BLACKROCK STRATEGIC TERM TRUST INC, N-30D, 1998-08-28

BLACKROCK STRATEGIC TERM TRUST INC
N-30D, 1998-08-28

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THE BLACKROCK STRATEGIC TERM TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
July 31, 1998

Dear Shareholder:

Domestic bonds provided investors with modest total returns during the
past six months, as interest rates generally fell. Supporting the bond market
was favorable inflation news and the belief that the Federal Reserve is unlikely
to raise short-term interest rates in the immediate future.

U.S. economic growth has slowed of late after a robust first quarter of
1998. We expect the fallout from the Asian fiscal crisis to quash any
significant rebound in U.S. growth for the remainder of the year. While we
expect that interest rates will be fairly stable in the near-term, our
longer-term outlook for the bond market remains optimistic, based on the
fundamentally favorable backdrop of low inflation, a currently high level of
real yields, and declining Treasury borrowing.

As you may know, the five investment management firms that comprised the
PNC Asset Management Group have consolidated under BlackRock, resulting in
BlackRock Inc., a $119 billion money management firm. 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 comments from your Trust's managers regarding the
markets and portfolio in addition to the Trust's financial statements and a
detailed portfolio listing. We thank you for your continued investment in the
Trust.

Sincerely,

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

1
<PAGE>

July 31, 1998
Dear Shareholder:

We are pleased to present the semi-annual report for The BlackRock
Strategic Term Trust Inc. ("the Trust") for the six months ended June 30, 1998.
We would like to take this opportunity to review the Trust's stock price and net
asset value (NAV) performance, summarize market developments and discuss recent
portfolio management activity.

The Trust is a diversified, actively managed closed-end bond fund whose
shares are traded on the New York Stock Exchange under the symbol "BGT". The
Trust's investment objective is to return $10 per share (its initial offering
price) to shareholders on or about December 31, 2002 while providing high
current income. Although there can be no guarantee, BlackRock is confident that
the Trust can achieve its investment objectives. The Trust seeks these
objectives by investing in investment grade fixed income securities, including
corporate debt securities, mortgage-backed securities backed by U.S. Government
agencies (such as Fannie Mae, Freddie Mac or Ginnie Mae), asset-backed
securities and commercial mortgage-backed securities. All of the Trust's assets
must be rated at least "BBB" by Standard & Poor's or "Baa" by Moody's at 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 (the market value of its assets per share) over the period:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
6/30/98 12/31/97 CHANGE HIGH LOW
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
STOCK PRICE $8.7500 $8.5000 2.94% $8.7500 $8.4400
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NET ASSET VALUE (NAV) $9.72 $9.54 1.89% $9.73 $9.53
- ------------------------------------------------------------------------------------------------------
5-YEAR U.S. TREASURY NOTE 5.47% 5.71% (0.24%) 5.79% 5.21%
- ------------------------------------------------------------------------------------------------------
</TABLE>

THE FIXED INCOME MARKETS

After an extremely strong first quarter of 1998, U.S. economic growth
slowed during the past three months. Despite the strong economic growth of the
past year, inflation stayed surprisingly subdued. One explanation for the
absence of inflation in the U.S. economy stems from the aftermath of the Asian
financial crisis. U.S. exports to Asia have slowed, while the strength of the
dollar caused cheap Asian imports to flood the U.S. market and exert downward
price pressure on domestic goods.

Yields of U.S. Treasury securities have remained in a fairly narrow range
bound during the period. For example, the yield of the 10-Year Treasury posted a
net decline of 29 basis points (0.29%), beginning 1998 at 5.74% and closing on
June 30, 1998 at 5.45%. The past six months represented a continuation of strong
Treasury performance, which has been due to moderating economic growth, low
inflation and a "flight to quality" from investors seeking a safe haven in U.S.
Treasury securities. Continued expectations that the Asian crisis will slow
economic growth and that the Fed will adopt an easing bias provided additional
support to the bond market. With Treasury supply waning due to a surplus in the
federal budget and an increased foreign demand for Treasuries due to their U.S.
government backing and relatively attractive yields, we anticipate a positive
environment for Treasuries for the balance of 1998.

<PAGE>

In light of declining interest rates and faster prepayment speeds during
the period, mortgages modestly underperformed the broader investment grade bond
market. As measured by the Lehman Brothers Mortgage Index, mortgages posted a
3.37% total return versus 3.92% for the Lehman Brothers Aggregate Index.
Mortgage rates fell below the critical 7% threshold for the first time since
January 1994, causing concerns that increased refinancing activity would
negatively impact the performance of mortgage securities. Accordingly, lower
coupon securities generally outperformed more prepayment-sensitive higher-coupon
issues. The financial turmoil in Asia caused a decline in perceived corporate
bond credit quality ratings and as a result corporate bonds underperformed
Treasuries during both the first and second quarters. Lower interest rates
brought a flood of new corporate supply during the first quarter of 1998,
contributing to the modest performance of corporates.

THE TRUST'S PORTFOLIO AND INVESTMENT STRATEGY

BlackRock actively manages the Trust's portfolio holdings consistent with
BlackRock's overall market outlook and the Trust's investment objectives. The
following chart compares the Trust's current and December 31, 1997 asset
composition.

