BLACKROCK ADVANTAGE TERM TRUST INC, N-30D, 1998-03-02

BLACKROCK ADVANTAGE TERM TRUST INC
N-30D, 1998-03-02

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

January 31, 1998

Dear Trust Shareholder:

U.S. fixed income investors have been rewarded with solid total returns
over the past twelve months ended December 31, 1997, as low inflation despite
strong economic growth drove Treasury yields lower.

The economy has shown some signs of slowing, which BlackRock expects may
persist as recessions in the emerging Asian economies and Japan will moderate
U.S. growth. We do not see immediate signs of inflationary pressure nor do we
anticipate an imminent change in monetary policy by the Federal Reserve. Our
longer-term outlook for the bond market remains optimistic, based on the
fundamentally favorable backdrop of slower economic growth, low inflation and
declining Treasury borrowing.

There are exciting developments occurring at BlackRock that we would like
to share with you. As you may know, BlackRock was acquired by PNC Bank, N.A. in
1995. In early 1998 the five investment management firms that comprise the PNC
Asset Management Group were consolidated under the BlackRock umbrella. This will
result in BlackRock Inc. becoming a $100 billion money management firm ranking
it among the 25 largest in the country. We look forward to using our global
investment management expertise to present exciting investment opportunities to
closed-end fund shareholders in the future.

This report contains detailed market and portfolio strategy commentary by
your Trust's managers in addition to the Trust's audited financial statements
and a detailed portfolio listing. We thank you for your continued investment in
the Trust and wish you a successful new year.

Sincerely,

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

<PAGE>

January 31, 1998

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, 1997. 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 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:

--------------------------------------------------------
12/31/97 12/31/96 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $9.375 $8.625 8.70% $9.437 $8.375
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $10.60 $10.10 4.95% $10.66 $9.87
- --------------------------------------------------------------------------------
10-YEAR TREASURY NOTE 5.74% 6.42% -68 bp 6.97% 5.70%
- --------------------------------------------------------------------------------

THE FIXED INCOME MARKETS

The U.S. economy exhibited strong growth and low inflation during 1997,
pushing bond yields below 6% for the first time since early 1996. Fueled by
increased consumer spending and low unemployment, growth was robust. The primary
inflation indicators, consumer and producer prices, remained dormant throughout
the period and unemployment rate remained low. After increasing the Fed Funds
Rate to 5.50% in March, the Federal Reserve left the rate unchanged for the
remainder of the year, as the combination of slowing domestic growth and the
economic turmoil in Asia threatened to exert deflationary pressures on the U.S.
economy.

The positive momentum has continued into the early days of 1998 based, in
part, on the possibility of early elimination of the budget deficit and on
comments by Fed Chairman Greenspan that deflation was an issue. New home sales
recently hit a new cyclical peak, the employment picture remains very strong and
consumer confidence and spending remain high. Despite the strong growth, current
and future inflation both appear to be controlled.

The market for mortgage-backed securities (MBS) outperformed U.S.
Treasuries for the twelve months ended December 31, 1997. For the period, the
MBS market as measured by the LEHMAN BROTHERS MORTGAGE INDEX posted a 9.48%
total return versus the 9.20% return of the MERRILL LYNCH 5-7 YEAR TREASURY
INDEX. Demand for mortgage securities was largely concentrated in the first half
of 1997, when MBS decisively outperformed Treasuries due to low interest rate
volatility and relatively stable mortgage prepayment activity. However, mortgage
rates fell below the critical 7% threshold toward year-end, causing concerns
that increased refinancing activity would negatively impact the performance of
mortgage securities.

A three-year trend of positive performance for investment grade corporates
ended abruptly in the fourth quarter of 1997 due to the Asian crisis. The
financial turmoil in Asia caused a decline in credit quality ratings and created
selling pressure for Asian Yankee bonds. Domestic corporate bonds fared better,
but the potential for lower corporate earnings and

<PAGE>

a large influx of new issues into the market caused yields to rise. As a result,
corporates underperformed Treasuries in 1997 for only the second time in the
past decade. With the U.S. economy remaining firm, domestic corporate bond
fundamentals remain fairly positive. At wider spread levels, we see value in
higher rated and improving domestic credits.

THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY

BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market strategy and the Trust's investment objectives. The
following chart compares the Trust's current and December 31, 1996 asset
composition.

