BLACKROCK TARGET TERM TRUST INC, N-30D, 1997-03-03

BLACKROCK TARGET TERM TRUST INC
N-30D, 1997-03-03

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THE BLACKROCK TARGET TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------

January 31, 1997

Dear Trust Shareholder:

The domestic fixed income markets over the past twelve months were once
again greatly influenced by interest rate volatility. Significant swings in the
pace of U.S. economic growth influenced the bond market's performance, as every
release of economic data led to market participant speculation regarding the
direction of Federal Reserve monetary policy.

Despite strong growth and rising wage pressures, the Fed's decision not to
raise interest rates at their two most recent policy meetings has markedly
increased the stakes in the bond market. The rationale behind the Fed's decision
not to raise interest rates appears to focus on the benign inflation data
released during the third quarter. Should economic growth slow and inflation
remain benign, the Fed will be proven correct in their inaction and the market
would be expected to rally significantly. On the other hand, signs of a stronger
economy could result in weaker bond prices as the likelihood of a Fed tightening
would increase.

BlackRock maintains a positive view on the bond market. On balance, the
outlook for moderate inflation remains intact, suggesting that further declines
in interest rates are likely. In addition to this favorable fundamental
backdrop, foreign demand for U.S. bonds has increased due to the renewed
attractiveness of the U.S. bond market on a global basis.

This annual report is designed to help you stay informed about your
investment and represents our ongoing commitment to improving our communication
with you. We hope you find this report useful now and in the future. We
appreciate your confidence and look forward to helping you achieve your
long-term investment goals.

Sincerely,

/s/ Laurence D. Fink /s/ Ralph L. Schlosstein
------------------------- ------------------------------
Laurence D. Fink Ralph L. Schlosstein
Chairman President

<PAGE>

January 31, 1997

Dear Shareholder:

We are pleased to present the annual report for The BlackRock Target Term
Trust Inc. ("the Trust") for the year ended December 31, 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 "BTT". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 2000 while providing high
current income. Although there can be no guarantee, BlackRock is confident that
the Trust can achieve its investment objectives. The Trust seeks these
objectives by investing in investment grade fixed income securities, including
corporate debt securities, mortgage-backed securities backed by U.S. Government
agencies (such as Fannie Mae, Freddie Mac or Ginnie Mae), asset-backed
securities and commercial mortgage-backed securities. All of the Trust's assets
must be rated at least "BBB" by Standard & Poor's or "Baa" by Moody's at the
time of purchase or be issued or guaranteed by the U.S. Government or its
agencies.

The table below summarizes the performance of the Trust's stock price and
NAV over the period:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
12/31/96 12/31/95 Change High Low
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stock Price $8.875 $8.75 1.43 $9.00 $8.375
- --------------------------------------------------------------------------------------------
Net Asset Value (NAV) $9.81 $10.02 (2.10%) $10.16 $9.65
- --------------------------------------------------------------------------------------------
</TABLE>

THE FIXED INCOME MARKETS

While 1996 featured several major shifts in sentiment and some
dramatically sharp market moves, the net year-over-year yield changes turned out
to be modest. Yields rose sharply across the Treasury yield curve throughout the
first half of the year in response to data indicating accelerating economic
growth, including a sharp rise in commodity prices, which rekindled inflationary
concerns. The possibility of a stronger economy dampened investor expectations
of continued Federal Reserve easing of monetary policy and initiated whispers of
a potentially more restrictive Fed policy.

Largely softer economic data and continued moderation in the broad
inflation measures during the third and fourth quarters allowed the Fed to leave
short term interest rates unchanged at their most recent policy meetings.
Additionally, a stronger dollar, large foreign buying of U.S. Treasuries and
balanced budget hopes following the November elections also supported the
market. However, Alan Greenspan's mention of "irrational exuberance in the
financial markets" on December 4th rattled the Treasury market, leading to a
monthlong rise in rates. A resilient housing market and strong consumer
confidence also contributed to the market decline in late December.

The mortgage-backed securities (MBS) market significantly outperformed
Treasuries during 1996 as lower volatility and benign prepayments prompted
strong investor demand. Supply and demand technical conditions remained positive
throughout the period, as strong demand from the mortgage agencies (Fannie Mae
and Freddie Mac) in the third and fourth quarters helped support MBS prices even
as mortgage rates fell and homeowners refinanced at a faster pace during October
and November. For the year, the MBS market as measured by the LEHMAN BROTHERS
MORTGAGE INDEX posted a 5.35% total return versus the 3.63% return of the LEHMAN
BROTHERS AGGREGATE INDEX.

2
<PAGE>

Corporate bond returns exceeded those of Treasuries and mortgage
securities during the fourth quarter, underscoring a strong year for corporates
as they outperformed Treasuries during every month in 1996. The demand for
yield, a strong fundamental credit environment and the increased participation
of foreign investors were the major influences which drove corporate bond prices
higher and yields spreads to Treasuries narrower. BlackRock enters 1997 cautious
on the corporate sector. Despite the sound credit environment of 1996 and
positive credit momentum going into the new year, corporate bond spreads versus
Treasuries are fairly narrow.

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
following chart compares the Trust's current and December 31, 1995 asset
composition.

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THE BLACKROCK TARGET TERM TRUST INC.
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COMPOSITION DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Taxable Zero-Coupon Bonds 55% 52%
- --------------------------------------------------------------------------------
Corporate Bonds 14% 9%
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Mortgage Pass-Throughs 11% 13%
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Stripped Mortgage-Backed Securities 6% 3%
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Non-Agency Multiple Class Pass-Throughs 4% 4%
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Asset-Backed Securities 3% 3%
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U.S. Government Securities 3% 1%
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Municipal Bonds 2% 1%
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Agency Multiple Class Pass-Throughs 1% 6%
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Adjustable Rate Mortgages 1% 6%
- --------------------------------------------------------------------------------
CMO Residuals 0% 2%
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RATING % OF CORPORATES
-----------------------------------------
CREDIT RATING DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
AA or equivalent 11% 11%
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A or equivalent 47% 44%
- --------------------------------------------------------------------------------
BBB or equivalent 42% 45%
- --------------------------------------------------------------------------------

As we have discussed in the Trust's recent reports, we have been seeking
to achieve the Trust's primary investment objective of returning $10 per share
to investors on or about its termination date by emphasizing the purchase of
investment grade corporate bonds with maturity dates on or shortly before the
Trust's scheduled termination date. As of year-end, 14% of the Trust's assets
were invested in corporates, an increase of 5% since December 31, 1995. To a
lesser degree, the Trust has also been buying commercial mortgage-backed
securities (CMBS), which are securities backed by commercial (as opposed to the
more traditional residential) mortgage loans. CMBS deals are typically issued in
several pieces, or tranches, which carry different maturity dates and credit
ratings. Whenever possible, we have bought tranches which fit the Trust's
maturity profile.

