BLACKROCK INCOME TRUST INC, N-30D, 1996-06-27

BLACKROCK INCOME TRUST INC
N-30D, 1996-06-27

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THE BLACKROCK INCOME TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
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May 31, 1996

Dear Trust Shareholder:

After posting strong returns during 1995, the fixed income markets have
given back much of their gains in 1996 in response to a strengthening U.S.
economy. Accelerating economic growth has raised concerns about an increased
inflationary environment, which could erode the value of fixed income
investments. The stronger economy also has led some market participants to
consider the possibility that the Federal Reserve may increase interest rates to
thwart inflation threats after three interest rate reductions over the past
twelve months.

Despite the pick-up in economic growth, we believe that current inflationary
fears will subside. Commodity prices have risen but manufacturers will have
difficulty passing along the increased costs of raw materials to consumers,
whose debt levels as a percentage of disposable income are at the highest point
since the recessionary highs of 1990. We believe that the overleveraged consumer
will have to retrench, restricting future economic expansion and creating a
positive environment for bonds in the latter half of this year.

The following semi-annual report provides detailed market commentary and a
review of portfolio management activity. We believe that BlackRock's duration
controlled management style and risk management capabilities will allow each
of our Trusts to achieve its long-term investment objective.

We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming years.

Sincerely,

Laurence D. Fink Ralph L. Schlosstein
Chairman President

1
<PAGE>

May 31, 1996

Dear Shareholder:

We are pleased to present the semi-annual report for The BlackRock Income
Trust Inc. ("the Trust") for the six months ended April 30, 1996. We would like
to take this opportunity to review the Trust's stock price and net asset value
(NAV) performance, summarize market developments and discuss recent portfolio
management activity.

The Trust is a diversified, actively managed closed-end bond fund whose
shares are traded on the New York Stock Exchange under the symbol "BKT". The
Trust's investment objective is to provide high current income consistent with
the preservation of capital. The Trust seeks this objective by investing
primarily in mortgage-backed securities backed by U.S. Government agencies (such
as Fannie Mae, Freddie Mac or Ginnie Mae) and, to a lesser extent, U.S.
Government securities, asset-backed securities and privately issued
mortgage-backed securities. At least 85% of the Trust's assets must be issued or
guaranteed by the U.S. Government or its agencies or rated "AAA" by Standard &
Poor's or "Aaa" by Moody's at the time of purchase (up to 5% can be unrated and
deemed by the Adviser to be of equivalent credit quality); the remaining 15% of
the Trust's assets must be rated at least "AA" by Standard & Poor's or "Aa" by
Moody's at the time of purchase.

The table below summarizes the performance of the Trust's stock price and
NAV (the market value of its bonds per share) over the period:

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4/30/96 10/31/95 Change High Low
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Stock Price $6.00 $7.25 (17.24%) $7.25 $6.00
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Net Asset Value (NAV) $7.42 $7.66 (3.13%) $7.85 $7.30
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Premium/(Discount) to NAV (19.14%) (5.35%) (13.79%) (7.71%) (20.00%)
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Ten Year Treasury Yield 6.65% 6.01% (10.58%) 6.68% 5.52%
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The Fixed Income Markets

The domestic fixed income markets witnessed two profoundly different
environments during the six month period, presenting both challenges and
opportunities to the management of the Trust. The Treasury market rally of 1995
continued through the middle of February 1996, as market demand for fixed income
securities remained strong due to a combination of moderate economic growth, low
absolute levels of inflation and two reductions of the Fed funds target rate.
The rally halted during mid-February, however, as data indicating accelerating
economic growth, in conjunction with a sharp rise in commodity prices, rekindled
inflationary concerns. Positive news for the economy which may indicate
increased levels of inflation can cause bond yields to rise and prices to fall.
The March 8th release of the February employment report showed a surprisingly
strong gain of 705,000 new jobs (subsequently revised downward to 624,000) and
produced the largest one-day price decline in U.S. bond prices in the last seven
years. For the first quarter of 1996, economic growth as measured by GDP grew
2.8%, which represented a strong rebound from the 0.5% gain posted in the fourth
quarter of 1995.

Interest rate movements reflected the change in investor sentiment toward
fixed income securities. Interest rates across the Treasury yield curve fell
dramatically from November to mid-January, as evidenced by the decline in yield
levels on the ten-year Treasury, which declined 49 basis points (0.49%) from
6.01% on October 31, 1995 to a low of 5.52% on January 19. However, data
released during February suggesting renewed economic vigor placed pressure on
bond prices, as thoughts of a stronger economy dampened investor expectations
that interest rates would continue to fall. These fears translated into a

2
<PAGE>

sharp rise in bond yields across the Treasury yield curve. The yield of the
ten-year Treasury ended the semi-annual period at 6.64%, an increase of 112
basis points in three and one-half months and a net rise of 63 basis points from
October 31, 1995.

The mortgage-backed securities (MBS) market posted strong relative
performance during the first four months of 1996, as rising interest rates
resulted in a reduction in prepayment risk. Still, many investors remained on
the sidelines, convinced that even historically high mortgage yields relative to
Treasuries offered inadequate compensation for the perceived risks of owning
MBS. Due to such narrow participation, MBS performance in 1996 has been somewhat
short of expectations, creating a window of purchasing opportunity for the
Trust.

The Trust's Portfolio and Investment Strategy

BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market outlook and the Trust's investment objectives. The
Trust is managed to maintain an interest rate sensitivity (or duration)
resembling that of a ten year Treasury; this means that the portfolio's NAV will
change similarly to the price of the ten year given a change in interest rates.
The following chart compares the Trust's current and October 31, 1995 asset
composition.

