BLACKROCK ADVANTAGE TERM TRUST INC, N-30D, 1996-03-01

BLACKROCK ADVANTAGE TERM TRUST INC
N-30D, 1996-03-01

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

January 31, 1996

Dear Shareholder,

Since the inception of The BlackRock Advantage Term Trust Inc. in 1990, the
market for investments in fixed income securities has witnessed an unprecedented
amount of interest rate volatility, which has changed the landscape for fixed
income investors. 1995 was a great year for investments in the bond market
following the disappointments of 1994, as yields declined and the value of fixed
income securities increased dramatically.

Looking forward, we maintain a positive outlook for the market's performance
in 1996. The economy currently appears to be growing at a steady rate and
inflation appears to be under control. Market participants are beginning to
agree that the Federal Reserve has achieved the "soft landing" that they set out
to accomplish through a series of interest rate increases last year and are
optimistic for a further ease in the Fed's monetary policy should a budget
accord emphasizing fiscal restraint be reached in Washington.

BlackRock Financial Management, Inc. is completing its first year as part of
PNC Bank Corporation, becoming an essential part of PNC's Asset Management Group
by taking a leadership role in their fixed income management operations. We have
witnessed consistent growth of our assets under management, which now stand at
approximately $34 billion, as both retail and institutional fixed income
investors continue to recognize the value of our risk management capabilities
and long-term investment philosophy.

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

Sincerely,

Laurence D. Fink Ralph L. Schlosstein
Chairman President

1
<PAGE>
January 31, 1996

Dear Shareholder:

We are pleased to present the annual report for The BlackRock Advantage Term
Trust Inc. (NYSE symbol: "BAT") for the year ended December 31, 1995. The past
year has been an exciting and challenging time to be participating in the fixed
income markets, and we would like to take this opportunity to review the Trust's
strong performance from both a stock price and net asset value (NAV)
perspective, as well as to discuss the opportunities available to the Trust in
the current lower interest rate environment.

The Trust is a diversified, closed-end bond fund whose investment objective
is to manage a portfolio of investment grade fixed income securities that will
return $10 per share (an amount equal to the Trust's initial public offering
price) to investors on or about December 31, 2005, while providing high current
income. The Trust seeks to meet this objective through investments in a broad
array of fixed income products including agency mortgage pass-through securities
(Fannie Mae, Freddie Mac or Ginnie Mae), U.S. Treasury and agency securities and
investment grade corporate debt securities.

The table below summarizes the performance of the Trust's stock price and
net asset value (the market value of its portfolio holdings per share) over the
fiscal year:

------------------------------------------------------
12/31/95 12/31/94 Change High Low
- --------------------------------------------------------------------------------
Stock Price $ 8.625 $7.75 11.29% $ 8.875 $7.75
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $10.49 $9.00 16.56% $10.49 $9.00
- --------------------------------------------------------------------------------
Premium/(Discount) to NAV (17.78%) (13.89%) (3.89%) (10.04%) (17.78%)
- --------------------------------------------------------------------------------

The Fixed Income Markets

The dramatic rally in the fixed income markets, which caused interest rates
to fall and prices of fixed income securities to rise since late 1994, has
changed the market landscape for fixed income investors. A deceleration in
economic growth from the torrid pace of 1994 as well as continued signs of
subdued inflation led to a substantial decrease in interest rates across the
Treasury yield curve. At the end of December, the yield of the Treasury 30-year
bond fell below 6.00% for the first time since October 1993, closing the year at
5.95%, while the yield of the 10-year Treasury fell approximately 2.25% to end
1995 at 5.57%.

The Federal Reserve reversed its policy of "tight" monetary control for the
first time in almost two years by lowering the Fed funds target rate by 25 basis
points (0.25%) on July 7, in response to economic reports expressing moderate
but sustainable economic growth in the first half of the year. During July and
early August, the bond market rally temporarily halted as stronger economic data
dampened expectations for a follow-up reduction in short-term rates. However, as
the fourth quarter began, the economy again showed signs of sluggish growth and
interest rates returned to their 1995 lows in anticipation of another Fed ease
by year-end. Indeed, the Fed made two quarter-point reductions in the Fed funds
rate on December 19 and January 31. These reductions could make the Trust's use
of leverage more profitable, as the Treasury yield curve is expected to steepen,
resulting in a wider differential (or "spread") between the Trust's borrowing
costs and the rates at which the Trust can invest the borrowed funds.

