BLACKROCK STRATEGIC TERM TRUST INC, N-30D, 1997-08-27

BLACKROCK STRATEGIC TERM TRUST INC
N-30D, 1997-08-27

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

July 31, 1997

Dear Trust Shareholder:

After experiencing higher interest rates in the face of a resilient stock
market and stronger economic growth for the first few months of 1997, bond
investors were comforted by more moderate economic data released during the
second quarter which allowed the bond market to recapture some of its losses.

Our outlook for the bond market is cautiously optimistic. Over the short
term, we believe that the recent rally may continue, since inflation news has
been positive and U.S. securities appear cheap relative to their global
counterparts. Additionally, Fed Chairman Greenspan appears to be comfortable
allowing the economy to expand in the absence of rising inflationary pressures.
Thus, we do not foresee another tightening in the immediate future in the
absence of a visible inflation shock. However, recent wage increases, the
buoyant stock market and record levels of consumer confidence could lead to
stronger consumer spending and overall economic growth in the third quarter.
Therefore, an uninterrupted decline in yields is by no means a certainty.

This report provides the Trust's portfolio managers an opportunity to
provide you with detailed market commentary and to review the major investment
themes of the portfolio over the past six months. We hope that you find this
report informative and look forward to serving your financial needs in the
future.

Sincerely,

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

<PAGE>

July 31, 1997

Dear Shareholder:

We are pleased to present the semi-annual report for The BlackRock
Strategic Term Trust Inc. ("the Trust") for the six months ended June 30, 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 "BGT". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 2002 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:

-----------------------------------------------------
6/30/97 12/31/96 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $8.125 $8.00 1.56% $8.125 $7.75
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NET ASSET VALUE (NAV) $9.30 $9.15 1.64% $9.33 $9.07
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5-YEAR U.S. TREASURY NOTE 6.39% 6.21% +18 bp 6.85% 6.06%
- --------------------------------------------------------------------------------

THE FIXED INCOME MARKETS

The strong economic growth witnessed during the fourth quarter of 1996
spilled over into the first quarter of 1997. Although inflationary measures such
as commodity, producer and consumer prices remained relatively stable, labor
markets continued to strengthen. In an effort to subdue this growth, the Federal
Reserve raised the Federal funds rate by 25 basis points at their March 25
policy meeting as a pre-emptive strike against inflation.

After expanding at a blistering pace of 5.9% during the first quarter, the
U.S. economy's growth rate slowed in the second quarter of 1997. Signs of an
economic slowdown were prevalent in a broad range of industrial and consumer
indicators, including lower factory orders, decreased consumer spending, and
higher inventories. In addition, inflationary forces remained benign according
to year-over-year comparisons for the consumer and producer indices. These
indicators allowed the Federal Reserve to maintain interest rate levels at their
May 20 and July 2 policy meetings and wait for more definite signs of inflation
before increasing interest rates.

The market for mortgage-backed securities (MBS) significantly outperformed
the broader investment grade bond market for the six months ended June 30, 1997.
Strong investor demand for higher yielding "spread product", which offers a
yield premium over comparable maturity Treasury securities, boosted prices in
the mortgage sector. For the period, the MBS market as measured by the LEHMAN
BROTHERS MORTGAGE INDEX posted a 3.91% total return versus the 3.11% return of

<PAGE>

the LEHMAN BROTHERS AGGREGATE INDEX. In the corporate bond market, strong
fundamentals created by steady economic growth, low inflation, and rising
corporate profits drove the sector to outperform comparable maturity Treasuries.
Corporate yields rose during March and April as interest rates drifted higher
and the stock market faltered. However, a benign inflationary outlook and strong
corporate earnings led to a reversal of performance in May and June.

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, 1996 asset
composition.

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THE BLACKROCK STRATEGIC TERM TRUST INC.
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COMPOSITION JUNE 30, 1997 DECEMBER 31, 1996
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Taxable Zero Coupon Bond 26% 26%
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Multiple Class Mortgage Pass-Throughs 19% 16%
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Stripped Mortgage-Backed Securities 14% 12%
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Corporate Bonds 13% 15%
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U.S. Government Securities 7% 5%
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Mortgage Pass-Throughs 6% 8%
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Municipal Zero Coupon Bonds 5% 4%
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Commercial Mortgage-Backed Securities 5% 4%
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Asset-Backed Securities 2% 2%
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Adjustable Rate Mortgages 1% 6%
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CMO Residuals 1% 1%
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FNMA Project Loans 1% 1%
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STANDARD & POOR'S/MOODY/FITCH'S
CREDIT RATING JUNE 30, 1997 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
AA or Equivalent 5% 8%
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A or Equivalent 36% 35%
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BBB or Equivalent 59% 57%
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In seeking the primary investment objective of returning the initial offer
price upon maturity, the Trust continued to emphasize securities offering both
attractive yield spreads over Treasury securities and a maturity date matching
the Trust's termination date of December 31, 2002. To that end, the Trust
remained primarily invested in investment grade corporate bonds, U.S. Treasury
securities, zero coupon bonds and well-structured mortgage and asset-backed
securities (ABS). Though the Trust made no major changes to the portfolio's
composition over the period, ABS exposure was modestly increased. ABS typically
offer more predictable maturity dates and cash flows than mortgage-backed
securities in addition to higher yields than Treasuries. The Trust also trimmed
its zero coupon bond holdings, which performed well in response to falling
interest rates, and reallocated those assets into coupon-bearing securities such
as Treasuries.

<PAGE>

We appreciate your continued confidence and look forward to managing The
BlackRock Strategic 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.