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Composition April 30, 1996 October 31, 1995
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Adjustable Rate Mortgages 20% 18%
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Mortgage Pass-Throughs 15% 24%
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FHA Project Loans 14% 15%
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U.S. Treasury Securities 12% 2%
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Agency Multiple Class Mortgage Pass-Throughs 11% 16%
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Stripped Mortgage-Backed Securities 11% 10%
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Non-Agency Multiple Class Mortgage Pass-Throughs 6% 7%
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Asset-Backed Securities 6% 4%
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CMO Residuals 3% 3%
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Commercial Mortgage-Backed Securities 1% 1%
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Corporate Bonds 1% 0%
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After increasing exposure to the mortgage-backed securities (MBS) sector for
much of 1995, the Trust reduced its overall mortgage holdings from 94% of assets
on October 31, 1995 to 81% on April 30, 1996. Most significantly, the Trust's
mortgage pass-through exposure was reduced by almost half to capture that
sector's strong performance.

Additionally, the Trust moderately increased its adjustable rate mortgage
(ARM) allocations as the rising interest rate environment during the first four
months of 1996 produced mixed performance in that market. Currently, we believe
that the ARM sector represents attractive value, particularly seasoned GNMA
ARMs, which are expected to perform well as prepayment rates should slow in
response to the higher interest rate environment.

The Trust's Board of Directors announced on December 14, 1995 a reduction in
the Trust's monthly dividend rate from $0.0625 ($0.75 annualized) to $0.046875
($0.5625 annualized) effective with the January 1996 payment. The reduction in
the Trust's dividend was made with the expectation that the Trust would be able
to sustain its dividend through its earned income without returning capital to
shareholders. This in turn should provide for greater long-term earning
potential for the Trust.

The new dividend rate reflected a decline in the amount of investment income
the Trust earned as interest rates declined sharply from late 1994 through early
1996. The two main reasons for the reduction to the Trust's income earning
potential:

3
<PAGE>

first, an increase in mortgage refinancing resulted in the reinvestment of
prepaid principal from higher yielding bonds into lower yielding bonds; and
second, the leverage employed by the Trust generated less excess income due to a
flattening of the yield curve. The Fed funds target rate declined only 0.25%
from late 1994 through December 1995, while the yield of the ten year Treasury
fell from 7.83% at year-end 1994 to 5.57% on December 31, 1995. This led to a
dramatic reduction in the yield spread between the Trust's borrowing costs and
the yields on available long term investments for the Trust.

We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the fixed income markets as well as to
maintain the Trust's ability to meet its investment objectives. We thank you for
your investment in The BlackRock Income Trust Inc. Please feel free to contact
our marketing center 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.

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The BlackRock Income Trust Inc.
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Symbol on New York Stock Exchange: BKT
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Initial Offering Date: July 22, 1988
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Closing Stock Price as of 4/30/96: $6.00
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Net Asset Value as of 4/30/96: $7.42
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Yield on Closing Stock Price as of 4/30/96 ($6.00)1: 9.38%
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Current Monthly Distribution per Share2: $0.046875
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Current Annualized Distribution per Share2: $0.56250
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1 Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.

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

4
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(Left Column)

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The BlackRock Income Trust Inc.
Portfolio of Investments
April 30, 1996
(Unaudited)
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Principal
Amount Value
(000) Description (Note 1)
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LONG-TERM INVESTMENTS-138.7%
Mortgage Pass-Throughs-58.9%
Federal Home Loan Mortgage Corporation,
$33,510@ 6.50%, 4/01/26 - 1/01/99 ...................... $ 31,467,901
1,735 6.774%, 2/01/18, 1 year CMT (ARM) ............. 1,739,244
7,151++ 7.50%, 7/01/07 - 2/01/23 ...................... 7,194,508
1,591 8.00%, 11/01/15 ............................... 1,642,618
3,618 8.50%, 5/01/01 - 3/01/08, 15 year ............. 3,742,286
1,931 8.50%, 6/01/06 - 4/01/25 ...................... 1,991,362
5,083 9.00%, 9/01/20 ................................ 5,353,228
42 10.50%, 6/01/19 ............................... 46,604
Federal Housing Administration,
1,912 Altercare Bucyrus, 8.25%, 6/25/34 ............. 1,924,347
2,328 Beachwood Manor, 8.25%, 10/01/34 .............. 2,366,491
4,308 Brookville, 7.50%, 8/01/28 .................... 4,192,286
3,749 Country Estates, 8.375%, 1/01/35 .............. 3,833,319
1,519 Elkton Care Center, 7.30%, 6/01/35 ............ 1,456,793
GMAC,
6,369 Series 33, 7.43%, 9/01/21 ................... 6,395,173
2,208 Series 46, 7.43%, 1/01/22 ................... 2,211,476
913 Series 48, 7.43%, 6/01/22 ................... 911,034
505 Series 51, 7.43%, 2/01/23 ................... 506,040
8,097 Series 56, 7.43%, 11/01/22 .................. 8,115,047
Merrill,
1,294 Series 54, 7.43%, 5/15/23 ................... 1,295,039
3,416 Series 95, 7.43%, 3/01/22 ................... 3,421,960
1,260 Middlesex, 8.625%, 9/01/34 .................... 1,306,732
1,688 Overlook Green South, 7.50%, 9/01/34 .......... 1,640,344
4,875 Parkside, 7.30%, 2/01/13 ...................... 4,730,294
1,918 Providence Apartments,
7.25%, 12/01/34 ............................. 1,832,130
Reilly,
3,154 Series 34, 7.43%, 8/01/19 ................... 3,171,785
1,903 Series 41, 8.28%, 3/01/20 ................... 1,903,658
572 Series 74, 7.43%, 10/01/23 .................. 549,208
2,344 Retreat at Windmere, 7.375%, 11/01/34 ......... 2,259,802
2,119 Rosewood, 7.875%, 12/01/34 .................... 2,117,265
1,523 Senaca Hills, 8.525%, 8/01/34 ................. 1,565,132
1,431 St. Camillus Nursing, 7.875%, 5/01/35 ......... 1,415,526
2,327 Summit Place, 7.90%, 11/01/34 ................. 2,304,758
2,885 Tuttle Grove, 7.25%, 10/01/35 ................. 2,756,552