To fund the purchase of finite, or "bullet", maturity securities such as
corporates and CMBS, we have been selling bonds whose maturities may extend
beyond the Trust's termination date (we consider these bonds to have "tail
risk"). In our efforts to eliminate these bonds from the portfolio, a particular
focus has been placed on reducing mortgage-backed securities (MBS), whose actual
maturity dates may fluctuate depending on interest rate movements. Additionally,
MBS offer

3
<PAGE>

less predictable cash flows than corporates, which typically pay semi-annually.
We believe that the strategy of reducing the Trust's "tail risk" will enhance
the Trust's ability to return its initial offering price upon termination.
Additionally, the Trust's increased corporate holdings may help produce a more
stable income stream.

We appreciate your continued confidence and look forward to managing The
BlackRock Target Term Trust Inc. in the coming years to realize its investment
objectives. Please feel free to contact the mutual fund specialists at
BlackRock's marketing center at (800) 227-7BFM (7236) if you have any questions
that are not answered in this report. Additionally, you can reach us via e-mail
at [email protected].

Sincerely,

/s/ Robert S. Kapito /s/ Michael P. Lustig
----------------------------- --------------------------
Robert S. Kapito Michael P. Lustig
Vice Chairman and Portfolio Manager Principal and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.

1Yield on Closing Stock Price is calculated by dividing the current annualizing
distribution per share and dividing it by the closing stock price per share.
2Distribution is not constant and is subject to change.

4
<PAGE>

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THE BLACKROCK TARGET TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--137.2%
MORTGAGE PASS-THROUGHS--14.5%
$ 5,000 Federal Home Loan Bank,
8.98%, 10/30/97 ..................... $ 5,200,000
Federal Home Loan Mortgage
Corporation,
9,828 5.00%, 11/01/00 - 5/01/01, 7 Year ... 9,109,639
687 7.50%, 10/01/23 ..................... 687,556
2,170 7.50%, 2/01/07 - 6/01/09, 15 Year ... 2,198,455
11,500 7.725%, 12/01/00, Multifamily ....... 11,787,891
11,533+ 8.00%, 9/01/19 - 12/01/23 ........... 11,836,972
25,227 9.00%, 1/01/09 - 9/01/16, 15 Year ... 26,307,401
23,368 9.00%, 9/01/16 ...................... 25,033,073
Federal National Mortgage
Association,
2,468 8.00%, 10/01/09 - 2/01/25 ........... 2,515,760
6,765 8.025%, 7/01/00, Multifamily ........ 6,984,863
15,049 8.50%, 12/01/20 - 9/01/21 ........... 15,599,208
12,926 9.50%, 5/01/18 - 3/01/19 ............ 13,993,761
Government National Mortgage
Association,
3,570 7.25%, 12/15/26 ..................... 3,608,390
670 9.00%, 6/15/09 - 4/15/13, 27 Year ... 717,631
-----------
135,580,600
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--8.4%
AAA 646 Countrywide Funding Corp.,
Series 1994-10, Class A-1,
5/25/09 ............................... 643,776
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
2,690 Series 1425, Class 1425-G, 8/15/06 ...... 2,684,943
3,537 Series 1564, Class 1564-I, 5/15/07,(l) .. 367,231
989 Series 1566, Class 1566-SB,
9/15/00 (ARM) ......................... 887,670
4,581 Series 1566, Class 1566-SC,
9/15/00, (ARM) ........................ 4,206,819
1,000 Series 1580, Class 1580-S,
9/15/00, (ARM) ........................ 790,310
11,617 Series 1702, Class 1702-PM,
10/15/16, (I) ......................... 1,686,893
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
21,334 Trust 1993-11, Class 11-M,
2/25/08, (l) ........................ 3,430,096
11,632 Trust 1993-23, Class 23-PL,
2/25/21, (l) ........................ 1,904,779
18,708 Trust 1993-G34, Class 34-PV,
2/25/17, (l) ........................ 2,142,976
6,000 Trust 1993-G26, Class 26-PT,
12/25/17, (I) ....................... 1,155,508
3,165 Trust 1993-M2, Class M2-H,11/25/03 .... 3,147,647
4,500 Trust 1993-169, Class 169-SA,
9/25/00, (ARM) ..................... 4,019,063
1,674 Trust 1993-227, Class 227-SB,
12/25/00 (ARM) 1,368,864
1,500 Trust 1993-227, Class 227-G,12/25/00 .. 1,444,950
AAA 7,250 First Boston Mortgage Securities
Corporation, Series 92-4,
7.50%, Class A 4, 10/25/22 ........... 7,351,953
AAA 3,002 Goldman Sachs Collateralized
Mortgage Obligation,
Trust 8, Class A, 3/25/18 ............ 3,051,632
AAA 5,751 Prudential-Bache Collateralized
Mortgage Obligation Trust,
Series 10, Class 10-H,
4/01/19 (P) .......................... 4,578,875
A2 10,219 Resolution Trust Corporation,
Series 1992-C6, Class B, 7/25/24 ..... 10,269,722
AAA 1,608 Ryland Acceptance Corp.,
Collateralized Mortgage Bonds,
Series 1972, Class D, 12/01/16 ....... 1,660,441
AAA 21,283 Salomon Capital Access Corp.,
Collateralized Mortgage
Obligation, Series 1986-1,
Class C, 9/01/15 ..................... 21,615,763
----------
78,409,911
----------

CORPORATE BONDS--19.4%
FINANCE & BANKING--12.1%
Aa3 5,845 Associates Corp. North America,
Zero Coupon, 5/01/98-6/29/00 ......... 4,725,760
Baa2 7,500 Erac USA Finance Co., 144A
7.00%, 6/15/00 ....................... 7,592,868
A1 11,860 Goldman Sachs Group LP,
Zero Coupon, 6/15/98-12/15/00 ........ 9,311,962
A2 5,000 Household Finance Corp.,
6.89%, 5/11/98 ....................... 5,051,840
International Lease Finance Corp.,
A1 3,000 6.30%, 11/01/99 ...................... 2,990,242
A1 6,000 6.63%, 4/01/99 ....................... 6,024,120
Baa3 3,000 Meditrust, 7.25%, 8/16/99 .............. 3,005,737
A1 4,663 Meridian Bancorp, Inc.,
Zero Coupon, 6/15/98-6/15/00 ......... 3,768,824
Aa3 5,000 Merrill Lynch & Company, Inc.,
6.00%, 1/15/01 ...................... 4,903,800

See Notes to Financial Statements.