2
<PAGE>

Market participants remain attentive to the politically-charged debate
surrounding Federal budget proposals. Congressional and White House leaders have
been unable to fashion a credible 7-year balanced budget agreement, and appear
resigned to let the debate linger as we move into the election year. As such,
fixed income investors are concerned about a potential credit downgrade or
technical default on certain U.S. Treasury issues should policy-makers be unable
to reach an agreement on extending the Federal debt-ceiling until a budget
accord is struck later in the year.

BlackRock Financial Management is attuned to these continuing political
issues, but we remain positive on the fixed income markets in early 1996 as
moderate economic and inflationary data have set the stage for continued strong
performance for fixed income securities.

The Trust's Portfolio and Investment Strategy

BlackRock has been actively managing the Trust's portfolio holdings
consistent with BlackRock's overall market outlook and the Trust's investment
objectives. The chart below illustrates the Trust's portfolio compositions as of
December 31, 1995 and December 31, 1994.

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The BlackRock Advantage Term Trust Inc.
- --------------------------------------------------------------------------------
Composition December 31, 1995 December 31, 1994
- --------------------------------------------------------------------------------
Taxable Zero-Coupon Bonds 37% 34%
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs 27% 39%
- --------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 13% 18%
- --------------------------------------------------------------------------------
Corporate Bonds 6% 0%
- --------------------------------------------------------------------------------
CMO Residuals 6% 6%
- --------------------------------------------------------------------------------
Municipal Bonds 3% 0%
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 2% 0%
- --------------------------------------------------------------------------------
Non-Agency Multiple Class Mortgage Pass-Throughs 2% 1%
- --------------------------------------------------------------------------------
Strip Mortgage-Backed Securities 2% 1%
- --------------------------------------------------------------------------------
Municipal Zero Coupon Bond 1% 1%
- --------------------------------------------------------------------------------
U. S. Government Securities 1% 0%
- --------------------------------------------------------------------------------

The most significant shift in the Trust's portfolio over the fiscal year has
been an increased exposure to the corporate debt sector and a corresponding
decrease in allocations to mortgage pass-through securities. Since first
obtaining the broadened investment authority from shareholders in May 1995 to
purchase and hold investment grade corporate debt, the Trust has increased its
holdings of these securities to 6% as of year end. The Trust may continue to
increase its allocation to corporate debt securities upon opportunity, as these
securities offer a higher degree of cash flow stability and call protection than
mortgage securities, and could provide the Trust with a more stable income over
time. BlackRock Financial Management remains confident in the Trust's ability to
return $10 per share to shareholders at its slated termination date in 2005.

3
<PAGE>

We look forward to managing the Trust in the coming year 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 Advantage Term Trust Inc. and extend our
continued commitment to addressing your questions and concerns. Please feel free
to contact our marketing center at (800) 227-7BFM (7236) if you have questions
which were not addressed in this report.

Sincerely,

Robert S. Kapito Keith T. Anderson
Vice Chairman and Portfolio Manager Managing Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.

1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.

2The dividebd is not constant and is subject to change.
3New distribution rate effective with the January 1996 payment.

4
<PAGE>

- --------------------------------------------------------------------------------
The BlackRock Advantage Term Trust Inc.
Portfolio of Investments
December 31, 1995

