- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE 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
1
<PAGE>
January 31, 1997
Dear Shareholder:
We are pleased to present the annual report for The BlackRock Advantage
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 "BAT". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 2005 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 $8.625 $8.625 (0%) $9.00 $8.00
Net Asset Value (NAV) $10.10 $10.49 (3.71%) $10.59 $9.54
</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.
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
- --------------------------------------------------------------------------------
COMPOSITION DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Taxable Zero-Coupon Bonds 33% 37%
- --------------------------------------------------------------------------------
Corporate Bonds 16% 6%
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs 10% 27%
- --------------------------------------------------------------------------------
Agency Multiple Class Mortgage Pass-Throughs 10% 13%
- --------------------------------------------------------------------------------
U. S. Government Securities 10% 1%
- --------------------------------------------------------------------------------
Strip Mortgage-Backed Securities 5% 2%
- --------------------------------------------------------------------------------
CMO Residuals 4% 6%
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 4% 2%
- --------------------------------------------------------------------------------
Municipal Bonds 4% 3%
- --------------------------------------------------------------------------------
Non-Agency Multiple Class Mortgage Pass-Throughs 3% 2%
- --------------------------------------------------------------------------------
Municipal Zero Coupon Bond 1% 1%
- --------------------------------------------------------------------------------
--------------------------------------------
RATING % OF CORPORATES
- --------------------------------------------------------------------------------
CREDIT RATING DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
AA or equivalent 0% 0%
- --------------------------------------------------------------------------------
A or equivalent 46% 61%
- --------------------------------------------------------------------------------
BBB or equivalent 54% 39%
- --------------------------------------------------------------------------------
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, 16% of the Trust's assets
were invested in corporates. 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.
3
<PAGE>
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 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 Advantage 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.
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BAT
- --------------------------------------------------------------------------------
Initial Offering Date: April 27, 1990
- --------------------------------------------------------------------------------
Closing Stock Price as of 12/31/96: $ 8.625
- --------------------------------------------------------------------------------
Net Asset Value as of 12/31/96: $10.10
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 12/31/96 ($8.625)1: 7.25%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.052083
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.6250
- --------------------------------------------------------------------------------
- ----------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2Distribution not constant and is subject to change.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--126.4%
Mortgage Pass-Throughs--12.9%
Federal Home Loan Mortgage
Corporation,
$ 1,901+ 6.50%, 8/01/25 - 11/01/25 ......... $ 1,817,692
7,217+ 9.50%, 1/01/05, 15 Year 7,542,704
975 Federal Housing Administration
Alzheimer Care Center,
8.125%, 12/25/37 .................. 984,788
20 Federal National Mortgage Association,
9.50%, 7/01/20 .................... 21,502
Government National Mortgage
Association,
1,025 9.50%, 1/15/17 - 1/15/19 .......... 1,108,596
