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

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

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THE BLACKROCK STRATEGIC TERM TRUST INC.
ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
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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 Strategic
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 "BGT". The
Trust's investment objective is to return at least $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 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
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STOCK PRICE $8.50 $8.00 6.25% $8.50 $7.75
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NET ASSET VALUE (NAV) $9.54 $9.15 4.26% $9.54 $9.07
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5-YEAR U.S. TREASURY NOTE 5.71% 6.21% -50 bp 6.86% 5.68%
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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

<PAGE>

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 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 STRATEGIC TERM TRUST INC.
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COMPOSITION DECEMBER 31, 1997 DECEMBER 31, 1996
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Taxable Zero Coupon Bond 27% 26%
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Multiple Class Mortgage Pass-Throughs 15% 16%
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Corporate Bonds 14% 15%
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Stripped Mortgage-Backed Securities 11% 12%
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Commercial Mortgage-Backed Securities 6% 4%
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Municipal Zero Coupon Bonds 6% 4%
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U.S. Government Securities 6% 5%
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Asset-Backed Securities 4% 2%
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Inverse Floating Rate Mortgages 3% 0%
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Adjustable Rate Mortgages 2% 6%
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FHAProject Loans 2% 0%
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Mortgage Pass-Throughs 2% 8%
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CMO Residuals 1% 1%
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FNMA Project Loans 1% 1%
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RATING % OF CORPORATES
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CREDIT RATING DECEMBER 31, 1997 DECEMBER 31, 1996
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AAA or Equivalent 7% 0%
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AA or Equivalent 5% 8%
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A or Equivalent 34% 35%
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BBB or Equivalent 54% 57%
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We continued to focus on securities with final maturity dates (or "bullet"
maturities) that match the Trust's termination date. 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 Strategic 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.

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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
DECEMBER 31, 1997

LONG-TERM INVESTMENTS -- 140.7%
MORTGAGE PASS-THROUGHS -- 6.3%
Federal Home Loan Mortgage
Corporation,
$19,198 6.50%, 01/01/99 -11/01/25 .............. $ 18,976,276
735 7.50%, 11/01/10, 15 Year ............... 754,080
18 7.50%, 02/01/17 ........................ 18,492
504 8.00%, 02/01/13 ........................ 521,074
1,138 9.00%, 11/01/05, 15 Year ............... 1,177,692
Federal Housing Administration,
5,679 7.25%, 01/01/23, Project 797 ........... 5,809,720
5,436 7.50%, 06/01/08, 15 Year ............... 5,577,269
Government National
Mortgage Association,
1,557 8.50%, 03/15/21 ........................ 1,635,098
96 9.00%, 01/15/20 ........................ 103,028
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34,572,729
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COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 8.9%
AAA 2,600 Aetna Commercial Mortgage
Trust, Series 1995-C5,
Class B, 12/26/30 ...................... 2,626,262
AAA 52,492 CS First Boston Mortgage Sec.,
Series 1997-C1, Class C1-AX,
06/20/29 # ............................. 5,929,900
BBB 3,000 DLJ 1993 Mortgage Pass Thru
Class B, 9.40%, 6/18/03 ................ 3,237,145
BBB 4,000 Federal Deposit Ins. Corp. Trust,
Series 1994-C1,
Class IIF, 09/25/25 .................... 4,247,589
AAA 4,544 LTC Commercial Mortgage Pass
Thru Certificate Series 1996-1,
Class A, 04/15/28 # .................... 4,610,020
AAA 1,000 LTC Commercial Mortgage Pass
Thru Certificate
11/28/12 # ............................. 1,051,094
A 2,290 Merrill Lynch Mtg. Invs. Co.,
Trust 1995-1,
Class C1, 05/25/13 ..................... 2,358,906
A 24,000 Merrill Lynch Mtg. Invs. Co.,
Pass Thru Certificate 1995,
Class C1C, 12/10/29 .................... 1,965,000
AAA 2,432 Morgan Stanley Capital I,
Series 1995-GAL1,
Class A1, 08/15/27 # ................... 2,456,720
Paine Webber Mortgage
Acceptance Corp.,
AAA 2,000 Series 1995-M1, Class M1-A,
01/15/07 # ........................... 2,024,586
BBB 1,656 Series 1995-M1, Class M1-D,
01/15/07 # ........................... 1,680,395
Resolution Trust Corp.,
A 5,869 Series 1993-C3, Class C3-D,
12/25/24 ............................. 5,879,628
AA 4,000 Series 1994-C1, Class C1-C,
06/25/26 ............................. 4,180,000
AA 2,915 Salomon Brothers Mtg. Sec. VII,
Series 1997-TZH,
Class TZH-A1, 03/25/22 # ............... 2,995,656
AAA 3,925 Structured Asset Securities Corp.
Series 1996-CFL,
Class B, 02/25/28 ...................... 3,897,843
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49,140,744
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 28.8%
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
2,749 Series 39, Class 39-J,
03/25/24 (I) ........................ 464,102
20,483++ Series 90, Class 90-G,
10/15/20 ............................ 21,384,713
3,125 Series 1218, Class 1218-G,
05/15/14 ............................ 3,059,989
5,000 Series 1295, Class 1295-JB,
03/15/07 ............................ 4,652,500
276 Series 1407, Class 1407-CL,
01/15/22 ............................ 274,670
1,883 Series 1488, Class 1488-F,
09/15/06 ............................ 1,867,880
1,625 Series 1488, Class 1488-PF,
09/15/06 ............................ 1,654,429
20,849 Series 1551, Class 1551-J,
07/15/08 (ARM) ...................... 742,649
2,285 Series 1577, Class 1577-A,
11/15/22 ............................ 2,266,540
7,155 Series 1590, Class 1590-JC,
01/15/19 (ARM) ...................... 470,812
1,371 PC GTD Series 1590,
Class 1590-K,
10/15/23 ............................ 1,373,291
1,434 Series 1602, Class 1602-Y,
07/15/22 ............................ 1,413,907
2,538 Series 1603, Class 1603-MB,
10/15/23 (ARM) ...................... 2,470,768
4,972 Series 1626, Class 1626-PV,
12/15/08 (I) ........................ 648,315