(Left column)
- --------------------------------------------------------------------------------
Principal
Rating* Amount Value
(unaudited) (000) Description (Note 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS-146.9%
Mortgage Pass-Throughs-39.9%
Federal Home Loan Mortgage
Corporation,
$ 3,925 6.50%, 8/01/25 - 11/01/25............ $ 3,881,959
10,371+ 9.50%, 2/01/01 - 1/01/02, 15 Year.... 10,857,246
Federal National Mortgage
Association,
763 8.50%, 7/01/22....................... 795,960
26 9.50%, 7/01/20....................... 27,636
Government National Mortgage
Association,
1,710+ 6.50%, 5/20/25, 1 Year CMT (ARM)...... 1,748,754
2,269++ 7.00%, 11/20/24, 1 Year CMT (ARM)..... 2,306,882
16,696+ 8.50%, 5/15/16 - 3/15/23.............. 17,641,028
1,269 9.50%, 1/15/17 - 5/15/2............... 1,362,153
1,079 10.00%, 1/15/16 - 9/15/20............. 1,187,515
------------
39,809,133
------------
Multiple Class Mortgage
Pass-Throughs-21.9%
AAA 1,778 Collateralized Mortgage Obligation,
Trust 26, Class A, 4/23/17 (P)........ 1,360,346
BBB 1,000 Merrill Lynch Mortgage Investors
Incorporated, Multiclass Mortgage
Pass-Through Certificates, Series
1995-C1, Class D, 7.897%, 5/25/15..... 1,030,260
Federal Home Loan Mortgage Corporation,
Multiclass Mortgage Participation
Certificates,
6,500++ Series 1255, Class 1255-H, 4/15/22...... 7,223,450
3,200+ Series 1295, Class 1295-JB, 3/15/07..... 2,929,728
908 Series 1541, Class 1541-TB, 7/15/23..... 648,340

(Right column)

Federal Home Loan Mortgage Corporation,
Multiclass Mortgage Participation
Certificates,
$ 1,952 Series 1584, Class 1584-FB, 9/15/23... $ 2,022,476
755 Series 1587, Class 1587-SJ, 10/15/08.. 570,619
433 Series 1666, Class 1666-SB, 1/15/24... 394,437
4,000+ Series 1700, Class 1700-B,
7/15/23 (P)......................... 3,490,000
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
32 Trust 1991-30, Class 30-M,
4/25/21 (I)......................... 745,664
382 Trust 1993-193, Class 193-PC,
9/25/23............................. 346,174
1,444 Trust 1993-193, Class 193-E,
9/25/23 (I)......................... 535,912
1,406 Trust 1993-225, Class 225-ME,
11/25/23 (P)........................ 413,013
221 Trust 1993-243, Class 243-C,
11/25/23 (P)........................ 171,740
------------
21,882,159
------------
Commercial Mortgage-
Backed Securities-2.1%
A 1,000 CS First Boston Mortgage Securities
Corporation, Series 95-AEW1 Class C,
7.458%, 11/25/27...................... 1,020,000
BBB 1,000 Morgan Stanley Capital 1 Incorporated,
Commercial Mortgage Pass Through,
Series 1995-GA1, Class D 8.25%,
8/15/27............................... 1,052,998
------------
2,072,998
------------
Corporate Bonds-9.3%
Finance & Banking-7.7%
A 1,000 Equitable Life of America,
6.95%, 12/01/05....................... 1,015,158
BBB+ 1,900 Paine Webber Group Inc.,
7.875%, 2/15/03....................... 2,025,305
A- 1,425 Smith Barney Holdings Inc.,
7.98%, 3/01/00........................ 1,527,728
A 2,985@ Transamerica Finance Corp.,
6.75%, 6/01/00........................ 3,079,041
------------
7,647,232
------------

See Notes to Financial Statements.

5
<PAGE>

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Principal
Rating* Amount Value
(unaudited) (000) Description (Note 1)
- --------------------------------------------------------------------------------
Corporate Bonds
Industrials-1.6%
BBB- $ 1,000 Burlington Industries Inc.,
7.25%, 9/15/05........................ $ 1,037,430
BBB- 500 Centex Corp.,
7.375%, 6/01/0........................ 513,605
------------
1,551,035
------------
Strip Mortgage-Backed
Securities-2.2%
Federal National Mortgage Association,
823 Trust 3, Class 2, 9.00%,
2/01/17 (I/O)....................... 200,233
4,352 Trust 6, Class 2, 9.00%,
1/01/17 (I/O)....................... 1,044,582
471 Trust 9, Class 2, 9.00%,
2/01/17 (I/O)....................... 113,112
1,673 Trust 10, Class 2, 10.00%,
3/01/17 (I/O)....................... 555,228
326 Trust 14, Class 2, 9.00%,
2/01/17 (I/O)....................... 77,896
195 Trust 34, Class 2, 9.00%,
5/01/18 (I/O)....................... 48,819
864 Trust 226, Class 2, 9.00%,
6/01/23 (I/O)....................... 207,454
------------
2,247,324
------------
Collateralized Mortgage
Obligation Residuals #-9.3%
424 American Housing Trust VII,
Senior Mortgage Pass-Through
Certificates, Series A, Class R,
11/25/20.............................. 2,177,370
Federal Home Loan Mortgage Corporation,
Multiclass Mortgage Participation
Certificates,
10 Series 114, Class 114-RS, 1/15/21..... 1,775,000
10 Series 1035, Class 1035-R, 1/15/21.... 757,186
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
20 Trust 1990-26, Class 26-R, 3/25/20.... 1,050,000
1,005+ Trust 1992-192, Class 192-SB, 11/25/07 917,817
1,000 Trust 1994-13, Class 13-SM, 2/25/09... 737,813
1,590++ Trust 1994-37, Class 37-SE, 3/25/24.. 1,316,089