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THE BLACKROCK ADVANTAGE TERM TRUST INC.
-----------------------------------------------------------------------------
COMPOSITION DECEMBER 31, 1997 DECEMBER 31, 1996
-----------------------------------------------------------------------------
Zero-Coupon Bonds 39% 33%
-----------------------------------------------------------------------------
Corporate Bonds 12% 16%
-----------------------------------------------------------------------------
Mortgage Pass-Throughs 9% 10%
-----------------------------------------------------------------------------
Agency Multiple Class Mortgage
Pass-Throughs 8% 10%
-----------------------------------------------------------------------------
U. S. Government Securities 8% 10%
-----------------------------------------------------------------------------
Inverse Floating Rate Mortgages 7% 0%
-----------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 6% 4%
-----------------------------------------------------------------------------
Stripped Mortgage-Backed Securities 4% 5%
-----------------------------------------------------------------------------
Taxable Municipal Bonds 4% 5%
-----------------------------------------------------------------------------
Non-Agency Multiple Class Mortgage
Pass-Throughs 2% 3%
-----------------------------------------------------------------------------
CMO Residuals 1% 4%
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
RATING % OF CORPORATES
--------------------------------------------
CREDIT RATING DECEMBER 31, 1997 DECEMBER 31, 1996
-----------------------------------------------------------------------------
AA or equivalent 3% 0%
-----------------------------------------------------------------------------
A or equivalent 41% 46%
-----------------------------------------------------------------------------
BBB or equivalent 51% 54%
-----------------------------------------------------------------------------
BB or equivalent 5% 0%
-----------------------------------------------------------------------------

We continued to focus on securities with final maturity dates (or "bullet"
maturities) that match the Trust's termination date. Specifically, the Trust has
seen a material increase in its investment grade corporate bond allocation over
the past year. We believe that the Trust's stake in bullet maturity securities,
particularly corporate bonds, will aid the Trust in reaching its target
termination value of $10.00 per share while maintaining a relatively stable
dividend stream. The Trust has been a net seller of mortgage-backed securities,
whose cash flows and maturity dates can change in response to interest rate
movements. Mortgage bonds tend to prepay when interest rates fall, which forces
the bondholder to reinvest cash flows at lower yields. Conversely, the average
maturities of mortgage bonds can extend when interest rates rise.

<PAGE>

We appreciate your investment in The BlackRock Advantage Term Trust Inc.
and look forward to managing the fund 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 weren't answered
in this report. Additionally, you can reach us via e-mail at
[email protected]

Sincerely,

/s/Robert S. Kapito /s/Michael P. Lustig
- ------------------- --------------------