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

<PAGE>

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THE BLACKROCK STRATEGIC TERM TRUST, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
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LONG-TERM INVESTMENTS -- 147.7%
MORTGAGE PASS-THROUGHS -- 9.6%
Federal Home Loan Mortgage
Corporation,
$19,261 6.50%, 11/01/25 ........................ $18,448,465
801 7.50%, 11/01/10, 15 Year ............... 812,588
19 7.50%, 02/01/15 ........................ 19,236
9,363 8.00%, 09/01/23 ........................ 9,582,409
1,363 9.00%, 11/01/05, 15 Year ............... 1,455,208
Federal Housing Administration,
5,722 7.25%, 01/01/23, Project 797 ........... 5,708,116
Federal National
Mortgage Association,
6,029 7.50%, 06/01/08, 15 Year ............... 6,115,726
2,703 8.00%, 06/01/22 ........................ 2,762,635
2,554 8.50%, 01/01/25 ........................ 2,650,268
Government National
Mortgage Association,
1,579 7.00%, 10/15/22 ........................ 1,549,457
1,831 8.50%, 04/15/21 ........................ 1,902,434
106 9.00%, 11/15/16 ........................ 111,620
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51,118,162
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COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 8.1%
AAA 2,600 Aetna Commercial Mortgage
Trust, Series 1995-C5,
Class B, 12/26/30 ...................... 2,553,153
AAA 52,775 CS First Boston Mortgage Sec.,
Series 1997-C1, Class C1-AX,
04/20/22 ............................... 6,060,879
BBB+ 4,000 Federal Deposit Ins. Corp. Trust,
Series 1994-C1,
Class IIF, 09/25/25 .................... 4,157,500
AAA 4,584 LTC Commercial MPT Cert.
Series 1996-1, Class A-144A,
04/15/28 ............................... 4,590,772
A 2,290 Merrill Lynch Mtg. Invs. Co.,
Trust 1995-1,
Class C1, 05/25/13 ..................... 2,317,643
AAA 3,131 Morgan Stanley Capital I,
Series 1995-GAL1,
Class A1, 08/15/27 ..................... 3,155,698
Paine Webber Mortgage
Acceptance Corp.,
AAA 2,000 Series 1995-M1, Class M1-A,
01/15/07 ............................. 1,989,260
BBB 1,656 Series 1995-M1, Class M1-D,
01/15/07 ............................. 1,654,788
Resolution Trust Corp.,
A 5,908 Series 1993-C3, Class C3-D,
12/25/24 ............................. 5,879,349
AA 4,000 Series 1994-C1, Class C1-C,
06/25/26 ............................. 4,082,486
AA 3,000 Salomon Brothers Mtg Sec. Vii,
Series 1997-TZH,
Class TZH-A1, 03/25/22 ................. 3,037,500
AAA 3,925 Structured Asset Securities
Corp., Series 1996-CFL,
Class B, 02/25/28 ...................... 3,841,769
-----------
43,320,797
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 30.4%
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
3,088 Series 39, Class 39-J,
03/25/24 (I) ........................... 552,689
22,040++ Series 90, Class 90-G,
10/15/20 ............................... 22,774,152
3,000 Series 1218, Class 1218-G,
05/15/14 ............................... 2,880,840
5,000+ Series 1295, CLASS 1295-JB,
03/15/07 ............................... 4,454,200
5,505 Series 1379, Class 1379-FB,
08/15/18 (I) ........................... 1,156,530
739 Series 1407, Class 1407-PO,
01/15/22 ............................... 729,555
1,883 Series 1488, Class 1488-F,
09/15/06 ............................... 1,814,496
1,625 Series 1488, Class 1488-PF,
09/15/06 ............................... 1,621,848
2,780 Series 1577, Class 1577-A,
11/15/22 ............................... 2,727,950
1,704 Series 1590, Class 1590-K
10/15/23 ............................... 1,692,529
1,598 Series 1602, Class 1602-Y,
07/15/22 ............................... 1,479,048
3,366++ Series 1603, Class 1603-MB,
10/15/23 (ARM) ......................... 3,082,726
4,973 Series 1626, Class 1626-PV,
12/15/08 (I) ........................... 758,455
2,067 Series 1662, Class 1662-P,
11/15/07 (I) ........................... 456,315
1,571 Series 1675, Class 1675-SB,
08/15/23 ............................... 1,468,848
29,836 Series 1954, Class 1954-MD,
03/15/16 (I) ........................... 4,270,208
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
155 Trust 1991-146, Class 146-SB,
10/25/06 (ARM) ......................... 153,965

10,000+ TRUST 1992-43, CLASS 43-E,
04/25/22 ............................... 9,982,800

See Notes to Financial Statements.

<PAGE>

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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
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$ 5,010+ Trust 1992-129, Class 129-G,
06/25/18 ............................... $ 4,561,355
2,000 Trust 1992-155, Class 155-SB,
12/25/06 (ARM) ......................... 2,138,800
35,550++ Trust 1992-156, Class 156-H,
04/25/06 ............................... 31,935,632
856 TRUST 1992-209, CLASS 209-SB,
04/25/07 ............................... 826,795
1,469 Trust 1993-17, Class 17-SH,
04/25/23 (ARM) ......................... 879,348
13,532 Trust 1993-26, Class 26-PT,
12/25/17 (I) ........................... 2,279,625
3,376 Trust 1993-71, Class 71-SB,
06/25/07 (ARM) ......................... 3,056,370
10,000 Trust 1993-92, Class 92-F,
06/25/23 (I) ........................... 5,111,290
9,800+ Trust 1993-124, Class 124-D,
08/25/22 (P) ........................... 8,737,288
536 Trust 1993-132, Class 132-CA,
10/25/22 (P) ........................... 358,533
6,244+ Trust 1993-170, Class 170-SA,
09/25/08 (ARM) ......................... 6,023,057
5,000 Trust 1993-245, Class 245-JA,
03/25/19 (I) ........................... 675,900
4,750+ Trust 1994-M1, CLASS M1-B,
10/25/23 Multifamily ................... 4,680,234
2,205 Trust 1994-40, Class 40-H,
10/25/20 ............................... 2,135,190
12,937 Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ......................... 4,410,595
31,374 Trust 1997-30, Class 30-I,
01/15/23 (I) ........................... 10,314,269
5,647 Trust 1997-32, Class 32-ML,
02/25/27 (P) ........................... 4,768,877
3,835 Trust 1997-35, Class 35-PK,
09/18/21 (I) ........................... 588,466
38,510 Trust 1997-50, Class 50-HJ,
07/25/05 (I) ........................... 4,404,581
AAA 3,250 Prudential Bache Collateralized
Mortgage Obligation,
Trust 10-H, Class H,
04/01/19 (P) ............................. 2,673,125
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162,616,484
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COLLATERALIZED MORTGAGE
OBLIGATION RESIDUALS ** -- 0.9%
AAA 253 American Housing Trust 8, Senior
Mortgage Pass-Through Certificate,
Series 8, Class R (REMIC),
01/25/21 ............................... 162,229
FEDERAL HOME LOAN MORTGAGE
CORPORATION, MULTICLASS
Mortgage Participation Certificates,
10 Series 1016, Class 1016-R, 11/15/20....... 119,500
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
1 Trust 1991-9, Class 9-R,
02/25/06 ............................... 860,300
1 Trust 1991-9, CLASS 9-RL,
02/25/06 ............................... $ 1,000
2 Trust 1991-48, Class 48-R,
05/25/06 ............................... 2,922,000
2 Trust 1991-48, Class 48-RL,
05/25/06 ............................... 1,000
17 Trust 1991-50, Class 50-R,
05/25/06 ............................... 667,400
AAA 718 Ryland Acceptance Corp,
Collateralized Mortgage Obligation,
Series 1983-R,
Class R, 10/01/18 ........................ 20,000
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4,753,429
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TAXABLE ZERO COUPON
BONDS -- 37.7%
Financing Corp (FICO Strips),
18,000 03/07/02 ............................... 13,263,840
5,311 08/08/02 ............................... 3,804,588
5,400 09/09/02 ............................... 3,849,444
4,472 09/26/02 ............................... 3,175,791
2,992 10/06/02 ............................... 2,121,448
3,667 11/02/02 ............................... 2,587,802
4,535 11/11/02 ............................... 3,196,313
3,616 12/06/02 ............................... 2,537,058
29,300 12/27/02 ............................... 20,479,235
Aid to Israel,
2,932 08/15/02 ............................... 2,101,076
Government Trust Certificates,
5,880 11/15/01 ............................... 4,457,393
25,000 11/15/02 ............................... 17,759,000
U.S. Treasury Strip,
108,000+ 08/15/02 ............................... 78,184,440
61,750++ 11/15/02 ............................... 44,066,035
280 05/15/04 ............................... 180,104
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201,763,567
-----------
UNITED STATES GOVERNMENT
SECURITIES -- 9.9%
United States Treasury Notes,
3,390 6.25%, 02/28/02 ........................ 3,370,914
1,650 6.375%, 04/30/99 ....................... 1,658,762
41,950 6.625%, 03/31/02 ....................... 37,335,220
United States Treasury Bonds,
8,514 6.5%, 11/15/26 ......................... 8,165,437
2,500 6.75%, 08/15/26 ........................ 2,474,225
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53,004,558
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STRIPPED MORTGAGE-BACKED
SECURITIES -- 20.2%
AAA 2,528 BEAR STEARNS SECURED INVESTORS
TRUST 1988-8, CLASS C,
12/01/18 (P/O) ........................... 2,244,244
AAA 3,393 Collateralized Mortgage Obligation
Trust 26, Class A,
04/23/17 (P/O) ........................... 2,768,787