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THE BLACKROCK STRATEGIC TERM TRUST INC.
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COMPOSITION JUNE 30, 1998 DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Taxable Zero Coupon Bond 24% 27%
- --------------------------------------------------------------------------------
Corporate Bonds 14% 14%
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U.S. Government Securities 14% 6%
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Multiple Class Mortgage Pass-Throughs 12% 15%
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Interest Only Mortgage-Backed Securities 8% 3%
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Commercial Mortgage-Backed Securities 6% 6%
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Principal Only Mortgage-Backed Securities 6% 8%
- --------------------------------------------------------------------------------
Asset-Backed Securities 4% 4%
- --------------------------------------------------------------------------------
Municipal Zero Coupon Bonds 4% 6%
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs 3% 2%
- --------------------------------------------------------------------------------
Inverse Floating Rate Mortgages 2% 3%
- --------------------------------------------------------------------------------
Adjustable Rate Mortgages 1% 2%
- --------------------------------------------------------------------------------
CMO Residuals 1% 1%
- --------------------------------------------------------------------------------
FNMA Project Loans 1% 1%
- --------------------------------------------------------------------------------
FHAProject Loans 0% 2%
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- --------------------------------------------------------------------------------
RATING % OF CORPORATES
- --------------------------------------------------------------------------------
CREDIT RATING JUNE 30, 1998 DECEMBER 31, 1997
- --------------------------------------------------------------------------------
AAAor Equivalent 7% 7%
- --------------------------------------------------------------------------------
AAor Equivalent 5% 5%
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Aor Equivalent 34% 34%
- --------------------------------------------------------------------------------
BBBor Equivalent 54% 54%
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3
<PAGE>

In accordance with the Trust's primary investment objective of returning
the initial offer price upon maturity, the Trust's portfolio management activity
focused on adding securities which offered both attractive yield spreads over
Treasury securities and a maturity date matching the Trust's termination date of
December 31, 2002. Additionally, the Trust has been active in reducing positions
in bonds which have maturity dates or potential cash flows after the Trust's
termination date. During the reporting period, the most significant additions
have been to U.S. government securities. Additionally, the Trust maintained its
significant weighting in investment grade corporate bonds and well-structured
mortgage securities such as commercial mortgage-backed securities (CMBS). To
finance these purchases, the Trust sold mortgage pass-through securities, as
their maturities may extend past the Trust's termination date in a rising
interest rate environment.

We look forward to managing the Trust to benefit from the opportunities
available in the fixed income markets and to meet its investment objectives. We
thank you for your investment in the BlackRock Strategic Term Trust Inc. Please
feel free to contact our marketing center at (800) 227-7BFM (7236) if you have
specific questions which were not addressed in this report.

Sincerely,

/s/ Robert S. Kapito /s/ Michael P. Lustig
- -------------------- ----------------------
Robert S. Kapito Michael P. Lustig
Vice Chairman and Portfolio Manager Director and Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.

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

4
<PAGE>
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THE BLACKROCK STRATEGIC TERM TRUST INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--145.3%
MORTGAGE PASS-THROUGHS--5.6%
Federal Home Loan Mortgage Corp.,
$18,975 6.50%, 11/01/25 ............................... $18,916,269
605 7.50%, 11/01/10, 15 Year ...................... 621,540
439 8.00%, 02/01/13, 20 Year ...................... 454,231
926 9.00%, 11/01/05, 15 Year ...................... 955,627
Federal National Mortgage
Association,
5,635 7.25%, 01/01/23, Project 797 .................. 5,758,724
4,617 7.50%, 02/01/02-06/01/08, 15 Year ............. 4,743,503
Government National Mortgage
Association,
83 9.00%, 01/15/20-03/15/20 ...................... 89,196
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31,539,090
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--20.3%
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage
Participation Certificates,
15,691+ Series 90, Class 90-G,
10/15/20 .................................... 16,450,253
1,962 Series 1218, Class 1218-G,
05/15/14 .................................... 1,941,019
5,000 Series 1295, Class 1295-JB,
03/15/07 .................................... 4,771,550
540 Series 1360, Class 1360-PE,
12/15/17 .................................... 528,768
1,883 Series 1488, Class 1488-F,
09/15/06 .................................... 1,877,295
1,625 Series 1488, Class 1488-PF,
09/15/06 .................................... 1,653,096
1,313 Series 1577, Class 1577-A,
11/15/22 .................................... 1,308,904
760 Series 1590, Class 1590-K,
10/15/23 .................................... 762,726
2,328 Series 1602, Class 1602-Y,
07/15/22 .................................... 2,305,915
1,376 Series 1603, Class 1603-MB,
10/15/23 (ARM) .............................. 1,341,017
1,620 Series 1675, Class 1675-SB,
08/15/23 (ARM) .............................. 1,579,275
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
1,469 Trust G93-17, Class 17-SH,
04/25/23 (ARM) .............................. 1,022,892
10,000+ Trust 1992-43, Class 43-E,
04/15/22 .................................... 10,353,900
21,340 Trust 1992-129, Class 129-G,
06/25/18 .................................... 20,970,391
2,000 Trust 1992-155, Class 155-SB,
12/25/06 (ARM) .............................. 2,196,400
35,550++ Trust 1992-156, Class 156-H,
04/15/06 .................................... 34,627,478
623 Trust 1992-209, Class 209-SB,
04/25/07 (ARM) .............................. 618,887
3,187 Trust 1993-71, Class 71-SB,
06/25/07 (ARM) .............................. 3,233,490
761 Trust 1993-117, Class 117-SA,
07/25/08 (ARM) .............................. 772,468
2,299 Trust 1993-170, Class 170-SA,
09/25/08 (ARM) .............................. 2,266,286
2,205 Trust 1994-40, Class 40-H,
10/25/20 .................................... 2,197,128
2,000 Trust 1997-7, Class WC,
04/25/22 (ARM) .............................. 860,000
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113,639,138
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COMMERCIAL MORTGAGE-BACKED
SECURITIES--8.2%
AAA 2,600 Aetna Commercial Mortgage
Trust, Series 1995-C5,
Class B, 6.74%, 12/26/30 ...................... 2,657,465
BBB 3,000 DLJ Mortgage Acceptance Corp.,
Series 1993-MF7, Class B, 9.40%,
06/18/03 ...................................... 3,194,242
BBB 4,000 FDIC Trust,
Series 1994-C1,
Class IIF, 8.70%, 09/25/25 .................... 4,240,859
LTC Commercial Mortgage
Pass-Through Certificates,
AAA 4,193 Series 1996-1, Class A, 9.20%,
04/15/28 # .................................... 4,277,732
BBB 1,000 Series 93-1, Class D, 7.06%,
11/28/12 # .................................... 1,051,250
A 2,290 Merrill Lynch Mortgage Investors, Inc.,
Trust 1995-1,
Class C1, 7.59%, 05/25/13 ..................... 2,368,152
AAA 1,702 Morgan Stanley Capital Trust I,
Series 1995-GAL1,
Class A1, 7.00%, 08/15/27 # ................... 1,708,596
Paine Webber Mortgage
Acceptance Corp.,
AAA 2,000 Series 1995-M1, Class M1-A,
6.70%, 01/15/07 # ........................... 2,031,857
BBB 1,656 Series 1995-M1, Class M1-D,
7.30%, 01/15/07 # ........................... 1,681,714
BBB 1,026 Series 1995-M2, Class M2-D,
7.20%, 12/01/03 # ........................... 1,039,724