(right column)
- --------------------------------------------------------------------------------
Principal
Rating* Amount Value
(unaudited) (000) Description (Note 1)
- --------------------------------------------------------------------------------

$ 23 Ryland Acceptance Corporation Four,
Series 71, Class 71-R, 6/01/18**
(REMIC)............................... $ 550,229
------------
9,281,504
------------
U.S. Government Security-1.9%
1,750 Small Business Administration,
Participation Certificate,
Series 1995-10, Class 10-C,
7.35%, 8/01/05........................ 1,857,734
------------
Taxable Zero-Coupon Bonds-54.9%
Aid to Israel,
7,716 2/15/05............................... 4,524,144
7,716 8/15/05............................... 4,384,339
Financing Corporation (FICO Strips),
3,661++ 6/06/05, CPN 12....................... 2,093,616
10,016++ 6/06/05, CPN 19....................... 5,727,850
1,710 8/03/05............................... 965,594
5,311 8/08/05............................... 2,988,553
1,392 10/05/05.............................. 779,840
4,825 11/02/05 ............................. 2,676,138
1,666 11/30/05.............................. 919,732
10,900+ 12/27/05, CPN 13...................... 6,024,430
Government Trust Certificates,
5,220 5/15/05............................... 3,022,850
13,760 Class T-1, 5/15/05.................... 7,968,278
15,926+ Resolution Funding Corporation, 7/15/05.. 9,164,776
6,216 Tennessee Valley Authority, 11/01/05..... 3,496,500
------------
54,736,640
------------
Municipal Bonds-4.8%
AAA 1,000 Kern County California
Pension Obligation, Taxable
6.66%, 8/15/05......................... 1,019,460
Long Beach California Pension Obligation,
Taxable Refunding,
AAA 1,000 6.79%, 9/01/05......................... 1,028,790
AAA 500 7.09%, 9/01/0.......................... 515,050

See Notes to Financial Statements.

6
<PAGE>

SHORT-TERM INVESTMENT-1.6%
Discount Note
1,640 Federal Home Loan Bank (a), 5.75%,
1/02/96 (cost $1,639,738)............. 1,639,738
------------
Total investments before investment
sold short-148.5% (cost $140,476,903). 148,097,407

INVESTMENT SOLD SHORT-(11.3%)
10,000 U.S. Treasury Bond, 6.875%, 8/15/25
(proceeds $10,962,500)................. (11,278,100)
------------
Total Investments, net of
short sales-137.2%.................... 136,819,307
Other liabilities in excess of
other assets-(37.2%).................. (37,096,068)
------------
NET ASSETS-100%......................... $ 99,723,239
============

(Right column)

- -------------
* Using the higher of the Standard & Poor's or Moody's ratings.
** Private placements restricted as to resale.
# Illiquid securities represent 6.3% of portfolio assets.
+ $32,910,397 principal amount pledged as collateral for reverse
repurchase agreements.
++ Entire principal amount pledged as collateral for reverse
repurchase agreements.
@ Entire principal amount pledged as collateral for futures transactions.
(a) Security was purchased on a discount basis, the interest rate shown
has been adjusted to reflect a money market equivalent yield.

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

ARM -Adjustable Rate Mortgage
I -Denotes a CMO with interest only characteristics
I/O -Interest Only
P -Denotes a CMO with principal only characteristics
REMIC -Real Estate Mortgage Investment Conduit
- --------------------------------------------------------------------------------

See Notes to Financial Statements.