(Right Column)

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Principal
Amount Value
(000) Description (Note 1)
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Federal Housing Administration,
USGI,
$ 4,442 Polaris 982, 7.43%, 11/01/21 ................ $ 4,452,838
943 Series 87, 7.43%, 12/01/22 .................. 944,111
5,144 Series 99, 7.43%, 10/01/23 .................. 5,151,661
2,800 Series 1003, 7.43%, 3/01/24 ................. 2,637,406
2,814 Series 6302, 7.43%, 12/01/21 ................ 2,825,455
7,199 Yorkville 6094, 7.43%, 6/01/21 .............. 7,214,138
3,633 Waterford, 8.625%, 7/25/27 .................... 3,751,066
1,418 Whitehall, 8.25%, 5/25/35 ..................... 1,441,213
Federal National Mortgage Association,
2,500 6.50%, Series 1994-M1, Class B,
10/25/03, Multifamily ......................... 2,411,719
2,170 7.00%, 11/01/08 ............................... 2,173,081
8,997+ 7.377%, 1/01/25, 1 year CMT (ARM) ............. 9,221,655
164 7.50%, 2/01/22 - 9/01/23 ...................... 162,321
1,087 7.609%, 12/01/22 .............................. 1,109,764
2,082 7.785%, 1/01/01, 7 year Multifamily ........... 2,135,100
7,925 8.00%, 5/01/08 - 5/01/22 ...................... 8,051,241
739 9.317%, 6/01/19, 10 year Multifamily .......... 784,460
1,887 9.484%, 7/01/19, Multifamily .................. 2,006,277
1,465 9.497%, 6/01/24, Multifamily .................. 1,602,213
273 9.50%, 1/01/19 - 6/01/20 ...................... 290,874
787 9.732%, 7/01/19, 10 year Multifamily .......... 860,471
Government National Mortgage
Association,
3,267 6.00%, 3/15/09 - 4/15/09, 15 year ............. 3,110,920
3,500 6.00%, 12/20/99, 1 year CMT (ARM) ............. 3,482,500
45,982+ 6.50%, 2/20/23 - 6/20/25,
1 year CMT (ARM) ............................ 46,452,697
24,938++ 7.00%, 5/20/25 - 6/20/25, 1 year
CMT (ARM) ................................... 25,265,508
15,216@ 7.00%, 10/15/17 - 1/15/99 ..................... 14,649,952
2,544 7.25%, 11/15/04 - 1/15/06 ..................... 2,560,967
87 8.50%, 5/15/01 - 2/15/17 ...................... 89,884
1,409 9.00%, 6/15/18 - 9/15/21 ...................... 1,479,249
14 9.50%, 7/15/16 ................................ 14,788
233 10.00%, 7/15/17 - 11/15/19 .................... 255,841
673 11.00%, 8/15/18 - 6/15/20 ..................... 752,548
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274,701,860
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See Notes to Financial Statements.

5
<PAGE>

(Left Column)

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S&P/ Principal
Moody's Amount Value
Rating* (000) Description (Note 1)
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Multiple Class Mortgage
Pass-Throughs-33.3%
AAA $2,100 Citicorp Mortgage Securities Inc.,
Series 1994-9, Class A-4, 6/25/09 ..... $ 1,904,532

AAA 25,845@@ Community Program Loan Trust,
Series 1987-A, Class A-4,
10/01/18 .............................. 21,483,656
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificate,
8,000 Series 120, Class 120-H, 2/15/21 ...... 8,294,000
1,000 Series 1388, Class 1388-H,
6/15/07 ............................. 786,950
8,693
Series 1443, Class 1443-OC
12/15/22 (ARM) ...................... 7,354,224
17,384+/@@ Series 1584, Class 1584-FB
9/15/23 (ARM) ....................... 17,840,002
1,804 Series 1596, Class 1596-SB
12/15/12 (ARM) ...................... 1,237,740
28,852@@ Series 1632, Class 1632-S,
4/15/23 (ARM) ....................... 1,099,992
32,000 Series 1809, Class 1809-SC
12/15/23 (ARM) ...................... 2,770,000
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
4,741 Trust 1988-16, Class 16-B,
6/25/18 ............................. 5,003,513
3,069 Trust 1991-38, Class 38-F,
4/25/21 (ARM) ....................... 3,224,246
2,341 Trust 1991-38, Class 38-SA,
4/25/21 (ARM) ....................... 2,197,457
4,150 Trust 1991-87, Class 87-S,
8/25/21 (ARM) ....................... 4,238,019
5,000 Trust 1992-43, Class 43-E,
4/25/22 ............................. 4,858,850
34,759+/@@ Trust 1992-69, Class 69-Z,
5/25/22 ............................. 34,966,183
4,780 Trust 1993-107, Class 107-SA,
6/25/08 (ARM) ....................... 3,720,612
28,780 Trust G1994-6, Class 6-PK,
11/17/22 (I) ........................ 4,694,664
6,797 Trust 1996-14, Class 14-M,
10/25/21 ............................ 5,256,070
14,300 Trust 1996-14, Class 14-PE,
8/25/23 (P) ......................... 3,861,000
Prudential Home Mortgage
Securities Co., Mortgage
Pass-Through Certificate
Aaa 743 Series 1993-43 Class 16,
10/25/23 (ARM) ...................... 521,886
Aa2 4,660 Series 1993-55 Class A-1,
12/26/23 (ARM) ...................... 4,747,527
AAA 890 Resolution Trust Corporation,
Mortgage Pass-Through
Certificates, Series 1992-2,
Class B-3, 11/25/21 ................... 893,117