793 10.00%, 1/15/16 - 8/15/16 ......... 872,330
-----------
12,347,612
-----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--16.1%
Merrill Lynch Mortgage
Investors Incorporated,
Multiclass Mortgage Pass-
Through Certificates,
BBB 1,000 Series 1995-C1, Class D, 5/25/13 .. 1,024,241
BBB 500 Series 1996-C1, Class D, 4/25/28 .. 497,402
AAA 2,000 NYC Mortgage Loan Trust,
Mortgage Pass Through, 144A
6.75%, 6/25/11 .................... 1,927,188
Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates,
3,200++ Series 1295, Class 1295-JB,
3/15/07 ......................... 2,864,960
908 Series 1541, Class 1541-TB,
7/15/23, (ARM) .................. 596,155
1,220 Series 1619, Class 1619-E,
10/15/13, (ARM) ................. 905,978
460 Series 1655, Class 1655-SB,
12/15/08, (ARM) ................. 371,692
773 Series 1661, Class 1661-SJ,
3/15/08 (ARM) ................... 569,080
433 Series 1666, Class 1666-SB,
1/15/24, (ARM) .................. 371,721
Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
$ 2,052 Trust 1992-129, Class 129-J,
7/25/20 ......................... $ 1,710,034
1,005 Trust 1992-192, Class 192-SB,
11/25/07, (ARM) ................. 907,951
259 Trust 1993-59, Class 59-SC,
11/25/07 (ARM) .................. 248,871
944 Trust 1993-183, Class 183-SE,
10/25/23 (ARM) .................. 716,563
1,444 Trust 1993-193, Class193-E,
9/25/23 ......................... 519,956
1,000+ Trust 1994-13, Class 13-SM,
2/25/09, (ARM) .................. 760,000
1,590 Trust 1994-37, Class 37-SC,
3/25/24 ......................... 1,173,713
274 Trust 1994-193, Class 193-PC,
9/25/23 ......................... 252,653
-----------
15,418,158
-----------
COMMERCIAL MORTGAGE-
BACKED SECURITIES--5.1%
A 1,000 CS First Boston Mortgage
Securities Corporation,
Series 95-AEW1, Class C,
7.458%, 11/25/27 .................. 1,005,625
AAA 1,000 Goldman Sachs Mortgage
Securities Corporation,
Series 1996- PL, Class A2,
7.41%, 2/15/27 .................... 1,020,000
AAA 925 LTC Commercial Mortgage
Corp., Series 1996-1, Class 1-A, 144A
7.06%, 4/15/28 .................... 928,099
BBB 1,000 Morgan Stanley Capital 1
Incorporated, Commercial
Mortgage Pass-Through,
Series 1995-GA1, Class D,
8.25%, 8/15/27 .................... 1,043,436
AAA 431 Sears Mortgage Securities
Corporation, Series 1993-7,
Class A15, 9.702%,
4/25/08, (ARM) .................... 391,767
AAA 500 Structured Asset Securities
Corporation, Series 1996- CFL,
Class B, 6.303%, 2/25/28 .......... 487,413
-----------
4,876,340
-----------
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
CORPORATE BONDS--20.9%
FINANCE & BANKING--10.2%
A3 $ 1,000@ American Savings Bank,
6.625%, 2/15/06 ................... $ 963,792
A2 1,556 Equitable Life of America,
Zero Coupon, 6/1/98-12/01/05 ...... 925,343
BBB 1,000 Macsaver Financial Services Inc.,
7.875%, 8/01/03 ................... 1,005,671
Baa3 1,900 PaineWebber Group Inc.,
7.875%, 2/15/03 ................... 1,973,644
BBB 1,000 Peoples Bank- Bridgeport,
7.20%, 12/01/06 ................... 979,769
Baa1 1,000 Salomon Inc.,
6.75%, 1/15/06 .................... 951,281
A2 1,425 Smith Barney Holdings Inc.,
7.98%, 3/01/00 .................... 1,483,815
A3 1,485 Transamerica Finance Corporation,
6.75%, 6/01/00 .................... 1,494,662
-----------
9,777,977
-----------
CORPORATE BONDS--
INDUSTRIALS--3.5%
Baa3 1,000 Burlington Industries Inc.,
7.25%, 9/15/05 .................... 979,620
BBB 1,000@@Tele-Communications Inc.,
8.25%, 1/15/03 .................... 1,009,830
A3 2,198 Union Pacific Corp., Zero
Coupon, 5/01/98-5/01/05 ........... 1,359,350
-----------
3,348,800
-----------
CORPORATE BONDS--
UTILITIES--2.0%
BBB 1,000 360 Communications Co.,
7.50%, 3/01/06 .................... 990,090
Baa3 1,000 NRG Energy Inc., 144A
7.625%, 2/01/06 ................... 946,981
-----------
1,937,071
-----------
CORPORATE BONDS--
YANKEE-OTHER--5.2%
A3 2,000 Bangkok Bank Public LTD, 144A
7.25%, 9/15/05 .................... 1,959,862
Baa3 1,000 Empresa Electric Guacolda SA, 144A
7.95%, 4/30/03 .................... 1,017,782
Baa1 1,000 Empresa Electric Pehuhuenche,