See Notes to Financial Statements.

<PAGE>
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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--(CONT'D)
Resolution Trust Corp.,
A $ 5,831 Series 1993-C3, Class C3-D,
7.10%, 12/25/24 ............................ $ 5,862,238
AA 4,000 Series 1994-C1, Class C1-C,
8.00%, 06/25/26 ............................ 4,055,000
AA 2,811 Salomon Brothers Mortgage
Securities Trust VII,
Series 1997-TZH,
7.15%, Class TZH-A1,
03/25/22 # ................................... 2,933,524
AAA 3,925 Structured Asset Securities Corp.,
Series 1996-CFL,
6.30%, Class B, 02/25/28 ..................... 3,918,305
A 4,500 TVO Southwest, Series 1994-MFI,
Class A2, 9.37%, 11/18/04 # .................. 4,874,370
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45,895,028
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STRIPPED MORTGAGE-BACKED
SECURITIES--22.0%
AAA 1,200 Bear Stearns Secured Investors Trust,
Series 1988-8, Class C,
12/01/18 (P/O) ................................ 1,166,773
AAA 2,698@ Collateralized Mortgage Obligation,
Trust 26, Class A,
04/23/17 (P/O) ................................ 2,281,008
AAA 52,139 CS First Boston Mortgage Securities,
Series 1997-C1, Class AX,
04/20/22 (I/O) # .............................. 5,764,435
Federal Home Loan Mortgage Corp.,
7,907 Series 2, Class M,
07/25/18 (I/O) .............................. 969,147
2,418 Series 39, Class J,
03/25/24 (I/O) .............................. 343,101
319 Series 186, Class 186-J,
08/15/21 (I/O) .............................. 552,795
8,586 Series 1215, Class 1215-P,
06/15/06 (I/O) .............................. 1,091,685
471 Series 1373, Class 1373-B,
09/15/22 (P/O) .............................. 419,544
674 Series 1375, Class 1375-H,
12/15/05 (I/O) .............................. 81,102
5,505 Series 1379, Class 1379-FB,
08/15/08 (I/O) .............................. 742,579
17,731 Series 1472, Class 1472-S,
05/15/06 (I/O) .............................. 902,353
17,040 Series 1551, Class 1551-J,
07/15/08 (I/O) .............................. 686,189
1,197 Series 1570, Class 1570-J,
08/15/23 (P/O) .............................. 1,189,242
6,351 Series 1590, Class 1590-JC,
01/15/19 (I/O) .............................. 441,862
2,269 Series 1597, Class 1597-H,
07/15/23 (P/O) .............................. 1,229,789
4,973 Series 1626, Class 1626-PV,
12/15/08 (I/O) .............................. 532,256
2,067 Series 1662, Class 1662-P,
11/15/07 (I/O) .............................. 363,349
3,347 Series 1662, Class 1662-PO,
01/15/09 (P/O) .............................. 2,641,265
1,520 Series 1900, Class 1900-SD,
01/15/23 (I/O) .............................. 288,800
18,465 Series 1938, Class 1938-SB,
08/15/19 (I/O) .............................. 92,323
113,486 Series 1954, Class 1954-BA,
04/15/21 (I/O) .............................. 2,517,975
70,062 Series 1954, Class 1954-BB,
04/15/21 (I/O) .............................. 897,670
30,702 Series 1954, Class 1954-LL,
05/15/21 (I/O) .............................. 402,967
30,702 Series 1954, Class 1954-LM,
05/15/21 (I/O) .............................. 417,359
23,960 Series 1954, Class 1954-MD,
03/15/16 (I/O) .............................. 2,779,638
15,351 Series 2049, Class 2049-PK,
06/15/14 (I/O) .............................. 2,034,457
Federal National Mortgage Association,
10,000 Trust G93-22, Class P,
06/25/23 (I/O) .............................. 4,278,090
5,439 Trust G93-25, Class N,
12/25/19 (I/O) .............................. 1,052,125
13,220 Trust G93-26, Class PT,
12/25/17 (I/O) .............................. 1,422,900
22,661 Trust G93-31, Class PS,
08/25/18 (I/O) .............................. 845,726
1,010 Trust 225, Class 1,
06/01/23 (P/O) .............................. 821,206
2,510 Trust 1991-49, Class G,
05/25/06 (I/O) .............................. 545,466
73 Trust 1991-79, Class B,
07/25/98 (P/O) .............................. 72,578
2,258 Trust 1992-82, Class IO,
05/15/22 (I/O) .............................. 554,068
3,617 Trust 1992-108, Class L,
07/15/07 (I/O) .............................. 887,650
10,249 Trust 1993-67, Class B,
12/25/21 (P/O) .............................. 9,563,563
2,617 Trust 1993-92, Class G,