(Right Column)

AAA $14,092 Salomon Capital Access
Corporation, Collateralized
Mortgage Obligations,
Series 1986-1, Class C,
9/01/15 ............................... $ 14,302,892
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155,257,132
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Commercial Mortgage-
Backed Securities-0.4%
AA 2,000 PaineWebber Mortgage
Acceptance Corporation IV,
Series 1995-M1,
Class B, 6.95%, 1/15/07 ............... 1,962,199
A 140,000 KPAC, Series 1994-C1,
Zero Coupon, 2/01/01 .................. 1,400
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1,963,599
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Corporate Bond-0.6%
A 2,500 Travelers Aetna Property Casualty Co.,
6.75%, 4/15/01 ........................ 2,491,600
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Asset-Backed Securities-8.0%
Aaa 14,062@@ Chase Manhattan Grantor Trust,
Series 1996-Class A, Automobile
Loan Pass-Through, 5.20%,
2/15/02 ............................... 13,855,047
Discover Card Master Trust,
AAA 3,650 Series 1993-1, Class A, 5.77%,
10/16/01 .............................. 3,660,257
AAA 7,200 Series 1996-3, Class A, 6.05%,
8/18/08 ............................... 6,619,500
AAA 6,000 Series 1996-4, Class A, 5.81%,
10/16/13 .............................. 5,996,220
AAA 5,000 First Chicago Master Trust,
Series 1994-J, Class A, 5.72%,
1/16/01 ............................... 5,009,350
AAA 1,191 NationsBank Auto Grantor Trust,
Series 1995-A, Class A, 5.85%,
6/15/02 ............................... 1,186,870
AAA 848 Premier Auto Trust, Series 1995-1,
Class A2, 7.35%, 5/04/97 .............. 848,048
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37,175,292
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Stripped Mortgage-Backed
Securities-16.1%
AAA 1,158 Chase Mortgage Finance Corporation,
Mortgage Pass-Through
Certificates, Series 1994-A,
Class AP, 1/25/10 (P/O) ............... 839,225
AAA 1,653@@ Collateralized Mortgage Obligation,
Trust 36, Class A, 10/25/17 (P/O) ..... 1,207,980
DBL, Collateralized Mortgage Obligation,
AAA 670 Trust K, Class 1, 9/23/17 (P/O) ....... 388,213
AAA 2,075 Trust V, Class 1, 9/01/18 (P/O) ....... 1,530,092
Federal Home Loan Mortgage
Corporation,
6,061 Series 188, Class 188-G,
9/15/21 (I/O) ....................... 1,894,147
30 Series 1003, Class 1003-O,
10/15/20 (I/O) ...................... 823,867

See Notes to Financial Statements.

6
<PAGE>

(Left Column)

Federal Home Loan Mortgage
Corporation,
$ 681 Series 1418, Class 1418-M,
11/15/22 (P/O) ...................... $ 186,950
3,388 Series 1473, Class 1473-JA,
2/15/05 (I/O) ....................... 258,300
9,461 Series 1690, Class 1690-B,
11/15/23 (P/O) ...................... 3,116,153
Federal National Mortgage Association,
30,170 Trust 2, Class 2, 2/01/17 (I/O) ....... 9,330,795
2,726 Trust 9, Class 2, 2/01/17 (I/O) ....... 808,415
31,597 Trust 23, Class 2, 9/01/17 (I/O) ...... 10,031,979
8,908 Trust 95, Class 2, 10/01/20 (I/O) ..... 2,861,553
14,430 Trust 103, Class 2, 9/01/06 (I/O) ..... 2,786,850
2,234 Trust 141, Class 2, 9/25/21 (I/O) ..... 712,183
7,069 Trust 225, Class 1, 2/01/23 (P/O) ..... 5,082,968
5,500 Trust 1991-110, Class 110-E,
5/25/21 (P/O) ....................... 3,549,205
60 Trust G1992-34, Class 34-A
4/25/22 (I/O) ....................... 1,836,947
1,405 Trust G1993-2, Class 2-KB,
1/25/23 (P/O) ....................... 393,750
12,614 Trust 1993-213, Class 213-H,
9/25/23 (P/O) ....................... 9,495,115
First Boston Mortgage
Securities Corporation,
AAA 1,955 Series 1987-C, Class Z,
4/25/17 (I/O) ....................... 423,912
AAA 23,170 Series 1988-E, Class 2,
10/01/18 (I/O) ...................... 7,095,727
AAA 19,871 Greenwich Capital Acceptance Inc.,
Series 1994-LB3, Class S,
8/25/24 (I/O) ......................... 509,185
Housing Security Incorporated,
AAA 478 Series 1992-EB, Class B-8,
9/25/22 (P/O) ......................... 276,062
AAA 713 Series 1993-D, Class D-8,
6/25/23 (P/O) ......................... 411,362
AAA 679 ML Trust XIX, Collateralized
Mortgage Obligation, Class B,
11/25/17 (P/O) ........................ 509,148
AAA 1 Prudential Home Mortgage Securities
Company, Mortgage Pass-Through
Certificates, Series 1993-29,
Class A18, 8/25/08 (I/O) .............. 3,150,000
Prudential Securities Inc.,
Collateralized Mortgage Obligation,
AAA 6 Trust 15, Class 1G, 5/20/21 (I/O) ..... 607,105
AAA 93 Trust 1991-24, Class O,
3/25/21 (I/O) ......................... 4,316,099
AAA 4,052 Residential Funding Corporation,
Trust 1992-S6, Class S6-A11
2/25/22 (I/O) ......................... 34,190
AAA 1,102 Structured Mortgage Asset Trust,
Series 1993-3C, Class CX
4/25/24 (P/O) ......................... 629,803
------------
75,097,280
------------