See Notes To Financial Statements.

<PAGE>

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PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- (CONT'D)
Federal Home Loan Mortgage
Corporation, Multiclass Mortgage
Participation Certificates,
$ 2,067 Series 1662, Class 1662-P,
11/15/07 (I) ....................... $ 406,112
1,297 Series 1675, Class 1675-SB,
08/15/23 ........................... 1,251,490
23,579 PC GTD Series 1938, Class 1938-
SB, 08/15/19 ....................... 324,211
130,721 Series 1954, Class 1954-BA,
04/15/21 ........................... 3,022,919
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
10,000++ Trust 1992-43, Class 43-E,
04/25/22 ........................... 10,287,500
4,279 Trust 1992-129, Class 108-CL
07/25/07 ........................... 1,132,141
5,010+ Trust 1992-129, Class 129-G,
06/25/18 ........................... 4,747,326
2,000 Trust 1992-155, Class 155-SB,
12/25/06 (ARM) ..................... 2,321,700
35,550++ Trust 1992-156, Class 156-H,
04/25/06 ........................... 32,874,152
1,155 Trust 1992-209, Class 209-SB,
04/25/07 ........................... 1,134,949
13,532 Trust 1993-26, Class 26-PT,
12/25/17 (I) ....................... 1,798,557
26,582 Trust 1993-G31, Class G31-PS,
08/25/18 (ARM) ..................... 946,055
1,469 Trust 1993-G17, Class G17-SH,
04/25/23 (ARM) ..................... 931,749
3,376 Trust 1993-O71, Class O71-SB,
06/25/07 (ARM) ..................... 3,520,268
10,000 Trust 1993-92, Class 92-F,
06/25/23 (I) ....................... 4,618,230
2,617 Trust 1993-92, Class 92-G,
05/25/23 ........................... 1,286,864
9,251+ Trust 1993-124, Class 124-D,
08/25/22 (P) ....................... 8,427,260
536 Trust 1993-132, Class 132-CA,
10/25/22 (P) ....................... 383,759
5,019 Trust 1993-170, Class 170-SA,
09/25/08 (ARM) ..................... 4,914,364
5,000 Trust 1993-245, Class 245-JA,
03/25/19 (I) ....................... 547,550
4,750+ Trust 1994-M1, Class M1-D,
10/25/03 ........................... 4,794,532
2,205 Trust 1994-40, Class 40-H,
10/25/20 ........................... 2,181,825
2,748 Trust 1994-42, Class 42-SO,
03/25/23 (ARM) ..................... 393,301
8,364 Trust 1994-54, Class 54-C,
11/25/23 (P) ....................... 7,501,019
20,598 Trust 1996-15, Class 15-SG,
08/25/08 (ARM) ..................... 2,326,932
12,937 Trust 1996-20, Class 20-SB,
10/25/08 (ARM) ..................... 4,835,071
24,000 Trust 1997-44, Class 44-SC,
06/25/08 ........................... 2,358,750
56,821 Trust 1997, Class 35-SB VAR,
03/25/09 ........................... 1,642,471
Government National Mortgage
Association, REMIC
Pass-Through Certificate,
2,551 Trust 1997-Class 14-RR 12/20/20 ...... 347,267
2,000 Trust 1997-7, CL-WC
VAR, 04/25/22 ..................... 1,270,000
AAA 3,188 Prudential Bache Collateralized
Mortgage Obligation, Trust 10-H,
Class H, 04/01/19 (P) ............. 2,762,804
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158,035,693
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COLLATERALIZED MORTGAGE
OBLIGATION RESIDUALS ** -- 0.8%
10 Federal Home Loan Mortgage
Corporation, Multiclass
Mortgage Participation Certificates,
Series 1016, Class 1016-R, 11/15/20 .... 101,500
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
1 Trust 1991-9, Class 9-R,
02/25/06 ......................... 737,500
1 Trust 1991-9, Class 9-RL,
02/25/06 ......................... 1,000
1 Trust 1991-48, Class 48-R,
05/25/06 ......................... 2,400,000
1 Trust 1991-48, Class 48-RL,
05/25/06 ......................... 1,000
2,986 Trust 1991-49, Class 49-G,
05/25/06 ......................... 717,166
15 Trust 1991-50 Class 50-R
05/25/06 ......................... 611,400
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4,569,566
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TAXABLE ZERO COUPON
BONDS -- 37.7%
Financing Corp (FICO Strips),
18,000 03/07/02 ................................ 14,119,020
29,300 12/27/02 ................................ 21,961,229
Government Trust Certificates,
5,880 11/15/01 ................................ 4,696,592
25,000 05/15/02 ................................ 18,847,500
U.S. Treasury Strip,
191,000++ 08/15/02 ................................ 147,192,240
280 05/15/04 ................................ 194,860
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207,011,441
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UNITED STATES GOVERNMENT
SECURITIES -- 9.1%
United States Treasury Bond,
25,000 6.125%, 11/15/27 ........................ 25,691,500
United States Treasury Notes,
11,500 6.125%, 08/15/07 ........................ 11,818,090
3,390+ 6.25%, 02/28/02 ......................... 3,451,969
1,600 6.25%, 06/30/02 ......................... 1,631,744
7,000 6.375%, 03/31/01 ........................ 7,131,250
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49,724,553
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See Notes To Financial Statements.