7
<PAGE>

(Left column)

- --------------------------------------------------------------------------------
The BlackRock Advantage Term Trust Inc.
Statement of Assets and Liabilities
December 31, 1995
- --------------------------------------------------------------------------------

Assets
Investments, at value (cost $140,476,903) (Note 1................. $148,097,407
Cash.............................................................. 31,706
Deposits with brokers as collateral
for investments sold short (Note 1)............................. 11,450,000
Interest receivable............................................... 1,289,728
Due from broker variation margin.................................. 14,426
Receivable for investments sold................................... 4,107
------------
160,887,374
------------
Liabilities
Reverse repurchase agreements (Note 4)............................ 48,581,000
Investments sold short, at value (proceeds
$10,962,500) (Note 1)........................................... 11,278,100
Interest payable.................................................. 512,765
Dividends payable................................................. 495,344
Accrued excise tax................................................ 100,000
Advisory fee payable (Note 2)..................................... 50,333
Administration fee payable (Note 2)............................... 10,067
Other accrued expenses............................................ 136,526
------------
61,164,135
------------
Net Assets........................................................ $ 99,723,239
============
Net assets were comprised of:
Common stock, at par (Note 5)................................... $ 95,107
Paid-in capital in excess of par................................ 87,797,396
------------
87,892,503

Undistributed net investment income............................. 2,713,657
Accumulated net realized gain................................... 1,698,474
Net unrealized appreciation..................................... 7,418,605
------------
Net assets, December 31, 1995................................... $ 99,723,239
============
Net asset value per share:
($99,723,239 / 9,510,667 shares of
common stock issued and outstanding)............................ $10.49
======

See Notes to Financial Statements.

(Right column)

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The BlackRock Advantage Term Trust Inc.
Statement of Operations
Year Ended December 31, 1995
- --------------------------------------------------------------------------------

Net Investment Income
Income
Interest earned (including net discount accretion
of $1,633,337 and net of interest expense of $4,516,272)...... $ 8,036,064
------------
Operating expenses
Investment advisory............................................. 549,399
Administration.................................................. 109,880
Reports to shareholders......................................... 79,000
Custodian....................................................... 72,000
Transfer agent.................................................. 25,000
Directors....................................................... 21,000
Audit........................................................... 18,000
Miscellaneous................................................... 58,314
------------
Total operating expenses.................................... 932,593
------------
Net investment income before excise tax.......................... 7,103,471
Excise Tax...................................................... 100,000
------------
Net investment income............................................ 7,003,471
------------
Realized and Unrealized Gain (Loss)
on Investments (Note 3)
Net realized gain (loss) on:
Investments..................................................... 9,130,262
Short sales..................................................... (5,399,219)
Futures......................................................... 283,290
------------
4,014,333
------------
Net change in unrealized appreciation
(depreciation) on:
Investments..................................................... 8,806,087
Short sales..................................................... 598,388
Futures......................................................... 113,702
------------
9,518,177
------------
Net gain on investments........................................... 13,532,510
------------
Net Increase In Net Assets Resulting from Operations.............. $ 20,535,981
============

See Notes to Financial Statements.

8
<PAGE>

(Left column)

- --------------------------------------------------------------------------------
The BlackRock Advantage Term Trust Inc.
Statement of Cash Flows
Year Ended December 31, 1995
- --------------------------------------------------------------------------------

Increase (Decrease) in Cash
Cash flows provided by operating activities:
Interest received............................................... $ 10,622,083
Operating expenses and excise taxes paid........................ (1,160,240)
Interest expense paid........................................... (4,295,634)
Proceeds from disposition of short-term
portfolio investments, net.................................... 3,682,262
Purchase of long-term portfolio investments..................... (140,856,559)
Proceeds from disposition of long-term portfolio investments.... 131,662,133
Variation margin on futures..................................... 382,566
Other........................................................... 8,983
------------
Net cash flows provided by operating activities................. 45,594
------------
Cash flows used for financing activities:
Increase in reverse repurchase agreements....................... 6,405,000
Cash dividends paid............................................. (6,419,551
------------
Net cash flows used for financing activities.................... (14,551)
------------
Net increase in cash.............................................. 31,043
Cash at beginning of year......................................... 663
------------
Cash at end of year............................................... $ 31,706
============