<PAGE>

A1 $ 4,565 Morgan Stanley Group, Inc.,
Zero Coupon, 2/15/98-2/15/01 ........ $ 3,566,440
A3 6,000 New American Capital, Inc., 144A
6.9375%, 4/12/00 .................... 6,033,750
Baa3 100 News America Holdings, Inc.,
9.125%, 10/15/99 .................... 106,704
Aa3 5,000 Norwest Corp.,
7.70%, 11/15/97 ..................... 5,073,250
Paine Webber Group, Inc.,
BBB+ 4,700 Zero Coupon, 3/01/98-3/01/00 ........ 3,850,368
Baa1 7,305 6.31%, 7/22/99 ...................... 7,253,566
Potomac Capital Investment Corp.,
Baa1 7,250 6.73%, 8/09/99 ...................... 7,251,807
Provident Bank, Cincinnati Ohio,
A3 6,274 Zero Coupon, 6/15/98-12/15/00 ....... 4,912,750
Baa1 10,300 Salomon Inc., 6.625%, 11/30/00 ........ 10,220,821
Smith Barney Holdings, Inc.,
A2 9,323 Zero Coupon, 5/15/98-6/1/00 ......... 7,557,512
A2 500 6.625%, 6/01/00, 144A ............... 501,368
A3 11,688 @ Transamerica Finance Corp.,
Zero Coupon, 6/01/98-6/01/00 ....... 9,479,450
-----------
113,182,939
-----------

Corporate Bonds--
Industrials--6.8%
AA- 3,000 BP America, Inc.,
9.75%, 3/01/99 ..................... 3,202,035
BBB 5,000 Columbia Gas Systems, Inc.,
6.39%, 11/28/00 .................... 4,959,163
Baa2 1,200 Enron Corp.,
8.50%, 2/01/00 ..................... 1,202,172
A1 14,435 Ford Motor Credit Co.,
Zero Coupon, 3/15/98-2/23/01 ....... 11,217,953
A3 10,000 General Motors Acceptance Corp.,
6.125%, 9/18/98 .................... 9,995,656
A2 5,265 Kern River Funding, 144A
6.42%, 3/31/01 ..................... 5,256,439
BBB 8,400 Nabisco, Inc.,
Zero Coupon, 1/15/98-1/15/00 ....... 7,048,003
Baa3 10,963 News America Holdings, Inc.,
Zero Coupon, 3/01/98-3/01/00 ....... 9,119,647
Baa1 3,350 PSI Energy Inc., Debenture,
6.35%, 11/15/06 .................... 3,325,357
Ba1 7,000 Tele Communications, Inc.,
7.375%, 2/15/00 .................... 6,962,340
Western Minnesota Municipal
Power Agency,
AAA 2,310 Zero Coupon, 1/01/98-1/01/00 ....... 1,918,526
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64,207,291
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CORPORATE BONDS--
SOVEREIGN & PROVINCIAL--0.5%
Baa2 5,000 Corporacion Andina De Fomento,
7.375%, 7/21/00 .................... 5,066,850
----------
ASSET-BACKED SECURITIES--4.4%
AAA 2,724 Banc One Auto Grantor Trust,
6.10%, 10/15/02 .................... 2,728,334
AAA 8,123 Chevy Chase Auto Receivables,
6.60%, 12/15/02 .................... 8,181,441
AAA 8,657 Fifth Third Bank Auto Trust, Series
1996-B, Class A, 6.45%, 3/15/02 .... 8,692,316
AAA 21,274 Ford Credit Grantor Trust,
Series 1995-B, Class A, 5.90%,
10/15/00 ........................... 21,261,045
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40,863,136
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STRIPPED MORTGAGE-BACKED
SECURITIES--8.5%
AAA 1,171 DBL, Inc., Trust V, Class 1,
9/01/18 (P/O) ...................... 924,010
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
1,991 Series 1067, Class 1067-J,
4/15/21 (l/O) .................... 597,296
5,258 Series 1149, Class 1149-IC,
10/15/21 (I/O) ................... 1,784,921
8,670 Series 1440, Class 1440-PK,
8/15/18 (I/O) .................... 997,027
247 Series 1664, Class 1664-A,
12/15/23 (P/O) ................... 240,814
10,000 Series 1700, Class 1700-B,
7/15/23, (P/O) ................... 9,100,000
2,442 Series 1790C, Class 1790C-K,
5/15/23 (P/O) .................... 1,098,727
Federal National Mortgage
Association, REMIC Pass-Through
Certificates,
3,930 Trust 2, Class 2, 2/01/17 (l/O) .... 1,168,523
15,668 Trust 4, Class 2, 2/01/17 (l/O) .... 4,671,102
185 Trust 18, Class 2, 2/01/17 (l/O) ... 54,905
3,452 Trust 19, Class 1, 6/01/17 (P/O) ... 2,691,560
480 Trust 225, Class 1, 2/01/23 (P/O) .. 359,657
12,592 Trust 226, Class 2, 6/01/23 (l/O) .. 3,553,351
1,251 Trust 1991-29, Class 29-J,
4/25/21 (I/O) .................... 459,414
168 Trust 1991-79, Class 79-B,
7/25/98 (P/O) .................... 154,412
1,218 Trust 1991-121, Class 121-B,
9/25/98 (P/O) .................... 1,131,019
3,517 Trust 1992-23, Class 23-D,
2/25/21 (P/O) .................... 2,321,104
4,808 Trust 1992-G56, Class B,
7/25/20, (P/O) ................... 4,406,392
9,167 Trust 1992-140, Class 140-HD,
11/25/06 (P/O) ................... 6,743,184
4,983 Trust 1993-G12, Class 12-E,
2/25/23 (P/O) .................... 2,173,859
5,000 Trust 1993-25, Class 25-CA,
1/25/17 (I/O) .................... 671,875
2,362 Trust 1993-88, Class 88-C,
6/25/00 (P/O) .................... 1,919,692

See Notes to Financial Statements.