See Notes to Financial Statements.

<PAGE>

Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation
Certificates:
$ 13,084 Series G2, Class G2-M,
07/25/18 (I/O) ......................... $ 2,618,963

4,100 SERIES 186, CLASS 186-J,
08/15/21 (I/O) ......................... 849,473
433 Series 1373, Class 1373-B,
09/15/22 (P/O) ......................... 348,612
1,249 Series 1375, Class 1375-H,
12/15/05 (I/O) ......................... 196,821
24,765 Series 1551, Class 1551-J,
07/15/08 (I/O) ......................... 875,180
6,820+ Series 1570, Class 1570-J,
08/15/23 (P/O) ......................... 5,661,131
8,248 Series 1590, Class 1590-JC,
01/15/19 (I/O) ......................... 495,512
2,269 Series 1597, Class 1597-H,
07/15/23 (P/O) ......................... 803,119
3,901 Series 1662, Class 1662-PO,
01/15/09 (P/O) ......................... 3,007,548
1,520 Series 1900, Class 1900-SD,
01/15/23 (I/O) ......................... 417,525
23,579 Series 1938, Class 1938-SB,
08/15/19 (I/O) ......................... 456,843
149,699 Series 1954, Class 1954-BA,
04/15/21 (I/O) ......................... 2,713,296
92,419 Series 1954, Class 1954-BB,
04/15/21 (I/O) ......................... 1,299,635
39,879 Series 1954, Class 1954-LL,
05/15/21 (I/O) ......................... 573,254
39,879 Series 1954, Class 1954-LM,
05/15/21 (I/O) ......................... 610,640
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REMIC Pass-Through Certificates,
5,071 Trust 116, Class 2,
01/01/17 (I/O) ......................... 1,637,280
1,363 Trust 225, Class 1,
02/01/23 (P/O) ......................... 1,009,777
3,475 Trust 1991-49, Class 49-G,
05/25/06 (I/O) ......................... 939,933
77 Trust 1991-79, Class 79-B,
07/25/98 (P/O) ......................... 72,901
3,026 Trust 1992-82, Class 82-2
05/25/22 (I/O) ......................... 945,737
10,500+ Trust 1993-67, Class 67-B,
12/25/21 (P/O) ......................... 9,011,730
31,131 Trust 1993-G31, Class 31-PS,
08/25/18 (I/O) ......................... 1,083,965
2,617 Trust 1993-92, Class 92-G,
05/25/23 (P/O) ......................... 974,038
5,900 Trust 1993-92, CLASS 92-G,
12/25/19 (I/O) ......................... 1,543,322
9,595 Trust 1993-146, Class 146-C,
05/25/23 (P/O) ......................... 8,275,650
15,220++ Trust 1993-213, Class 213-H,
09/25/23 (P/O) ......................... 12,158,543
1,172 Trust 1993-237, Class 237-E,
11/25/23 (P/O) ......................... 852,944
1,930 Trust 1993-249, CLASS 249-PE,
11/25/23 (P/O) ......................... 1,410,463
4,034 Trust 1994-16, Class 16-D,
11/25/23 (P/O) ......................... 3,399,758
4,448 Trust 1994-24, Class 24-C,
11/25/23 (P/O) ......................... 3,678,299
2,946 Trust 1994-42, Class 42-SO,
03/25/23 (I/O) ......................... 427,226
3,369 Trust 1994-54, Class 54-C,
11/25/23 (P/O) ......................... 2,674,275
550 Trust 1994-54, Class 54-E,
11/25/23 (P/O) ......................... 317,625
19,313+ Trust 1994-61, Class 61-DB,
03/25/24 (P/O) ......................... 12,393,520
6,900 Trust 1994-87, Class 87-E,
03/25/09 (P/O) ......................... 5,220,190
10,147 Trust 1996-55, Class 55-S,
11/25/26 (I/O) ......................... 2,879,241
20,598 Trust 1996-15, Class 15-SG,
08/25/08 (I/O) ......................... 2,252,908
4,484 Trust 1996-24, Class 24-SB,
10/25/08 (I/O) ......................... 880,047
8,499 Trust 1996-24, Class 24-SJ,
01/25/22 (I/O) ......................... 2,395,670
2,000 Trust 1997-7, Class 7-WC
04/25/22 (I/O) ......................... 1,502,000
4,490 Trust 1997-17, Class 17-PJ,
03/18/18 (I/O) ......................... 867,218
24,000 Trust 1997-44, Class 44-SC,
06/25/08 (I/O) ......................... 2,625,000
AAA 1,698 SALOMON BROTHERS MORTGAGE SECURITIES,
Series 87-3, Class B,
10/23/17 (I/O) ........................... 624,160
-----------
107,994,003
-----------