(Right Column)

CMO Residuals**-4.1%
AAA $ 5,522 American Housing Trust III, Senior
Mortgage Pass-Through Certificates,
Series 1, Class 4, (REMIC)#,
3/25/19 ............................... $ 848,046
AAA 25 Collateralized Mortgage Obligation,
Trust 13#, 1/20/03 .................... 995,510
AAA 4 Collateralized Mortgage Securities
Corporation, Collateralized
Mortgage Obligations,
Series 1990-3, Class 3-R,
(REMIC)#, 5/25/20 ..................... 265,236
AAA 45 FBC Mortgage Securities Trust 16,
Variable Rate Collateralized
Mortgage Obligation,
Series A#, 7/01/17 .................... 1,185,125
AAA 3,115 FBC Mortgage Securities Trust 19,
Variable Rate Collateralized
Mortgage Obligation,
Series A#, 10/20/18 ................... 249,800
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
450 Series 32, Class 32-R, (REMIC),
3/15/20 ............................. 509,243
7 Series 1017, Class 1017-R,
(REMIC), 11/15/20 ..................... 1,186,706
13,537 Series 1119, Class 1119-R,
(REMIC), 8/15/21 ...................... 3,599,970
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
1,100 Trust 1989-99, Class 99-R,
12/25/19 ............................ 1,275,000
10 Trust 1990-12, Class 12-R,
2/25/20 ............................. 1,975,000
100 Trust 1990-57, Class 57-R,
5/25/20 ............................. 1,077,000
27 Trust 1990-86, Class 86-R,
7/25/20 ............................. 2,028,000
AAA 7,310 ML Collateralized Mortgage
Obligations, Trust V#, 3/20/18 ........ 2,521,982
AAA 10 P-B Collateralized Mortgage
Obligation, Trust 8,
Class 8-H, (REMIC)#, 3/01/19 .......... 198,000
AAA 43 PaineWebber, Collateralized
Mortgage Obligation,
Series N, Class 7, (REMIC)#,
1/01/19 ............................... 365,091
AAA 1,059 Ryland Acceptance Corporation,
Collateralized Mortgage Bonds,
Series 33, Class A#, 6/20/18 .......... 307,780

See Notes to Financial Statements.

7
<PAGE>

(Left Column)

AAA $ 995 Smith Barney Mortgage Capital
Trust VIII, Collateralized
Mortgage Obligations, Series 1,
Class 1-R, (REMIC)#, 5/01/19 .......... $ 346,000
------------
18,933,489
------------
U.S Government Securities-17.3%
U.S. Treasury Notes,
14,251++ 5.375%, 11/30/97 ...................... 14,121,886
12,790 6.25%, 2/15/03 ........................ 12,568,221
7,600+ 6.50%, 5/15/05 ........................ 7,500,212
24,750++ 6.375%, 3/31/01 ....................... 24,703,470
15,500 United States Treasury Bond,
12.75%, 11/15/10 ...................... 21,871,895
------------
80,765,684
------------

Total long-term investments
(cost $660,398,183) ................... 646,385,936
------------
Contracts***
------------
SHORT-TERM INVESTMENTS
CALL OPTION PURCHASED-0.4%
503 U.S. Treasury Bond,
expiring June 1996 @ $106
(cost $7,044,389) ..................... 1,697,625
------------
Total investments before
investments sold short-139.1%
(cost $667,442,572) ................... 648,083,561
------------
Principal
Amount
(000)
---------
INVESTMENTS SOLD SHORT-(4.1%)

(15,000) Federal Home Loan Mortgage
Corporation, 7.00%, 1/01/99 ........... (14,479,650)

(4,655) United States Treasury Notes,
5.00%, 2/15/99 ........................ (4,516,095)
------------
Total investments sold short
(proceeds $18,973,863) ................ (18,995,745)
Total investments,
net of short sales-135.0%
(cost $648,468,709) ................... 629,087,816
Liabilities in excess of
other assets-(35.0%) .................. (163,041,350)
------------
NET ASSETS-100% ......................... $466,046,466
============

- ------------------
*Using the higher of Standard & Poor's or Moody's rating.
**Illiquid securities representing 2.9% of portfolio assets.
***One contract equals 100,000 face value.
#Private placements restricted as to resale.
+$1,784,098 principal amount pledged as collateral for futures
transactions.
++$44,949,725 principal amount pledged as collateral for mortgage
dollar rolls.
@Entire principal amount pledged as collateral for mortgage swap.
@@$10,147,437 principal amount pledged as collateral for mortgage
swap.

- --------------------------------------------------------------------------------
Key to Abbreviations

ARM --Adjustable Rate Mortgage.
CMO --Collateralized Mortgage Obligation.
CMT --Constant Maturity Treasury.
I --Denotes a CMO with interest only characteristics.
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, 1996
(Unaudited)
- --------------------------------------------------------------------------------
Assets

Investments, at value (cost $667,442,572) (Note 1) .............. $648,083,561
Cash ............................................................ 113,190
Receivable for investments sold ................................. 23,094,184
Deposit with brokers for investments
sold short (Note 1) ........................................... 19,020,413
Interest receivable ............................................. 8,762,982
Unrealized appreciation on interest rate floor
(Notes 1 & 3) ................................................. 46,679
------------
699,121,009
------------
Liabilities