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PRINCIPAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
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STRIPPED MORTGAGE-BACKED
SECURITIES -- 14.8%
AAA $ 1,934 Bear Stearns Secured Investors
Trust Series 1988-8, Class C,
12/01/18 (P/O) ........................... $ 1,818,216
AAA 3,160@ Collateralized Mortgage Obligation
Trust 26, Class A,
04/23/17 (P/O) ........................... 2,726,197
Federal Home Loan Mortgage
Corporation,
10,992 Series G2, Class G2-M,
07/25/18 (I/O) ......................... 1,843,398
374 Series 186, Class 186-J,
08/15/21 (I/O) ......................... 667,289
11,467 Series 1215, Class 1215-P,
06/15/06 (I/O) ......................... 1,926,777
471 Series 1373, Class 1373-B,
09/15/22 (P/O) ......................... 403,133
1,010 Series 1375, Class 1375-H,
12/15/05 (I/O) ......................... 142,317
5,505+ Series 1379, Class 1379-FB,
08/15/18 (I/O) ......................... 940,637
21,967 Series 1472, Class 1472-S,
05/15/06 (I/O) ......................... 1,094,849
5,530+ Series 1570, Class 1570-J,
08/15/23 (P/O) ......................... 5,180,535
2,269 Series 1597, Class 1597-H,
07/15/23 (P/O) ......................... 1,093,965
3,628 Series 1662, Class 1662-PO,
01/15/09 (P/O) ......................... 2,821,569
1,520 Series 1900, Class 1900-SD,
01/15/23 (I/O) ......................... 474,050
80,702 Series 1954, Class 1954-BA,
04/15/21 (I/O) ......................... 1,084,434
35,129 Series 1954, Class 1954-LL,
05/15/21 (I/O) ......................... 483,018
35,129 Series 1954, Class 1954-LM,
05/15/21 (I/O) ......................... 504,974
26,836 Series 1954, Class 1954-MD,
03/15/16 (I/O) ......................... 3,480,185
Federal National Mortgage Association
1,212 Trust 225, Class 1,
02/01/23 (P/O) ......................... 975,517
77 Trust 1991-79, Class 79-B,
07/25/98 (P/O) ......................... 75,056
2,717 Trust 1992-82, Class 82-2,
05/25/22 (I/O) ......................... 704,519
12,500+ Trust 1993-67, Class 67-B,
12/25/21 (P/O) ......................... 11,524,375
5,900 Trust 1993-92, Class 92-G,
12/25/19 (I/O) ......................... 1,291,652
13,948++ Trust 1993-213, Class 213-H,
09/25/23 (P/O) ......................... 12,067,563
1,172 Trust 1993-237, Class 237-E,
11/25/23 (P/O) ......................... 997,192
1,927 Trust 1993-249, Class 249-PE,
11/25/23 (P/O) ......................... 1,599,512
3,471 Trust 1994-16, Class 16-D,
11/25/23 (P/O) ......................... 3,220,506
3,884 Trust 1994-24, Class 24-C,
11/25/23 (P/O) ......................... 3,557,888
550 Trust 1994-54, Class 54-E,
11/25/23 (P/O) ......................... 383,763
6,069 Trust 1994-87, Class 87-E,
03/25/09 (P/O) ......................... 4,861,460
4,484 Trust 1996-24, Class 24-SB,
10/25/08 (I/O) ......................... 992,154
8,499 Trust 1996-24, Class 24-SJ,
01/25/22 (I/O) ......................... 2,485,973
4,490 Trust 1997-17, Class 17-PJ,
03/18/18 (I/O) ......................... 693,213
4,671 Trust 1997-32, Class 32-ML,
02/25/27 (P/O) ......................... 3,999,682
3,411 Trust 1997-35, Class 35-PK,
09/18/21 (I/O) ......................... 468,939
37,267 Trust 1997-50, Class 50-HJ,
12/25/17 (I/O) ......................... 3,930,462
AAA 1,499 Salomon Brothers Mortgage Securities,
Series 87-3, Class B,
10/23/17 (I/O) ......................... 502,287
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81,017,256
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ASSET-BACKED SECURITIES -- 5.9%
AAA 7,100 Barnett Auto TR.
Class A2, 5.92%, 07/15/00 ................ 7,094,453
AAA 3,369 CF/SPC SMART INC.
Class A1-14, 09/15/01 # .................. 3,389,342
AAA 4,651 Structured Mtg. Asset Residential
Trust (SMART), Series 1997-2,
Class 2, 03/15/06 ........................ 4,680,545
AAA 4,825 Structured Mtg. Asset Residential
Trust (SMART), Series 1997-3,
04/15/06 ................................. 4,908,043
AAA 4,500 Student Loan Marketing Assoc.,
Trust 1995-1, Class 1,
10/25/09 (ARM) ........................... 4,487,344
AAA 8,000 Student Loan Marketing Assoc.,
Trust 1997-A5,
10/27/25 (ARM) ........................... 7,877,500
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32,437,227
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MUNICIPAL BOND -- 7.8%
AAA 1,000 Kern County California,
Pension Series
6.39%, 08/15/02 .......................... 1,008,510
AAA 3,510 Long Beach California ,
Pension Series
6.56%, 09/01/02 .......................... 3,565,388
Los Angeles County California,
BBB 6,250 Pension Series A
7.60%, 06/30/98 .......................... 6,304,750
AAA 5,000 Pension Series D
6.54%, 06/30/02 .......................... 5,080,400
AAA 10,000 New Jersey Economic
Development Authority
Series B, 02/15/03 ...................... 7,389,700
BBB 5,000 New York, New York
Taxable Series 1,
6.54%, 03/15/02 .......................... 5,032,300