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

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

<PAGE>

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THE BLACKROCK ADVANTAGE TERM TRUST, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS -- 146.7%
MORTGAGE PASS-THROUGHS -- 12.4%
Federal Home Loan Mortgage
Corporation,
$1,709+ 6.50%, 8/01/25 - 11/01/25 .............. $ 1,688,854
4,920+ 9.50%, 1/01/05, 15 Year ................ 5,106,607
975 Federal Housing Administration,
Alzheimer Care Center,
8.125%, 12/25/37 ....................... 1,045,438
16 Federal National Mortgage
Association,
9.50%, 7/01/20 ......................... 17,323
Government National Mortgage
Association,
3,614+ 8.00%, 1/15/26 - 7/15/27 ............... 3,745,847
855 9.50%, 1/15/17 - 5/15/20 ............... 923,118
-----------
12,527,187
-----------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 21.3%
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
3,200+ Series 1295, Class 1295-JB,
3/15/07 .............................. 2,977,600
1,414++ Series 1490, Class 1490-SE,
4/15/08, (ARM) ....................... 1,339,272
908 Series 1541, Class 1541-TB,
7/15/23, (ARM) ....................... 786,181
460 Series 1655, Class 1655-SB,
12/15/08, (ARM) ...................... 415,610
433 Series 1666, Class 1666-SB,
1/15/24, (ARM) ....................... 408,530
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
3,488 Trust 1992-129, Class 129-J,
7/25/20, (ARM) ....................... 3,097,763
259 Trust 1993-59, Class 59-SC,
11/25/07, (ARM) ...................... 260,845
1,444 Trust 1993-193, Class 193-E,
9/25/23 .............................. 587,592
191 Trust 1993-193, Class 193-PC,
9/25/23 .............................. 180,232
1,855 Trust 1993-212, Class 212-SA,
11/25/08, (ARM) ...................... 1,783,012
1,000 Trust 1994-13, Class 13-SM,
2/25/09, (ARM) ....................... 915,130
1,590 Trust 1994-37, Class 37-SC,
3/25/24, (ARM) ....................... 1,429,090
4,462+ Trust 1994-72, Class 72-L,
4/25/24 .............................. 4,343,254
2,500 Trust 1997-50, Class 50-HK,
8/25/27, (I) ......................... 974,219
A2 2,000 NYC Mortgage Loan Trust,
Series 1996, Class A2,
6/25/11 ............................... 2,020,000
-----------
21,518,330
-----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 12.0%
Credit Suisse First Boston
Mortgage Securities Corporation,
A 1,000 Series 1995-AEW 1, Class C,
7.458%, 11/25/27 ........................ 1,012,500
AAA 8,952 Series 1997, Class C1,
6/20/29 (I) ............................. 1,011,257
BBB 1,000 DLJ Mortgage Acceptance
Corporation, Series 1997-CF,
Class B1, 4/15/07 ....................... 1,069,887
AAA 1,000 Goldman Sachs Mortgage
Securities Corporation,
Series 1996- PL, Class A2,
7.41%, 2/15/27 ........................... 1,047,507
AAA 909 LTC Commercial Mortgage
Corporation, Series 1996-1,
Class 1-A,
7.06%, 4/15/28 ............................ 922,004
Merrill Lynch Mortgage Investors
Incorporated, Multiclass
MORTGAGE PASS-THROUGH
Certificates,
BBB 1,000 Series 1995-C1, Class C,
7.93%, 5/25/15 ........................... 1,032,722
BBB 500 Series 1996-C1, Class D, 7.42%,
4/25/28 .................................. 508,120
AAA 12,000 Series 1997-C2, Class C2,
1.29%, 12/10/29, (I/O) ................... 982,500
Morgan Stanley Capital 1
Incorporated, Commercial
Mortgage Pass-Through Certificates
BBB 1,000 Series 1995-GAL1, Class D,
8.25%, 8/15/27 ............................. 1,060,778
AAA 3,651 Series 1997-HF1, Class X,
1.98%, 6/15/17, (I/O) ...................... 351,605
AAA 2,635 Sears Mortgage Securities
Corporation, Series 1993-7,
Class A15,
9.41%, 4/25/08, (ARM) ....................... 2,555,935

See Notes to Financial Statements.