Reverse repurchase agreements (Note 4) .......................... 146,433,199
Payable for investments purchased ............................... 62,142,357
Investments sold short, at value
(proceeds $18,973,863) (Note 1) ............................... 18,995,745
Unrealized depreciation on mortgage swap
(Notes 1 & 3) ................................................. 3,588,398
Unrealized depreciation on interest rate cap
(Notes 1 & 3) ................................................. 340,500
Dividends payable ............................................... 312,978
Advisory fee payable (Note 2) ................................... 249,568
Due to broker-variation margin .................................. 174,977
Interest payable ................................................ 100,804
Administration fee payable (Note 2) ............................. 76,790
Other accrued expenses .......................................... 659,227
------------
233,074,543
------------
Net Assets ...................................................... $466,046,466
============
Net assets were comprised of:
Common stock, at par (Note 5) ................................. $ 628,499
Paid-in capital in excess of par .............................. 563,355,769
------------
563,984,268
------------
Distributions in excess of net investment income .............. (927,411)
Accumulated net realized losses ............................... (73,668,123)
Net unrealized depreciation ................................... (23,342,268)
------------
Net assets, April 30, 1996 .................................... $466,046,466
============
Net asset value per share:
($466,046,466 d/b 62,849,878 shares of
common stock issued and outstanding) .......................... $7.42
=====

(Right Column)

- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Statement of Operations
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------

Net Investment Income
Income
Interest (net of premium amortization of $6,973,428
and interest expense of $6,336,382) ......................... $ 21,312,106
------------
Expenses
Investment advisory ........................................... 1,565,652
Administration ................................................ 481,739
Custodian ..................................................... 146,500
Transfer agent ................................................ 112,000
Reports to shareholders ....................................... 99,500
Directors ..................................................... 38,000
Audit ......................................................... 29,000
Legal ......................................................... 12,500
Miscellaneous ................................................. 114,396
------------
Total operating expenses .................................... 2,599,287
------------
Net investment income ......................................... 18,712,819
------------
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain (loss)
Investments ................................................... (5,243,967)
Futures ....................................................... 1,137,043
Short sales ................................................... (282,639)
------------
(4,389,563)
------------
Net change in unrealized appreciation (depreciation)
Investments ................................................... (9,967,938)
Futures ....................................................... 52,396
Short Sales ................................................... (21,882)
------------
(9,937,424)
------------
Net loss on investments ......................................... (14,326,987)
------------
Net Increase In Net Assets
Resulting from Operations ....................................... $ 4,385,832
============

See Notes to Financial Statements.

9
<PAGE>

(Left Column)

- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Statement of Cash Flows
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------

Increase (Decrease) in Cash
Cash flows provided by operating activities:
Interest received ........................................... $ 31,893,477
Operating expenses paid ..................................... (2,347,318)
Interest expense paid ....................................... (5,767,761)
Purchase of short-term portfolio
investments including options, net ........................ (5,745,717)
Purchase of long-term portfolio investments ................. (2,084,474,620)
Proceeds from disposition of long-term
portfolio investments ..................................... 2,155,375,336
Variation margin on futures ................................. (1,364,416)
---------------
Net cash flows provided by operating activities ............. 87,568,981
---------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements ................... (68,004,676)
Cash dividends paid ......................................... (19,789,124)
---------------
Net cash used for financing activities ...................... (87,793,800)
---------------
Net decrease in cash .......................................... (224,819)
Cash at beginning of period ................................... 338,009
---------------
Cash at end of period ......................................... $ 113,190
---------------
Reconciliation of Net Increase in Net
Assets to Net Cash Provided by
Operating Activities
Net increase in net assets resulting from operations .......... $ 4,385,832
---------------
Decrease in investments ....................................... 31,384,036
Increase in interest receivable ............................... (2,165,397)
Decrease in receivable for investments sold ................... 36,567,899
Increase in depreciation on mortgage swap ..................... 1,085,947
Decrease in variation margin receivable ....................... 205,610
Increase in appreciation of interest rate floor ............... (46,679)
Net realized loss ............................................. 4,389,563
Increase in unrealized depreciation ........................... 9,937,424
Increase in deposits with brokers for
investments sold short ...................................... (19,020,413)
Increase in payable for investments sold short ................ 18,995,745
Increase in payable for investments purchased ................. 2,437,737
Decrease in interest payable .................................. (488,464)
Decrease in depreciation of interest rate cap ................. (351,828)
Increase in accrued expenses and other
liabilities ................................................. 251,969
---------------
Total adjustments ........................................... 83,183,149
---------------
Net cash provided by operating activities ..................... $ 87,568,981
===============

(Right Column)

- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Statements of Changes
in Net Assets
(Unaudited)
- --------------------------------------------------------------------------------

Increase (Decrease) Six Months Year
in Net Assets Ended Ended
April 30, 1996 October 31, 1995
-------------- ----------------

Operations:

Net investment income ....................... $ 18,712,819 $ 31,941,790

Net realized loss on investments,
futures, short sales and options .......... (4,389,563) (16,509,006)

Net change in net unrealized
appreciation (depreciation) on
investments, futures,
short sales and options ................... (9,937,424) 57,353,523
------------ ------------
Net increase (decrease) in
net assets resulting from
operations ................................ 4,385,832 72,786,307

Dividends from net investment
income ...................................... (18,712,819) (41,414,771)

Distributions in excess of net
investment income ........................... (927,411) (192,946)

Return of capital ............................. - (5,529,060)
------------ ------------
Total (decrease) increase ................... (15,254,398) 25,649,530

Net Assets

Beginning of period ......................... 481,300,864 455,651,334
------------ ------------
End of period ............................... $466,046,466 $481,300,864
============ ============

See Notes to Financial Statements.