ASSET-BACKED SECURITIES -- 3.5%
AAA 4,281 Chase Manhattan Grantor Trust,
Series 1996-A, Class A,
5.20%, 02/15/02 .......................... 4,235,141
AAA 4,878 Structured Mtg. Asset Residential
Trust (SMART),Series 1997-2,
Class 2, 03/15/06 ........................ 4,853,411
AAA 4,962 Structured Mtg. Asset Residential
Trust (SMART), Series 1997-3,
04/15/06 ................................. 4,986,388
AAA 4,500 Student Loan Marketing Assoc.,
Trust 1995-1, Class 1,
10/25/09 (ARM) ........................... 4,500,000
-----------
18,574,940
-----------

MUNICIPAL BOND -- 7.8%
AAA 1,000 Kern County California,
Pension Series
6.54%, 08/15/02 .......................... 982,870

AAA 3,510 LONG BEACH CALIFORNIA ,
Pension Series
6.56%, 09/01/02 .......................... 3,472,022

See Notes to Financial Statements.

<PAGE>

Los Angeles County California,
BBB $ 6,250 PENSION SERIES A
7.60%, 06/30/98 ........................ $ 6,329,813
AAA 5,000 Pension Series D
6.54%, 06/30/02 ........................ 4,951,900
AAA 10,000 New Jersey Economic
Development Authority
Series B, 02/15/03 ....................... 6,867,500
BBB 5,000 New York, New York
Taxable Series 1,
6.54%, 03/15/02 .......................... 4,919,900
BBB 5,000 New York, New York
Taxable Series 1,
7.125%, 08/15/02 ......................... 5,038,850
BBB 5,000 New York, New York
Taxable Series 1,
7.34%, 04/15/02 .......................... 5,075,000
BBB 1,235 New York, New York
Taxable Series A,
6.73%, 09/15/02 .......................... 1,222,119
AAA 1,950 San Francisco California International
Airport, Taxable 2nd Series,
Issue 13 A, 6.35%, 05/01/02 .............. 1,920,341
AA 1,000 St. Josephs Health System California,
Direct Obligation NTS Series A,
7.13% 07/01/02 ........................... 1,010,410
-----------
41,790,725
-----------
CORPORATE BONDS -- 19.5%
BANKING & FINANCE -- 9.8%
BBB 4,960 AHMANSON HF&CO.
8.25%, 10/01/02 .......................... 5,246,458
BBB 1,700 Amsouth Bankcorporation
6.75%, 11/01/25 .......................... 1,665,013
A 5,000 Goldman Sachs Group L. P.
6.25%, 02/01/03 # ........................ 4,835,596
A 2,800 Merrill Lynch & Co. Inc.
6.00%, 01/15/01 .......................... 2,741,340
A 5,000 Nationsbank Corp, Series E
6.65%, 04/09/02 .......................... 4,963,300
A 5,000 Nationsbank Corp.
7.00%, 09/15/01 .......................... 5,044,150
Paine Webber Group Inc.
BBB 2,190 7.875%, 02/15/03 ......................... 2,270,395
BBB 7,790 8.25%, 05/01/02 .......................... 8,141,719
Smith Barney Holdings Inc.,
A 3,000 5.875%, 02/01/01 ......................... 2,917,620
A 1,500 7.00%, 05/15/00 .......................... 1,514,460
A 4,500 7.98%, 03/01/00 .......................... 4,649,445
A 8,500 Transamerica Finance Corporation
6.75%, 06/01/00 .......................... 8,522,865
-----------
52,512,361
-----------
CORPORATE BONDS (CONT'D)
INDUSTRIAL -- 2.7%
A 1,000 Bass America Inc.
8.125%, 03/31/02 ......................... 1,054,810
A 1,000 Ford Motor Credit Co.
8.00%, 06/15/02 .......................... 1,050,590
BBB 5,000 RJR NABISCO INC.
8.625%, 12/01/02 ......................... 5,139,650
BBB 4,000 Tele Communications Inc.
9.25%, 04/15/02 .......................... 4,292,080
BBB 2,700 Tenneco Inc.
8.075%, 10/01/02 ......................... 2,833,542
-----------
14,370,672
-----------
CORPORATE BONDS (CONT'D)
UTILITY -- 1.7%
BBB 5,000 COLUMBIA GAS SYSTEMS INC.,
6.610%, 11/28/02 ......................... 4,943,500
BBB 4,000 360 Communications,
7.125%, 03/01/03 ......................... 3,970,640
-----------
8,914,140
-----------
CORPORATE BONDS (CONT'D)
YANKEE BONDS -- 5.3%
AA 5,000 African Dev. Bank, 7.75%,
12/15/01 ................................. 5,205,800
BBB 5,000 Corporacion Andina De Fome
7.10%, 02/01/03 .......................... 5,024,100
BBB 3,500 Empresa Elec. Guacolda SA
7.95%, 04/30/03 # ....................... 3,567,972
BBB 2,000 Empresa Elec. Pehuence
7.30%, 05/01/03 .......................... 2,009,205
AAA 7,500 U.S. Remittance Master,
Series 1996-1, 01/01/01 .................. 7,429,500
BBB 4,842 YPF Sociedad Anonima
7.50%, 10/26/02 .......................... 4,982,085
-----------
28,218,662
-----------
PUT OPTION PURCHASED--0.1%
50,000 Interest Rate Swap
3 month LIBOR over 8.5%,
Expires 6/15/01 .......................... 656,350
-----------
Total Investments before
securities sold short
(Cost $786,262,801)--147.7% .............. $789,608,850
-----------
SECURITIES SOLD SHORT -- (9.7%)
48,000@ U.S. Treasury Bond
7.50%, 11/15/24
(Proceeds $44,430,000) ................... (51,787,680)
-----------
Total Investments net of short
sales - 138.0%
(Cost $741,832,801) ...................... 737,821,170
-----------
Liabilities in excess of other
assets - ( 38.0%) ........................ (203,177,787)
-----------
NET ASSETS-- 100% $534,643,383
===========
- ----------