See Notes To Financial Statements.

<PAGE>

MUNICIPAL BOND -- (CONT'D)
BBB $ 5,000 New York, New York
Taxable Series 1,
7.125%, 08/15/02 ........................ $ 5,147,800
BBB 5,000 New York, New York
Taxable Series 1,
7.34%, 04/15/02 ......................... 5,177,150
BBB 1,235 New York, New York
Taxable Series A,
6.73%, 09/15/02 ......................... 1,253,537
AAA 1,950 San Francisco California International
Airport, Taxable 2nd Series,
Issue 13 A, 6.35%, 05/01/02 ............. 1,964,645
AA 1,000 St. Josephs Health System California,
Direct Obligation NTS Series A,
7.13%, 07/01/02 ......................... 1,033,420
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42,957,600
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CORPORATE BONDS -- 20.5%
BANKING & FINANCE -- 9.7%
BBB 4,960 Ahmanson HF&Co.
8.25%, 10/01/02 ......................... 5,322,750
BBB 1,700 Amsouth Bankcorporation
6.75%, 11/01/25 .......................... 1,707,260
A 5,000 Goldman Sachs Group L. P.
6.25%, 02/01/03 # ........................ 4,956,421
A 2,800 Merrill Lynch & Co. Inc.
6.00%, 01/15/01 .......................... 2,788,268
A 5,000 Nationsbank Corp, Series E
6.65%, 04/09/02 .......................... 5,073,500
A 5,000 Nationsbank Corp.
7.00%, 09/15/01 .......................... 5,139,700
Paine Webber Group Inc.
BBB 2,190 7.875%, 02/15/03 ......................... 2,310,319
BBB 7,790 8.25%, 05/01/02 .......................... 8,290,196
Salomon
A 3,000 5.875%, 02/01/01 ......................... 2,961,210
A 1,500 7.00%, 05/15/00 .......................... 1,522,410
A 4,500 7.98%, 03/01/00 .......................... 4,653,315
A 8,500 Transamerica Finance Corporation
6.75%, 06/01/00 .......................... 8,600,385
-----------
53,325,734
-----------
INDUSTRIAL -- 2.7%
A 1,000 Bass America Inc.
8.125%, 03/31/02 ......................... 1,070,450
A 1,000 Ford Motor Credit Co.
8.00%, 06/15/02 .......................... 1,064,800
BBB 5,000 RJR Nabisco Inc.
8.625%, 12/01/02 ......................... 5,322,950
BBB 4,000 Tele Communications Inc.
9.25%, 04/15/02 .......................... 4,390,680
BBB 2,700 Tenneco Inc.
8.075%, 10/01/02 ......................... 2,888,514
-----------
14,737,394
-----------
UTILITY -- 1.7%
BBB 5,000 Columbia Gas Systems Inc.,
6.610%, 11/28/02 ......................... 5,042,600
BBB- 4,000 360 Communications,
7.125%, 03/01/03 ......................... 4,096,320
-----------
9,138,920
-----------
YANKEE BONDS -- 6.4%
AA 5,000@ African Dev. Bank, 7.75%,
12/12/01 ................................ 5,268,600
BBB 5,000 Corporacion Andina De Fome
7.10%, 02/01/03 ......................... 5,033,700
BBB 3,500 Empresa Elec. Guacolda SA
7.95%, 04/30/03 (Chile) # ............... 3,586,410
BBB 2,000 Empresa Elec. Pehuence
7.30%, 05/01/03 (Chile) .................. 2,023,180
BBB 2,000 Korea Dev Bank, 6.50%, 11/15/02 ............ 1,603,880
BBB 5,000 Transparatadora de Gas Dal S,
10.25%, 04/25/01 (Argentina) ............. 5,176,274
AAA 1,500 U.S. Remittance Master,