<PAGE>
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PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------

$ 8,505 Trust 1993-128, Class 128-B,
7/25/23, (P/O) .................... $ 7,760,413
18,55+ Trust 1993-152, Class 152-C,
6/25/22 (P/O) ..................... 6,880,500
5,151 Trust 1993-225A, Class 225A-MB,
12/25/22 (P/O) .................... 4,507,020
431 Trust 1994-009, Class 9-G,
11/25/23 (P/O) .................... 399,692
AAA 16,497 Prudential Securities, Collateralized
Mortgage Obligations,
Series 16, Class 16-P,
10/25/21 (I/O) .................... 3,052,034
------------
79,822,503
------------

CMO RESIDUALS**--0.4%
AAA 5 American Housing Trust V,
Senior-Mortgage Pass-Through
Certificates,
Series A, Class R, 4/25/21
(REMIC)# .......................... 502
AAA 10 Collateralized Mortgage Securities
Corporation, Collateralized
Mortgage Obligations,
Series 1989-2, Class I, 6/25/19 ..... 351,502
AAA 1 M.D.C. Asset Investors, Trust VI,
Collateralized Mortgage Obligations,
11/01/17 (REMIC)# ................. 183,152
AAA 57 PaineWebber, CMO Trust, Series N7,
Collateralized Mortgage Obligation,
1/01/19 (REMIC)# .................. 440,113
AAA 150 Prudential-Bache CMO Trust II,
Collateralized Mortgage Obligations,
6/01/18 (REMIC)# .................. 487,869
AAA 1,454 Ryland Acceptance Corp. Four,
Collateralized Mortgage Bonds,
Series 1986, Class R, 4/01/19
(REMIC)# .......................... 552,120
AAA 44 Shearson Lehman Collateralized
Mortgage Obligation Inc.,
Mortgage-Backed Sequential Pay
Bonds, Series V, Sequence V-9,
5/01/19 (REMIC)# .................. 1,662,639
AAA 1,935 Structured Asset Securities Corporation,
Collateralized Mortgage Obligations,
Series 1989-1, Class R, 7/01/19
(REMIC)# ......................... 95,327
------------
3,773,223
------------

U.S GOVERNMENT SECURITIES--4.2%
40,000+ United States Treasury Bonds,
6.50%, 11/15/26 .................. 39,256,400
------------

TAXABLE ZERO COUPON BONDS--74.6%
2,185 Agency STRIPS, Series 1, relating to
Federal National Mortgage Association
8.95% Debentures,
Series SM-2018-A, 8/12/00 ........ 1,742,739

$ 10,407 Federal Home Loan Mortgage
Corporation, Debenture, 5/15/00 .. $ 8,451,782
6,250 Federal Judiciary Office Building,
8/15/00 ......................... 4,973,610
27,870 Federal National Mortgage Association,
2/01/00-8/12/00 ................. 22,537,733
175,635+ Financing Corporation (FICO Strips),
2/08/00-12/27/00 ................ 140,184,545
333 Government and Agency Term
Obligation Receipt, 11/15/00 .... 258,326
Government Trust Certificates,
16,644 Series 1-D, 5/15/00 ............. 13,591,490
42,627 Series 2-F, 5/15/00 ............. 34,809,208
13,659 Series J-I, 5/15/00 ............. 11,153,939
356 Physical Treasury Coupons,
8/15/00 ........................ 285,007
40,000 Tennessee Valley Authority,
11/01/00 ....................... 31,122,000
1,862 U.S. Treasury CUBES,
11/15/00 ....................... 1,465,673
U.S. Treasury Strips,
541,869+ 2/15/00-11/15/00 ............... 428,589,037
---------------
699,165,087
--------------
MUNICIPAL BONDS--2.8%
Baa1 11,565 New York City, Gen. Oblig.,
Zero Coupon, 3/15/98-3/15/00 .... 9,334,416
AAA 5,000 New York St. Dorm. Auth. Rev.,
Taxable Pension Obligation,
6.63%, 10/01/00 ................. 5,012,400
Baa1 3,120 New York St. Housing Finance Service
Contract, Series B,
7.03%, 9/15/01................... 3,143,899
AAA 2,606 Long Beach California, Pension
Obligation, Zero Coupon,
3/01/98-9/01/00 ................ 2,073,782
AAA 7,165 Massachusetts State Housing
Finance Authority,
Series 1991-A, 6.85%, 4/01/21 ....... 7,006,027
------------
26,570,523
------------

TOTAL LONG-TERM INVESTMENTS
(cost $1,273,923,779) .............. 1,285,898,463
------------
SHORT-TERM INVESTMENTS--2.3%
CORPORATE BONDS--0.6%
FINANCE & BANKING--0.4%
Aa3 318 Associates Corp. North America,
Zero Coupon, 5/01/97-11/1/97 ..... 307,429
A1 620 Goldman Sachs Group L.P.,
Zero Coupon, 6/15/97-12/15/97 .... 596,390
A1 266 Meridian Bancorp, Inc.,
Zero Coupon, 6/15/97-12/15/97 .... 254,850
A1 218 Morgan Stanley Group, Inc.,
Zero Coupon, 2/15/97-8/15/97 ..... 214,393

See Notes to Financial Statements.