7.30%, 5/01/03 .................... 1,010,532
A3 1,000 Israel Electric Corp. Ltd., 144A
7.25%, 12/15/06 ................... 994,220
-----------
4,982,396
-----------
STRIPPED MORTGAGE-BACKED
SECURITIES--6.2%
Collateralized Mortgage
Obligation,
AAA $ 1,370 Trust 26, Class A, 4/23/17 (P/O) .. $ 1,084,636
AAA 107 Trust 29, Class A, 5/23/17 (P/O) .. 81,589
Federal National Mortgage
Association,
211 Trust 34, Class 2, 9.00%,
5/01/18 (I/O) ................... 63,257
690 Trust 226, Class 2, 9.00%,
6/01/23 (I/O) ................... 202,646
1,406 Trust 1993-225, Class 225-ME,
11/25/23 (P/O) .................. 401,589
287 Trust 1993-243, Class 243-C,
11/25/23 (P/O) .................. 192,597
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
7,167 Series G-25 Class S, 8/25/06 ...... 322,947
4,000+ Series 1700, Class 1700-B
7/15/23 (P/O) ................... 3,640,000
-----------
5,989,261
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS RESIDUALS***--4.3%
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
10 Series 114, Class 114-RS
1/15/21 ......................... 2,038,560
10 Series 1035, Class 1035-R,
1/15/21 ......................... 752,978
20 Federal National Mortgage
Association, REMIC Pass-
Through Certificates,
Trust 1990-26, Class 26-R,
3/25/20 ........................... 818,959
50 Prudential-Bache CMO
Trust II, Collateralized Mortgage
Obligations (REMIC)**,
6/01/18 ........................... 162,623
18 Ryland Acceptance Corporation,
Series 71, Class 71-R,
6/01/18 (REMIC)** 441,034
-----------
4,214,154
-----------
U.S GOVERNMENT SECURITIES--12.9%
1,750 Small Business Administration,
Participation Certificates,
Series 1995-10, Class 10-C,
7.35%, 8/01/05 1,768,047
U.S. Treasury Notes,
300++ 5.875%, 10/31/98 299,952
125 6.50%, 10/15/06 125,684
18,000+ U.S.Treasury Strips,
11/15/05 10,199,160
-----------
12,392,843
-----------
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
TAXABLE ZERO COUPON BONDS--42.2%
$10,000 Bankers Trust,
12/31/04 $ 5,830,000
Aid to Israel,
6,203 2/15/05 3,632,907
6,203 8/15/05 3,505,567
Government Trust Certificates,
5,220 Class 2F, 5/15/05 3,043,416
13,760 Class T-1, 5/15/05 8,022,493
22,926+ Resolution Funding Corporation,
7/15/05 13,192,996
6,216 Tennessee Valley Authority,
11/01/05 3,280,883
-----------
40,508,262
-----------
MUNICIPAL BONDS--4.6%
AAA 1,533 Kern County California Pension
Obligation, Zero Coupon,
2/15/98-8/15/05 932,456
AAA 2,043 Long Beach California,
Pension Obligation, Zero
Coupon, 3/01/98-9/01/09 1,437,524
Los Angeles County California,
Pension, Series 4, Zero
AAA 1,508 Coupon, 6/30/98-6/30/05 898,393
Pension, Series A Asset
AAA 1,000 Guaranty, 8.62%, 6/30/06 1,120,190
-----------
4,388,563
-----------
MUNICIPAL ZERO COUPON BONDS--1.2%
AAA 1,000 Alaska Energy Power Authority,
Revenue Bond,
First Series, 7/01/05 639,740
AAA 1,000 Alameda County California
Pension Obligation, Capital
Appreciation Taxable Series B,
Zero Coupon, 12/01/05 536,080
-----------
1,175,820
-----------
Total long-term investments
(cost $113,868,181) 121,357,257
-----------
SHORT-TERM INVESTMENTS--2.5%
CERTIFICATE OF DEPOSIT--2.1%
2,000 Bank Of Tokyo,
5.80%, 1/21/97 2,000,011
CORPORATE BONDS--0.2%
A2 70 Equitable Life of America
Zero Coupon, 6/1/97 - 12/1/97 66,910
A3 106 Union Pacific Corp.
Zero Coupon, 5/1/97 - 11/1/97 102,910
-----------
169,820
-----------
MUNICIPAL BONDS--0.2%
AAA $ 66 Kern County California Pension
Obligation,
Zero Coupon, 2/15/97 -
8/15/97 $ 65,186
AAA 68 Long Beach California,
Pension Obligation,
Zero Coupon, 3/1/97 - 9/1/97 66,286
AAA 68 Los Angeles County California
Pension, Series 4,
Zero Coupon, 6/30/97 -
12/31/97 64,730
-----------
196,202
-----------
CONTRACTS+++
--------- PUT OPTIONS PURCHASED--0.1%
80 U.S. Treasury Note, 7.00%, 7/15/06
@$102 expires 7/02/97
(cost $115,000) 121,248
-----------
Total short-term investments
(cost $2,452,115) 2,487,281
-----------
Total investments, --129.0%
(cost $116,320,296) 123,844,539
Liabilities in excess of other
assets--(29.0%) (27,816,426)
-----------
NET ASSETS--100% $ 96,028,113
============
- ----------
* Using the higher of Standard & Poor's or Moody's rating.