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.............. $ 20,535,981
Increase in investments........................................... (6,977,239)
Net realized gain................................................. (4,014,333)
Increase in unrealized appreciation............................... (9,518,177)
Decrease in deposits with brokers for investments sold short...... 17,650,000
Increase in receivable for investments sold....................... (2,570)
Increase in interest receivable................................... (296,916)
Increase in due from broker-variation margin...................... (14,426)
Decrease in other assets.......................................... 17,005
Increase in interest payable...................................... 220,638
Decrease in payable for investments sold short.................... (17,418,700)
Decrease in accrued expenses and other liabilities................ (135,669)
------------
Total adjustments........................................... (20,490,387)
------------
Net cash flows provided by operating activities................... $ 45,594
============

See Notes to Financial Statements.

(Right column)

- --------------------------------------------------------------------------------
The BlackRock Advantage Term Trust Inc.
Statements of Changes
in Net Assets
- --------------------------------------------------------------------------------

Year Ended December 31,
--------------------------------
1995 1994
---- ----
Increase (Decrease)
in Net Assets
Operations:
Net investment income...................... $ 7,003,471 $ 4,998,024
Net realized gain on investments,
short sales and futures.................. 4,014,333 1,437,198
Net change in unrealized appreciation
(depreciation) on investments,
short sales and futures.................. 9,518,177 (16,026,817)
------------ ------------
Net increase (decrease) in net assets
resulting from operations................ 20,535,981 (9,591,595)
Dividends from net investment income......... (6,379,920) (6,934,967)
------------ ------------
Total increase (decrease).............. 14,156,061 (16,526,562)

Net Assets
Beginning of year............................ 85,567,178 102,093,740
------------ ------------
End of year.................................. $ 99,723,239 $ 85,567,178
============ ============

See Notes to Financial Statements.

9
<PAGE>

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The BlackRock Advantage Term Trust Inc.
Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.................... $ 9.00 $10.73 $10.43 $10.96 $ 9.89
------ ------ ------ ------ ------
Net investment income (net of $.47, $.25, $.16,
$.18 and $.13, respectively, of interest expense)... .74 .53 .56 1.38 1.19
Net realized and unrealized gain (loss) on securities. 1.42 (1.53) .57 (1.01) .94
------ ------ ------ ------ ------
Net increase (decrease) from investment operations.... 2.16 (1.00) 1.13 .37 2.13
------ ------ ------ ------ ------
Dividends from net investment income.................. (.67) (.73) (.83) (.90) (1.06)
------ ------ ------ ------ ------
Net asset value, end of year*......................... $10.49 $ 9.00 $10.73 $10.43 $10.96
====== ====== ====== ====== ======
Market value, end of year*............................ $ 8.625 $ 7.75 $10.75 $10.625 $11.25
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN+:............................. 20.31% (22.16%) 9.33% 2.52% 24.10%

RATIOS TO AVERAGE NET ASSETS:
Operating expenses #.................................. 1.00% 1.06% 1.07% 1.08% 1.24%
Net investment income................................. 7.53% 5.38% 5.09% 13.09% 11.79%

SUPPLEMENTAL DATA:
Average net assets (in thousands)..................... $93,044 $92,932 $102,302 $99,967 $ 96,225
Portfolio turnover.................................... 94% 142% 18% 3% 254%
Net assets, end of year (in thousands)................ $99,723 $85,567 $102,094 $99,149 $104,210
Revese repurchase agreements outstanding,
end of year (in thousands).......................... $48,581 $42,176 $ 50,000 $43,823 $ 50,015
Asset coverage++...................................... $ 3,053 $ 3,029 $ 3,039 $ 3,263 $ 3,084

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

# The ratios of expenses, including excise tax, to average net assets
were 1.11%, 1.13%, 1.23%, 1.37% and 1.30% for the years 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.

++ 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 years 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.

10
<PAGE>

(Left column)

- --------------------------------------------------------------------------------
The BlackRock Advantage Term Trust Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------

Note 1. Accounting
Policies

The BlackRock Advantage Term Trust Inc. (the "Trust"), a Maryland corporation,
is a diversified, closed-end management investment company. The Trust's
investment objective is to manage a portfolio of investment grade fixed income
securities that will return $10 per share to investors on or about December 31,
2005 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 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
cost of the purchase or proceeds from the sale 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.