5
<PAGE>

- --------------------------------------------------------------------------------
PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- (CONT'D)
AAA $ 500 Structured Asset Securities
Corporation, Series 1996-CFL,
Class B,
6.303%, 2/25/28 .............................. $ 496,541
-----------
12,051,356
-----------
CORPORATE BONDS -- 18.0%
FINANCE & BANKING -- 9.4%
A3@ 1,000 American Savings Bank,
6.625%, 2/15/06 ................................ 1,001,579
1,556 Equitable Life Assurance Society
USA,
Zero Coupon,
6/01/98 - 12/01/05 ............................. 1,023,223
Ba1 1,000 Macsaver Financial Services Inc.,
7.875%, 8/01/03 ................................ 927,236
Baa1 1,900 PaineWebber Group Inc.,
7.875%, 2/15/03 ................................ 2,004,386
Salomon SmithBarney, Inc.,
A2 1,000 6.75%, 1/15/06 ................................. 1,008,760
AA 486 7.15%, 3/25/25 ................................. 499,276
A2 1,425 7.98%, 3/01/00 ................................. 1,473,550
A 1,485 Transamerica Finance Corporation,
6.75%, 6/01/00 ................................. 1,502,538
-----------
9,440,548
-----------
INDUSTRIALS -- 3.5%
BBB- 1,000 Burlington Industries, Inc.,
7.25%, 9/15/05 ................................. 988,412
Ba1 1,000@@ Tele-Communications, Inc.,
8.25%, 1/15/03 ................................. 1,067,890
Union Pacific Corp.,
A3 2,198 Zero Coupon,
5/01/98 - 5/01/05 .............................. 1,504,342
-----------
3,560,644
-----------
UTILITIES -- 2.1%
BBB- 1,000 360 Communications Co.,
7.50%, 3/01/06 ................................. 1,045,910
Baa3 1,000 NRG Energy, Inc.,
7.625%, 2/01/06 ................................ 1,045,694
-----------
2,091,604
-----------
YANKEE -- 3.0%
Baa3 1,000 Empresa Electric Guacolda SA,
7.95%, 4/30/03 ................................. 1,024,689
Baa1 1,000 Empresa Electric Pehuhuenche,
7.30%, 5/01/03 ................................. 1,011,590
A3 1,000 Israel Electric Corp. Ltd.,
7.25%, 12/15/06 ................................ 1,020,100
-----------
3,056,379
-----------
Total Corporate Bonds 18,149,175
-----------
ASSET-BACKED SECURITIES -- 1.5%
Structured Mortgage Asset
Residential Trust,
AAA 965 1997-3, 8.724%, 4/15/06 ........................ 981,609
AAA 481 1997-4, 7.85%, 9/15/01 ......................... 484,192
-----------
1,465,801
-----------
STRIPPED MORTGAGE-BACKED
SECURITIES -- 6.3%
Collateralized Mortgage Obligation,
AAA 1,058 TRUST 26, CLASS A, 4/23/17, (P/O) ................ 912,687
AAA 84 Trust 29, Class A, 5/23/17, (P/O)65,211
Federal Home Loan Mortgage
Corporation,
5,614 Series G-25, Class S,
8/25/06, (I/O) ............................... 218,600
2,133 Series 1700, Class 1700-B,
7/15/23, (P/O) ............................... 2,058,547
1,500 Series 1946, Class 1946-N,
10/15/08, (P/O) .............................. 1,066,875
1,500 Series 1946, Class 1946-SN,
10/15/08, (I/O) .............................. 368,437
39,093 Series 1995, Class 1995-SJ,
10/15/27, (I/O) .............................. 146,597
Federal National Mortgage
Association,
1,406 Trust 1993-225, Class 225-ME,
11/25/23, (P/O) .............................. 496,494
309 Trust 1993-243, Class 243-C,
11/25/23, (P/O) .............................. 260,738
945 Trust 1997-85, Class 85-LE,
10/25/23, (P/O) .............................. 747,436
-----------
6,341,622
-----------
U.S. GOVERNMENT SECURITIES -- 12.0%
1,735 Small Business Administration,
Participation Certificates,
Series 1995-10, Class 10-C,
7.35%, 8/01/05 ............................... 1,803,855
10,000+ U.S. Treasury Notes,
6.625%, 3/31/02 .............................. 10,323,400
-----------
12,127,255
-----------

See Notes to Financial Statements.

<PAGE>

ZERO COUPON BONDS -- 56.5%
Aid to Israel,
$12,407 2/15/05 - 8/15/05 ......................... $ 8,029,078
Government Trust Certificates,
5,220 Class 2F, 5/15/05 ......................... 3,401,822
13,760 Class T-1, 5/15/05 ........................ 8,877,814
22,926++ Resolution Funding Corporation,
7/15/05 ................................... 14,765,261
6,216 Tennessee Valley Authority,
11/01/05 .................................. 3,908,870
18,000++ U.S. Treasury Strips,
Zero Coupon, 11/15/05 ..................... 11,448,720
10,000 Vanguard Prime Money Market Strip,
12/31/04 .................................. 6,463,000
-----------
56,894,565
-----------
TAXABLE MUNICIPAL BONDS -- 6.0%
AA A 1,000 Alameda County California
Pension Obligation,
Zero Coupon, 12/01/05 ..................... 597,340
AA A 1,000 Alaska Energy Power Authority Revenue,
Zero Coupon, 7/01/05 ...................... 715,940
AA A 1,533 Kern County California
Pension Obligation,
Zero Coupon, 2/15/98 - 8/15/05 ............ 1,041,080
Long Beach California
Pension Obligation,
AA A 1,543 Zero Coupon, 3/01/98 - 9/01/05 ............ 1,046,346
AA A 500 7.09%, 9/01/09 527,985
Los Angeles County California
Pension Obligation,
AA A 1,508 Zero Coupon, 6/30/98 - 6/30/05 ............ 1,004,608
AA A 1,000 8.62%, 6/30/06 ............................ 1,150,280
-----------
6,083,579
-----------
COLLATERALIZED MORTGAGE
OBLIGATION RESIDUAL** -- 0.7%
10 Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation Certificates,
Series 1035, Class 1035-R,
1/15/21 ................................... 751,500
----------
Total long-term investments
(cost $136,407,221) ....................... 147,910,370
-----------
SHORT-TERM INVESTMENTS -- 0.5%
DISCOUNT NOTES--0.5%
550 Federal Home Loan Mortgage
Corporation,
5.75%, 1/02/98
(cost $549,908) ........................... 549,908
CONTRACTS #
-----------
PUT OPTIONS PURCHASED--0.0%
10 U.S. Treasury Note, 6.625% 5/31/07
@ 100 expiring 3/19/98
(cost $149,219) ........................... 2,800
-----------
Total short-term investments
(cost $699,127) ........................... 552,708
-----------
Total investments before investment
sold short
(cost $137,106,348) ........................ 148,463,078
PRINCIPAL
AMOUNT
(000) INVESTMENT SOLD SHORT -- (5.2%)
--------
$5,000 U.S. Treasury Bonds,
6.375%, 8/15/27
(proceeds $5,146,680) ...................... (5,273,450)
-----------
Total investments, net of
investment sold
short -- 142.0%
(cost $131,959,668) ........................ 143,189,628
Other liabilities in excess of other
assets -- (42.0%) .......................... (42,356,724)
------------
NET ASSETS -- 100% $100,832,904
=============