Series 1996-1, 01/01/01 .................. 7,539,844
Baa1 4,466 YPF Sociedad Anonima
7.50%, 10/26/02 (Argentina) .............. 4,628,279
-----------
34,860,167
-----------
Total Corporate Bonds .................... 112,062,215
-----------
Total Long-term
Investments --
(Cost $753,418,841) .................... 771,529,024
-----------
CONTRACTS ##
-----------
SHORT-TERM INVESTMENTS -- 1.1%
PUT OPTION PURCHASED -- 0.3%
140 Treasury Note 6.625%
5/15/07 @ $100
Expires 3/19/98 .......................... 39,200
-----------
NOTIONAL
AMOUNT
(000)
-----------
$90,000 Interest Rate Swap
3 month LIBOR over 6.9%
Expires 10/30/98 ......................... 810,000
90,000 Interest Rate Swap
3 month LIBOR over 6.7%
Expires 2/02/98 .......................... 17,100
100,000 Interest Rate Swap
3 month LIBOR over 6.5%
Expires 6/15/98 .......................... 988,300
-----------
1,815,400
-----------
CALL OPTION PURCHASED -- 0.6%
104,000 Interest Rate Swap
3 month LIBOR over 6.2%
Expires 8/13/99 .......................... 2,984,800
-----------
Principal
Amount
(000)
--------- U.S. Government Agency -- 0.2%
1,040 Federal Home Loan Mortgage Corp.
6.002%, 01/02/98 ......................... 1,039,827
-----------

Total Short-term
Investments
(Cost $8,444,990) ........................ 5,879,227
-----------

Total Investments before
outstanding call options written
and investments sold
short -- 141.7%
(Cost $761,863,831) ..................... 777,408,251
-----------

See Notes To Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
NOTIONAL
RATING* AMOUNT VALUE
(UNAUDITED) (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
CALL OPTIONS WRITTEN -- (0.4%)
$225,000 Interest Rate Swap
3 month LIBOR over 5.26%
Expires 12/01/98 ..................... $ (820,350)
162,000 Interest Rate Swap
3 month LIBOR over 6.10%
Expires 2/13/98 ...................... (761,400)
150,000 Interest Rate Swap
3 month LIBOR over 5.60%
Expires 6/16/98 ...................... (390,000)
-----------
(1,971,750)
-----------
Principal
Amount
(000)
---------
INVESTMENTS SOLD SHORT -- (10.9%)
48,000 U.S. Treasury Bond
7.50%, 11/15/24
(Proceeds $44,430,000) (57,420,000)
2,500 U.S. Treasury Bond
6.375%, 08/15/27
(PROCEEDS $2,553,418) ................. (2,636,725)
-----------
(60,056,725)
-----------

Total call options written
and investments sold
short -- 11.3%
(Proceeds $48,676,978) ............... (62,028,475)
-----------

Total Investments net of
call options written and
investments sold
short -- 130.4%
(Cost $713,186,853) .................. 715,379,776
-----------
Liabilities in excess of other assets
-- (30.4%) .......................... (166,863,633)
-----------
NET ASSETS-- 100% ...................... $548,516,143
============
- ---------
* 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.
## One contract equals 100,000 face value.
+ 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
DECEMBER 31, 1997
- --------------------------------------------------------------------------------

