indicates that the inflationary fears that consumed
the market during most of 1994 have dissipated. However, the steep decline in
interest rates could stimulate a resurgence in consumption and increase the
potential for renewed
2
<PAGE>
inflationary pressures. In addition, the momentum with which the economy entered
1995 and the weakness of the dollar could prove the arrival of a "soft landing"
to be premature.
The last quarter of 1994 capped a year of tremendous change in the
mortgage-backed securities market, reflecting trends that developed throughout
the year and have since continued into 1995. Importantly, despite the recent
decline of interest rates, prepayment speeds have continued to be relatively
slow across all coupon types compared to the levels seen in 1993 after declines
in interest rates. In addition, supply has continued to diminish across all
sectors of the mortgage market including fixed-rate pass-throughs, adjustable
rate mortgages and CMOs. The lack of supply of mortgage-backed securities
contributed to tighter yield spreads relative to their Treasury benchmarks,
helping mortgages to outperform Treasuries during the first few months of 1995.
The Trust's Portfolio and Investment Strategy
The portfolio continues to maintain a high credit quality bias focusing
primarily on mortgage-backed securities (such as agency pass-throughs,
adjustable rate mortgages and CMOs), U.S. Treasury securities, and asset-backed
securities. Consistent with the changes in value in the market place during the
Trust's semi-annual period ended April 30, BlackRock has made several
modifications to the Trust's portfolio in an attempt to take advantage of these
dislocations in the marketplace. The chart below illustrates the changes in
portfolio composition that have occurred over the fiscal period ended April 30,
1995. Exposure to derivative securities remains relatively low and the portfolio
continues to maintain a bias toward government quality securities. Going
forward, BlackRock will continue to actively manage the portfolio, adjusting the
Trust's holdings based on our view of relative value while keeping consistent
with the Trust's objective of providing high current monthly income consistent
with the preservation of capital.
________________________________________________________________________________
Composition April 30, 1995 October 31, 1994
________________________________________________________________________________
Mortgage Pass-Throughs 20% 29%
________________________________________________________________________________
U.S. Treasury Securities 15% 14%
________________________________________________________________________________
Asset-Backed Securities 15% 10%
________________________________________________________________________________
Agency Multiple Class Mortgage Pass-Throughs 15% 8%
________________________________________________________________________________
FHA Project Loans 14% 16%
________________________________________________________________________________
Adjustable Rate Mortgages 8% 9%
________________________________________________________________________________
Non-Agency Multiple Class Mortgage Pass-Throughs 5% 4%
________________________________________________________________________________
Stripped Mortgage-Backed Securities 3% 5%
________________________________________________________________________________
CMO Residuals 3% 3%
________________________________________________________________________________
Commercial Mortgage-Backed Securities 1% 1%
________________________________________________________________________________
Municipal Bonds 1% 1%
________________________________________________________________________________
The Trust reduced its allocation to agency-backed mortgage pass-through
securities, increased its holdings in both asset-backed securities and
Treasuries and maintained its exposure to FHA Project Loans, which are backed by
the Federal Housing Administration. Some FHA Project loans have lockout
provisions, which help to provide a predictable cash flow in addition to
attractive yields. The Trust's allocation to adjustable rate mortgages (ARMs) is
heavily concentrated in mortgages backed by GNMA, which is backed by the full
faith and credit of the U.S. government. The performance of these securities has
been strong, with a decline in supply and an increase in demand for GNMA ARMs
over the semi-annual period.
The sharp decline in interest rates year-to-date could lead to an increase
in prepayment speeds and price volatility of mortgage-backed securities (MBS).
In response, the Trust would look to modestly lighten its mortgage exposure so
as to somewhat insulate the portfolio from prepayments while still deriving the
yield advantage of the mortgage sector. Specifically, the Trust would look to
lighten its allocation to some fixed-rate pass-through securities which could
experience significant
3
<PAGE>
prepayments and spread widening. ARMs, whose coupons periodically adjust to a
spread over a specified index, and FHA project loans both offer relatively
predictable cash flows and could be excellent pass-through mortgage security
alternatives in the coming months.
We thank you for your investment in The BlackRock Income Trust Inc. Please
feel free to contact us at (800) 227-7BFM (7236) if you have specific questions
which were not addressed in this report.
Sincerely,
Robert Kapito Keith T. Anderson
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
________________________________________________________________________________
The BlackRock Income Trust Inc.
________________________________________________________________________________
Symbol on New York Stock Exchange: BKT
________________________________________________________________________________
Initial Offering Date: July 22, 1988
________________________________________________________________________________
Closing Stock Price as of 4/30/95: $6.875
________________________________________________________________________________
Net Asset Value as of 4/30/95: $7.49
________________________________________________________________________________
Yield on Closing Stock Price as of 4/30/95 ($6.875)1: 10.91%
________________________________________________________________________________
Current Monthly Distribution per Share2: $0.0625
________________________________________________________________________________
Current Annualized Distribution per Share2: $0.7500
________________________________________________________________________________
___________
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2The distribution is not constant and is subject to change.
4
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___________________________________________________
The BlackRock Income Trust Inc.
Portfolio of Investments
April 30, 1995
(Unaudited)
___________________________________________________
(LEFT COLUMN)
___________________________________________________
Principal
Amount Value
(000) Description (Note 1)
___________________________________________________
LONG-TERM INVESTMENTS-155.8%
Mortgage Pass-Throughs-66.4%
Federal Home Loan Mortgage
Corporation,
$ 1,971 6.128%, 1 year CMT (ARM) ...$ 1,937,419
16,164(d) 7.50% ...................... 15,946,273
12,821 8.00% ...................... 12,800,208
1,342 8.50% ...................... 1,369,678
4,951 8.50%, 15 year ............. 5,086,651
43 10.50% ..................... 45,855
Federal Housing Administration,
1,925 Altercare Bucyrus, 8.25% ... 1,886,941
2,335 Beachwood Manor, 8.25% ..... 2,305,526
4,332 Brookville, 7.50% .......... 4,131,890
3,759 Country Estates, 8.375% .... 3,658,300
1,563 Elkton Care Center, 7.30% .. 1,454,986
6,451 GMAC, Series 33, 7.43% ..... 6,363,667
2,236 GMAC, Series 46, 7.43% ..... 2,199,083
925 GMAC, Series 48, 7.43% ..... 904,448
511 GMAC, Series 51, 7.43% ..... 503,270
8,208 GMAC, Series 56, 7.43% ..... 8,081,471
1,309 Merrill, Series 54, 7.43% .. 1,286,890
3,458 Merrill, Series 95, 7.43% .. 3,401,484
1,263 Middlesex, 8.625% .......... 1,271,662
1,695 Overlook Green South, 7.50% 1,616,269
5,012 Parkside, 7.30% ............ 4,805,709
2,718 Project Gladys Hampton, 8.45% 2,740,014
1,926 Providence Apartments, 8.25% 1,806,240
3,673 Reilly, Series 34, 7.43% ... 3,712,894
583 Reilly, Series 74, 7.43% ... 552,754
2,358 Retreat at Windmere, 7.375% 2,229,582
2,096 Rosewood, 7.875% ........... 2,020,268
1,528 Senaca Hills, 8.525% ....... 1,532,787
1,445 St. Camillus Nursing, 7.875% 1,393,105
2,336 Summit Place, 7.90% ........ 2,254,539
2,999 Tuttle Grove, 7.25% ........ 2,782,646
4,500 USGI, Polaris 982, 7.43% ... 4,431,173
954 USGI, Series 87, 7.43% ..... 935,846
7,700 USGI, Series 87 H, 7.22 .... 7,115,915
5,361 USGI, Series 99, 7.43 ...... 5,233,607
2,829 USGI, Series 1003, 7.43% ... 2,660,956
(RIGHT COLUMN)
___________________________________________________
Principal
Amount Value
(000) Description (Note 1)
___________________________________________________
Federal Housing Administration,
$ 2,168 USGI, Series 2024, 7.88% ...$ 2,130,507
2,849 USGI, Series 6302, 7.43% ... 2,796,114
7,293 Yorkville 6094, 7.43% ...... 7,184,730
3,654 Waterford, 8.625% .......... 3,672,554
1,363 Whitehall, 8.75% ........... 1,335,250
Federal National Mortgage
Association,
2,500 6.50%, Multifamily,
Series 1994-M1, Class B .... 2,342,188
2,703 7.00% ...................... 2,634,812
8,622 7.50% ...................... 8,419,517
1,460 7.746%, 1 year CMT (ARM) ... 1,487,310
7,000(dd)7.778%, 7 year Multifamily . 7,107,784
2,100(dd)7.785%, 7 year Multifamily . 2,127,054
10,402(d) 8.00% ...................... 10,504,211
747 9.317%, 10 year Multifamily 781,326
1,906 9.484%, Multifamily ........ 2,016,166
1,474 9.497%, Multifamily ........ 1,531,128
291 9.50% ...................... 304,133
795 9.732%, 10 year Multifamily 863,793
Government National Mortgage
Association,
3,575 6.00%, 15 year ............. 3,333,811
24,700 6.50%, 1 year CMT (ARM) .... 24,746,313
10,527 7.00% ...................... 9,964,233
15,856 7.00%, 1 year CMT (ARM) .... 16,046,963
3,078 7.25% ...................... 3,049,819
18,069 7.50%, 1 year CMT (ARM) .... 18,483,553
11,522 8.00% ...................... 11,515,077
17,615 8.50% ...................... 17,990,481
25,143 9.00% ...................... 26,224,720
238 9.50% ...................... 250,350
305 10.00% ..................... 327,548
1,031 11.00% ..................... 1,136,548
------------
312,767,999
------------
See Notes to Financial Statements.