** Private placements restricted as to resale.
*** Illiquid securities representing 3.5% of portfolio assets.
+ $24,019,801 principal amount pledged as collateral for reverse repurchase
agreements.
++ Entire principal amount pledged as collateral for reverse repurchase
agreements.
+++ One contract equals 100,000 face value.
@ $289,137 principal amount pledged as collateral for futures transactions.
@@ Entire principal amount pledged as collateral for futures transactions.
- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
- --------------------------------------------------------------------------------
ARM -- Adjustable Rate Mortgage.
CMO -- Collateralized Mortgage Obligation.
G.O. -- General Obligation Bond.
I/O -- Interest only.
P/O -- Principal only.
REMIC -- Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments, at value
(cost $116,320,296) (Note 1) ......................... $123,844,539
Cash ................................................. 172,908
Interest receivable .................................. 621,053
Due from broker-variation margin ..................... 100,831
Receivable for investments sold ...................... 434
-------------
124,739,765
-------------
LIABILITIES
Reverse repurchase agreements (Note 4) ............... 26,932,625
Payable for investments purchased .................... 883,513
Dividends payable .................................... 495,344
Interest payable ..................................... 158,312
Accrued excise tax ................................... 103,453
Advisory fee payable (Note 2) ........................ 41,412
Administration fee payable (Note 2) .................. 8,282
Other accrued expenses ............................... 88,711
28,711,652
=============
NET ASSETS ........................................... $96,028,113
=============
Net assets were comprised of:
Common stock, at par (Note 5) ........................ $95,107
Paid-in capital in excess of par ..................... 87,687,396
-------------
87,782,503
Undistributed net investment income .................. 2,295,109
Accumulated net realized loss ........................ (1,855,349)
Net unrealized appreciation .......................... 7,805,850
-------------
Net assets, December 31, 1996 ........................ $96,028,113
=============
Net asset value per share:
($96,028,113 / 9,510,667 shares of
common stock issued and outstanding) ................. $10.10
=======
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest earned (including net discount
accretion of $780,925 and net of interest
expense of $2,068,883) .............................. $6,373,163
-----------
Operating expenses
Investment advisory ................................... 478,360
Administration ........................................ 95,672
Reports to shareholders ............................... 79,000
Custodian ............................................. 79,000
Transfer agent ........................................ 25,000
Audit ................................................. 15,000
Directors ............................................. 6,000
Miscellaneous ......................................... 69,757
-----------
Total operating expenses ............................ 847,789
-----------
Net investment income before excise tax ................. 5,525,374
Excise tax ............................................ 110,000
-----------
Net investment income ................................... 5,415,374
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ........................................... (1,671,656)
Short sales ........................................... (126,343)
Futures ............................................... (1,755,824)
-----------
(3,553,823)
-----------
Net change in unrealized
appreciation (depreciation) on:
Investments ........................................... (96,260)
Short sales ........................................... 315,600
Futures ............................................... 167,905
-----------
387,245
-----------
Net loss on investments ................................. (3,166,578)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $2,248,796
===========
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows provided by operating activities:
Interest received ............................ $ 9,110,721
Operating expenses and excise taxes paid ..... (1,012,857)
Interest expense paid ........................ (2,423,336)
Purchase of short-term
portfolio investments, net ................. (697,377)
Purchase of long-term portfolio investments .. (92,671,456)
Proceeds from disposition of long-term
portfolio investments ...................... 117,102,128
Variation margin on futures .................. (1,674,324)
-------------
Net cash flows provided by operating
activities ................................. 27,733,499
-------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements .... (21,648,375)
Cash dividends paid ........................ (5,943,922)
-------------
Net cash flows used for financing activities (27,592,297)
-------------
Net increase in cash ......................... 141,202
Cash at beginning of year .................... 31,706
-------------
Cash at end of year .......................... $ 172,908
-------------