10
<PAGE>

- --------------------------------------------------------------------------------
The BlackRock Income Trust Inc.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Six Months Year Ended October 31,
Ended ------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: April 30, 1996 1995 1994 1993 1992 1991
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......................... $ 7.66 $ 7.25 $ 8.75 $ 8.90 $ 9.43 $ 8.49
------ ------ ------ ------ ------ ------
Net investment income (net of $.10, $.22, $.10, $.09, $.09,
and $.07, respectively, of interest expense) ............. .30 .51 .73 .91 .74 1.05

Net realized and unrealized gain (losses) on
investments, short sales, futures and
options .................................................. (.23) .65 (1.45) (.21) (.31) .92
------ ------ ------ ------ ------ ------
Net increase (decrease) from investment operations ........... .07 1.16 (.72) .70 .43 1.97
------ ------ ------ ------ ------ ------
Dividends from net investment income ......................... (.30) (.66) (.78) (.85) (.83) (1.03)

Distributions in excess of net investment income ............. (.01) - - - (.05) -

Return of capital distribution ............................... - (.09) - - (.08) -
------ ------ ------ ------ ------ ------
Total dividends and distributions .......................... (.31) (.75) (.78) (.85) (.96) (1.03)
------ ------ ------ ------ ------ ------
Net asset value, end of period* .............................. $ 7.42 $ 7.66 $ 7.25 $ 8.75 $ 8.90 $ 9.43
====== ====== ====== ====== ====== ======
Per share market value, end of period* ....................... $ 6 $ 7-1/4 $ 6-3/8 $ 8-3/8 $ 9-1/8 $10-1/8
====== ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN+ ..................................... (13.15%) 26.50% (15.31%) 1.01% (.55%) 37.55%

RATIOS TO AVERAGE NET ASSETS:

Operating expenses# .......................................... 1.09%** 1.08% 1.10% 1.03% 1.02% 1.07%

Net investment income ........................................ 7.81%** 6.85% 9.21% 10.19% 7.85% 11.95%

SUPPLEMENTAL DATA:

Average net assets (in thousands) ............................$481,681 $466,449 $496,707 $558,530 $582,984 $541,488

Portfolio turnover ........................................... 298% 267% 223% 121% 131% 261%

Net assets, end of period (in thousands) .....................$466,046 $481,301 $455,651 $549,755 $555,737 $582,845

Reverse repurchase agreements outstanding,
end of period (in thousands) ...............................$146,433 $214,438 $109,286 $74,700 $168,150 $ 83,025

Asset coverage++ .............................................$ 4,183 $ 3,244 $ 5,169 $ 8,360 $ 4,305 $ 8,020

<FN>

* NAV and market value are published in The Wall Street Journal each Monday.

** Annualized.

# The ratios of operating expenses including interest expense to average net
assets were 3.71%, 4.08%, 2.32%, 2.02%, 1.97%, and 1.88% for the periods
indicated above, respectively.

+ 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.

++ 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.

<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, 1996.

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 intended to enhance the Trust^s 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 intended to both manage the duration of the Trust's
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.

Interest Rate Floors: Interest rate floors 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 under a specified fixed rate.

(Right column)

Interest rate floors are used by the Trust to both manage the duration of
the portfolio and its exposure to changes in short-term interest 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 floors
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 falling 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 floor. However, the Trust does not anticipate
non-performance by any counterparty.

Securities Transactions and Net 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. Expenses are recorded on the
accrual basis which may require the use of certain estimates by management.

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 Man-

14
<PAGE>

(Left Column)

agement, 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.

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, 1996 aggregated
$2,085,665,278 and $2,101,066,145, respectively.

The Trust may invest without limit in securities which are not readily
marketable, including those which are restricted as to dis position 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,
1996, the Trust held 2.9% of its portfolio assets in illiquid securities
including 1.1% of its portfolio assets in securities restricted as to resale.

The federal income tax basis of the Trust's investments at April 30, 1996
was $670,542,034 and, accordingly, net unrealized depreciation for federal
income tax purposes was $22,458,473 (gross unrealized appreciation-$16,290,970;
gross unrealized depreciation-$38,749,443).

For federal income tax purposes, the Trust has a capital loss carryforward
at October 31, 1995 of approximately $64,731,200 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, approximately $23,358,200 will
expire in 2002 and approximately $15,428,200 will expire in 2003. 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, 1996, the Trust entered into financial
futures contracts. Details of open contracts at April 30, 1996 are as follows:

(Right column)

Value at Value at Unrealized
Number of Expiration Trade April 30, Appreciation/
Contracts Type Date Date 1996 (Depreciation)
- --------- ---- ---- ---- ---- --------------
Short position:
256 2 yr. T-Note June 1996 $26,466,919 $26,412,000 $ 54,919

Long positions:
55 Muni-Bond Index June 1996 6,167,136 6,118,750 (48,386)
13 5 yr. T-Note June 1996 1,383,972 1,376,984 (6,988)
50 10 yr. T-Note June 1996 5,393,906 5,375,000 (18,906)
65 10 yr. T-Note Sept. 1996 6,916,715 6,969,219 52,504
160 30 yr. T-Bond June 1996 17,577,299 17,465,000 (112,299)
--------
$(79,156)
========

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
----- ---- ---- ------------------------------- ---- ------------
$97,313 FNMA 8% 1-mo. LIBOR minus 15 basis pts. Oct.'96 $(3,588,398)

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, 1996 unrealized
depreciation was $340,500.

The Trust sold an interest rate floor which settled on December 4, 1995 with
a notional amount of approximately $32 million which will decline over the term
of the agreement. At April 30, 1996, the notional amount is approximately $28
million. Under the agreement, the Trust pays the excess, if any, of 8.15% over
one-month LIBOR. In exchange, the Trust received a fee on settlement date of
$1.4 million which is being recognized into income over the term of the
agreement. The agreement terminates on December 15, 2000. At April 30, 1996
unrealized appreciation was $46,679.