* Using the higher of Standard & Poor's or Moody's rating.
** IIliquid securities representing 0.6% of portfolio assets. See Note 3.
# Private placement / 144A securities restricted as to resale. See Note 3.
+ Partial principal amount pledged as collateral for reverse repurchase
agreements. See Note 4.
++ Entire principal amount pledged as collateral for reverse repurchase
agreements. See Note 4.
@ Amount pledged as collateral for Financial Futures

- --------------------------------------------------------------------------------
KEY TO ABBREVIATIONS
ARM -- Adjustable Rate Mortgage
CMO -- Collateralized Mortgage Obligation
CMT -- Constant Maturity Treasury
P/O -- Principal Only Class
P -- Denotes a CMO with Principal Only Characteristics
I/O -- Interest Only Class
I -- Denotes a CMO with Interest Only Characteristics
REMIC -- Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------

ASSETS
Investments, at value
(cost $786,262,801) (Note 1) ......................... $ 789,608,850
Cash ................................................... 441,336
Deposit with broker for investments
sold short (Note 1) .................................. 52,620,000
Interest receivable .................................... 5,862,094
Receivable for investments sold ........................ 9,148,379
Unrealized appreciation on interest rate cap
(Notes 1 &3) ......................................... 67,588
Unrealized appreciation on interest rate swap
(Notes 1 &3) ......................................... 1,003
Other assets (Note 1) .................................. 42,094
-------------
857,791,344
-------------
LIABILITIES
Reverse repurchase agreement (Note 4) .................. 241,944,750
Investment sold short, at value
(proceeds $44,430,000) (Note 1) ...................... 51,787,680
Payable for investments purchased ...................... 28,046,492
Interest payable ....................................... 932,485
Due to broker-variation margin ......................... 65,475
Advisory fee payable (Note 2) .......................... 195,611
Administration fee payable (Note 2) .................... 54,336
Other accrued expenses and liabilities ................. 121,132
-------------
323,147,961
-------------

NET ASSETS ............................................. $ 534,643,383
=============

Net assets were comprised of:
Common stock, at par (Note 5) ........................ $ 575,106
Paid-in capital in excess of par ..................... 535,942,670
-------------
536,517,776
Undistributed net investment income .................. 13,503,719
Accumulated net realized losses ...................... (11,238,585)
Net unrealized depreciation .......................... (4,139,527)
-------------
Net assets, June 30, 1997 ............................ $ 534,643,383
=============

NET ASSET VALUE PER SHARE:
($534,643,383 / 57,510,639 shares of
common stock issued and outstanding) ................. $9.30
=====

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------

NET INVESTMENT INCOME
Income
Interest (net including accretion of discount
of $2,551,900 and net of interest
expense of $5,823,312) ............................. $ 20,524,348
-------------
Expenses
Investment advisory .................................. 1,181,292
Administration ....................................... 328,137
Reports to shareholders .............................. 109,510
Custodian ............................................ 63,446

TRANSFER AGENT ......................................... 44,216
Audit ................................................ 42,097
Directors ............................................ 32,857
Legal ................................................ 8,741
Miscellaneous ........................................ 132,583
-------------
Total operating expenses ........................... 1,942,879
-------------
Net investment income .................................. 18,581,469
-------------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments .......................................... 535,421
Short Sales .......................................... (3,010,223)
Options .............................................. 7,129,125
Futures .............................................. (3,733,525)
-------------
920,798
-------------
Change in net unrealized appreciation (depreciation) on:
Investments .......................................... 153,424
Short Sales .......................................... 725,445
Options .............................................. (316,900)
Futures .............................................. (154,506)
-------------
407,463
-------------
Net gain on investments ................................ 1,328,261
-------------

NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ 19,909,730
=============

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH Cash flows used for operating activities:
Interest received (excluding net discount
amortization of $2,551,900) ........................ $ 23,262,357
Operating expenses paid .............................. (2,064,215)
Interest expense paid ................................ (6,681,058)
Cash received from disposition of short-term
portfolio investments, net ......................... 8,000,044
Variation Margin on Futures .......................... (7,885,378)
Purchase of long-term portfolio investments .......... (414,369,772)
Proceeds from disposition of long-term
portfolio investments .............................. 384,512,575
-------------
NET CASH FLOWS USED FOR OPERATING ACTIVITIES ........... (15,225,447)
-------------
Cash flows provided by financing activities:
Net proceeds from issuance of reverse
repurchase agreements .............................. 28,859,375
Cash dividends paid .................................. (13,658,632)
-------------
Net cash provided by financing activities ............ 15,200,743
-------------
Net decrease in cash ................................... (24,704)
Cash at beginning of period ............................ 466,040
-------------
CASH AT END OF PERIOD .................................. $ 441,336
=============
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 ...................................... $ 19,909,730
-------------
Increase in investments ................................ (33,995,009)
Net realized gain ...................................... (920,798)
Decrease in unrealized depreciation .................... (407,463)
Increase in receivable for investments sold ............ (8,604,926)
Increase in payable from variation margin .............. 49,812
Increase in interest receivable ........................ (533,403)
Increase in unrealized appreciation on interest
rate cap ............................................. (67,588)
Increase in unrealized appreciation on interest
rate swap ............................................ (1,003)
Decrease in other assets ............................... 16,946
Increase in payable for investments purchased .......... 9,953,584
Decrease in deposits with brokers
for short sales ...................................... 4,595,625
Decrease in payable for securities sold short .......... (4,238,570)
Decrease in interest payable ........................... (857,746)
Decrease in accrued expenses and
other liabilities .................................... (124,638)
-------------
TOTAL ADJUSTMENTS .................................... (35,135,177)
-------------
Net cash flows used for operating activities ........... $ (15,225,447)
=============

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF CHANGES
IN NET ASSETS
(UNAUDITED)
- --------------------------------------------------------------------------------

FOR THE YEAR
FOR THE SIX MONTHS ENDED
ENDED DECEMBER 31,
JUNE 30, 1997 1996
------------- -------------
INCREASE (DECREASE) IN

NET ASSETS

Operations:

Net investment income .................. $ 18,581,469 $ 33,170,965

Net realized gain (loss) ............... 920,798 (2,052,546)