7
<PAGE>

- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
BBB+ $ 280 Paine Webber Group, Inc.,
Zero Coupon, 3/01/97-9/01/97 ..... $ 273,711
A3 324 Provident Bank
Zero Coupon, 6/15/97-12/15/97 .... 311,979
A2 549 Smith BarneyHoldings,Inc.
Zero Coupon, 5/15/97-12/01/97 .... 530,282
A3 675 Transamerica Finance Corp.
Zero Coupon, 6/01/97-12/01/97 .... 650,748
------------
3,139,782
------------

INDUSTRIALS--0.2%
A1 708 FORD MOTOR CREDIT CO.,
Zero Coupon, 3/15/97-9/15/97 ..... 691,301
BBB 560 Nabisco, Inc.,
Zero Coupon, 1/15/97-7/15/97 ..... 552,395
Baa3 763 News America Holdings, Inc.,
Zero Coupon, 3/01/97-10/15/97 .... 741,005
AAA 124 Western Minnesota Municipal Power
Agency, Zero Coupon,
1/01/97-7/01/97 .................. 122,000
------------
2,106,701
------------

MUNICIPAL BONDS--0.1%
GENERAL OBLIGATION - CITY--0.1%
Baa1 626 New York City, Gen. Oblig.,
Zero Coupon, 3/15/97-9/15/97 ..... 608,031
GENERAL OBLIGATION - COUNTY--0.0%
AAA 139 Long Beach California, Pension
Obligation, Zero Coupon,
3/01/97-9/01/97 ................... 135,225
------------
743,256
------------
CERTIFICATE OF DEPOSIT--1.1%
10,000 Bank Of Tokyo, 5.80%, 1/21/97 ........ 10,000,055
------------
DISCOUNT NOTE--0.4%
4,065 Federal Home Loan Mortgage
Discount Notes, 6.502%, 1/02/97 ... 4,064,266
------------

PURCHASED PUT OPTION--0.1%
Contracts##
---------

750 U.S. Treasury, 7.00%, 7/15/06
@102, expiring July 1997 .......... 1,136,700
------------

Total Short-Term Investments
(cost $21,189,955) ................ 21,190,760
------------
Total Investments--139.5%
(cost $1,295,113,734) ............. 1,307,089,223
Liabilities in excess of other
assets--(39.5%) .................. (369,749,533)
------------

NET ASSETS--100% ..................... $937,339,690
============
- ----------
* Using the higher of Standard & Poor's or Moody's rating.
** Illiquid securities representing .3% of portfolio assets.
# Private placements restricted as to resale.
## One contract equals $100,000 face value.
+ $370,366,810principal amount pledged as collateral for reverse repurchase
agreements.
@ $4,865,415principal amount pledged as collateral for futures transactions.

- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM -- Adjustable Rate Mortgage.
CMO -- Collateralized Mortgage Obligation.
G.O. -- General Obligation Bond.
I -- Denotes a CMO with Interest only characteristics.
P -- Denotes a CMO with Principal only characteristics.
I/O -- Interest only.
P/O -- Principal only.
REMIC -- Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------

See Notes to Financial Statements.

8
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

Assets
Investments, at value
(cost $1,295,113,734) (Note 1) .......................... $1,307,089,223
Cash .................................................... 768,709
Interest receivable ..................................... 5,060,009
Due from broker-variation margin ........................ 622,462
Receivable for investments sold ......................... 34,272
--------------
1,313,574,675
--------------

Liabilities
Reverse repurchase agreements (Note 4) .................. 368,549,750
Dividends payable ....................................... 4,574,187
Interest payable ........................................ 1,574,497
Accrued excise tax ...................................... 670,000
Advisory fee payable (Note 2) ........................... 361,586
Administration fee payable (Note 2) ..................... 90,998
Other accrued expenses .................................. 413,967
--------------
376,234,985
--------------
Net Assets .............................................. $ 937,339,690
==============
Net assets were comprised of:
Common stock, at par (Note 5) ......................... $ 954,606
Paid-in capital in excess of par ...................... 892,768,946
--------------
893,723,552
Undistributed net investment income ................... 26,480,057
Accumulated net realized gains ........................ 4,928,842
Net unrealized appreciation ........................... 12,207,239
--------------
Net assets, December 31, 1996 ......................... $ 937,339,690
==============
Net asset value per share:
($937,339,690 / 95,460,639 shares of
common stock issued and outstanding) .................... $9.82
=====
- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------

NET INVESTMENT INCOME
Income
Interest (including net accretion of discount
of $41,001,842 and net of interest expense
of $27,205,801) ........................................ $ 72,073,975
------------
Operating expenses
Investment advisory ...................................... 4,237,623
Administration ........................................... 1,067,381
Custodian ................................................ 510,000
Reports to shareholders .................................. 500,000
Transfer agent ........................................... 250,000
Directors ................................................ 72,000
Audit .................................................... 30,000
Legal .................................................... 15,000
Miscellaneous ............................................ 188,137
------------
Total operating expenses ............................... 6,870,141
------------
Net investment income before excise tax .................... 65,203,834
Excise tax ................................................. 670,000
------------
Net investment income ...................................... 64,533,834
============

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments .............................................. 12,183,768
Futures .................................................. (8,294,209)
Short sales .............................................. 3,192,281
------------
7,081,840
------------
Net change in unrealized appreciation
(depreciation) on:
Investments .............................................. (36,099,809)
Futures .................................................. (208,844)
------------
(36,308,653)
------------
Net loss on investments .................................. (29,226,813)
------------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .................................. $ 35,307,021
============

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH
Cash flows provided by operating activities:
Interest received .............................. $ 60,117,328
Operating expenses paid ........................ (7,001,574)
Interest expense paid .......................... (28,287,739)
Proceeds from disposition of short-term
portfolio investments, net ................... (19,030,300)
Purchase of long-term portfolio investments .... (1,314,530,932
Proceeds from disposition of long-term
portfolio investments ........................ 1,433,664,405
Variation margin on futures .................... (9,027,318)
-------------
Net cash flows provided by operating
activities ................................... 115,903,870
-------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements ...... (60,275,250)
Cash dividends paid ............................ (54,889,093)
-------------
Net cash flows used for financing activities ... (115,164,343)
-------------
Net increase in cash ............................. 739,527
Cash at beginning of year ........................ 29,182
-------------
Cash at end of year .............................. $ 768,709
=============

RECONCILIATION OF NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS TO NET CASH FLOWS
PROVIDED BY OPERATING ACTIVITIES
Net increase in net assets resulting from
operations ....................................... $ 35,307,021
-------------
Decrease in investments .......................... 78,090,058
Net realized gain ................................ (7,081,840)
Decrease in unrealized appreciation .............. 36,308,653
Decrease in receivable for investments sold ...... 1,231,348

Decrease in interest receivable .................. 793,686
Increase in receivable for variation margin ...... (524,265)
Decrease in payable for investments purchased .... (27,677,419)
Decrease in interest payable ..................... (1,081,938)
Increase in accrued expenses and other liabilities 538,566
-------------
Total adjustments .............................. 80,596,849
-------------
Net cash flows provided by operating activities .. $ 115,903,870
=============

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
INCREASE (DECREASE) IN
NET ASSETS

Operations:
Net investment income ....... $ 64,533,834 $ 69,498,237

Net realized gain (loss) on
investments, futures
and short sales ........... 7,081,840 (2,990,472)

Net change in unrealized
appreciation (depreciation)
on investments,
and futures short sales ... (36,308,653) 97,495,898
------------- -------------

Net increase in net assets
resulting from operations . 35,307,021 164,003,663

Dividends and distributions:
Dividends from net
investment income ......... (54,888,918) (66,625,406)
Distributions from net
realized capital gains .... -- (282,086)
------------- -------------

Total increase (decrease) ... (19,581,897) 97,096,171

NET ASSETS
Beginning of year ............. 956,921,587 859,825,416
-------------
End of year ................... $ 937,339,690 $ 956,921,587
============= =============

See Notes to Financial Statements.