05/25/23 (P/O) .............................. 1,420,237
6,999 Trust 1993-124, Class D,
08/25/22 (P/O) .............................. 6,412,790
11,573 Trust 1993-213, Class H,
09/25/23 (P/O) .............................. 10,466,782
5,000 Trust 1993-245, Class JA,
03/25/19 (I/O) .............................. 414,500
800 Trust 1994-8, Class D,
11/25/23 (P/O) .............................. 655,248
1,590 Trust 1994-16, Class D,
11/25/23 (P/O) .............................. 1,569,590
1,598 Trust 1994-24, Class C,
11/25/23 (P/O) .............................. 1,570,134
See Notes to Financial Statements.
6
<PAGE>
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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
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$ 2,544 Trust 1994-42, Class SO,
03/25/23 (I/O) .............................. $ 361,112
4,308 Trust 1994-54, Class C,
11/25/23 (P/O) .............................. 4,044,526
550 Trust 1994-54, Class E,
11/25/23 (P/O) .............................. 429,209
5,010 Trust 1994-87, Class E,
03/25/09 (P/O) .............................. 4,076,445
20,598 Trust 1996-15, Class SG,
08/25/08 (I/O) .............................. 2,513,601
12,937 Trust 1996-20, Class SB,
10/25/08 (I/O) .............................. 4,944,226
4,484 Trust 1996-24, Class SB,
10/25/08 (I/O) .............................. 924,890
8,499 Trust 1996-24, Class SJ,
01/25/22 (I/O) .............................. 2,347,863
4,490 Trust 1997-17, Class PJ,
03/18/18 (I/O) .............................. 342,397
3,813 Trust 1997-32, Class ML,
02/25/27 (P/O) .............................. 3,429,406
2,925 Trust 1997-35, Class PK,
09/18/21 (I/O) .............................. 309,842
49,427 Trust 1997-35, Class SB,
03/25/09 (I/O) .............................. 1,475,098
24,000 Trust 1997-44, Class SC,
06/25/08 (I/O) .............................. 2,276,250
32,145 Trust 1997-50, Class HJ,
12/25/17 (I/O) .............................. 2,906,554
57,220 Trust 1997-90, Class L,
10/25/19 (I/O) .............................. 6,866,346
57,817 Trust 1998-27, Class L,
03/25/20 (I/O) .............................. 7,371,720
Government National Mortgage
Association,
2,395 Series 1997-16, Class PR,
12/20/20 (I/O) ................................ 269,471
AAA 23,869 Merrill Lynch Mortgage Investors, Inc.,
Series 1997-C2, Class IO,
12/10/29 (I/O) ................................ 1,920,677
AAA 2,825 Prudential Bache CMO Trust,
Series 10, Class H,
04/01/19 (P/O) ................................ 2,487,524
AAA 1,241 Salomon Brothers Mortgage Securities,
Series 1987-3, Class B,
10/23/17 (I/O) ................................ 376,894
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123,056,367
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ASSET-BACKED SECURITIES--7.3%
AAA 5,885 Barnett Auto Receivables Trust,
Class A2, 5.92%, 07/15/00 ..................... 5,887,022
AAA 7,972 Brazos Student Loan Financial Corp.,
Series 1998-A, Class A1,
6.23%, 06/01/06 ............................... 7,969,065
BBB 5,000 Broad Index Secured Trust Offering,
Class 1998-1000,
6.58%, 03/26/01, # ............................ 5,009,619
AAA 5,100 Chase Credit Card Master Trust,
Series 1997-5, Class 5-A,
6.19%, 08/15/05 ............................... 5,162,164
Structured Mortgage Asset
Residential Trust,
AAA 3,189 Class A1 14, 7.85%, 04/15/05 # ................ 3,211,778
AAA 4,312 Series 1997-2,
Class 2, 8.24%, 03/15/06 ...................... 4,347,330
AAA 4,599 Series 1997-3,
8.57%, 04/15/06# .............................. 4,674,452
AAA 4,500 Student Loan Marketing Association,
Trust 1995-1, Class 1,
10/25/09 (ARM) ................................ 4,500,000
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40,761,430
-------------
TAXABLE ZERO COUPON
BONDS--34.6%
Financing Corp (FICO Strips),
AAA 18,000 03/07/02. ..................................... 14,648,220
AAA 29,300 12/27/02. ..................................... 22,844,038
Government Trust Certificates (Israel),
AAA 25,000 05/15/02. ..................................... 19,651,750
U.S. Treasury Strips,
119,800+ 08/15/02 ...................................... 95,606,390
51,200+ 10/31/02 ...................................... 40,416,768
-------------
193,167,166
-------------