5
<PAGE>
(LEFT COLUMN)
_______________________________________________________________
Principal
Amount Value
(000) Description (Note 1)
_______________________________________________________________
Multiple Class Mortgage
Pass-Throughs-30.8%
$ 2,100 Citicorp Mortgage Securities, Inc.,
Series 1994-9, Class A4 .............$ 1,825,359
Collateralized Mortgage Obligation,
4,330+ Trust 21, Class Y ................... 4,222,868
2,078 Trust 36, Class A (P) ............... 1,537,802
DBL, Collateralized
Mortgage Obligation,
855 Trust K, Class A (P) ................ 459,664
2,565 Trust V, Class I (P) ................ 1,898,432
Federal Home Loan Mortgage
Corporation,
14,500(d)(d) Series 138, Class F ................. 16,248,990
1,000 Series 1388, Class 1388-H ........... 747,665
9,932@ Series 1496, Class 1496-QD .......... 4,087,697
17,384(d)(d) Series 1584, Class 1584-FB (ARM) .... 16,340,660
9,461 Series 1690, Class 1690-B (P) ....... 2,578,069
Federal National Mortgage
Association, REMIC
Pass-Through Certificates,
4,000 Trust 1989-18, Class 18-C ........... 4,280,000
3,069 Trust 1991-38, Class 38-F (ARM) ..... 3,413,167
1,743 Trust 1991-38, Class 38-SA (ARM) .... 1,277,312
32,178(d)(dd)Trust 1992-69, Class 69-Z ........... 30,028,840
2,618 Trust 1992-87, Class 87-C (P) ....... 2,615,739
14,150(dd) Trust 1993-100, Class 100-C (P) ..... 10,988,359
14,350 Trust 1993-152, Class 152-D (P) ..... 9,296,109
12,614(d) Trust 1993-213, Class 213-H (P) ..... 8,104,325
738 Housing Security Incorporated,
Series 1993-D, Class D-8 ............ 400,821
847 ML Trust XIX, Collateralized
Mortgage Obligation, Class B (P) .... 611,975
752 Morgan Stanley Capital Inc.,
Series 1986-C, Class C-14 ........... 773,323
2,692 Nomura Asset Securities Corporation,
Mortgage Pass-Through Certificates,
Series 1994-3, Class A-1 ............ 2,673,019
1,495 Resolution Trust Corporation, Mortgage
Pass-Through Certificates,
Series 1992-2, Class B-3 ............ 1,491,743
1,409 Ryland Mortgage Securities Corporation,
Series 1992-3, Class A-1 (ARM) ...... 1,424,340
(RIGHT COLUMN)
_______________________________________________________________
Principal
Amount Value
(000) Description (Note 1)
_______________________________________________________________
$17,813++ Salomon Capital Access Corporation,
Collateralized Mortgage Obligations,
Series 1986-1, Class C ..............$ 17,858,027
------------
145,184,305
------------
Commercial Mortgage-Backed
Securities-0.1%
140,000 KP Acceptance Corp.,
Series 1994-CI, Class R ............. 1,400
425 Resolution Trust Corporation,
Series 1991-M5, Class A ............. 434,201
------------
435,601
------------
Asset-Backed Securities-23.3%
5,000 American Express Master Trust,
Series 1994-3, Class A, 7.85% ...... 5,071,850
10,000 Chase Manhattan Credit Card Trust,
Series 1992-1, Class A, 7.40% ...... 10,065,600
25,845 Community Program Loan Trust,
Series 1987-A, Class A-4, 4.50% .... 20,288,325
27,700 Discover Card Master Trust,
Series 1994-2, Class A, 6.475% (ARM) 27,717,174
1,999 EQCC Home Equity Loan Trust,
Series 1994-1, Class B, 5.75% ...... 1,861,219
12,500 First USA Credit Card Master Trust,
Series 1994-4, Class A,
6.495% (ARM) ....................... 12,519,500
5,550 Household Affinity Credit Card Trust,
Series 1994-2, Class A-1, 7.00% .... 5,555,162
14,407 MBNA Credit Card Trust,
Series 1991-A, Class A, 8.25% ...... 14,451,615
11,800 Standard Credit Card Master Trust,
Series 1995-1, Class A, 8.25% ...... 12,281,219
------------
109,811,664
------------
Stripped Mortgage-Backed
Securities-5.6%
1,259 Chase Mortgage Finance Corporation,
Mortgage Pass-Through Certificates,
Series 1994-A, Class AP, (P/O) .... 863,704
Federal Home Loan Mortgage
Corporation,
73 Series 188, Class G (I/O) ......... 2,891,603
7,233 Series 1159, Class E (P/O) ........ 5,241,465
612 Series 1418, Class M (P/O) ........ 148,195
See Notes to Financial Statements.