Net change in unrealized
appreciation (depreciation)
on investments, futures
and short sales ...................... 407,463 (10,429,730)
------------- -------------

Net increase in net assets
resulting from operations ............ 19,909,730 20,688,689

Dividends from net
investment income .................... (11,382,189) (30,313,915)
------------- -------------

Total increase
(decrease) ........................... 8,527,541 (9,625,226)
NET ASSETS
Beginning of period ...................... 526,115,842 535,741,068
------------- -------------
End of period ............................ $ 534,643,383 $ 526,115,842
============= =============

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $9.15 $9.32 $ 8.12 $ 9.36 $ 9.76 $ 10.13
----- ----- ------ ------ ------ -------
Net investment income (net of interest expense
of $.10, $.19, $.34, $.19, $.12, and $.17,
respectively) .32 .58 .62 .46 .82 .82
Net realized and unrealized gain (loss)
on investments .02 (.22) 1.14 (1.07) .39 (.29)
----- ----- ------ ------ ------ -------
Net increase (decrease) from investment
operations .34 .36 1.76 (.61) .43 .53
Dividends from net investment income (.19) (.53) (.56) (.49) (.83) (.90)
Distributions in excess of net investment
income -- -- -- (.14) -- --
----- ----- ------ ------ ------ -------
Net asset value, end of period* $9.30 $9.15 $ 9.32 $ 8.12 $ 9.36 $ 9.76
===== ===== ====== ====== ====== =======
Market value, end of period* $8.13 $8.00 $ 7.63 $ 7.13 $ 9.75 $ 9.88
===== ===== ====== ====== ====== =======
TOTAL INVESTMENT RETURN+: 16.94% 11.79% 14.68% (20.28%) 7.24% 1.29%
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses** 0.74%+++ 0.74% 0.78% 0.98% 0.93% 0.89%
Net Investment Income 7.10%+++ 6.39% 7.13% 5.32% 8.40% 8.32%
SUPPLEMENTAL DATA:
Average net assets (in thousands) $528,039 $518,963 $501,869 $491,747 $560,543 $568,959
Portfolio turnover rate 57% 107% 135% 133% 94% 18%
Net assets, end of period (000) $534,643 $526,116 $535,741 $467,125 $538,465 $561.407
Reverse repurchase agreements
outstanding, end of period (000) $241,945 $213,085 $232,396 $184,672 $175,569 $249,768
Asset coverage++ $ 3,210 $ 3,469 $ 3,305 $ 3,529 $ 4,067 $ 3,248

</TABLE>

- ----------
* NAV and market value published in THE WALL STREET JOURNAL each Monday.
** The ratios of operating expenses, including interest expense, to average
net assets were 2.97%+++, 3.87%, 4.68%, 3.18%, 2.12%, and 2.64% for the
periods indicated above, respectively. The ratios of operating expenses,
including interest expense and excise tax, to average net assets were
2.97%+++, 3.87%, 4.68%, 3.18%, 2.12%, and 2.67% 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 period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions. Total
investment returns for periods of less than one full year are not
annualized.
++ Per $1,000 of reverse repurchase agreement outstanding.
+++ Annualized.

The information above represents the unaudited operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each of the periods indicated. This
information has been determined based upon financial information provided in the
financial statements and market value data for the Trust's shares.

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERMTRUST INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE 1. ACCOUNTING POLICIES The BlackRock Strategic Term Trust Inc., (the
"Trust") a Maryland corporation, is a diversified, closed-end management
investment company. The investment objective of the Trust is to manage a
portfolio of investment grade fixed income securities that will return at least
$10 per share to investors on or shortly before December 31, 2002, 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, municipal
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 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 are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.

OPTION SELLING/PURCHASING: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing purchase or sale
transaction, including brokerage commissions, is also treated as a realized gain
or loss. If an option is exercised, the premium paid or received is added to the
proceeds from the sale or cost of the purchase in determining whether the Trust
has realized a gain or a loss on investment transactions. The Trust, as writer
of an option, may have no control over whether the underlying securities may be
sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written option.

Options, when used by the Trust, help in maintaining a targeted duration.
Duration is a measure of the price sensitivity of a security or a portfolio to
relative changes in interest rates. For instance, a duration of "one" means that
a portfolio's or a security's price would be expected to change by approximately
one percent with a one percent change in interest rates, while a duration of
five would imply that the price would move approximately five percent in
relation to a one percent change in interest rates.

Option selling and purchasing is used by the Trust to effectively "hedge"
positions so that changes in interest rates do not change the duration of the
portfolio unexpectedly. In general, the Trust uses options to hedge a long or
short position or an overall portfolio that is longer or shorter than the
benchmark security. A call option gives the purchaser of the option the right
(but not obligation) to buy, and obligates the seller to sell (when the option

<PAGE>

is exercised), the underlying position at the exercise price at any time or at a
specified time during the option period. A put option gives the holder the right
to sell and obligates the writer to buy the underlying position at the exercise
price at any time or at a specified time during the option period. Put options
can be purchased to effectively hedge a position or a portfolio against price
declines if a portfolio is long. In the same sense, call options can be
purchased to hedge a portfolio that is shorter than its benchmark against price
changes. The Trust can also sell (or write) covered call options and put options
to hedge portfolio positions.

The main risk that is associated with purchasing options is that the option
expires without being exercised. In this case, the option expires worthless and
the premium paid for the option is considered the loss. The risk associated with
writing call options is that the Trust may forego the opportunity for a profit
if the market value of the underlying position increases and the option is
exercised. The risk in writing put options is that the Trust may incur a loss if
the market value of the underlying position decreases and the option is
exercised. In addition, as with futures contracts, the Trust risks not being
able to enter into a closing transaction for the written option as the result of
an illiquid market.

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) overtime.

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.

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

SWAP OPTIONS: Swap options are similar to options on securities except that
instead of purchasing the right to buy a security, the purchaser of the swap
option has the right to enter into a previously agreed upon interest rate swap
agreement at any time before the expiration of the option. Premiums received or
paid from writing or purchasing options which expire unexercised are treated by
the Trust on the expiration date as realized gains or losses. The difference
between the premium and the amount paid or received on effecting a closing
purchase or sale transaction, including brokerage commissions, is also treated
as a realized gain or loss. If an option is exercised, the premium paid or
received is added to the proceeds from the sale or cost of the purchase in
determining whether the Trust has realized a gain or a loss on investment
transactions. The Trust, as writer of an option, bears the market risk of an
unfavorable change in the value of the swap contract underlying the written
option. Interest rate swap options may be used as part of an income producing
strategy reflecting the view of the Trust's management on the direction of
interest rates.