- -----------
* Using the higher of Standard & Poor's or Moody's rating.
** Illiquid securities representing 3.4% of portfolio assets.
# One contract equals 100,000 face value.
+ (Partial) principal amount pledged as collateral for reverse repurchase
agreements.
++ Entire principal amount pledged as collateral for reverse repurchase
agreements.
@ (Partial) principal amount pledged as collateral for futures transactions.
@@ Entire principal amount pledged as collateral for futures transactions.

------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM -- Adjustable Rate Mortgage.
I -- Denotes a CMO with Interest only characteristics.
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, 1997
- --------------------------------------------------------------------------------

ASSETS
Investments, at value
(cost $137,106,348) (Note 1) ....... $148,463,078
Cash ................................. 187,872
Deposits with brokers as
collateral for Investment sold short
(Note 1) ............................ 5,362,500
Receivable for investments sold ...... 1,024,996
Interest receivable .................. 813,452
------------
155,851,898
------------
LIABILITIES
Reverse repurchase agreements (Note 4) 48,274,880
Investment sold short, at value
(proceeds $5,146,680) Note 1) ...... 5,273,450
Dividends payable .................... 495,344
Accrued excise tax ................... 148,763
Interest payable ..................... 120,397
Payable for investments purchased .... 114,071
Due to broker-variation margin ....... 99,637
Advisory fee payable (Note 2) ........ 43,034
Administration fee payable (Note 2) .. 8,607
Unrealized depreciation on
interest rate swaps (Notes 1 and 3) 5,228
Other accrued expenses ............... 435,583
------------
55,018,994
------------
NET ASSETS ........................... $100,832,904
============
Net assets were comprised of:
Common stock, at par (Note 5) ...... $ 95,107
Paid-in capital in excess of par ... 87,551,396
------------
87,646,503
Undistributed net investment income 3,770,414
Accumulated net realized loss ...... (1,596,340)
Net unrealized appreciation ........ 11,012,327
------------
Net assets, December 31, 1997 ...... $100,832,904
============
Net asset value per share:
($100,832,904 / 9,510,667 shares of
common stock issued and outstanding) $10.60
======

NET INVESTMENT INCOME
Income
Interest earned (including net discount
accretion of $3,770,547 and net of interest
expense of $2,439,318) ............... $ 8,280,412
-----------
Operating expenses
Investment advisory ................ 489,035
Reports to shareholders ............ 118,000
Administration ..................... 97,759
Custodian .......................... 30,000
Transfer agent ..................... 25,000
Audit .............................. 18,000
Directors .......................... 18,000
Miscellaneous ...................... 65,442
-----------
Total operating expenses ......... 861,236
-----------
Net investment income before excise tax 7,419,176
Excise tax ....................... 136,000
-----------
Net investment income ................ 7,283,176
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ........................ 2,519,213
Futures ............................ (2,277,122)
Short Sales ........................ 16,918
-----------
259,009
-----------
Net change in unrealized appreciation
(depreciation) on:
Investments ........................ 3,832,487
Futures ............................ (494,012)
Short Sales ........................ (126,770)
Interest RateSwaps ................. (5,228)
-----------
3,206,477
-----------
Net gain on investments .............. 3,465,486
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............ $10,748,662
===========

See Notes to Financial Statements.