6
<PAGE>
(LEFT COLUMN)
_______________________________________________________________
Principal
Amount Value
(000) Description (Note 1)
_______________________________________________________________
Stripped Mortgage-Backed
Securities-(cont'd)
Federal Home Loan Mortgage
Corporation,
$ 5,975 Series 1473, Class JA (I/O) ..........$ 584,109
Federal National Mortgage Association,
3,152+ Trust 9, Class 2 (I/O) ............... 951,432
11,087 Trust 95, Class 2 (I/O) .............. 3,339,901
21,830 Trust 232, Class 2 (I/O) ............. 6,712,688
1,256 Series G1993-2, Class KB (P/O) ....... 281,573
493 Housing Security Incorporated,
Series 1992-E, Class B-8 (P/O) ....... 278,474
1 Prudential Home Mortgage
Securities Company, Mortgage
Pass-Through Certificates,
Series 1993-29, Class A18 (I/O) ...... 4,500,000
5,246 Resolution Funding Corporation,
Trust 1992-S6, Class S6-A11 (I/O) .... 68,854
1,150 Structured Mortgage Asset Trust,
Series 1993-3C, Class CX (P/O) ....... 616,134
-----------
26,478,132
-----------
CMO Residuals*-5.4%
5,522 American Housing Trust III, Senior
Mortgage Pass-Through Certificates,
Series 1, Class 4, (REMIC)# .......... 1,131,887
Centex Acceptance Corporation,
GNMA-Collateralized Bonds,
1,478 Series D# ............................ 179,771
503 Series H# ............................ 10
Collateralized Mortgage Obligation,
190 Trust 13# ............................ 1,045,200
37 Trust 14# ............................ 2,057,237
4 Collateralized Mortgage Securities
Corporation, Collateralized Mortgage
Obligations, Series 1990-3,
Class 3-R (REMIC)# ................... 358,484
(RIGHT COLUMN)
_______________________________________________________________
Principal
Amount Value
(000) Description (Note 1)
_______________________________________________________________
$ 45 FBC Mortgage Securities Trust 16,
Variable Rate Collateralized Mortgage
Obligation, Series A# ................$ 1,249,725
3,115 FBC Mortgage Securities Trust 19,
Variable Rate Collateralized Mortgage
Obligation, Series A# ................ 289,077
Federal Home Loan Mortgage Corporation,
Multiclass Mortgage Participation
Certificates,
0 Series 30, Class 30-R (REMIC) ........ 1,000
450 Series 32, Class 32-R (REMIC) ........ 710,000
7 Series 1017, Class 1017-R (REMIC) .... 967,382
160 Series 1119, Class 1119-R (REMIC) .... 4,001,235
Federal National Mortgage Association,
10 Trust 1988-10, Class 10-R ............ 10
1,100 Trust 1989-99, Class 99-R ............ 1,565,405
10 Trust 1990-12, Class 12-R ............ 2,478,558
10 Trust 1990-35, Class 35-R ............ 10
75 Trust 1990-53, Class R ............... 1,831,802
100 Trust 1990-57, Class 57-R ............ 1,882,000
30 Trust 1990-78, Class 78-R ............ 553,848
29 Trust 1990-86, Class 86-R ............ 1,823,000
6,000 ML Collateralized Mortgage Obligation,
Trust V# ............................. 1,405,885
10 P-B Collateralized Mortgage Obligation,
Trust 8, Class 8-H (REMIC)# .......... 141,000
43 PaineWebber, Collateralized Mortgage
Obligation, Trust Series N-7,
(REMIC)# ............................. 601,291
1,059 Ryland Acceptance Corporation Four,
Collateralized Mortgage Bonds,
Series 33# ........................... 479,106
100 Smith Barney Mortgage Capital Trust
VIII, Collateralized Mortgage
Obligations, Series 1, Class 1-R
(REMIC)# ............................ 468,000
-----------
25,220,923
-----------
See Notes to Financial Statements.
7
<PAGE>
(LEFT COLUMN)
_______________________________________________________________
Principal
Amount Value
(000) Description (Note 1)
_______________________________________________________________
U.S. Government Securities-23.6%
U.S. Treasury Bonds,
$12,065(dd) 7.50%, 11/15/24 .....................$ 12,227,154
7,685 12.00%, 5/15/05 ..................... 10,329,101
U.S. Treasury Notes,
11,150(d) 6.00%, 6/30/96 ...................... 11,097,707
950 7.50%, 1/31/97 ...................... 964,402
2,375 7.50%, 11/15/01 ..................... 2,441,049
7,170(dd) 7.50%, 2/15/05 ...................... 7,390,692
42,445(dd) 7.75%, 1/31/00 ...................... 43,890,677
21,660(dd) 7.875%, 11/15/04 .................... 22,844,585
------------
111,185,367
------------
Municipal Bond-0.6%
3,000 Los Angeles Waste Wtr. Sys. Rev.,
Series A, 5.70%, 6/01/20 ............ 2,837,400
------------
Total long-term investments
(cost $774,376,631) ................. 733,921,391
------------
SHORT-TERM INVESTMENT-0.3%
Contracts** CALL OPTION PURCHASED
500 U.S. Treasury Bonds, expiring Sept. '94
at $104 (cost $1,151,437) ........... 1,218,750
------------
Total investments before investments
sold short-156.1%
(cost $775,528,068) ................. 735,140,141
Principal
Amount
(000) INVESTMENTS SOLD SHORT-(32.3%)
Federal National Mortgage Association,
$20,000 7.00%, 30 year ...................... (19,018,600)
8,000 7.50%, 30 year ...................... (7,812,480)
U.S. Treasury Notes,
42,000 4.375%, 11/15/96 .................... (40,694,220)
17,800 6.625%, 3/31/97 ..................... (17,820,859)
5,000 6.875%, 2/28/97 ..................... (5,025,000)
37,270 6.875%, 3/31/00 ..................... (37,240,929)
10,000 7.125%, 2/29/00 ..................... (10,095,300)
14,250 7.25%, 2/15/98 ...................... (14,445,938)
Total investments sold short
(proceeds $151,948,517) .............(152,153,326)
------------
Total investments, net of short sales
-123.8% ............................. 582,986,815
Liabilities in excess of other
assets-(23.8%) ......................(111,946,801)
------------
NET ASSETS-100% .......................$471,040,014
============
(RIGHT COLUMN)
________
#Private placements restricted as to resale.
*Illiquid securities representing 3.4% of portfolio assets.
**One contract equals 100,000 face value.
(d)$49,028,253 principal amount pledged as collateral for reverse
repurchase agreements.
(dd)Entire principal amount pledged as collateral for reverse
repurchase agreements.
@$2,469,375 principal amount pledged as collateral for futures
transactions.
+Entire principal amount pledged as collateral for mortgage
swap.
++$12,281,693 principal amount pledged as collateral for
mortgage swap.
__________________________________________________________________
Key to Abbreviations
ARM -Adjustable Rate Mortgage.
CMO -Collateralized Mortgage Obligation.
CMT -Constant Maturity Treasury.
I/O -Interest Only.
P -Denotes a CMO with principal only characteristics.
P/O -Principal Only.
REMIC -Real Estate Mortgage Investment Conduit.
__________________________________________________________________
See Notes to Financial Statements.
8
<PAGE>
(LEFT COLUMN)
_________________________________________________________________
The BlackRock Income Trust Inc.
Statement of Assets and Liabilities
April 30, 1995
(Unaudited)
_________________________________________________________________
Assets
Investments, at value (cost $775,528,068) (Note 1) ..$735,140,141
Cash ................................................ 676,468
Deposits with brokers for investments sold short
(Note 1) ........................................... 143,799,375
Receivable for investments sold ..................... 43,920,515
Interest receivable ................................. 7,999,356
Due from broker-variation margin .................... 250,045
------------
931,785,900
------------
Liabilities
Reverse repurchase agreements (Note 4) .............. 196,558,000
Investments sold short, at value
(proceeds $151,948,517) (Note 1) ................... 152,153,326
Payable for investments purchased ................... 102,516,953
Unrealized depreciation on mortgage swap
(Notes 1 & 3) ...................................... 5,464,873
Interest payable .................................... 1,665,906
Unrealized depreciation on interest rate cap
(Notes 1 & 3) ...................................... 904,389
Dividends payable ................................... 472,026
Advisory fee payable (Note 2) ....................... 260,138
Administration fee payable (Note 2) ................. 81,323
Other accrued expenses .............................. 668,952
------------
460,745,886
------------
Net Assets $471,040,014
------------
Net assets were comprised of:
Common stock, at par (Note 5) ......................$ 628,499
Paid-in capital in excess of par ................... 569,077,775
------------
569,706,274
------------
Undistributed net investment income ................ 5,257,859
Accumulated net realized losses .................... (56,317,876)
Net unrealized depreciation ........................ (47,606,243)
------------
Net assets, April 30, 1995 .........................$471,040,014
============
Net asset value per share:
($471,040,014 / 62,849,878 shares of
common stock issued and outstanding) ............... $7.49
=====
See Notes to Financial Statements.