RECONCILIATION OF NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS TO NET CASH
FLOWS PROVIDED BY OPERATING
ACTIVITIES
Net increase in net assets resulting
from operations ................................ $ 2,248,796
-------------
Decrease in investments ........................ 21,086,290
Net realized loss .............................. 3,553,823
Increase in unrealized appreciation ............ (387,245)
Decrease in deposits with brokers for
investments sold short ......................... 11,450,000
Decrease in receivable for investments sold .... 3,673
Decrease in interest receivable ................ 668,675
Increase in due from broker-variation margin ... (86,405)
Decrease in interest payable ................... (354,453)
Increase in payable for investments purchased .. 883,513
Decrease in payable for investments sold short . (11,278,100)
Decrease in accrued expenses and other
liabilities .................................. (55,068)
-------------
Total adjustments ............................ 25,484,703
-------------
Net cash flows provided by operating activities $ 27,733,499
-------------
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
STATEMENTS OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
---- ----
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income ....... $ 5,415,374 $ 7,003,471
Net realized gain (loss) on
investments, short sales
and futures ............... (3,553,823) 4,014,333
Net change in unrealized
appreciation (depreciation)
on investments, short
sales and futures ......... 387,245 9,518,177
------------ ------------
Net increase in net assets
resulting from operations . 2,248,796 20,535,981
Dividends from net investment
income .................... (5,943,922) (6,379,920)
------------ ------------
Total increase (decrease) (3,695,126) 14,156,061
NET ASSETS
Beginning of year ............. 99,723,239 85,567,178
------------ ------------
End of year ................... $ 96,028,113 $ 99,723,239
============ ============
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE 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 ............ $10.49 $9.00 $10.73 $10.43 $10.96
------- ------- ------- -------- -------
Net investment income (net of $.22, $.47, $.25,
$.16 and $.18, respectively, of
interest expense) ............................. .57 .74 .53 .56 1.38
Net realized and unrealized gain (loss) on
securities .................................... (.33) 1.42 (1.53) .57 (1.01)
------- ------- ------- -------- -------
Net increase (decrease) from investment
operations .................................... .24 2.16 (1.00) 1.13 .37
------- ------- ------- -------- -------
Dividends from net investment income ............ (.63) (.67) (.73) (.83) (.90)
------- ------- ------- -------- -------
Net asset value, end of period* ................. $10.10 $10.49 $9.00 $10.73 $10.43
======= ======= ======= ======== =======
Market value, end of period* .................... $8.625 $8.625 $7.75 $10.75 $10.625
======= ======= ======= ======== =======
TOTAL INVESTMENT RETURN+: ....................... 7.30% 20.31% (22.16%) 9.33% 2.52%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses # ............................ 0.91% 1.00% 1.06% 1.07% 1.08%
Net investment income ........................... 5.80% 7.53% 5.38% 5.09% 13.09%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ............... $93,370 $93,044 $92,932 $102,302 $99,967
Portfolio turnover .............................. 76% 94% 142% 18% 3%
Net assets, end of period (in thousands) ........ $96,028 $99,723 $85,567 $102,094 $99,149
Reverse repurchase agreements outstanding,
end of period (in thousands) .................. $26,933 $48,581 $42,176 $50,000 $43,823
Asset coverage++ ................................ $4,565 $3,053 $3,029 $3,039 $3,263
</TABLE>
- ----------
* NAV and market value are published in The Wall Street Journal each Monday.
# The ratios of operating expenses, including interest expense, to average
net assets were 3.06%, 5.86%, 3.59%, 2.58%, and 3.12%, for the periods
indicated above, respectively. The ratios of operating expenses, including
interest expense and excise tax, to average net assets were 3.18%, 5.97%,
3.66%, 2.74%, and 3.41% for the periods indicated above, respectively.
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each year reported. Dividends and
distributions are assumed, for purposes of this calculation, to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
This calculation does not reflect brokerage commissions.
++ 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.
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING
The BlackRock Advantage PoliciesTerm 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.
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.
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 anytime 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 the
11
<PAGE>
option period. Put options can be purchased to effectively hedge a position or a
portfolio against price declines if a portfolio is long. In the same sense, call
options can be purchased to hedge a portfolio that is shorter than its benchmark
against price changes. The Trust can also sell (or write) covered call options
and put options to hedge portfolio positions.