8
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH
Cash flows used for operating activities:
Interest received ............................... $ 6,756,784
Operating expenses and excise taxes pai ......... (603,107)
Interest expense paid ........................... (2,477,233)
Purchase of short-term
portfolio investments, net .................... 1,809,988
Purchase of long-term portfolio
investments .................................... 65,732,188)
Proceeds from disposition of long-term
portfolio investments ......................... 47,433,002
Variation margin on futures ..................... (2,570,666)
------------
Net cash flows used for operating
activities .................................... (15,383,420)
------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements ......... 21,342,255
Cash dividends paid ........................... (5,943,871)
------------
Net cash flows provided by financing
activities .................................... 15,398,384
------------
Net increase in cash ............................ 14,964
Cash at beginning of year ....................... 172,908
------------
Cash at end of year ............................. $ 187,872
============
RECONCILIATION OF NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS TO NET
CASH FLOWS USED FOR OPERATING ACTIVITIES
Net increase in net assets resulting
from operations ................................. $ 10,748,662
------------
Increase in investments ........................... (21,153,053)
Net realized gain ................................. (259,009)
Increase in unrealized appreciation ............... (3,206,477)
Increase in receivable for investments sold ....... (1,024,562)
Increase in interest receivable margin ............ 200,468
Increase in deposits with brokers for
investments sold short .......................... (5,362,500)
Increase in unrealized depreciation of
interest rate swap .............................. 5,228
Increase in payable for investments sold .......... 5,273,450
Decrease in interest payable ...................... (37,915)
Decrease in payable for investments purch ......... (769,442)
Increase in accrued expenses and other
liabilities ..................................... 394,129
------------
Total adjustments ............................... (26,132,082)
------------
Net cash flows used for operating activities ...... $(15,383,420)

YEAR ENDED DECEMBER 31,
----------------------
1997 1996
----- -----
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment income ................... $ 7,283,176 $ 5,415,374
Net realized gain (loss) on
investments, short sales
and futures ........................... 259,009 (3,553,823)
Net change in unrealized
appreciation (depreciation)
on investments, short
sales, interest rate swaps
and futures ........................... 3,206,477 387,245
------------ ------------
Net increase in net assets
resulting from operations ............. 10,748,662 2,248,796
Dividends from net investment
income ................................ (5,943,871) (5,943,922)
------------ ------------
Total increase (decrease) ............. 4,804,791 (3,695,126)
NET ASSETS
Beginning of year ......................... 96,028,113 99,723,239
------------ ------------
End of year ............................... $100,832,904 $ 96,028,113
============ ============

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK ADVANTAGE TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 1993
------ ----- ----- ---- ----
<S> <C> <C> <C> <C> <C>

PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year ................................ $ 10.10 $10.49 $ 9.00 $10.73 $10.43
------- ------ ------ ------ ------
Net investment income (net of $.26, $.22, $.47, $.25,
and $.16, respectively, of interest expense) ................. 0.76 .57 .74 .53 .56
Net realized and unrealized gain (loss) on securities .......... 0.36 (.33) 1.42 (1.53) .57
------- ------ ------ ------ ------
Net increase (decrease) from investment operations ................ 1.12 .24 2.16 (1.00) 1.13
------- ------ ------ ------ ------
Dividends from net investment income .............................. (0.62) (.63) (.67) (.73) (.83)
------- ------ ------ ------ ------
Net asset value, end of year* ..................................... $ 10.60 $10.10 $10.49 $ 9.00 $10.73
======= ====== ====== ====== ======
Market value, end of year* ........................................ $ 9.375 $8.625 $8.625 $ 7.75 $10.75
======= ====== ====== ====== ======
TOTAL INVESTMENT RETURN+: ......................................... 15.79% 7.30% 20.31% (22.16%) 9.33%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses # .............................................. 0.88% 0.91% 1.00% 1.06% 1.07%
Net investment income ............................................. 7.47% 5.80% 7.53% 5.38% 5.09%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ................................. $ 97,493 $93,370 $93,044 $92,932 $102,302
Portfolio turnover ................................................ 31% 76% 94% 142% 18%
Net assets, end of year (in thousands) ............................ $100,833 $96,028 $99,723 $85,567 $102,094
Reverse repurchase agreements outstanding,
end of year (in thousands) ..................................... $ 48,275 $26,933 $48,581 $42,176 $ 50,000
Asset coverage++ .................................................. $ 3,089 $ 4,565 $ 3,053 $ 3,029 $ 3,039
</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 3.39%, 3.06%, 5.86%, 3.59%, and 2.58%, for the years
indicated above, respectively. The ratios of operating expenses, including
interest expense and excise tax, to average net assets were 3.52%, 3.52%,
5.97%, 3.66%, and 2.74% 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.