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.

15
<PAGE>

(Left column)

The average daily balance of reverse repurchase agreements outstanding
during the six months ended April 30, 1996 was approximately $205,028,000 at a
weighted average interest rate of approximately 5.65%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the period was
$243,918,988 as of November 30, 1995, which was 23.0% 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 monthly balance of dollar rolls outstanding during the six
months ended April 30, 1996 was approximately

(Right column)

$7,141,170. The maximum amount of dollar rolls outstanding at any month-end
during the year was $31,133,190 as of April 30, 1996, which was 4.5% of total
assets.

Note 5. Capital

There are 200 million shares of 1 par value common stock authorized. Of the
62,849,878 shares outstanding at April 30, 1996, the Adviser owned 10,753
shares.

Note 6. Dividends

Since April 30, 1996, the Board of Directors of the Trust declared dividends
from undistributed earnings of $0.046875 per share payable May 31, 1996 and June
28, 1996 to shareholders of record on May 15, 1996 and June 14, 1996,
respectively.

Note 7. Quarterly Data

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized
gain (loss) on
investments, Net increase
short sales, (decrease)
futures and in net assets Dividends
Net investment options resulting from and
income written operations distributions Period end
Quarterly Total Per Per Per Per Share price net asset
period income Amount share Amount share Amount share Amount share High Low value
- --------- ----------- ---------- ----- ----------- ----- ----------- ----- ----------- ----- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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

May 1, 1995
to July 31, 1995 9,186,628 7,888,261 .13 4,537,191 .07 12,425,452 .20 11,784,243 .188 7-3/8 6-7/8 7.50

August 1, 1995
to October 31, 1995 5,947,291 4,700,291 .07 16,703,524 .27 21,403,815 .34 11,784,174 .188 7-3/8 6-7/8 7.66

November 1, 1995
to January 31, 1996 11,192,969 9,880,763 .16 21,999,110 .35 31,879,873 .51 10,802,096 .172 7-1/4 6-1/4 7.85

February 1, 1996
to April 30, 1996 10,119,137 8,832,056 .14 (36,326,097) (.58) (27,494,041) (.44) 8,838,134 .141 6-5/8 6 7.42

</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 Boston EquiServe L.P. (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.

The Annual Meeting of Trust Shareholders was held May 8, 1996 to vote on the
following matters:

(1) To elect three Directors as follows:

Director Class Term Expiring
-------- ----- ---- --------
Richard E. Cavanagh ............... I 3 years 1999
James Grosfeld .................... I 3 years 1999
James Clayburn LaForce, Jr. ....... I 3 years 1999

Directors whose term of office continues beyond this meeting are Andrew
F. Brimmer, Kent Dixon, Frank J. Fabozzi, Laurence D. Fink 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, 1996.

Shareholders elected the three Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:

Votes for Votes Against Abstentions
--------- ------------- -----------
Richard E. Cavanagh .......... 49,717,576 0 1,559,957
James Grosfeld ............... 49,702,986 0 1,574,547
James Clayburn LaForce, Jr. .. 49,660,346 0 1,617,187

Ratification of
Deloitte & Touche LLP ...... 49,932,681 755,170 589,681

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 $39 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, which trade on either the New York or American stock exchanges, several
open-end funds and separate accounts for more than 80 clients in the U.S. and
overseas. BlackRock is a subsidiary of PNC Asset Management Group which is a
division of PNC Bank, one of the nation's largest banking organizations.

What Can the Trust Invest In?

The Trust will invest at least 65% of its assets in mortgage-backed securities.
At least 85% of the Trust's assets must be rated at least "AAA" by Standard &
Poor's or "Aaa" by Moody's at the time of purchase; of this 85% at least 80% of
the Trust's assets must be rated at least "AAA" by Standard & Poor's at the time
of purchase while the remaining 5% can be invested in securities at least "AAA"
by Standard & Poor's, "Aaa" by Moody's or deemed "AAA" by the Advisor at the
time of purchase. Additionally, 15% of the Trust's assets can be invested in
securities rated at least "AA" by Standard & Poor's or "Aa" by Moody's at time
of purchase. 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 seek to meet the Trust in accordance with the Trust's
investment objective by managing the assets of the Trust so as 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
EquiServe L.P. 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. In general, the portfolio
is typically leveraged at approximately 33-1/3% of total assets.

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 can cause net assets to decline faster than the market in a
rapidly rising rate environment. BlackRock's portfolio managers continuously
monitor and regularly review the Trust's use of leverage and the Trust may
reduce, or unwind, the amount of leverage employed should BlackRock consider
that reduction to be in the best interests of shareholders.

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. 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.

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 Mortgage instruments with interest rates that
Securities (ARMs): 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-backed securities which separate
Mortgage Obligations (CMOs): 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 guaran
teed 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 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. Also known as a STRIP.

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.

Stripped Mortgage Arrangements in which a pool of assets is
Backed Securities: 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
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Taxable Trusts
- --------------------------------------------------------------------------------------------------
Stock Maturity
Perpetual Trusts 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
- --------------------------------------------------------------------------------------------------
Stock Maturity
Perpetual Trusts 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
</TABLE>

If you would like further information
please do not hesitate to call BlackRock at (800) 227-7BFM or
consult with your financial advisor.

<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 $41 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of many individual investors in twenty-one closed-end
funds traded on either the New York or American stock exchanges, and several
open-end funds and on behalf of more than 80 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, Ford Motor Company Pension Plan, 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 do not hesitate to call BlackRock at (800) 227-7BFM

<PAGE>

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
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Boston EquiServe L.P.
150 Royall Street
Canton, MA 02021
(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, 1996 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

The BlackRock
Income
Trust Inc.

- -------------------

Semi-Annual Report
April 30, 1996