The main risk that is associated with purchasing options is that the
option expires without being exercised. In this case, the option expires
worthless and the premium paid for the option is considered the loss. The risk
associated with writing call options is that the Trust may forego the
opportunity for a profit if the market value of the underlying position
increases and the option is exercised. The risk in writing put options is that
the Trust may incur a loss if the market value of the underlying position
decreases and the option is exercised. In addition, as with futures contracts,
the Trust risks not being able to enter into a closing transaction for the
written option as the result of an illiquid market.
FINANCIAL FUTURES CONTRACTS: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Duration is a measure of the price sensitivity of a security
or a portfolio to relative changes in interest rates. For instance, a duration
of "one" means that a portfolio 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 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 less or greater 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 theform of interest on the loan. The Trust also
12
<PAGE>
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 substantially all taxable income to shareholders. Therefore, no
federal income tax provision is required. As part of its tax 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.
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.
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 $110,000 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 was computed weekly and
payable monthly at an annual rate of 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 0.10% 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.
NOTE 3. PORTFOLIO
SECURITIES
Purchases and sales of Securities investment securities, other than short-term
investments and dollar rolls, for the year ended December 31, 1996 aggregated
$93,554,969 and $113,568,089, 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, 1996, the Trust
held 8.1% of its portfolio assets in securities restricted as to resale
including 3.5% 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
13
<PAGE>
financial reporting and, accordingly, net unrealized appreciation for federal
income tax purposes was $7,524,243 (gross unrealized appreciation-$8,804,711;
gross unrealized depreciation-$1,280,468).
For federal income tax purposes, the Trust had a capital loss carryforward
at December 31, 1996 of approximately $3,590,700, of which $36,900 expires in
2001 and $3,553,800 expires in 2004. 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, 1996, the Trust entered into financial
futures contracts. Details of the open contracts 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:
10 yr- March
129 T-Note 1997 $14,358,732 $14,077,125 $281,607
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, 1996 was approximately $37,693,955 at a
weighted average interest rate of approximately 6.01%. The maximum amount of
reverse repurchase agreements outstanding at any month-end during the year ended
December 31, 1996 was $50,809,750 as of December 31, 1996 which was 33.1% 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 Trust did not enter into dollar rolls
during the year ended December 31, 1996.
NOTE 5. CAPITAL
There are 200 million shares of $.01 par value common stock authorized. Of
the 9,510,667 shares outstanding at December, 1996, the Adviser owned 10,667
shares.
NOTE 6. DIVIDENDS
Subsequent to December 31, 1996, the Board of Directors of the Trust
declared a dividend from undistributed earnings of $0.052083 per share payable
February 28, 1997, to shareholders of record on February 14, 1997.
NOTE 7. QUARTERLY DATA
(UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND NET INCREASE (DECREASE)
UNREALIZED IN NET ASSETS
NET INVESTMENT GAIN (LOSS) RESULTING FROM
QUARTERLY TOTAL INCOME ON INVESTMENTS OPERATIONS
PERIOD INCOME AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE
------ ------ ------------------ --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995 to
March 31, 1995 ... $2,386,839 $1,719,383 $.18 $3,284,792 $.35 $5,004,175 $.53
April 1, 1995 to
June 30, 1995 .... 2,228,954 2,432,170 .26 5,029,588 .52 7,461,758 .78
July 1, 1995 to
September 30, 1995 1,880,202 1,655,384 .17 184,826 .02 1,840,210 .19
October 1, 1995 to
December 31, 1995 1,540,069 1,196,534 .13 5,033,304 .53 6,229,838 .66
January 1, 1996 to
March 31, 1996 ... 1,009,990 792,734 .08 (4,985,580) (.53) (4,192,846) (.45)
April 1, 1996 to
June 30, 1996 .... 1,856,006 1,648,961 .17 (1,559,618) (.16) 89,343 .01
July 1, 1996 to
September 30, 1996 1,780,329 1,569,709 .17 1,438,015 .15 3,007,724 .32
October 1, 1996 to
December 31, 1996 1,726,838 1,403,970 .15 1,940,605 .20 3,344,575 .35
</TABLE>
DIVIDENDS PERIOD
AND END
QUARTERLY DISTRIBUTIONS SHARE PRICE NET ASSET
PERIOD AMOUNT PER SHARE HIGH LOW VALUE
------ -------------------- -------------- -----
January 1, 1995 to
March 31, 1995 ... $1,069,951 $.11 $8 3/8 $7 3/4 $9.41
April 1, 1995 to
June 30, 1995 .... 1,604,920 .17 8 7/8 8 10.03
July 1, 1995 to
September 30, 1995 1,604,920 .17 8 3/4 8 1/8 10.05
October 1, 1995 to
December 31, 1995 2,100,129 .22 8 7/8 8 1/2 10.49
January 1, 1996 to
March 31, 1996 ... 990,731 .10 9 8 1/4 9.94
April 1, 1996 to
June 30, 1996 .... 1,485,989 .16 8 1/4 8 9.79
July 1, 1996 to
September 30, 1996 1,485,883 .16 8 3/8 8 9.95
October 1, 1996 to
December 31, 1996 1,981,319 .21 8 3/4 8 1/4 10.10
14
<PAGE>
- --------------------------------------------------------------------------------
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, 1996, 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, 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 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, 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
15
<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, 1996.