(RIGHT COLUMN)
_________________________________________________________________
The BlackRock Income Trust Inc.
Statement of Operations
Six Months Ended April 30, 1995
(Unaudited)
_________________________________________________________________
Net Investment Income
Income
Interest (net of premium amortization of $1,928,102
and interest expense of $4,814,615) ...............$ 21,841,784
------------
Expenses
Investment advisory ................................ 1,475,801
Administration ..................................... 454,093
Reports to shareholders ............................ 139,000
Custodian .......................................... 133,500
Transfer agent ..................................... 101,500
Directors .......................................... 36,000
Audit .............................................. 20,500
Legal .............................................. 7,500
Miscellaneous ...................................... 120,652
------------
Total operating expenses ......................... 2,488,546
------------
Net investment income .............................. 19,353,238
------------
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain (loss)
Investments ........................................ 486,629
Futures ............................................ (3,441,887)
Short sales ........................................ (560,394)
Options written .................................... (32,670)
------------
(3,548,322)
------------
Net change in unrealized appreciation (depreciation)
Investments ........................................ 23,602,945
Futures ............................................ (262,837)
Short sales ........................................ (204,809)
Options written .................................... 16,825
------------
23,152,124
------------
Net gain on investments ............................ 19,603,802
------------
Net Increase In Net Assets
Resulting from Operations ...........................$ 38,957,040
============
See Notes to Financial Statements.
9
<PAGE>
_________________________________________________________________
The BlackRock Income Trust Inc.
Statement of Cash Flows
Six Months Ended April 30, 1995
(Unaudited)
_________________________________________________________________
Increase (Decrease) in Cash
Cash flows used for operating activities:
Interest received ..................................$ 26,976,806
Operating expenses paid ............................ (2,241,013)
Interest expense paid .............................. (3,346,447)
Proceeds from disposition of short-term
portfolio investments including options
written, net ...................................... 1,420,743
Purchase of long-term portfolio investments ........(966,284,390)
Proceeds from disposition of long-term
portfolio investments ............................. 884,007,201
Variation margin on futures ........................ (3,954,679)
------------
Net cash flows used for operating activities ....... (63,421,779)
------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements .......... 87,272,336
Cash dividends paid ................................ (23,533,234)
------------
Net cash provided by financing activities .......... 63,739,102
------------
Net increase in cash ................................ 317,323
Cash at beginning of period ......................... 359,145
------------
Cash at end of period ...............................$ 676,468
============
Reconciliation of Net Increase in Net
Assets to Net Cash Used for
Operating Activities
Net increase in net assets resulting from
operations .........................................$ 38,957,040
------------
Increase in investments ............................. (56,843,032)
Increase in interest receivable ..................... (1,607,695)
Increase in receivable for investments sold ......... (19,855,632)
Decrease in depreciation on mortgage swap ........... (3,936,776)
Increase in variation margin receivable ............. (253,828)
Increase in deposits with brokers for investments
sold short .........................................(143,799,375)
Net realized loss ................................... 3,548,322
Decrease in unrealized depreciation ................. (23,152,124)
Decrease in payable for investments purchased ....... (10,586,393)
Increase in payable for investments sold short ...... 152,153,326
Increase in interest payable ........................ 1,468,168
Increase in depreciation of interest rate cap ....... 260,562
Decrease in options written ......................... (21,875)
Increase in accrued expenses and other
liabilities ........................................ 247,533
------------
Total adjustments ..................................(102,378,819)
------------
Net cash used for operating activities ..............$(63,421,779)
------------
(RIGHT COLUMN)
_________________________________________________________________
The BlackRock Income Trust Inc.
Statements of Changes
in Net Assets
(Unaudited)
_________________________________________________________________
Increase (Decrease)
in Net Assets Six Months Year
Ended Ended
April 30, 1995 October 31, 1994
-------------- ----------------
Operations:
Net investment income ............. $ 19,353,238 $ 45,805,294
Net realized loss on investments,
short sales, futures and options
written ........................... (3,548,322) (17,177,241)
Net change in net unrealized
appreciation (depreciation) on
investments, short sales,
futures and options written ....... 23,152,124 (73,508,164)
------------ ------------
Net increase (decrease) in
net assets resulting from
operations ........................ 38,957,040 (44,880,111)
Dividends from net investment
income ............................ (23,568,360) (49,223,493)
------------ ------------
Total increase (decrease) ......... 15,388,680 (94,103,604)
Net Assets
Beginning of period ............... 455,651,334 549,754,938
------------ ------------
End of period ..................... $471,040,014 $455,651,334
============ ============
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended October 31,
April 30, ----------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.25 $ 8.75 $ 8.90 $ 9.43 $ 8.49 $ 8.42
-------- -------- -------- -------- -------- --------
Net investment income (net of $.08, $.10, $.09, $.09,
$.07 and $.01, respectively, of interest expense) . .31 .73 .91 .74 1.05 1.13
Net realized and unrealized gain (losses) on
investments, short sales, futures and
options written ................................... .31 (1.45) (.21) (.31) .92 -
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations .. .62 (.72) .70 .43 1.97 1.13
-------- -------- -------- -------- -------- --------
Dividends from net investment income ................ (.38) (.78) (.85) (.83) (1.03) (1.06)
Distributions in excess of net investment income .... - - - (.05) - -
Return of capital distribution ...................... - - - (.08) - -
Total dividends and distributions ................. (.38) (.78) (.85) (.96) (1.03) (1.06)
-------- -------- -------- -------- -------- --------
Net asset value, end of period* .....................$ 7.49 $ 7.25 $ 8.75 $ 8.90 $ 9.43 $ 8.49
======== ======== ========== ======== ======== ========
Per share market value, end of period* ..............$ 6-7/8 $ 6-3/8 $ 8-3/8 $ 9-1/8 $ 10-1/8 $ 8-1/4
======== ======== ========== ======== ======== ========
TOTAL INVESTMENT RETURN(D) .......................... 13.84% (15.31%) 1.01% (.55%) 37.55% 5.49%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses .................................. 1.10%** 1.10% 1.03% 1.02% 1.07% 1.10%
Net investment income ............................... 8.54%** 9.21% 10.19% 7.85% 11.95% 13.58%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ...................$456,789 $496,707 $558,530 $582,984 $541,488 $507,257
Portfolio turnover .................................. 135% 223% 121% 131% 261% 77%
Net assets, end of period (in thousands) ............$471,040 $455,651 $549,755 $555,737 $582,845 $519,429
Reverse repurchase agreements outstanding,
end of period (in thousands) ......................$196,558 $109,286 $ 74,700 $168,150 $ 83,025 -
Asset coverage(D)(D) ................................$ 3,396 $ 5,169 $ 8,360 $ 4,305 $ 8,020 -
<FN>
- --------------------
*NAV and market value are published in The Wall Street Journal each Monday.
**Annualized.
(D)Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each year reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Trust's dividend reinvestment
plan. This calculation does not reflect brokerage commissions. Total
investment returns for periods of less than one full year are not
annualized.