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 or a security's price would be

11
<PAGE>

(Left column)

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 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

(Right column)

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, 1995.

Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis and the Trust accretes discount and amortizes premium on
securities purchased using the interest method.

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 sufficient taxable income to shareholders. Therefore, no federal
income tax provision is required. As part of itstax planning strategy, the Trust
intends to 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.

Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.

Deferred Organization Expenses: A total of $125,000 was incurred in
connection with the organization of the Trust. These costs have been deferred
and were amortized ratably over a period of sixty months from the date the Trust
commenced investment operations through April 1995.

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 $100,000 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.

12
<PAGE>

(Left column)

Note 2. Agreements

The Trust has an Investment Advisory Agreement with BlackRock Financial
Management, Inc., (the "Adviser") and an Administration Agreement with
Prudential Mutual Fund Management, Inc. ("PMF"), an indirect, wholly-owned
subsidiary of The Prudential Insurance Co.
of America.

The investment advisory fee paid to the Adviser was computed weekly and
payable monthly at an annual rate of 0.60% of the Trust's average weekly net
assets through December 31, 1995. This fee will be 0.50% of the Trust's average
weekly net assets from January 1, 1996 to December 31, 2000 and 0.40% from
January 1, 2001 to the termination or liquidation of the Trust. The
administration fee paid to PMF was also computed weekly and payable monthly at
an annual rate of 0.12% of the Trust's average weekly net assets until December
31, 1995. This fee will be 0.10% of the Trust's average weekly net assets from
January 1, 1996 to December 31, 2000 and 0.08% from January 1, 2001 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.

On February 28, 1995, the Advisor was acquired by PNC Bank, N.A. Following
the acquisition, the Advisor has become a wholly-owned corporate subsidiary of
PNC Asset Management Group, Inc., the holding company for PNC's asset management
businesses.

Note 3. Portfolio
Securities

Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended December 31, 1995 aggregated $140,856,559
and $128,883,929, respectively.

The Trust may invest up to 85% 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, 1995, the Trust
held 6.3% of its portfolio assets in illiquid securities including 0.4% in
securities restricted as to resale.

The federal income tax basis of the Trust's investments at December 31,
1995 was substantially the same as the basis for financial reporting and,
accordingly, net unrealized appreciation for federal income tax purposes was
$7,620,504 (gross unrealized appreciation-$12,951,980; gross unrealized
depreciation-$5,331,476).

For federal income tax purposes, the Trust had a capital loss carryforward
at December 31, 1995 of approximately

(Right column)

$36,900 which will expire in 2001. Such carryforward is after utilization of
approximately $4,128,100 to offset the Trust's net taxable gains recognized in
the year ended December 31, 1995. Accordingly, no capital gains distribution is
expected to be paid to shareholders until net gains have been realized in excess
of such amount.

During the year ended December 31, 1995, the Trust entered into financial
futures contracts. Details of the open contracts at December 31, 1995 are as
follows:

Value at Value at Unrealized
Number of Expiration Trade December 31, Appreciation/
Contracts Type Date Date 1995 (Depreciation)
- --------- ---- ---- ---- ---- --------------
Short
Position:
10 10 yr- March
T-Note 1996 $1,130,265 $1,145,938 $(15,673)
Long
Position:
50 30 year March
T-Bond 1996 5,944,063 6,073,438 129,375
--------
$113,702
========

Note 4. Borrowings

Reverse Repurchase Agreements: The Trust may enter 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 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, 1995 was approximately $44,900,000 at a
weighted average interest rate of approximately 6.04%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year ended
December 31, 1995 was $48,581,000 as of December 31, 1995 which was 30.2% 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 Trust did not enter into dollar rolls
during the year ended December 31, 1995.

13
<PAGE>

Note 5. Capital

There are 200 million shares of $.01 par value common stock authorized. Of the
9,510,667 shares outstanding at December 31, 1995, the Adviser owned 10,667
shares.

Note 6. Dividends

Subsequent to December 31, 1995, the Board of Directors of the Trust declared a
dividend from undistributed earnings of $0.052083 per share payable February 29,
1996 to shareholders of record on February 15, 1996.