FINANCIAL FUTURES CONTRACTS: A futures contract is an agreement between two
parties to buy or sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period that the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.

Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. 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
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 the risk of not being able to
enter into a closing transaction for the futures contract because of an illiquid
secondary market. In addition, since futures are used to shorten or lengthen a
portfolio's duration, there is a risk that the portfolio may have temporarily
performed better without the hedge or that the Trust may lose the opportunity to
realize appreciation in the market price of the underlying positions.

<PAGE>

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 June 30, 1997.

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 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 meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required. As part of the tax planning strategy, the
Trust may retain a portion of its taxable income and pay an excise tax on the
undistributed amounts.

DIVIDENDS AND DISTRIBUTIONS: The Trust declares and pays dividends and
distributions monthly, first from net investment income, then from 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 $67,520 was incurred in connection
with the organization of the Trust. These costs were deferred and amortized
ratably over a period of sixty months from the date the Trust commenced
operations.

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 Dean Witter
InterCapital Inc. ("DWI").

The investment advisory fee paid to the Adviser is computed weekly and
payable monthly at an annual rate of 0.45%. The administration fee paid to DWI
is also computed weekly and payable monthly at an annual rate of 0.125% from
January 1, 1995 through December 31, 1998 and 0.10% from January 1, 1999 to the
termination 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. DWI 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 period ended June
30, 1997 aggregated $424,323,356 and $372,031,573 respectively.

The Trust may invest up to 60% 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 June 30, 1997, the Trust held
0.6% of its portfolio assets in illiquid securities including 0.1% of its
portfolio assets in securities restricted as to resale.

The portfolio 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

<PAGE>

certain circumstances for PNC Mortgage Securities Corp. or its affiliates to
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 June 30, 1997 was
substantially the same as the basis for financial reporting, and, accordingly,
net unrealized appreciation for federal income tax purposes was $3,346,049
(gross unrealized appreciation--$15,039,012; gross unrealized
depreciation--$11,692,963).

For federal income tax purposes, the Trust has a capital loss carryforward of
$12,134,000 of which $9,420,600 expires in 2001 and $2,713,400 expires in 2004.

During the six months ended June 30, 1997 the Trust entered into financial
futures contracts. Details of open contracts at June 30, 1997 were as follows:

VALUE AT VALUE AT
NUMBER OF EXPIRATION TRADE JUNE 30, UNREALIZED
CONTRACTS TYPE DATE DATE 1997 DEPRECIATION
- --------- ---- ---- ---- ---- ------------
Long positions:
30 Yr.
200 T-Bond Sep. 1997 $22,251,050 $22,212,500 ($38,550)
10 Yr.
20 T-Note Sep. 1997 2,129,465 2,157,500 28,035
Short Positions:
(85) Eurodollar Sep. 1997 19,958,616 20,000,500 (41,884)
(80) Eurodollar Dec. 1997 18,744,580 18,780,000 (35,420)
(75) Eurodollar Mar. 1998 17,554,294 17,588,438 (34,144)
(70) Eurodollar Jun. 1998 16,363,883 16,394,000 (30,117)
(65) Eurodollar Sep. 1998 15,180,409 15,203,500 (23,091)
(60) Eurodollar Dec. 1998 13,997,685 14,019,000 (21,315)
---------
($196,486)
=========

The Trust entered into an interest rate cap agreement which settled on
February 19, 1997. Under the agreement, the Trust paid $1,934,400 and will
receive from the counterparty an amount of interest calculated as the excess of
the 3 month LIBORover 6.0% ("Protected Rate") based on the notional amount of
$60 million. Where the 3 month LIBOR is equal to or less than the Protected Rate
no amount is receivable by the Trust. The agreement terminates on February 19,
2002. At June 30, 1997, the unrealized appreciation was $67,588.

The Trust entered into an interest rate swap agreement which settles on June
13, 2001 with a notional amount of $15,455,000. Under the agreement, the Trust
will pay interest to the counterparty on the notional amount at the 10 year
forward swap rate and will receive from the counterparty interest on the
notional amount at a rate of 7.235%. The agreement terminates on June 13, 2011.
At June 30, 1997, the unrealized appreciation was $1,003.

The Trust entered into a put swaption agreement which settled on February 7,
1997. The premium paid by the Trust was $1,095,000. The put swaption agreement
grants the Trust the right to enter into an interest rate swap agreement which
commences June 15, 2001 with a notional amount of $50 million and which
terminates on June 15, 2011. Under the interest rate agreement, the Trust will
pay interest to the counterparty on the notional amount at a rate of 8.5% and
will receive from the counterparty interest on the notional amount at the 10
year forward swap rate. The swaption agreement terminates on June 15, 2001. At
June 30, 1997, the unrealized depreciation was $438,650.

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 the 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 transaction,
including accrued interest.

The average daily balance of reverse repurchase agreements outstanding during
the six months ended June 30, 1997 was $208,274,035 at a weighted average
interest rate of approximately 5.60%. The maximum amount of reverse repurchase
outstanding at any month-end during the period ended June 30, 1997 was
$241,944,750 as of June 30, 1997 which was 28.2% 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 average monthly balance of dollar rolls outstanding during the six months
ended June 30, 1997 was approximately $17,100,000. The maximum amount of dollar
rolls outstanding at any month end during the period was $17,240,580 as of June
30, 1997 which was 2.0% of total assets.

NOTE 5. CAPITAL There are 200 million shares of $.01 par value common stock
authorized. Of the 58,660,527 shares outstanding at June 30, 1997, the Adviser
owned 10,527 shares.

NOTE 6. DIVIDENDS AND DISTRIBUTIONS Subsequent to June 30,1997 the Board of
Directors of the Trust declared a dividend from undistributed earnings of
$.039583 per share payable July 31, 1997 to shareholders of record on July 15,
1997.

<PAGE>

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

Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by Dean Witter Trust Company (the "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, for the participants' accounts. The Trust will not issue shares
under the Plan.

Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment will be made for any fraction of a Trust share.

The Plan Agent's fees for the handling of the reinvestment of dividends
and distributions will be paid by the Trust. However, each participant will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal income tax 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) 576-3143 or BlackRock Financial Management
at (800) 227-7BFM. The addresses are on the front of this report.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

There have been no material changes in the Trust's investment objectives
or policies that have not been approved by the shareholders, or to its charter
or by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.