(D)(D)Per $1,000 of reverse repurchase agreement outstanding.
The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data, for each of the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's shares.
</FN>
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
(Left Column)
- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Note 1. Accounting
Policies
The BlackRock Income Trust Inc. (the "Trust"), a Maryland corporation, is a
diversified closed-end management investment company. The investment objective
of the Trust is to achieve high monthly income consistent with preservation of
capital. The ability of issuers of debt securities held by the Trust to meet
their obligations may be affected by economic developments in a specific
industry or region. No assurance can be given that the Trust's investment
objective will be achieved.
The following is a summary of significant accounting policies followed by
the Trust.
Securities Valuation: The Trust values mortgage-backed, asset-backed and other
debt securities on the basis of current market quotations provided by dealers or
pricing services approved by the Trust's Board of Directors. In determining the
value of a particular security, pricing services may use certain information
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities, various relationships observed in the
market between securities, and calculated yield measures based on valuation
technology commonly employed in the market for such securities. Exchange-traded
options are valued at their last sales price as of the close of options trading
on the applicable exchanges. In the absence of a last sale, options are valued
at the average of the quoted bid and asked prices as of the close of business. A
futures contract is valued at the last sale price as of the close of the
commodities exchange on which it trades unless the Trust's Board of Directors
determines that such price does not reflect its fair value, in which case it
will be valued at its fair value as determined by the Trust's Board of
Directors. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost, if their term to maturity from date of purchase was 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original term to maturity from date of purchase exceeded 60 days.
(Right Column)
In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
Option Selling/Purchasing: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.
Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means that
a portfolio's or a security's price would be expected to change by approximately
one percent with a one percent change in interest rates, while a duration of
five would imply that the price would move approximately five percent in
relation to a one percent change in interest rates.
Option selling and purchasing is used by the Trust to effectively "hedge"
more volatile positions so that changes in interest rates do not change the
duration of the portfolio unexpectedly. In general, the Trust uses options to
hedge a long or short position or an overall portfolio that is longer or shorter
than the benchmark security. A call option gives the purchaser of the option the
right (but not obligation) to buy, and obligates the seller to sell (when the
option is exercised), the underlying position at the exercise price at any time
or at a specified time during the option period. A put option gives the holder
the
12
<PAGE>
(Left Column)
right to sell and obligates the writer to buy, the underlying position at the
exercise price at any time or at a specified time during the option period. Put
options can be purchased to effectively hedge a position or a portfolio against
price declines if a portfolio is long. In the same sense, call options can be
purchased to hedge a portfolio that is shorter than its benchmark against price
changes. The Trust can also sell (or write) covered call options and put options
to hedge portfolio positions.
The main risk that is associated with purchasing options is that the option
expires without being exercised. In this case, the option expires worthless and
the premium paid for the option is considered the loss. The risk associated with
writing call options is that the Trust may forego the opportunity for a profit
if the market value of the underlying position increases and the option is
exercised. The risk in writing put options is that the Trust may incur a loss if
the market value of the underlying position decreases and the option is
exercised. In addition, as with futures contracts, the Trust risks not being
able to enter into a closing transaction for the written option as the result of
an illiquid market.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Duration is a measure of the price sensitivity of a security
or a portfolio to relative changes in interest rates. For instance, a duration
of "one" means that a portfolio's or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively "hedge" more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
(Right Column)
The Trust may invest in financial futures contracts primarily for the
purpose of hedging its existing portfolio securities or securities the Trust
intends to purchase against fluctuations in value caused by changes in
prevailing market interest rates. Should interest rates move unexpectedly, the
Trust may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets. The Trust is also at the risk
of not being able to enter into a closing transaction for the futures contract
because of an illiquid secondary market. In addition, since futures are used to
shorten or lengthen a portfolio's duration, there is a risk that the portfolio
may have temporarily performed better without the hedge or that the Trust may
lose the opportunity to realize appreciation in the market price of the
underlying positions.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential price declines in similar securities owned. When the Trust makes a
short sale, it may borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The Trust may
have to pay a fee to borrow the particular securities and may be obligated to
pay over any payments received on such borrowed securities. A gain, limited to
the price at which the Trust sold the security short, or a loss, unlimited as to
dollar amount, will be recognized upon the termination of a short sale if the
market price is greater or less than the proceeds originally received.
Securities Lending: The Trust may lend its portfolio securities to qualified
institutions. The loans are secured by collateral at least equal, at all times,
to the market value of the securities loaned. The Trust may bear the risk of
delay in recovery of, or even loss of rights in, the securities loaned should
the borrower of the securities fail financially. The Trust receives compensation
for lending its securities in the form of interest on the loan. The Trust also
continues to receive interest on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the six months ended April 30, 1995.
Mortgage Swaps: Mortgage swaps are a variation on interest rate swaps. In a
simple interest rate swap, one investor pays a floating rate of interest on a
notional principal amount and receives a fixed rate of interest on the same
notional principal amount for a specified period of time. Alternatively, an
investor may pay a fixed rate and receive a floating rate. Rate swaps were
conceived as asset/liability management tools. In more complex swaps, the
notional principal amount may decline (or
13
<PAGE>
(Left Column)
amortize) over time. Mortgage swaps combine the fixed/floating concept with an
amortizing feature that is indexed to mortgage securities. Scheduled
amortization and prepayments on the index pools reduce the notional amount.
During the term of the swap, changes in the value of the swap are recognized
as unrealized gains or losses by "marking-to-market" to reflect the market value
of the swap. When the swap is terminated, the Trust will record a realized gain
or loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Trust's basis in the contract, if any.
Mortgage swaps are used by the Trust to enhance its income earning ability
by effectively owning mortgage pass-throughs and locking-in the financing rate
at a very attractive spread to market levels. This allows mortgage pass-throughs
to be held more cheaply than if they were owned outright and financed, but at a
decreased level of liquidity.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the mortgage swap. However, the Trust does not anticipate
non-performance by any counterparty.
Interest Rate Caps: Interest rate caps are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
excess, if any, of a floating rate over a specified fixed rate.
Interest rate caps are used by the Trust to both manage the duration of the
portfolio and its exposure to changes in short term rates. Duration is a measure
of the price sensitivity of a security or a portfolio to relative changes in
interest rates. For instance, a duration of "one" means that a portfolio's or a
security's price would be expected to change by approximately one percent with a
one percent change in interest rates, while a duration of "five" would imply
that the price would move approximately five percent in relation to a one
percent change in interest rates. Owning interest rate caps reduces the
portfolio's duration, making it less sensitive to changes in interest rates from
a market value perspective. The effect on income involves protection from rising
short term rates, which the Trust experiences primarily in the form of leverage.
The Trust is exposed to credit loss in the event of non-performance by the
other party to the interest rate cap. However, the Trust does not anticipate
non-performance by any counterparty.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes discount and amortizes premium on
securities purchased using the interest method.
(Right Column)
Taxes: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no federal income tax provision is required.
Dividends and Distributions: The Trust declares and pays dividends and
distributions monthly, first from net investment income, then from realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards are distributed at least
annually. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Note 2. Agreements
The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Adviser") and an Administration Agreement with Prudential
Mutual Fund Management, Inc. ("PMF"), an indirect, wholly-owned subsidiary of
The Prudential Insurance Co. of America.
The investment fee paid to the Adviser is computed weekly and payable
monthly at an annual rate of 0.65% of the Trust's average weekly net assets. The
administration fee paid to PMF is also computed weekly and payable monthly at an
annual rate of 0.20% of the first $500 million of the Trust's average weekly net
assets and 0.15% of any excess.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust. PMF
pays occupancy and certain clerical and accounting costs of the Trust. The Trust
bears all other costs and expenses.