TAXABLE MUNICIPAL BONDS--6.6%
AAA 1,000 Kern County California,
Pension Obligation,
6.39%, 08/15/02 ............................... 1,013,770
AAA 3,510 Long Beach California ,
Pension Obligation,
6.56%, 09/01/02 ............................... 3,580,410
AAA 5,000 Los Angeles County California,
Pension Obligation,
6.54%, 06/30/02 ............................... 5,090,800
AAA 10,000 New Jersey Economic
Development Auth., Zero Coupon,
02/15/03 ...................................... 7,663,100
New York City G.O.,
BBB 5,000 6.54%, 03/15/02 ............................... 5,074,450
BBB 5,000 7.125%, 08/15/02 .............................. 5,189,900
BBB 5,000 7.34%, 04/15/02 ............................... 5,209,000
BBB 1,235 New York St.Environ. Fac. Auth.,
6.73%, 09/15/02 ............................... 1,262,615
AAA 1,950 San Francisco California International
Airport, 6.35%, 05/01/02 ...................... 1,971,450
AA 1,000 St. Josephs Health System California,
G.O., 7.13%, 07/01/02 ......................... 1,037,370
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37,092,865
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See Notes to Financial Statements.
7
<PAGE>
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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
CORPORATE BONDS--19.9%
BANKING & FINANCE--9.6%
BBB $ 4,900 Ahmanson HF & Co., 8.25%,
10/01/02 ...................................... $ 5,269,369
BBB 1,700 Amsouth Bankcorp., 6.75%,
11/01/25 ...................................... 1,747,163
A 5,000 Goldman Sachs Group LP, 6.25%,
02/01/03 # .................................... 4,973,566
A 2,800 Merrill Lynch & Co. Inc., 6.00%,
01/15/01 ...................................... 2,801,512
Nationsbank Corp.,
A 5,000 6.65%, 04/09/02 ............................... 5,109,300
A 5,000 7.00%, 09/15/01 ............................... 5,139,350
Paine Webber Group Inc.,
BBB 2,190 7.875%, 02/15/03 .............................. 2,322,780
BBB 7,790 8.25%, 05/01/02 ............................... 8,304,140
Salomon Inc.,
A 3,000 5.875%, 02/01/01 .............................. 2,985,600
A 1,500 7.00%, 05/15/00 ............................... 1,525,710
A 4,500 7.98%, 03/01/00 ............................... 4,637,925
A 8,500 Transamerica Finance Corp.,
6.75%, 06/01/00 ............................... 8,618,065
-------------
53,434,480
-------------
INDUSTRIAL--2.6%
A 1,000 Bass America Inc., 8.125%,
03/31/02 ...................................... 1,070,380
A 1,000 Ford Motor Credit Co., 8.00%,
06/15/02 ...................................... 1,066,700
BBB 5,000 RJR Nabisco Inc., 8.625%, 12/01/02 .............. 5,160,950
BBB 4,000 TCI Communications Inc., 9.25%,
04/15/02 ...................................... 4,409,280
BBB 2,700 Tenneco Inc. 8.075%, 10/01/02 ................... 2,875,905
-------------
14,583,215
-------------
UTILITY--1.7%
BBB 5,000 Columbia Gas Systems Inc., 6.610%,
11/28/02 ...................................... 5,056,750
A 4,000 360 Communications, 7.125%,
03/01/03 ...................................... 4,142,840
-------------
9,199,590
-------------

YANKEE BONDS--6.0%
AA 5,000@ African Development Bank, 7.75%,
12/01/01 ...................................... 5,267,050
BBB 5,000 Corporacion Andina De Fome,
7.10%, 02/01/03 ............................... 5,051,700
BBB 3,500 Empresa Elec. Guacolda SA,
7.95%, 04/30/03 (Chile) # ..................... 3,496,220
BBB 1,650 Empresa Elec. Pehuence,
7.30%, 05/01/03 (Chile) ....................... 1,622,670
BBB 2,000 Korea Dev Bank, 6.50%, 11/15/02 ................. 1,679,340
BBB 5,000 Transpatadora de Gas Tragas,
10.25%, 04/25/01 (Argentina) .................. 5,100,822
AAA 7,500 U.S. Remittance Master,
Series 1996-1, 01/01/01 # ..................... 7,539,844
Baa1 4,075 YPF Sociedad Anonima,
7.50%, 10/26/02 (Argentina) ................... 4,176,412
------------
33,934,058
-------------
Total corporate bonds 111,151,343
-------------