See Notes to Financial Statements.

<PAGE>

- -------------------------------------------------------------------------------
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 shortly before
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 between securities,
observed in the market 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 60 days or less are valued at amortized
cost, if their term to maturity from date of purchase is 60 days or less.
Short-term securities with a term to maturity greater than 60 days from the date
of purchase are valued at current market quotations until maturity.

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 commence 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. 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 the form of interest on the loan. The Trust also
continues to receive interest on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Trust. The Trust did not engage in
securities lending during the year ended December 31, 1997.

INTEREST RATE SWAPS: In a simple interest rate swap, one investor pays a
floating rate of interest on a notional principal amount and receives a fixed
rate of interest on the same notional principal amount for a specified period of
time. Alternatively, an investor may pay a fixed rate and receive a floating
rate. Rate swaps were conceived as asset/liability management tools. In more
complex swaps, the notional principal amount may decline (or amortize) over
time.

During the term of the swap, changes in the value of the swap are recognized
as unrealized gains or losses by "marking-to-market" to reflect the market value
of the swap. When the swap is terminated, the Trust will record a realized gain
or loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Trust's basis in the contract, if any.

12
<PAGE>

The Trust is exposed to credit loss in the event of non-performance by the
other party to the mortgage swap. However, the Trust does not anticipate
non-performance by any counterparty.

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.

RECLASSIFICATION OF CAPITAL ACCOUNTS: The Trust accounts for and reports
distributions to shareholders in accordance with the American Institute
ofCertified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, CapitalGain, and
Return ofCapital Distributions by InvestmentCompanies.The effect caused by
applying this statement was to decrease paid-in capital and increase
undistributed net investment income by $136,000 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 Investments Fund
Management, LLC ("PIFM"), an indirect, wholly-owned subsidiary of The Prudential
Insurance Co. of America.

The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.50% of the Trust's average weekly net
assets. The administration fee paid to PIFM is also computed weekly and payable
monthly at an annual rate of 0.10% of the Trust's average weekly net assets
through 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. PIFM pays occupancy and certain clerical
and accounting costs of the Trust. The Trust bears all other costs and expenses.

NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
and dollar rolls, for the year ended December 31, 1997 aggregated $64,962,746
and $42,819,998, 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, 1997, the Trust
held 3.4% of its portfolio assets in illiquid securities.

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

The federal income tax basis of the Trust's investments at December 31, 1997
was substantially the same as the basis for financial reporting and,
accordingly, net unrealized appreciation for federal income tax purposes was
$11,337,458 (gross unrealized appreciation-$11,719,273; gross unrealized
depreciation-$381,815).

<PAGE>

For federal income tax purposes, the Trust had a capital loss carryforward at
December 31, 1997 of approximately $3,638,600, of which $36,900 expires in 2001,
$3,385,900 expires in 2004 and $215,800 expires in 2005. 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, 1997, the Trust entered into financial
futures contracts. Details of the open contracts at December 31, 1997 are as
follows:

VALUE AT VALUE AT
NUMBER OF EXPIRATION TRADE DECEMBER 31, UNREALIZED
CONTRACTS TYPE DATE DATE 1997 DEPRECIATION
- ---------- ----- -------- ------- ------------- -------------
SHORT POSITIONS
100 30-yr. T-bond Mar 1998 $12,046,875 $11,899,550 $(147,325)
129 10-yr. T-note Mar 1998 14,468,156 14,403,076 (65,080)
---------
$(212,405)
=========

The Trust entered into two interest rate swaps. Under the first interest rate
swap, the Trust pays the fixed rate and receives the floating rate based on the
notional amount. Under the second interest rate swap, the Trust pays the
floating rate and receives the fixed rate based on the notional amounts. Details
of open interest rate swaps at December 31, 1997 are as follows:

NOTIONAL UNREALIZED
AMOUNT FIXED TERMINATION APPRECIATION
(000) TYPE RATE FLOATING RATE DATE (DEPRECIATION)
- ---------- ----- ----- ------------- ----------- --------------
$(25,000) Interest Rate 6.421% 3 month LIBOR 07/27/01 $ (215,010)
36,375 Interest Rate 6.365% 3 month LIBOR 07/27/00 209,782
----------
$ (5,228)
==========

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, 1997 was approximately $42,135,626 at a weighted
average interest rate of approximately 5.60%. The maximum amount of reverse
repurchase agreements outstanding at any month-end during the year ended
December 31, 1997 was $49,303,184 as of July 31, 1997 which was 33.2% 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, 1997.

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, 1997, the Adviser owned 10,667
shares.

<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, 1997, 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, 1997, 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, 1997, 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 13, 1998

<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, 1997.

During the fiscal year ended December 31, 1997, the Trust paid aggregate
dividends of $0.6250 per share from net investment income. For federal income
tax purposes, the aggregate of any dividends from net investment income and
short-term capital gains distributions you received are reportable in your 1997
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 1997 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 1998.

- --------------------------------------------------------------------------------
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 shortly before 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 $55 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 125 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 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.

<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.

18
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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).

<PAGE>

INVERSE-FLOATING RATE
MORTGAGES: Mortgage instruments with coupons that adjust at
periodic intervals according to a formula which
sets inversely with a market level interest rate
index.

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.

20
<PAGE>

- --------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
SUMMARY OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------

TAXABLE TRUSTS
- --------------------------------------------------------------------------------
STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ ------
The BlackRock Income Trust Inc. .......................... BKT N/A
The BlackRock North American Government
Income Trust Inc. ........................................ BNA N/A

TERM TRUSTS
The BlackRock 1998 Term Trust Inc. ....................... BBT 12/98
The BlackRock 1999 Term Trust Inc. ....................... BNN 12/99
The BlackRock Target Term Trust Inc. ..................... BTT 12/00
The BlackRock 2001 Term Trust Inc. ....................... BLK 06/01
The BlackRock Strategic Term Trust Inc. .................. BGT 12/02
The BlackRock Investment Quality Term Trust Inc. ......... BQT 12/04
The BlackRock Advantage Term Trust Inc. .................. BAT 12/05
The BlackRock Broad Investment Grade
2009 Term Trust Inc. .................................. BCT 12/09

TAX-EXEMPT TRUSTS
- --------------------------------------------------------------------------------

STOCK MATURITY
PERPETUAL TRUSTS SYMBOL DATE
------ --------
The BlackRock Investment Quality
Municipal Trust Inc. .................................. BKN N/A
The BlackRock California Investment
Quality Municipal Trust Inc. .......................... RAA N/A
The BlackRock Florida Investment Quality
Municipal Trust ....................................... RFA N/A
The BlackRock New Jersey Investment
Quality Municipal Trust Inc. .......................... RNJ N/A
The BlackRock New York Investment Quality
Municipal Trust Inc. .................................. RNY N/A

TERM TRUSTS
The BlackRock Municipal Target Term Trust Inc. .......... BMN 12/06
The BlackRock Insured Municipal 2008 Term Trust Inc. .... BRM 12/08
The BlackRock California Insured
Municipal 2008 Term Trust Inc. ........................ BFC 12/08
The BlackRock Florida Insured Municipal
2008 Term Trust ....................................... BRF 12/08
The BlackRock New York Insured Municipal
2008 Term Trust Inc. .................................. BLN 12/08
The BlackRock Insured Municipal Term Trust Inc. ......... BMT 12/10

IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE CALL BLACKROCK AT (800) 227-7BFM (7236)
OR CONSULT WITH YOUR FINANCIAL ADVISOR.

<PAGE>

- --------------------------------------------------------------------------------
BLACKROCKFINANCIAL MANAGMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------

BlackRock Financial Management Inc. (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages approximately $55 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 125 institutional clients in the
United States and overseas.

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.

22
<PAGE>

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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.
Walter F. Mondale
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 Investments 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 Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 227-7BFM

Printed on recycled paper

====================
BlackRock
====================
The
Advantage
Term Trust Inc.
====================
Annual Report
December 31, 1997

09247-A10 1