On February 28, 1995, the Adviser was acquired by PNC Bank, NA. Following
the acquisition, the Adviser has become a wholly-owned corporate subsidiary of
PNC Asset Management Group, Inc., the holding company for PNC's asset management
businesses.
Note 3. Portfolio
Securities
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the six months ended April 30, 1995 aggregated
$953,983,860 and $886,340,844, respectively.
The Trust may invest without limit in securities which are not readily
marketable, including those which are restricted as to disposition under
securities law ("restricted securities") although the Trust does not expect that
such investments will generally exceed 25% of its portfolio assets. At April 30,
1995, the Trust held 3.4% of its portfolio assets in illiquid securities
including 1.1% of its portfolio assets in securities restricted as to resale.
14
<PAGE>
(Left Column)
The federal income tax basis of the Trust's investments at April 30, 1995
was $778,627,530 and, accordingly, net unrealized depreciation for federal
income tax purposes was $43,487,389 (gross unrealized appreciation-$13,351,541;
gross unrealized depreciation-$56,838,930).
For federal income tax purposes, the Trust has a capital loss carryforward
at October 31, 1994 of approximately $49,303,000 of which approximately
$6,398,700 will expire in 1997, approximately $4,473,500 will expire in 1998,
approximately $15,072,600 will expire in 2001 and approximately $23,358,200 will
expire in 2002. Accordingly, no capital gains distribution is expected to be
paid to shareholders until net gains have been realized in excess of such
amounts.
During the six months ended April 30, 1995, the Trust entered into financial
futures contracts. Details of open contracts at April 30, 1995 are as follows:
Value at Value at Unrealized
Number of Expiration Trade April 30, Appreciation/
Contracts Type Date Date 1995 (Depreciation)
- --------- -------------- ---------- --------- ---------- -------------
Short positions:
170 Eurodollar Sept. 1995 $ 39,759,625 $ 39,758,750 875
90 Fed Funds May 1995 35,234,487 35,245,319 (10,832)
90 Fed Funds June 1995 35,182,024 35,200,316 (18,292)
1,204 5 yr. T-Note June 1995 124,502,910 125,291,250 (788,340)
270 30 yr. T-Bond Sept. 1995 28,221,817 28,316,250 (94,433)
552 30 yr. T-Bond June 1995 58,295,891 58,132,500 163,391
Long positions:
32 30 yr. T-Bond June 1995 3,368,240 3,371,000 2,760
302 30 yr. T-Note June 1995 30,818,711 30,898,375 79,664
9 Fed Funds June 1995 35,209,356 35,230,318 20,962
---------
$(644,245)
=========
Transactions in options written during the six months ended April 30, 1995
were as follows:
Number of
Contracts Premiums
--------- --------
Options outstanding at October 31, 1994 ............. 200 $ 5,050
Options expired ..................................... (200) (5,050)
Options outstanding at April 30, 1995 ............... 0 $ 0
The Trust entered into a FNMA mortgage swap with an original notional amount
of $150 million. Under this agreement, the Trust receives a fixed rate and pays
a floating rate. The swap settled on October 27, 1993. Details of this swap is
as follows:
Current
Notional
Amount Fixed Termination Unrealized
(000) Type Rate Floating Rate Date Depreciation
- -------- ---- ----- ------------------------------ ----------- ------------
$108,777 FNMA 8% 1-mo. LIBOR minus 15 basis pts. Oct.'96 $(5,464,873)
(Right Column)
The Trust entered into an interest rate cap which settled on November 5,
1991 with a notional amount of $200 million. Under this agreement, the Trust
receives the excess, if any, of three-month LIBOR over the fixed rate of 8.50%.
The agreement terminates on November 5, 1996. At April 30, 1995 unrealized
depreciation was $904,389. Note 4. Borrowings Reverse Repurchase Agreements: The
Trust enters into reverse repurchase agreements with qualified, third party
broker-dealers as determined by and under the direction of the Trust's Board of
Directors. Interest on the value of reverse repurchase agreements issued and
outstanding is based upon competitive market rates at the time of issuance. At
the time the Trust enters into a reverse repurchase agreement, it establishes
and maintains a segregated account with the lender containing liquid high grade
securities having a value not less than the repurchase price, including accrued
interest, of the reverse repurchase agreement.
The average daily balance of reverse repurchase agreements outstanding
during the six months ended April 30, 1995 was approximately $165,705,000 at a
weighted average interest rate of approximately 5.86%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year was
$196,558,000 as of April 30, 1995, which was 21.1% of total assets. Dollar
Rolls: The Trust enters into dollar rolls in which the Trust sells securities
for delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date. During the roll period the Trust forgoes principal and interest
paid on the securities. The Trust is compensated by the interest earned on the
cash proceeds of the initial sale and by the lower repurchase price at the
future date.
The average weekly balance of dollar rolls outstanding during the six months
ended April 30, 1995 was approximately $4,148,101. The maximum amount of dollar
rolls outstanding at any month-end during the year was $55,244,665 as of
December 31, 1994, which was 5.9% of total assets.
Note 5. Capital
There are 200 million shares of $.01 par value common stock authorized. Of the
62,849,878 shares outstanding at April 30, 1995, the Adviser owned 10,753
shares.
15
<PAGE>
Note 6. Dividends
Since April 30, 1995, the Board of Directors of the Trust declared a dividend
from undistributed earnings of $.0625 per share payable May 31, 1995 and June
30, 1995 to shareholders of record on May 15, 1995 and June 15, 1995,
respectively.
<TABLE>
<CAPTION>
Note 7. Quarterly Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized
gains (losses) on
investments, Net increase
short sales (decrease)
futures and in net assets Dividends
Net investment options resulting from and Period end
Quarterly Total income (loss) written operations distributions Share price net asset
period income (loss) Amount Per share Amount Per share Amount Per share Amount Per share High Low value
- ----------- ------------- ----------------- ----------------- ----------------- ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 1,
1992 to
January 31,
1993 $18,834,280 $17,391,995 $.28 $4,231,706 $.06 $21,623,701 $.34 $13,278,062 $.212 $ 9-1/2 $ 8-3/8 $9.03
February 1,
1993 to
April 30,
1993 18,640,365 17,205,269 .27 (15,258,204) (.24) 1,947,065 .03 13,289,815 .212 9-1/2 8-3/8 8.85
May 1,
1993 to
July 31,
1993 15,634,103 14,235,190 .23 7,239,174 .12 21,474,364 .34 13,313,485 .212 9-1/4 8-7/8 8.98
August 1,
1993 to
October 31,
1993 9,591,808 8,088,216 .13 (9,376,309) (.15) (1,288,093) (.01) 13,345,303 .212 9-1/8 8-3/8 8.75
November 1,
1993 to
January 31,
1994 13,196,365 8,584,248 .14 (12,850,059) (.21) (4,265,811) (.07) 13,348,984 .212 8-5/8 7-3/4 8.47
February 1,
1994 to
April 30,
1994 7,657,185 9,529,620 .15 (41,634,010) (.66) (32,104,390) (.51) 12,306,006 .196 8-1/2 7 7.76
May 1,
1994 to
July 31,
1994 18,431,996 16,068,999 .26 31,105,782 .49 47,174,781 .75 11,784,274 .188 7-3/8 6-5/8 7.55
August 1,
1994 to
October 31,
1994 11,977,840 11,622,427 .18 (67,307,118) (1.07) (55,684,691) (.89) 11,784,229 .188 7-1/4 6-1/8 7.25
November 1,
1994 to
January 31,
1995 7,966,522 6,718,106 .11 6,924,347 .11 13,642,453 .22 11,784,164 .188 6-7/8 5-7/8 7.28
February 1,
1995 to
April 30,
1995 13,875,262 12,635,132 .20 12,679,455 .20 25,314,587 .40 11,784,196 .188 7-1/4 6-5/8 7.49
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INCOME TRUST INC.