UNITED STATES GOVERNMENT
SECURITIES--20.2%
United States Treasury Bond,
82,500+ 6.125%, 11/15/27 .............................. 88,403,700
United States Treasury Notes,
11,500 6.125%, 08/15/07 .............................. 11,965,405
3,390 6.25%, 02/28/02 ............................... 3,467,868
1,600 6.25%, 06/30/02 ............................... 1,640,256
7,000 6.375%, 03/31/01 .............................. 7,148,750
-------------
112,625,979
-------------
COLLATERALIZED MORTGAGE
OBLIGATION RESIDUALS **--0.6%
10 Federal Home Loan Mortgage Corp.,
Series 1016, Class 1016-R,
11/15/20 ...................................... 90,200
Federal National Mortgage Association,
REMIC,
1 Trust 1991-9, Class 9-R,
02/25/06 .................................... 662,400
1 Trust 1991-9, Class 9-RL,
02/25/06 .................................... 1,000
1 Trust 1991-48, Class 48-R,
05/25/06 .................................... 2,168,500
1 Trust 1991-48, Class 48-RL,
05/25/06 .................................... 1,000
12 Trust 1991-50, Class 50-R,
05/25/06 .................................... 611,400
-------------
3,534,500
-------------

Total long-term investments--
(cost $793,852,035) .......................... $812,462,906
-------------

See Notes to Financial Statements.

8
<PAGE>
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--0.7%
Repurchase Agreement (0.0%)
$ 110 State Street Bank & Trust Co., 5.25%,
dated 06/30/98; due 07/01/98
in the amount of $110,016;
(collateralized by $110,000 U.S.
Treasury Note 6.5%, due
08/31/01, value including
accrued interest--$115,172)
(cost $110,016) ............................ $ 110,016
-------------
Notional
Amount
(000)
-------
PUT OPTION PURCHASED--0.0%
$ 90,000 Interest Rate Swap,
3 Month LIBOR over 6.90%,
expires 10/30/98 ............................. 55,800
-------------

CALL OPTIONS PURCHASED---0.7%
52,000 Interest Rate Swap,
3 Month LIBOR over 6.20%,
expires 08/13/99 ............................. 1,490,320
100,000 Interest Rate Swap,
3 Month LIBOR over 5.92%,
expires 09/21/98 ............................. 435,000
68,000 Interest Rate Swap,
3 Month LIBOR over 5.85%,
expires 08/07/00 ............................. 1,417,800
100,000 Interest Rate Swap,
3 Month LIBOR over 5.82%,
expires 01/1/99 .............................. 458,100
-------------
3,801,220
-------------
Total short-term investments
(cost $4,995,616) ............................ 3,967,036
-------------
Total investments before
outstanding call options written
and investments sold short--146%
(cost $798,847,651) ............................ 816,429,942
-------------

CALL OPTIONS WRITTEN--(0.2%)
225,000 Interest Rate Swap,
3 Month LIBOR over 5.25%,
expires 12/01/98 ............................... (190,125)
65,000 Interest Rate Swap,
3 Month LIBOR over 5.90%,
expires 09/21/98 ............................... (463,255)
65,000 Interest Rate Swap,
3 Month LIBOR over 5.80%,
expires 01/11/99 ............................... (612,690)
-------------
(premium received $1,854,125) ................ (1,266,070)
-------------
INVESTMENT SOLD SHORT--(11.1%)
U.S. Treasury Bond,
48,000 7.50%, 11/15/24 .............................. (59,557,440)
2,500 6.375%, 08/15/27 ............................. (2,745,300)
-------------
(proceeds $46,983,418) ....................... (62,302,740)
-------------
Total call options written
and investments sold
short--(11.3%) ............................... (63,568,810)
-------------
Total investments net of
call options written and
investments sold
short--134.7%
(cost $750,305,981) .......................... 752,861,132
Liabilities in excess of other
assets--(34.7%) ............................ (193,776,319)
-------------
NET ASSETS--100% ............................ $ 559,084,813
=============

- ---------
* Using the higher of Standard & Poor's or Moody's rating.
** Illiquid securities representing 0.6% of portfolio assets. See Note 3.
# Securities restricted as to resale.
+ 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.
G.O. -- General Obligation.
LIBOR -- London InterBank Offer Rate.
P/O -- Principal Only Class. I/O -- Interest Only Class.
REMIC -- Real Estate Mortgage Investment Conduit.
- --------------------------------------------------------------------------------

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

ASSETS
Investments, at value (cost $798,847,651)
(Note 1) ..................................................... $816,429,942
Deposit with broker as collateral for investments
sold short (Note 1) .......................................... 62,667,500
Interest receivable ............................................ 7,045,575
Receivable for investments sold ................................ 9,233,933
Interest rate cap, at value (amortized cost
$1,407,896) (Note 1 & 3) ..................................... 530,400
Other assets (Note 1) .......................................... 34,267
------------
895,941,617
------------
LIABILITIES
Reverse repurchase agreements (Note 4) ......................... 250,848,750
Investments sold short, at value
(proceeds $46,983,418) (Note 1) .............................. 62,302,740
Payable for investments purchased .............................. 19,949,817
Swap options written, at value
(proceeds $1,854,125) (Note 1) ............................... 1,266,070
Interest payable ............................................... 939,800
Unrealized depreciation on interest rate swap
(Note 1 & 3) ................................................. 437,247
Advisory fee payable (Note 2) .................................. 419,159
Administration fee payable (Note 2) ............................ 116,433
Due to broker .................................................. 116,187
Due to custodian ............................................... 107,228
Other accrued expenses and liabilities ......................... 353,373
------------
336,856,804
------------
NET ASSETS ..................................................... $559,084,813
============