ASSETS
Investments, at value (cost $761,863,831)
(Note 1) .................................... $ 777,408,251
Cash .......................................... 432,669
Deposit with broker as collateral for
investments sold short (Note 1) ............ 60,041,250
Interest receivable ........................... 5,707,338
Receivable for investments sold ............... 3,565,099
Interest rate cap, at value (amortized
cost $1,599,642) (Note 1 & 3) ............... 1,015,665
Unrealized appreciation on interest
rate swap (Note 1 &3) ....................... 46,086
Due from broker-variation margin .............. 439,249
Other assets .................................. 13,642
-------------
848,669,249
-------------
LIABILITIES
Reverse repurchase agreement (Note 4) ......... 212,243,690
Investment sold short, at value
(proceeds $46,983,418) (Note 1) ............. 60,056,725
Swap options written, at value
(Proceeds $1,693,560) (Note 1) .............. 1,971,750
Payable for investments purchased ............. 20,791,328
Interest payable .............................. 2,336,254
Dividend payable .............................. 2,276,468
Advisory fee payable (Note 2) ................. 205,172
Administration fee payable (Note 2) ........... 56,117
Other accrued expenses and liabilities ........ 215,602
-------------
300,153,106
-------------
NET ASSETS .................................... $ 548,516,143
=============

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 ......... 15,406,537
Accumulated net realized loss ............... (5,330,040)
Net unrealized appreciation ................. 1,921,870
-------------
Net assets, December 31, 1997 ............... $ 548,516,143
=============

Net asset value per share:
($548,516,143 / 57,510,639 shares of
common stock issued and outstanding) ........ $9.54
=====

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------

NET INVESTMENT INCOME
Income
Interest (including net accretion of
discount of $1,616,807 and net of
interest expense of $12,299,179) .......... $ 40,327,763
------------
Expenses
Investment advisory ......................... 2,390,685
Administration .............................. 663,213
Reports to shareholders ..................... 189,000
Custodian ................................... 129,000
Audit ....................................... 110,000
Transfer agent .............................. 94,000
Directors ................................... 84,000
Legal ....................................... 18,000
Miscellaneous ............................... 230,503
------------
Total operating expenses .................. 3,908,401
------------
Net investment income ......................... 36,419,362
------------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ................................. (2,903,796)
Short Sales ................................. 9,588,330
Options ..................................... 2,277,905
Futures ..................................... (2,133,096)
------------
6,829,343
------------
Change in net unrealized appreciation
(depreciation) on:
Investments ................................. 9,209,265
Short Sales ................................. (416,140)
Interest Rate Cap ........................... (583,977)
Options ..................................... (2,049,106)
Futures ..................................... 308,818
------------
6,468,860
------------

Net gain on investments ....................... 13,298,203
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................. $ 49,717,565
============

See Notes to Financial Statements.

<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH
Cash flows provided by operating activities:
Interest received ....................................... $ 50,631,488
Operating expenses paid ................................. (3,923,925)
Interest expense paid ................................... (11,753,156)
Cash received from disposition of short-term
portfolio investments, net ............................ 6,960,217
Variation margin on futures ............................. (1,369,366)
Purchase of long-term portfolio investments ............. (887,124,259)
Proceeds from disposition of long-term
portfolio investments ................................. 874,704,555
-------------
Net cash flows provided by operating activities ....... 28,125,554
-------------
Cash flows used for financing activities:
Decrease in reverse repurchase agreements ............... (841,685)
Cash dividends paid ..................................... (27,317,240)
........................................................... -------------
Net cash used for financing activities .................. (28,158,925)
-------------
Net decrease in cash ...................................... (33,371)
Cash at beginning of year ................................. 466,040
-------------
Cash at end of year ....................................... $ 432,669
=============
RECONCILIATION OF NET INCREASE IN
NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH FLOWS
PROVIDED BY OPERATING ACTIVITIES
Net increase in net assets resulting
from operations ......................................... $ 49,717,565
-------------
Increase in investments ................................... (7,590,217)
Increase in Interest Rate Cap ............................. (1,015,665)
Net realized gain ......................................... (6,829,343)
Decrease in unrealized depreciation ....................... (6,468,860)
Increase in unrealized appreciation on interest
rate swap ............................................... (46,086)
Increase in receivable for investments sold ............... (3,021,646)
Decrease in payable for variation margin .................. (454,912)
Increase in interest receivable ........................... (378,647)
Decrease in other assets .................................. 45,398
Increase in payable for investments purchased. ............ 2,698,420
Decrease in swap options written .......................... (262,500)
Decrease in deposits with brokers
for short sales ......................................... (2,825,625)
Decrease in payable for securities sold short ............. 4,030,475
Increase in interest payable .............................. 546,023
Decrease in accrued expenses and
other liabilities ....................................... (18,826)
-------------
Total adjustments ....................................... (21,592,011)
-------------
Net cash flows provided by operating activities ........... $ 28,125,554
=============

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

YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
------------ -----------
INCREASE (DECREASE) IN

NET ASSETS

Operations:

Net investment income ............ $ 36,419,362 $33,170,965

Net realized gain (loss) on
investments, short sales,
options and futures ............ 6,829,343 (2,052,546)

Net change in unrealized
appreciation (depreciation)
on investments, futures,
interest rate cap, options
and short sales ................ 6,468,860 (10,429,730)
----------- ------------

Net increase in net assets
resulting from operations ...... 49,717,565 20,688,689

Dividends from net
investment income .............. (27,317,264) (30,313,915)
----------- ------------

Total increase (decrease) ........ 22,400,301 (9,625,226)

NET ASSETS
Beginning of year .................. 526,115,842 535,741,068
----------- ------------
End of year ........................ $548,516,143 $526,115,842
============ ============

See Notes to Financial Statements.