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by State Street Bank & Trust Company (the "Plan Agent")
in Trust shares pursuant to the Plan. Shareholders who do not participate in the
Plan will receive all distributions in cash paid by check in United States
dollars mailed directly to the shareholders of record (or if the shares are held
in street or other nominee name, then to the nominee) by the Custodian, as
dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market, on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue shares under the Plan below net asset value.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividend or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 699-1BFM. The addresses are on the front of
this report.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders, or to its charter or
by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
At a Special Meeting of Trust Shareholders held on February 15, 1995, the
Shareholders approved the Trust's advisory agreement with BlackRock Financial
Management, Inc. The result of the voting is as follows:
Votes For 48,129,741 Votes Against 960,097 Votes Withheld 1,571,359
The Annual Meeting of Trust Shareholders was held May 15, 1995 to vote on
the following matters:
(1) To elect four Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Andrew F. Brimmer ....... III 3 years 1998
Kent Dixon .............. III 3 years 1998
Laurence D. Fink ........ III 3 years 1998
Richard E. Cavanagh ..... I 1 years 1996
Directors whose term of office continues beyond this meeting are Frank
J. Fabozzi, James Grosfeld, James Clayburn La Force, Jr. and Ralph L.
Schlosstein.
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1995.
Shareholders elected the four Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:
Votes For Votes Against Votes Withheld
Andrew F. Brimmer 46,747,428 - 952,015
Kent Dixon 46,873,933 - 825,510
Laurence D. Fink 46,831,486 - 867,958
Richard E. Cavanagh 46,789,762 - 909,681
17
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INCOME TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
The Trust's Investment Objective
The Trust's investment objective is to manage a portfolio of high quality
securities to achieve high monthly income consistent with preservation of
capital. The Trust will seek to distribute monthly income that is greater than
that obtainable on an annualized basis by investment in United States Treasury
securities having the same maturity as the average dollar weighted maturity of
the Trust's investments.
Who Manages the Trust?
BlackRock Financial Management, Inc. ("BlackRock") is the investment adviser for
the Trust. BlackRock is a registered investment adviser specializing in fixed
income securities. Currently, BlackRock manages over $27 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of institutional and individual investors in 21 closed-end
funds, several open-end funds and over 75 separate accounts for various clients
in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset Management
Group which is a division of PNC Bank, the nation's twelfth largest banking
organization.
What Can the Trust Invest In?
The Trust will invest at least 65% of its assets in mortgage-backed securities.
In addition, at least 80% of the Trust's assets will be invested in securities
that are either issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or in securities that are rated at the time of investment
"AAA". Under current market conditions, BlackRock expects that the primary
investments of the Trust will be U.S. government securities, securities backed
by government agencies (such as mortgage-backed securities), privately issued
mortgage-backed securities, commercial mortgage-backed securities and
asset-backed securities.
What is the Adviser's Investment Strategy?
The Adviser will manage the assets of the Trust in accordance withthe Trust's
investment objective and policies to seek to provide high monthly income
consistent with the preservation of capital. The Trust will seek to provide
monthly income that is greater than that which could be obtained by investing in
U.S. Treasury securities with an average life similar to that of the Trust's
assets. Under current market conditions, the average life of the Trust's assets
is expected to be in the range of seven to ten years. Under other market
conditions, the Trust's average life may vary and may not be predictable using
any formula. In seeking the investment objective, the Adviser may actively
manage among various types of securities in different interest rate
environments.
Traditional mortgage pass-through securities make interest and principal
payments on a monthly basis and can be a source of attractive levels of income
to the Trust. While mortgage-backed securities in the Trust are of high credit
quality, they typically offer a yield spread above Treasuries due to the
uncertainty of the timing of their cash flows as they are subject to changes in
the rate of prepayments when interest rates change and either a larger or
smaller proportion of mortgage holders refinance their mortgages or move. While
mortgage-backed securities offer the opportunity for attractive yields, they
subject a portfolio to interest rate risk and prepayment exposure which result
in reinvestment risk when prepaid principal must be reinvested.
Multiple-class mortgage pass-through securities, or collateralized mortgage
obligations (CMOs), are also an investment that may be used in the Trust's
portfolio. These securities are issued in multiple classes each of which has a
different coupon rate, stated maturity and prioritization on the timing of
receipt of cash flows coming from interest and principal payments on the
underlying mortgages. Principal prepayments can be allocated among the different
classes of a CMO in a number of ways; for instance, they can be applied to each
of the classes in the order of their respective stated maturities. This feature
allows an investor to better plan the average life of their investment. As a
result, these securities may be used by the Trust to help manage prepayment risk
and align the assets of the portfolio more closely with its targeted average
life.
Additionally, in order to attempt to protect the portfolio from interest rate
risk, the Adviser will attempt to locate securities with call protection, such
as commercial mortgage-backed securities with prepayment penalties or lockouts.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates.
18
<PAGE>
How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends
Regularly?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.
Leverage Considerations in the Trust
Under current market conditions, leverage increases the income earned
by the Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in longer
term assets is the benefit to the Trust from leverage. Since inception, the
range of leverage utilized by the Trust generally hss been between 20% and 33%.
Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but in a rapidly rising environment, it can cause net assets to
decline faster. The Trust may reduce, or unwind, the amount of leverage employed
should BlackRock consider that reduction to be in the best interests of the
Trust. BlackRock's portfolio managers continuously monitor and regularly review
the Trust's use of leverage and maintain the ability to unwind the leverage if
that course is chosen.
Special Considerations and Risk Factors Relevant to the Trust
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Investment Objective. Although the objective of the Trust is to provide high
monthly income consistent with preservation of capital, there can be no
assurance that this objective will be achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends may
be higher or lower than the dividend the Trust is currently paying.
Leverage. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.
Market Price of Shares. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BKT) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
Mortgage-Backed and Asset-Backed Securities. The cash flow and yield
characteristics of these securities differ from traditional debt securities. The
major differences typically include more frequent payments and the possibility
of prepayments which will change the yield to maturity of the security.
Illiquid Securities. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
Non-U.S Securities. The Trust may invest a portion of its assets in non-U.S.
dollar-denominated securities which involve special risks such as currency,
political and economic risks, although under current market conditions does not
do so.
Antitakeover Provisions. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
19
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INCOME TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
Adjustable Rate Mortgage-Backed
Securities (ARMs):
Mortgage instruments with interest rates that adjust at periodic intervals at a
fixed amount over the market levels of interest rates as reflected in specified
indexes. ARMS are backed by mortgage loans secured by real property.
Asset-Backed Securities:
Securities backed by various types of receivables such as automobile and credit
card receivables.
Closed-End Fund:
Investment vehicle which initially offers a fixed number of shares and trades on
a stock exchange. The fund invests in a portfolio of securities in accordance
with its stated investment objectives and policies.
Collateralized Mortgage Obligations (CMOs):
Mortgage-backed securities which separate mortgage pools into short-, medium-,
and long-term securities with different priorities for receipt of principal and
interest. Each class is paid a fixed or floating rate of interest at regular
intervals. Also known as multiple-class mortgage pass-throughs.
Discount:
When a fund's net asset value is greater than its stock price the fund is said
to be trading at a discount.