Note 7. Quarterly Data
(Unaudited)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized
gains (losses) Net increase
on investments, (decrease)
short sales, in net assets Dividends Period
Net investment futures and resulting from and and
income options operations distributions net
Quarterly Total Per Per Per Per Share price 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>
January 1, 1994
to
March 31, 1994 $ 784,706 $ 514,935 $.05 $(7,292,590) $(.76) $(6,777,655) $(.71) $1,228,492 $.13 $10-3/4 $8-7/8 $ 9.89

April 1, 1994
to
June 30, 1994 946,382 714,715 .08 (2,337,450) (.25) (1,622,735) (.17) 1,723,904 .18 9-1/2 8-1/2 9.54
July 1, 1994
to
September 30, 1994 1,967,044 1,713,249 .18 (1,313,325) (.14) 399,924 .04 1,723,739 .18 9-1/ 8 9.40
October 1, 1994
to
December 31, 1994 2,345,644 2,055,125 .22 (3,646,254) (.38) )(1,591,129) (.16 2,258,832 .24 8-3/8 7-3/8 9.00
January 1, 1995
to
March 31, 1995 2,386,839 1,719,383 .18 3,284,792 .35 5,004,175 .53 1,069,951 .11 8-3/8 7-3/4 9.41
April 1, 1995
to
June 30, 1995 2,228,954 2,432,170 .26 5,029,588 .52 7,461,758 .78 1,604,920 .17 8-7/8 8 10.03
July 1, 1995
to
September 30, 1995 1,880,202 1,655,384 .17 184,826 .02 1,840,210 .19 1,604,920 .17 8-3/4 8-1/8 10.05
October 1, 1995
to
December 31, 1995 1,540,069 1,196,534 .13 5,033,304 .53 6,229,838 .66 2,100,129 .22 8-7/8 8-1/2 10.49
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

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

The Shareholders and Board of Directors of
The BlackRock Advantage Term Trust Inc.:

We have audited the accompanying statement of assets and liabilities of The
BlackRock Advantage Term Trust Inc., including the portfolio of investments, as
of December 31, 1995, and the related statements of operations and of cash flows
for the year then ended, the 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 financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these 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 misstatement. 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, 1995, 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 financial statements and financial highlights present
fairly, in all material respects, the financial position of The BlackRock
Advantage Term Trust Inc. as of December 31, 1995, 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.

Deloitte & Touche LLP

New York, New York
February 9, 1996

14
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE 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 its fiscal year ended December 31, 1995.

During the fiscal year ended December 31, 1995, the Trust paid aggregate
distributions of $0.6708 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 1995 federal income tax return
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 1995 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 1996.

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------

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

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

15
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE 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, 2005 while
providing high monthly income.

Who Manages the Trust?

BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages
approximately $34 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 80 clients in the U.S. and overseas. BlackRock is a subsidiary of
PNC Asset Management Group, Inc. which is a division of PNC Bank, N.A., the
nation's eleventh largest banking organization.

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 2005. 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
33-1/3% of 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.

16
<PAGE>

How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends
Regularly?

The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, Boston
Financial Data Services. Investors who wish to hold shares in a brokerage
account should check with their financial advisor to determine whether their
brokerage firm offers dividend reinvestment services.

Leverage Considerations in 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 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
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 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.

17
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE 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 dividends
and distributions of 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 Administration, a
publicly owned, federally chartered corporation
that facilitates a secondary mortgage market by
purchasing mortgages from lenders such as
savings institutions and reselling them to
investors by means of mortgage-backed
securities. Obligations of FNMA are not
guaranteed by the U.S. government, however;
they are backed by FNMA's authority to borrow
from the U.S. government. Also known as Fannie
Mae.

GNMA: Government National Mortgage Association, a
U.S. 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).

18
<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 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.

Strip 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.

19
<PAGE>

(Left column)

BlackRock

Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein

Officers
Ralph L. Schlosstein, President
Scott Amero, Vice President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Kevin J. Mahoney, Assistant Treasurer
Karen H. Sabath, Secretary

Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM

Administrator
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292

Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
(800) 699-1BFM

Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434

Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022

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

The BlackRock Advantage Term Trust Inc.
c/o Prudential Mutual Fund Management, Inc.
32nd floor
One Seaport Plaza
New York, NY 10292
(800) 227-7BFM
09247 A10 1
(Right column)

The BlackRock
Advantage
Term Trust Inc.
- ---------------------------
Annual Report
December 31, 1995