<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

YEAR ENDED DECEMBER 31,
------------------------------------------------------

1997 1996 1995 1994 1993
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $9.15 $9.32 $ 8.12 $ 9.36 $ 9.76
----- ----- ------ ------ -------
Net investment income (net of interest expense
of $.18, $.19, $.34, $.19 and $.12,
respectively) ...................................... .67 .58 .62 .46 .82
Net realized and unrealized gain (loss)
ON INVESTMENTS ..................................... .20 (.22) 1.14 (1.07) (.39)
----- ----- ------ ------ -------
Net increase (decrease) from investment
operations ......................................... .87 .36 1.76 (.61) .43
Dividends from net investment income ................. (.48) (.53) (.56) (.49) (.83)
Distributions in excess of net investment
income ............................................. -- -- -- (.14) --
----- ----- ------ ------ -------
Net asset value, end of year* .......................... $9.54 $9.15 $ 9.32 $ 8.12 $ 9.36
===== ===== ====== ====== =======
Market value, end of year* ............................. $8.50 $8.00 $ 7.63 $ 7.13 $ 9.75
===== ===== ====== ====== =======
TOTAL INVESTMENT RETURN+: .............................. 12.56% 11.79% 14.68% (20.28%) 7.24%
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses** ................................... 0.73% 0.74% 0.78% 0.98% 0.93%
Net Investment Income .................................. 6.84% 6.39% 7.13% 5.32% 8.40%
SUPPLEMENTAL DATA:
Average net assets (in thousands) ...................... $531,101 $518,963 $501,869 $491,747 $560,543
Portfolio turnover rate ................................ 110% 107% 135% 133% 94%
Net assets, end of year (000) .......................... $548,516 $526,116 $535,741 $467,125 $538,465
Reverse repurchase agreements
outstanding, end of year (000) ....................... $212,244 $213,085 $232,396 $184,672 $175,569
Asset coverage++ ....................................... $ 3,584 $ 3,469 $ 3,305 $ 3,529 $ 4,067
</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 3.05%, 3.87%, 4.68%, 3.18% and 2.12% for the periods
indicated above, respectively. The ratios of operating expenses, including
interest expense and excise tax, to average net assets were 3.05%, 3.87%,
4.68%, 3.18% and 2.12% for the periods indicated above, respectively.
+ Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each year reported. Dividends and
distributions, 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.
++ Per $1,000 of reverse repurchase agreement outstanding.

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

See Notes to Financial Statements.

<PAGE>

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

NOTE 1. ACCOUNTING The BlackRock Strategic Term Trust Inc., (the
POLICIES "Trust") a Maryland corporation, is a diversified,
closed-end management investment company. The
investment objective of the Trust s 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

13
<PAGE>

seller to sell (when the option is exercised), the underlying position at the
exercise price at any time or at a specified time during the option period. A
put option gives the holder the right to sell and obligates the writer to buy
the underlying position at the exercise price at any time or at a specified time
during 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.

14
<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.

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.

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 Purchases and sales of investment securities,
SECURITIES other than short-term investments, and dollar
rolls for the year ended december 31, 1997
aggregated $889,822,679 and $852,517,628 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 December 31, 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
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 December 31, 1997
was substantially the same as the basis for financial reporting, and,
accordingly, net unrealized apprecia-

15
<PAGE>

tion for federal income tax purposes was $15,544,420 (gross unrealized
appreciation--$30,531,241; gross unrealized depreciation--$14,986,821).

For federal income tax purposes, the Trust has a capital loss carryforward of
approximately $7,465,000 of which $3,939,000 expires in 2001 and $3,526,000
expires in 2004.

During the year ended December 31, 1997 the Trust entered into financial
futures contracts. Details of open contracts at December 31, 1997 were as
follows:

VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE DECEMBER 31, APPRECIATION
CONTRACTS TYPE DATE DATE 1997 (DEPRECIATION)
- -------- ----- -------- ------- ----------- -------------
Long positions:
30 Yr.
800 T-Bond Mar. 1998 $ 95,566,475 $96,375,000 808,525
10 Yr.
20 T-Note Mar. 1998 2,232,590 2,243,125 10,535
Short Positions:
(95) Eurodollar Mar. 1998 22,247,440 22,378,438 (130,998)
(90) Eurodollar Jun. 1998 21,051,027 21,197,250 (146,223)
(80) Eurodollar Sep. 1998 18,691,455 18,832,000 (140,545)
(75) Eurodollar Dec. 1998 17,504,607 17,639,063 (134,456)
---------
$266,838
=========