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 .......................... 25,008,526
Accumulated net realized loss ................................ (3,815,017)
Net unrealized appreciation .................................. 1,373,528
------------
Net assets, June 30, 1998 .................................... $559,084,813
============

Net asset value per share:
($559,084,813 / 57,510,639 shares of
common stock issued and outstanding) ......................... $9.72
=====

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

NET INVESTMENT INCOME
Income
Interest (including net accretion of discount
of $856,514, and net of interest
expense of $6,720,485) ..................................... $23,367,657
-----------
Expenses
Investment advisory .......................................... 1,242,162
Administration ............................................... 345,045
Reports to shareholders ...................................... 127,000
Custodian .................................................... 61,000
Audit ........................................................ 59,000
Transfer agent ............................................... 50,000
Directors .................................................... 43,000
Registration ................................................. 24,000
Legal ........................................................ 11,000
Miscellaneous ................................................ 421,346
-----------
Total operating expenses ................................... 2,383,553
-----------
Net investment income .......................................... 20,984,104
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments .................................................. 3,580,869
Options ...................................................... (4,158,725)
Futures ...................................................... 2,092,879
-----------
............................................................... 1,515,023
-----------
Change in net unrealized appreciation
(depreciation) on:
Investments .................................................. 500,688
Short sales .................................................. (2,246,015)
Interest rate cap ............................................ (293,519)
Options ...................................................... 1,997,556
Futures ...................................................... (507,052)
-----------
(548,342)
-----------
Net gain on investments ........................................ 966,681
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .............................................. $21,950,785
===========

See Notes to Financial Statements.

10
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH
Cash flows used for operating activities:
Interest received ............................................. $27,893,391
Operating expenses paid ....................................... (1,971,478)
Interest expense paid ......................................... (8,116,939)
Cash received from disposition of short-term
portfolio investments, net .................................. 929,811
Variation margin on futures ................................... 2,648,315
Purchase of long-term portfolio investments ................... (431,047,982)
Proceeds from disposition of long-term
portfolio investments ....................................... 384,178,508
-------------
Net cash flows used for operating activities ................ (25,486,374)
-------------
Cash flows provided by financing activities:
Increase in reverse repurchase agreements ..................... 38,605,060
Cash dividends paid ........................................... (13,658,583)
-------------
Net cash flows provided by financing activities ............... 24,946,477
-------------
Net decrease in cash ............................................ (539,897)
Cash at beginning of period ..................................... 432,669
-------------
Cash at end of period ........................................... $ (107,228)
=============
RECONCILIATION OF NET INCREASE IN
NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH FLOWS
USED FOR OPERATING ACTIVITIES
Net increase in net assets resulting
from operations ............................................... $ 21,950,785
-------------
Increase in investments ......................................... (38,055,010)
Decrease in interest rate cap ................................... 485,265
Net realized gain ............................................... (1,515,023)
Decrease in unrealized appreciation ............................. 548,342
Decrease in unrealized appreciation on interest
rate swap ..................................................... 483,333
Increase in receivable for investments sold ..................... (5,668,834)
Decrease in receivable for variation margin ..................... 555,436
Increase in interest receivable ................................. (1,338,237)
Increase in other assets ........................................ (20,624)
Decrease in payable for investments purchased. .................. (841,511)
Decrease in swap options written ................................ (705,680)
Increase in deposits with brokers
for short sales ............................................... (2,626,250)
Increase in payable for securities sold short ................... 2,246,015
Decrease in interest payable .................................... (1,396,454)
Increase in accrued expenses and
other liabilities ............................................. 412,073
-------------
Total adjustments ............................................. (47,437,159)
-------------
Net cash flows used for operating activities .................... $ (25,486,374)
=============

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

FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1998 1997
------------- ------------
INCREASE (DECREASE) IN
NET ASSETS

Operations:

Net investment income ......................... $ 20,984,104 $ 36,419,362

Net realized gain ............................. 1,515,023 6,829,343

Net change in unrealized
appreciation (depreciation) ................. (548,342) 6,468,860
----------- -----------

Net increase in net assets
resulting from operations ................... 21,950,785 49,717,565

Dividends from net
investment income ........................... (11,382,115) (27,317,264)
----------- -----------

Total increase ................................ 10,568,670 22,400,301

NET ASSETS

Beginning of period ............................. 548,516,143 526,115,842
----------- -----------
End of period .................................. $559,084,813 $548,516,143
============ ============

See Notes to Financial Statements.