- --------------------------------------------------------------------------------
The BlackRock Target Term Trust Inc.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 10.02 $ 9.01 $ 10.40 $ 10.28 $ 10.53
-------- -------- ---------- --------- --------
Net investment income (net of interest expense of
$.28, $.36, $.21, $.10 and $.18, respectively) ..... .68 .72 .63 .81 .74
Net realized and unrealized gain (loss) on investments (.31) .99 (1.30) .04 (.12)
-------- -------- ---------- --------- --------
Net increase (decrease) from investment operations ..... .37 1.71 (.67) .85 .62
-------- -------- ---------- --------- --------
Dividends from net investment income ................... (.57) (.70) (.72) (.87)
-------- -------- ---------- --------- --------
Net asset value, end of period* ........................ $ 9.82 $ 10.02 $ 9.01 $ 10.40 $ 10.28
======== ========= ========== ========= ========
Market value, end of period* ........................... $ 8.875 $ 8.75 $ 8.125 $ 10.00 $ 10.00
======== ========= ========== ========= ========
TOTAL INVESTMENT RETURN+ ............................... 7.94% 16.34% (11.98%) 7.36% (.20%)
RATIOS TO AVERAGE NET ASSETS:
Operating expenses# .................................... 0.73% 0.75% 0.75% 0.73% 0.88%
Net investment income .................................. 6.89% 7.57% 6.62% 7.62% 7.18%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ...................... $936,823 $ 918,344 $ 909,105 $1,011,691 $981,133
Portfolio turnover ..................................... 95% 118% 84% 41% 30%
Net assets, end of period (in thousands) ............... $937,340 $ 956,922 $ 859,825 $ 992,627 $ 981,267
Reverse repurchase agreements outstanding,
end of period (in thousands) ......................... $368,550 $ 428,825 $ 422,578 $ 270,800 $ 270,636
Asset coverage++ ....................................... $ 3,543 $ 3,231 $ 3,035 $ 4,666 $ 4,625
</TABLE>

- ----------
* NAV and market value published in The Wall Street Journal each Monday.
# The ratios of operating expenses, including interest expense, to average
net assets were 3.57%, 4.53%, 2.89%, 1.63% and 2.61% for the periods
indicated above, respectively. The ratios of operating expenses including
interest expense and excise tax, if applicable, to average net assets were
3.64%, 4.54%, 2.89%, 1.63% and 2.62% 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 period reported. Dividends are
assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Trust's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions.
++ Per $1,000 of reverse repurchase agreement outstanding.

The information above represents the audited 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.

See Notes to Financial Statements.

11
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE 1. ACCOUNTING The BlackRock Target Term Trust Inc.(the "Trust"),
POLICIES a Maryland corporation, is a diversified,
closed-end management investment company. The
investment objective of the Trust is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial offering
price per share) to investors on or shortly before December 31, 2000 while
providing high monthly income. 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 securi- ties 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.

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
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 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

12
<PAGE>

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 or 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 that 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 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.

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 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 premiums 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 less or greater than the proceeds originally received.

SECURITY 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 Year ended December 31, 1996.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes discount or amortizes premium on securities
purchased using the interest method.

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 substan-tially all of its taxable income to shareholders. Therefore,
no

13
<PAGE>

federal income tax provision is required. As part of its tax planning strategy,
the Trust may retain a portion of its taxable income and pay an excise tax on
the undistributed amounts.

DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions monthly first from net investment income, then from net realized
short-term capital gains and other sources, if necessary. Net long-term capital
gains, if any, in excess of loss carryforwards may be distributed annually.
Dividends and distributions are recorded on the ex-dividend date.

ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect caused by
applying this statement was to decrease paid-in capital and increase
undistributed net investment income by $670,000 due to certain expenses not
being deductible for tax purposes. Net investment income, net realized gains and
net assets were not affected by this change.

NOTE 2. AGREEMENTS

The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc. (the "Adviser"), a wholly-owned corporate subsidiary of PNC
Asset Management Group, Inc., the holding company for PNC's asset management
business, and an Administration Agreement with Prudential Mutual Fund
Management, LLC ("PMF"), an indirect, wholly-owned subsidiary of The Prudential
Insurance Co. of America. The investment advisory fee paid to the Adviser is
computed weekly and payable monthly at an annual rate of 0.45% of the Trust's
average weekly net assets through December 31, 1996 and 0.30% from January 1,
1997 to the termination or liquidation of the Trust. The administration fee paid
to PMF is also computed weekly and payable monthly at an annual rate of 0.125%
of the first $500 million and 0.10% of any excess through December 31, 1996, and
0.10% of the first $500 million of the Trust's average weekly net assets and
0.08% of any excess from January 1, 1997 to the termination or liquidation of
the Trust.

Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Adviser. 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 Year ended December 31, 1996 aggregated
$1,286,853,513, and $1,347,630,648, respectively. The Trust may invest up to 40%
of its total assets in securities which are not readily marketable, including
those which are restricted as to disposition under securities law ("restricted
securities"). At December 31, 1996, the Trust held 1.8% of its portfolio assets
in securities restricted as to resale including .3% of its portfolio assets in
illiquid securities.

The Trust may from time to time purchase in the secondary market certain
mortgage pass-through securities packaged or master serviced by PNC Mortgage
Securities Corp. (or Sears Mortgage if PNC Mortgage Securities Corp. succeeded
to rights and duties of Sears) or mortgage related securities containing loans
or mortgages originated by PNC Bank or its affiliates. It is possible under
certain circumstances, PNC Mortgage Securities Corp. or its affiliates could
have interests that are in conflict with the holders of these mortgage backed
securities, and such holders could have rights against PNC Mortgage Securities
Corp. or its affiliates.