The Trust entered into one interest rate cap. Under the agreement the Trust
receives the excess, if any, of a floating rate over a fixed rate. The Trust
paid a transaction fee for the agreement. Details of the cap is as follows:

Details of open interest rate swaps at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
NOTIONAL UNREALIZED
AMOUNT FLOATING FIXED TERMINATION APPRECIATION
(000) TYPE RATE RATE DATE (DEPRECIATION)
------ ------ -------- ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
(150,000) Interest Rate 3 month LIBOR 6.421% 7/27/01 $(1,290,066)
(5,455) Forward Rate 3 month LIBOR 7.235% 6/15/01 77,461
5,455 Forward Rate 3 month LIBOR 7.235% 6/15/01 --
218,250 Interest Rate 3 month LIBOR 6.365% 7/27/00 1,258,691
----------
$ 46,086
==========
</TABLE>

Details of open swap option ("swaptions") agreements at December 31, 1997 are
as follows:

NOTIONAL VALUE AT
AMOUNT FIXED FLOATING TERMINATION AMORTIZED DECEMBER 31, UNREALIZED
(000) RATE RATE DATE COST 1997 (DEPRECIATION)
- ------ ----- -------- ----------- --------- ------------ -------------
<C> <C> <C> <C> <C> <C> <C>
Puts Purchased:
90,000 6.90% 3 month LIBOR 10/30/98 1,728,900 810,000 (918,900)
90,000 6.70% 3 month LIBOR 02/02/98 765,000 17,100 (747,900)
100,000 6.50% 3 month LIBOR 06/15/98 1,270,000 988,300 (281,700)
104,000 6.20% 3 month LIBOR 08/13/99 1,552,200 2,984,800 1,432,600
Calls Written:
(225,000) 5.26% 3 month LIBOR 12/01/98 (731,250) (820,350) (89,100)
(162,000) 6.10% 3 month LIBOR 02/13/98 (392,310) (761,400) (369,090)
(150,000) 5.60% 3 month LIBOR 06/16/98 (570,000) (390,000) 180,000
--------
(794,090)
========

</TABLE>

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 year ended December 31, 1997 was $215,691,820 at a weighted average interest
rate of approximately 5.40%. The maximum amount of reverse repurchase
outstanding at any month-end during the year was $249,105,750 as of April 30,
1997 which was 29.3% of total assets.

DOLLAR ROLLS: The Trust may enter into dollar rolls in which the Trust sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period the Trust forgoes principal and
interest paid on the securities. The Trust will be compensated by the interest
earned on the cash proceeds of the initial sale and by the lower repurchase
price at the future date.

The average monthly balance of dollar rolls outstanding during the year ended
December 31, 1997 was approximately $18,000,000 The maximum amount of dollar
rolls outstanding at any month end during the period was $17,685,000 as of
December 31, 1997 which was 2.1% of total assets.

NOTE 5. CAPITAL There are 200 million shares of $.01 par value
common stock authorized. Of the 57,510,639 shares
outstanding at December 31, 1997, the Adviser owned 10,724 shares.

16
<PAGE>

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

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

We have audited the accompanying statement of assets and liabilities of
The BlackRock Strategic 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 statement 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
Strategic 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

17
<PAGE>

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

We wish to advise you as to the federal tax status of dividends and
distributions paid by the Trust during the fiscal year ended December 31, 1997.

During the fiscal year ended December 31, 1997, the Trust paid aggregate
dividends and distributions of $0.4750 per share from net investment income. For
federal income tax purposes, the aggregate of any dividends and short-term
capital gains distributions you received are reportable in your 1997 federal
income tax returns as ordinary income. Further, we wish to advise you that your
income dividends do not qualify for the dividends received deduction.

For the purpose of preparing your 1997 annual federal income tax return,
however, you should report the amounts as reflected on the appropriate Form 1099
DIV which was mailed to you in January 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 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 transfer agent 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, state or local income tax that may
be payable on such dividend 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 other 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.

18
<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 at least $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 $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 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.

19
<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.

20
<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).

21
<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 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
REPURCHASE AGREEMENTS: In a reverse repurchase agreement, the
Trust sells securities and agrees to
repurchase them at a mutually agreed
date and price. During this time, the
Trust continues to receive the principal
and interest payments from that
security. At the end of the term, the
Trust receives the same securities that
were sold for the same initial dollar
amount plus interest on the cash
proceeds of the initial sale.

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

22
<PAGE>

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

TAXABLE TRUSTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TERMINATION
STOCK SYMBOL DATE
----------- ----------
PERPETUAL TRUSTS
<S> <C> <C>
The BlackRock Income Trust Inc. ........................................... BKT N/A
The BlackRock North American Government Income Trust Inc. ................. BNA N/A

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

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

TERMINATION
PERPETUAL TRUSTS STOCK 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
OR CONSULT WITH YOUR FINANCIAL ADVISOR.
</TABLE>

23
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BlackRock
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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
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

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

Printed on recycled paper

9347P-10-8

9247P-10-8

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