Dividend:
This is income generated by securities in a portfolio and distributed to
shareholders after the deduction of expenses. This Trust declares and pays
dividends on a monthly basis.
Dividend Reinvestment:
Shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested into additional shares of the Trust.
FHA:
Federal Housing Administration, a government agency that facilitates a secondary
mortgage market by providing an agency that guarantees timely payment of
interest and principal on mortgages.
FHLMC:
Federal Home Loan Mortgage Corporation, a publicly owned, federally chartered
corporation that facilitates a secondary mortgage market by purchasing mortgages
from lenders such as savings institutions and reselling them to investors by
means of mortgage-backed securities. Obligations of FHLMC are not guaranteed by
the U.S. government, however; they are backed by FHLMC's authority to borrow
from the U.S. government. Also known as Freddie Mac.
FNMA:
Federal National Mortgage Association, a publicly owned, federally chartered
corporation that facilitates a secondary mortgage market by purchasing mortgages
from lenders such as savings institutions and reselling them to investors by
means of mortgage-backed securities. Obligations of FNMA are not guaranteed by
the U.S. government, however; they are backed by FNMA's authority to borrow from
the U.S. government. Also known as Fannie Mae.
GNMA:
Government National Mortgage Association, a government agency that facilitates a
secondary mortgage market by providing an agency that guarantees timely payment
of interest and principal on mortgages. GNMA's obligations are supported by the
full faith and credit of the U.S. Treasury. Also known as Ginnie Mae.
Government Securities:
Securities issued or guaranteed by the U.S. government, or one of its agencies
or instrumentalities, such as GNMA (Government National Mortgage Association),
FNMA (Federal National Mortgage Association) and FHLMC (Federal Home Loan
Mortgage Corporation).
Interest-Only Securities (I/O):
Mortgage securities that receive only the interest cash flows from an underlying
pool of mortgage loans or underlying pass-through securities. Also known as a
STRIP.
20
<PAGE>
Market Price:
Price per share of a security trading in the secondary market. For a closed-end
fund, this is the price at which one share of the fund trades on the stock
exchange. If you were to buy or sell shares, you would pay or receive the market
price.
Mortgage Dollar Rolls:
A mortgage dollar roll is a transaction in which the Trust sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (although not the same) securities on a
specified future date. During the "roll" period, the Trust does not receive
principal and interest payments on the securities, but is compensated for giving
up these payments by the difference in the current sales price (for which the
security is sold) and lower price that the Trust pays for the similar security
at the end date as well as the interest earned on the cash proceeds of the
initial sale.
Mortgage Pass-Throughs:
Mortgage-backed securities issued by Fannie Mae, Freddie Mac or Ginnie Mae.
Multiple-Class Pass-Throughs:
Collateralized Mortgage Obligations.
Net Asset Value (NAV):
Net asset value is the total market value of all securities held by the Trust,
plus income accrued on its investments, minus any liabilities including accrued
expenses, divided by the total number of outstanding shares. It is the
underlying value of a single share on a given day. Net asset value for the Trust
is calculated weekly and published in Barron's on Saturday and The New York
Times or The Wall Street Journal each Monday.
Principal-Only Securities (P/O):
Mortgage securities that receive only the principal cash flows from an
underlying pool of mortgage loans or underlying pass-through securities.
Project Loans:
Mortgages for multi-family, low- to middle-income housing.
Premium:
When a fund's stock price is greater than its net asset value, the fund is said
to be trading at a premium.
REMIC:
A real estate mortgage investment conduit is a multiple-class security backed by
mortgage-backed securities or whole mortgage loans and formed as a trust,
corporation, partnership, or segregated pool of assets that elects to be treated
as a REMIC for federal tax purposes. Generally, Fannie Mae REMICs are formed as
trusts and are backed by mortgage-backed securities.
Residuals:
Securities issued in connection with collateralized mortgage obligations that
generally represent the excess cash flow from the mortgage assets underlying the
CMO after payment of principal and interest on the other CMO securities and
related administrative expenses.
Reverse Repurchase Agreements:
In a reverse repurchase agreement, the Trust sells securities and agrees to
repurchase them at a mutually agreed date and price. During this time, the Trust
continues to receive the principal and interest payments from that security. At
the end of the term, the Trust receives the same securities that were sold for
the same initial dollar amount plus interest on the cash proceeds of the initial
sale.
Strips:
Arrangements in which a pool of assets is separated into two classes that
receive different proportions of the interest and principal distribution from
underlying mortgage-backed securities. IO's and PO's are examples of strips.
21
<PAGE>
- --------------------------------------------------------------------------------
BlackRock Financial Management, Inc.
Summary of Closed-End Funds
- --------------------------------------------------------------------------------
Taxable Trusts
- --------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
The BlackRock Income Trust Inc. BKT N/A
The BlackRock North American Government Income Trust Inc. BNA N/A
Term Trusts
The BlackRock 1998 Term Trust Inc. BBT 12/98
The BlackRock 1999 Term Trust Inc. BNN 12/99
The BlackRock Target Term Trust Inc. BTT 12/00
The BlackRock 2001 Term Trust Inc. BLK 06/01
The BlackRock Strategic Term Trust Inc. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. BQT 12/04
The BlackRock Advantage Term Trust Inc. BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. BCT 12/09
Tax-Exempt Trusts
- --------------------------------------------------------------------------------
Maturity
Perpetual Trusts Stock Symbol Date
------------ --------
The BlackRock Investment Quality Municipal Trust Inc. BKN N/A
The BlackRock California Investment Quality Municipal Trust Inc.RAA N/A
The BlackRock Florida Investment Quality Municipal Trust RFA N/A
The BlackRock New Jersey Investment Quality Municipal Trust Inc.RNJ N/A
The BlackRock New York Investment Quality Municipal Trust Inc. RNY N/A
Term Trusts
The BlackRock Municipal Target Term Trust Inc. BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. BRM 12/08
The BlackRock California Insured Municipal 2008 Term Trust Inc. BFC 12/08
The BlackRock Florida Insured Municipal 2008 Term Trust BRF 12/08
The BlackRock New York Insured Municipal 2008 Term Trust Inc. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. BMT 12/10
If you would like further information please do not hesitate to call BlackRock
at (800) 227-7BFM or consult with your financial advisor.
22
<PAGE>
BLACKROCK FINANCIAL MANAGEMENT INC.
AN OVERVIEW
BlackRock Financial Management ("BlackRock") is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages over $27 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of institutional and individual investors in 21 closed-end
funds, several open-end funds and over 75 institutional clients in the United
States and overseas. BlackRock's institutional investor base includes Chrysler
Corporation Master Retirement Trust, General Retirement System of the City of
Detroit, State Treasurer of Florida, General Electric Pension Trust and Unisys
Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed- end funds to offer a finite term, the first
closed-end fund to achieve a AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
If you would like further information
please call BlackRock at (800) 227-7BFM
23
<PAGE>
(Left Column)
- ---------
BlackRock
- ---------
Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein
Officers
Ralph L. Schlosstein, President
Scott Amero, Vice President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Kevin J. Mahoney, Assistant Treasurer
Karen H. Sabath, Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Administrator
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements
as of April 30, 1995 were not audited
and, accordingly, no opinion is expressed on them.
This report is for shareholder information.
This is not a prospectus intended for use in
the purchase or sale of any securities.
The BlackRock Income Trust Inc.
c/o Prudential Mutual Fund Management, Inc.
32nd floor
One Seaport Plaza
New York, NY 10292
(800) 227-7BFM
09247F-10-0
(Right Column)
- ---------------------------------
- ---------------------------------
The BlackRock
Income
Trust Inc.
- ---------------------------------
Semi-Annual Report
April 30, 1995