During the fiscal year ended December 31, 1996, the Trust paid aggregate
dividends of $0.6250 per share from net investment income. For federal income
tax purposees, the aggregate of any dividends and short-term capital gains
distributions you received are reportable in your 1996 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 1996 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which will be 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 and Trust Company (the "Plan
Agent") in Trust shares pursuant to the Plan. Shareholders who do not
participate in the Plan will receive all distributions in cash paid by check in
United States dollars mailed directly to the shareholders of record (or if the
shares are held in street or other nominee name, then to the nominee) by the
custodian, as dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange or elsewhere, for the participants' accounts. The Trust will not
issue shares under the Plan below net asset value.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.
The Plan Agent's fee 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.
16
<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 $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, N.A., 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 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
331/3% 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.
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<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 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 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 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.
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THE BLACKROCK ADVANTAGE TERM TRUST INC.
GLOSSARY
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ADJUSTABLE RATE MORTGAGE- Mortgage instruments with interest rates that
BACKED SECURITIES (ARMs): adjust at periodic intervals at a fixed amount
over the market levels of interest rates as
reflected in specified indexes. ARMS are backed by
mortgage loans secured by real property.
ASSET-BACKED SECURITIES: Securities backed by various types of receivables
such as automobile and credit card receivables.
CLOSED-END FUND: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange.
The fund invests in a portfolio of securities in
accordance with its stated investment objectives
and policies.
COLLATERALIZED MORTGAGE Mortgage-backed securities which separate mortgage
OBLIGATIONS (CMOS): 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).
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<PAGE>
INTEREST-ONLY Mortgage securities that receive only the interest
SECURITIES (I/O): 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 Mortgage securities that receive only the
SECURITIES (P/O): 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 In a reverse repurchase agreement, the Trust sells
AGREEMENTS: 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 Arrangements in which a pool of assets is
SECURITIES: 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.
20
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BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
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TAXABLE TRUSTS
- --------------------------------------------------------------------------------
Stock Termination
PERPETUAL TRUSTS Symbol Date
------- -----------
The BlackRock Income Trust Inc. .............................. BKT N/A
The BlackRock North American Government Income Trust Inc. .... BNA N/A
TERM TRUSTS
The BlackRock 1998 Term Trust Inc. ........................... BBT 12/98
The BlackRock 1999 Term Trust Inc. ........................... BNN 12/99
The BlackRock Target Term Trust Inc. ......................... BTT 12/00
The BlackRock 2001 Term Trust Inc. ........................... BLK 06/01
The BlackRock Strategic Term Trust Inc. ...................... BGT 12/02
The BlackRock Investment Quality Term Trust Inc. ............. BQT 12/04
The BlackRock Advantage Term Trust Inc. ...................... BAT 12/05
The BlackRock Broad Investment Grade 2009 Term Trust Inc. .... BCT 12/09
TAX-EXEMPT TRUSTS
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<TABLE>
<CAPTION>
Stock Termination
PERPETUAL TRUSTS Symbol Date
------- -----------
<S> <C> <C>
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.
21
<PAGE>
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BLACKROCKFINANCIAL MANAGMENT, INC.
AN OVERVIEW
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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.
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<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 ADVANTAGE TERM TRUST INC.
c/o Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM
[Logo] Printed on recycled paper 09247-A10 1
THE BLACKROCK
ADVANTAGE
TERM TRUST INC.
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ANNUAL REPORT
DECEMBER 31, 1996