The Annual Meeting of Trust Shareholders was held April 15, 1997 to vote
on the following matters:
<TABLE>
<CAPTION>

(1) To elect four Directors to serve as follows:
DIRECTOR CLASS TERM EXPIRING
-------- ----- ----- ------
<S> <C> <C> <C>
Andrew F. Brimmer III 3 years 2000
Kent Dixon III 3 years 2000
Laurence D. Fink III 3 years 2000
Walter F. Mondale II 2 years 1999
Directors whose term of office continues beyond this meeting are Richard E. Cavanagh, James Grosfeld, James
Clayburn LaForce, Jr., Frank J. Fabozzi, and Ralph L. Schlosstein.
</TABLE>

(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1997.

(3)To approve a new investment advisory agreement with BlackRock
Financial Management, Inc.
Shareholders elected the four Directors, ratified the selection of
Deloitte & Touche LLP, and ratified the new investment advisory
agreement. The results of the voting was as follows:
<TABLE>
<CAPTION>

VOTES FOR VOTES AGAINST ABSTENTIONS
-------- ----------- ----------
<S> <C> <C> <C>
Andrew F. Brimmer 27,914,702 0 2,157,976
KENT DIXON 27,994,463 0 2,078,215
Laurence D. Fink . 27,993,232 0 2,079,446
Walter F. Mondale 27,863,573 0 2,209,105
Ratification of Deloitte & Touche LLP 28,992,155 206,209 874,313
Ratification of new investment advisory agreement 20,461,767 8,430,096 1,180,816

</TABLE>

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC 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, 2002
while providing high monthly income.

WHO MANAGES THE TRUST?
BlackRock Financial Management, Inc. ("BlackRock") is the investment adviser for
the Trust. BlackRock is a registered investment adviser specializing in fixed
income securities. Currently, BlackRock manages approximately $50 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 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, 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 2002. 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.

<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, Dean Witter
Trust Company. Investors who wish to hold shares in a brokerage account should
check with their financial adviser to determine whether their brokerage firm
offers dividend reinvestment services.

LEVERAGE CONSIDERATIONS IN A TERM TRUST
Under current market conditions, leverage increases the income earned by the
Trust. The Trust employs leverage primarily through the use of reverse
repurchase agreements and dollar rolls. Leverage permits the Trust to borrow
money at short-term rates and reinvest that money in longer-term assets which
typically offer higher interest rates. The difference between the cost of the
borrowed funds and the income earned on the proceeds that are invested in longer
term assets is the benefit to the Trust from leverage. In general, the portfolio
is typically leveraged at approximately 331/3% of total assets.

Leverage also increases the duration (or price volatility of the net assets) of
the Trust, which can improve the performance of the fund in a declining rate
environment, but can cause net assets to decline faster than the market in a
rising environment. BlackRock's portfolio managers continuously monitor and
regularly review the Trust's use of leverage and the Trust may reduce, or
unwind, the amount of leverage employed should BlackRock consider that reduction
to be in the best interests of the shareholders.

SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS

THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.

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

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

LEVERAGE. The Trust utilizes leverage through reverse repurchase agreements and
dollar rolls, which involves special risks. The Trust's net asset value and
market value may be more volatile due to its use of leverage.

MARKET PRICE OF SHARES. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange and as such are subject to supply
and demand influences. As a result, shares may trade at a discount or a premium
to their net asset value.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The cash flow and yield
characteristics of these securities differ from traditional debt securities. The
major differences typically include more frequent payments and the possibility
of prepayments which will change the yield to maturity of the security.

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

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

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

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

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

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
GLOSSARY
- --------------------------------------------------------------------------------

ADJUSTABLE RATE MORTGAGE-
BACKED SECURITIES (ARMS): Mortgage instruments with interest rates
that adjust at periodic intervals at a
fixed amount relative to the market
levels of interest rates as reflected in
specified indexes. ARMs are backed by
mortgage loans secured by real property.

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

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

COLLATERALIZED Mortgage-backed securities which separate
mortgage 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 deduction of expenses.
This Trust declares and pays dividends on
a monthly basis.

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

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

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

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

INTEREST-ONLY Mortgage securities that receive only the
SECURITIES (I/O): 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 each Monday.

PRINCIPAL-ONLY SECURITIES (P/O): Mortgage securities that receive only the
principal cash flows from an underlying
pool of mortgage loans or underlying
pass-through securities.

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 In a reverse repurchase agreement, the
REPURCHASE AGREEMENTS: Trust sells securities and agrees to
repurchase them at a mutually agreed date
and price. During this time, the Trust
continues to receive the principal and
interest payments from that security. At
the end of the term, the Trust receives
the same securities that were sold for
the same initial dollar amount plus
interest on the cash proceeds of the
initial sale.

STRIPPED MORTGAGE BACKED 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.

<PAGE>

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

TAXABLE TRUSTS
- --------------------------------------------------------------------------------

TERMINATION
TOCK SYMBOL DATE
----------- ----------
<S> <C> <C>
PERPETUAL TRUSTS
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

</TABLE>

TAX-EXEMPT TRUSTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

TERMINATION
PERPETUAL TRUSTS STOCK 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 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 $50 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.

<PAGE>

THE BLACKROCK
STRATEGIC TERM
TRUST INC.
================================================================================
SEMI-ANNUAL REPORT
JUNE 30, 1997

[GRAPHIC OMITTED]

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
Keith T. Anderson, VICE PRESIDENT
Michael C. Huebsch, VICE PRESIDENT
Scott Amero, VICE PRESIDENT
Robert S. Kapito, VICE PRESIDENT
Richard M. Shea, VICE PRESIDENT/TAX
Henry Gabbay, TREASURER
James Kong, ASSISTANT TREASURER
Frank Smith, ASSISTANT TREASURER
Karen H. Sabath, SECRETARY

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

ADMINISTRATOR
Dean Witter InterCapital Inc.
Two World Trade Center
New York, NY 10048
(800) 729-8855

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

TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311-3977
(800) 526-3143

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

The accompanying financial statements as of June 30, 1997 were not audited
and accordingly, no opinion is expressed on them.

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

THE BLACKROCK STRATEGIC TERM TRUST INC.
c/o Dean Witter InterCapital, Inc.
71st Floor
Two World Trade Center
New York, NY 10048
Call toll free (800) 227-7BFM