The federal income tax basis of the Trust's investments at December 31,
1996 was substantially the same as the basis for financial reporting and
accordingly, net unrealized appreciation for federal income tax purposes was
$11,725,228 (gross unrealized appreciation-$24,255,309; gross unrealized
depreciation-$12,530,081).

During the Year ended December 31, 1996, the Trust entered into financial
futures contracts. Details of open futures at December 31, 1996 are as follows:

VALUE AT VALUE AT
NUMBER OF EXPIRATION TRADE DECEMBER 31, UNREALIZED
CONTRACTS TYPE DATE DATE 1996 APPRECIATION
- --------- ---- ---- ---- ---- ------------
Short
position:
30 Yr. March
500 T-Bond 1997 $56,544,250 $56,312,500 $231,750

NOTE 4. BORROWINGS

Reverse Repurchase Agreements: The Trust may enter into reverse repurchase
agreements with qualified,

14
<PAGE>

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 will be based upon competitive market rates at
the time of issuance. At the time the Trust enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with the lender,
the value of which at least equals the principal amount of the reverse
repurchase transactions including accrued interest.

The average daily balance of reverse repurchase agreements outstanding
during the year ended December 31, 1996 was approximately $494,830,448 at a
weighted average interest rate of approximately 5.49%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the Year ended
December 31, 1996 was $471,812,000 as of March 31, 1996, which was 31.7% of
total assets. The amount of reverse repurchase agreements outstanding at
December 31, 1996 was $368,549,750, which was 28.1% of total assets.

DOLLAR ROLLS: The Trust may enter 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 will be 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 year
ended December 31, 1996 was approximately $851,600. The maximum amount of dollar
rolls outstanding at any month-end during the year ended December 31, 1996 was
$10,218,700 as of January 31, 1996, which was .79% of total assets.

NOTE 5. CAPITAL

There are 200 million shares of $.01 par value common stock authorized. Of the
95,460,639 shares outstanding at December 31, 1996, the Adviser owned 10,639
shares.

NOTE 6. DIVIDENDS

Subsequent to December 31, 1996, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.047917 per share payable February 28,
1997 to shareholders of record on February 14, 1997.

NOTE 7. QUARTERLY DATA
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------

NET REALIZED AND
UNREALIZED
NET INVESTMENT GAINS (LOSSES)
QUARTERLY TOTAL INCOME ON INVESTMENTS
PERIOD INCOME AMOUNT PER SHARE AMOUNT PER SHARE
------ --------- ---------------------- -----------------------
<S> <C> <C> <C> <C> <C>
January 1, 1995
to March 31, 1995 $ 24,821,335 $ 21,969,605 $ .23 $ 33,502,291 .35
April 1, 1995
to June 30, 1995 16,128,039 15,710,472 .16 34,604,887 .37
July 1, 1995
to September 30, 1995 17,948,613 16,249,910 .17 (4,458,729) (.05)
October 1, 1995
to December 31, 1995 17,591,442 15,568,250 .16 30,856,977 .32
January 1, 1996
to March 31, 1996 17,814,047 16,056,023 .17 (29,459,484) (.30)
April 1, 1996
to June 30, 1996 17,364,505 15,674,219 .16 (9,128,754) (.10)
July 1, 1996
to September 30, 1996 17,757,955 16,046,501 .17 (600,810) (.01)
October 1, 1996
to December 31, 1996 19,137,468 16,757,091 .18 9,962,235 .10
- -----------------------------------------------------------------------------------------
</TABLE>

- ---------------------------------------------------------------------------------------------------
NET INCREASE
DECREASE PERIOD
IN NET ASSETS DIVIDENDS END
RESULTING FROM AND NET
QUARTERLY OPERATIONS DISTRIBUTIONS SHARE PRICE ASSET
PERIOD AMOUNT PER SHARE AMOUNT PER SHARE HIGH LOW VALUE
------ ---------------------- -------------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995
to March 31, 1995 $ 55,471,896 $ .58 $15,512,613 $ .16 $ 8 7/8 $ 8 1/8 $ 9.43
April 1, 1995
to June 30, 1995 50,315,359 .53 15,512,614 .16 9 1/4 8 3/8 9.79
July 1, 1995
to September 30, 1995 11,791,181 .12 15,795,395 .17 9 8 3/8 9.75
October 1, 1995
to December 31, 1995 46,425,227 .48 20,086,870 .21 9 1/4 8 5/8 10.02
January 1, 1996
to March 31, 1996 (13,403,461) (.13) 9,148,209 .10 9 8 5/8 9.79
April 1, 1996
to June 30, 1996 6,545,465 .06 13,722,306 .14 8 7/8 8 3/8 9.71
July 1, 1996
to September 30, 1996 15,445,691 .16 13,721,940 .14 8 7/8 8 1/2 9.73
October 1, 1996
to December 31, 1996 26,719,326 .28 18,296,463 .19 9 8 5/8 9.82
- ---------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

The Shareholders and Board of Directors of The BlackRock New York Investment
Quality Term Trust Inc.:

We have audited the accompanying consolidated statement of assets and
liabilities of The BlackRock Target Term Trust Inc., including the portfolio of
investments, as of December 31, 1996, and the related consolidated statements of
operations and of cash flows for the year then ended, the consolidated
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These consolidated financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996, by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such consolidated financial statements and financial highlights
present fairly, in all material respects, the financial position of The
BlackRock Target Term Trust Inc. as of December 31, 1996, and the results of its
operations, its cash flows, the changes in its net assets and the financial
highlights for the respective stated periods, in conformity with generally
accepted accounting principles.

/s/ Deloitte & Touche LLP
- --------------------------
DELOITTE & TOUCHE LLP

New York, New York
February 3, 1997

16
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
TAX INFORMATION
- --------------------------------------------------------------------------------

We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during the fiscal year ended December 31, 1996.

During the fiscal year ended December 31, 1996, the Trust paid aggregate
dividends of $0.5750 per share from net investment income. For federal income
tax purposes, the aggregate of any dividends and short-term capital gains
distributions you received are reportable in your 1996 federal income tax
returns as ordinary income. Further, we wish to advise you that your income
dividends do not qualify for the dividends received deduction.

For the purpose of preparing your 1996 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which was mailed to you in January 1997.

- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------

Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by State Street Bank & Trust Company (the "Plan Agent")
in Trust shares pursuant to the Plan. Shareholders who do not participate in the
Plan will receive all distributions in cash paid by check in United States
dollars mailed directly to the shareholders of record (or if the shares are held
in street or other nominee name, then to the nominee) by the custodian, as
dividend disbursing agent.

The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue any new shares in connection with the Plan.

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 dividends 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.

17
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to manage a portfolio of investment grade
fixed income securities that will return $10 per share (the initial public
offering price per share) to investors on or about December 31, 2000 while
providing high monthly income.

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 approximately $43 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 Stock or American Stock
Exchanges, several open-end funds and separate accounts for more than 100
clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group, Inc. which is a division of PNC Bank, one of the nation's
largest banking organizations.

WHAT CAN THE TRUST INVEST IN?
The Trust may invest in all fixed income securities rated investment grade or
higher ("AAA", "AA", "A" or "BBB"). Examples of securities in which the Trust
may invest include U.S. government and government agency securities, zero coupon
securities, mortgage-backed securities, corporate debt securities, asset-backed
securities, U.S. dollar-denominated foreign debt securities and municipal
securities. 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) and corporate debt
securities.

WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 2000. At the Trust's termination,
BlackRock expects that the value of the securities which have matured, combined
with the value of the securities that are sold will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
its objective by actively managing its assets in relation to market conditions,
interest rate changes and, importantly, the remaining term to maturity of the
Trust.

In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide high monthly income to investors. The portfolio managers
will attempt to achieve this objective by investing in securities that provide
competitive income. In addition, leverage will be used (in an amount up to
331/3% of the total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). It is important to note that the Trust will be managed so as to
preserve the integrity of the return of the initial offering price.

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 adviser. 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, State Street
Bank & Trust Company. Investors who wish to hold shares in a brokerage account
should check with their financial adviser to determine whether their brokerage
firm offers dividend reinvestment services.

LEVERAGE CONSIDERATIONS IN A TERM 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 331/3% 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
rising 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 the shareholders.

SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.

RETURN OF INITIAL INVESTMENT. Although the objective of the Trust is to return
its initial offering price upon termination, there can be no assurance that this
objective will be achieved.

DIVIDEND CONSIDERATIONS. The income and dividends paid by the Trust are likely
to decline to some extent over the term of the Trust due to the anticipated
shortening of the dollar-weighted average maturity of the Trust's assets.

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 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.

CORPORATE DEBT SECURITIES. The value of corporate debt securities generally
varies inversely with changes in prevailing market interest rates. The Trust may
be subject to certain reinvestment risks in environments of declining interest
rates.

ZERO COUPON SECURITIES. Such securities receive no cash flows prior to maturity,
therefore interim price movements on these securities are generally more
sensitive to interest rate movements than securities that make periodic coupon
payments. These securities appreciate in value over time and can play an
important role in helping the Trust achieve its primary objective.

ILLIQUID SECURITIES. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.

NON-U.S SECURITIES. The Trust may invest less than 10% of its assets in non-U.S.
dollar-denominated securities which involve special risks such as currency,
political and economic risks, although under current market conditions does not
do so.

ANTITAKEOVER PROVISIONS. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.

19
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK TARGET TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE-
BACKED SECURITIES (ARMS): Mortgage instruments with interest rates that
adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are backed by
mortgage loans secured by real property.

ASSET-BACKED SECURITIES: Securities backed by various types of receivables
such as automobile and credit card receivables.

CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange.
The fund invests in a portfolio of securities in
accordance with its stated investment objectives
and policies. Collateralized

MORTGAGE OBLIGATIONS (CMOS): Mortgage-backed securities which separate mortgage
pools into short-, medium-, and long-term
securities with different priorities for receipt
of principal and interest. Each class is paid a
fixed or floating rate of interest at regular
intervals. Also known as multiple-class mortgage
pass-throughs.

DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.

DIVIDEND: This is income generated by securities in a
portfolio and distributed to shareholders after
the deduction of expenses. This Trust declares and
pays dividends on a monthly basis.

DIVIDEND REINVESTMENT: Shareholders may elect to have all distributions
of dividends and capital gains automatically
reinvested into additional shares of the Trust.

FHA: Federal Housing Administration, a government
agency that facilitates a secondary mortgage
market by providing an agency that guarantees
timely payment of interest and principal on
mortgages.

FHLMC: Federal Home Loan Mortgage Corporation, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FHLMC are not guaranteed by the U.S.
government, however; they are backed by FHLMC's
authority to borrow from the U.S. government. Also
known as Freddie Mac.

FNMA: Federal National Mortgage Association, a publicly
owned, federally chartered corporation that
facilitates a secondary mortgage market by
purchasing mortgages from lenders such as savings
institutions and reselling them to investors by
means of mortgage-backed securities. Obligations
of FNMA are not guaranteed by the U.S. government,
however; they are backed by FNMA's authority to
borrow from the U.S. government. Also known
asFannie 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).

20
<PAGE>

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.

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 and other assets 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 on 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 STRIPS.

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-BACKED
SECURITIES: Arrangements in which a pool of assets is
separated into two classes that receive different
proportions of the interest and principal
distributions from underlying mortgage-backed
securities. IO's and PO's are examples of strips.

21
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- ----------------------------------------------------------------------------------------
TAXABLE TRUSTS
- ----------------------------------------------------------------------------------------
STOCK TERMINATION
PERPETUAL TRUSTS SYMBOL DATE
<S> <C> <C>
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 TERMINATION
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 CALL BLACKROCK AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.

22
<PAGE>
- --------------------------------------------------------------------------------
BLACKROCKFINANCIAL MANAGMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------

BlackRock Financial Management Inc. (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages approximately $43 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 traded either on the New York Stock Exchange or the American
Stock Exchange, several open-end funds and over 100 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 market, 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 propriety 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 propriety analytical tools are used for
evaluating, investing in and designing investment strategies and portfolio 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.

23
<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
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, LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM

INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434

LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022

This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of any securities.

THE BLACKROCK TARGET TERM TRUST INC.
c/o Prudential Mutual Fund Management, LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM

Printed on recycled paper 092476-10-0

THE BLACKROCK
TARGET
TERM TRUST INC.
================================================================================
ANNUAL REPORT
DECEMBER 31, 1996