11
<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............... $ 9.54 $9.15 $9.32 $ 8.12 $ 9.36 $ 9.76
------ ----- ----- ------ ------ -------
Net investment income (net of interest expense
of $0.12, $0.18, $0.19, $0.34, $0.19 and $0.12,
respectively) .................................. 0.36 0.67 0.58 0.62 0.46 0.82
Net realized and unrealized gain (loss)
on investments ................................. 0.02 0.20 (0.22) 1.14 (1.07) (0.39)
------ ----- ----- ------ ------ ----
Net increase (decrease) from investment operations . 0.38 0.87 0.36 1.76 (0.61) 0.43
Dividends from net investment income ............. (0.20) (0.48) (0.53) (0.56) (0.49) (0.83)
Distributions in excess of net investment income . -- -- -- -- (0.14) --
------ ----- ----- ------ ------ -------
Net asset value, end of period* .................... $ 9.72 $9.54 $9.15 $ 9.32 $ 8.12 $ 9.36
====== ===== ===== ====== ====== =======
Market value, end of period* ....................... $ 8.75 $8.50 $8.00 $ 7.63 $ 7.13 $ 9.75
====== ===== ===== ====== ====== =======
TOTAL INVESTMENT RETURN+: .......................... 5.79% 12.56% 11.79% 14.68% (20.28%) 7.24%
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses** ............................... 0.87%+++ 0.73% 0.74% 0.78% 0.98% 0.93%
Net Investment Income .............................. 7.64%+++ 6.84% 6.39% 7.13% 5.32% 8.40%
SUPPLEMENTAL DATA:
Average net assets (in thousands) .................. $555,160 $531,101 $518,963 $501,869 $491,747 $560,543
Portfolio turnover rate ............................ 30% 110% 107% 135% 133% 94%
Net assets, end of period (000) .................... $559,085 $548,516 $526,116 $535,741 $467,125 $538,465
Reverse repurchase agreements
outstanding, end of period (000) ................. $250,849 $212,244 $213,085 $232,396 $184,672 $175,569
Asset coverage++ ................................... $ 3,229 $ 3,584 $ 3,469 $ 3,305 $ 3,529 $ 4,067

</TABLE>

- ------
* Net asset value 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 3.32%+++, 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
3.32%+++, 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 period reported. Dividends and
distributions, if any, are assumed for purposes of this calculation to be
reinvested at prices obtained under the Trust's dividend reinvestment plan.
Total investment return does not reflect brokerage commissions.
++ Per $1,000 of reverse repurchase agreement outstanding.
+++ Annualized.

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

See Notes to Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------

NOTE 1. ORGANIZATION & The BlackRock Strategic
ACCOUNTING Term Trust Inc., (the "Trust")
POLICIES a Maryland corporation, is
a diversified, closed-end
management investment company. The investment objective of the Trust is to
manage a portfolio of investment grade fixed income securities that will return
at least $10 per share to investors on or shortly before December 31, 2002,
while providing high monthly income. The ability of issuers of debt securities
held by the Trust to meet their obligations may be affected by economic
developments in a specific industry or region. No assurance can be given that
the Trust's investment objective will be achieved.

The following is a summary of significant accounting policies followed by
the Trust.

SECURITIES VALUATION: The Trust values mortgage-backed, asset-backed, municipal
and other debt securities on the basis of current market quotations provided by
dealers or pricing services approved by the Trust's Board of Directors. In
determining the value of a particular security, pricing services may use certain
information with respect to transactions in such securities, quotations from
dealers, market transactions in comparable securities, various relationships
observed in the market between securities, and calculated yield measures based
on valuation technology commonly employed in the market for such securities.
Exchange-traded options are valued at their last sales price as of the close of
options trading on applicable exchanges. In the absence of a last sale, options
are valued at the average of the quoted bid and asked prices as of the close of
business. A futures contract is valued at the last sale price as of the close of
the commodities exchange on which it trades unless the Trust's Board of
Directors determines that such price does not reflect its fair value, in which
case it will be valued at its fair value as determined by the Trust's Board of
Directors. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.

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

In connection with transactions in repurchase agreements, the Trust's
custodian takes possession of the underlying collateral securities, the value of
which at least equals the principal amount of the repurchase transaction,
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral. If the seller defaults and
the value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.

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

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

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

13
<PAGE>

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.

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

<PAGE>

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 BlackRock Advisors, Inc., which is an indirect majority-owned
subsidiary of PNC Bank, N.A.,and an Administration Agreement with Morgan Stanley
Dean Witter Advisors Inc. ("MSDWA"), formerly DeanWitter InterCapital, Inc.

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 MSDWA
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. MSDWA 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
SECURITIES investment securities, other
than short-term investments,
and dollar rolls for the six months ended June 30, 1998 aggregated $322,094,596
and $238,166,669 respectively.

The Trust may invest up to 60% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities"). At June 30, 1998, 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 Trust may from time to time purchase in the secondary market certain
mortgage pass-through securities packaged or master serviced by PNC Mortgage
Securities Corp. (or Sears Mortgage if PNC Mortgage Securities Corp. succeeded
to rights and duties of Sears) or mortgage related securities containing loans
or mortgages originated by PNC Bank or its affiliates, including Midland Loan
Services, Inc. It is possible under certain circumstances, PNC Mortgage
Securities Corp. or its affiliates, including Midland Loan Services, Inc. could
have interests that are in conflict with the holders of these mortgage-backed
securities, and such holders could have rights against PNC Mortgage Securities
Corp. or its affiliates, including Midland Loan Services, Inc.

The federal income tax basis of the Trust's investments at June 30, 1998
was substantially the same as the basis for financial reporting, and,
accordingly, net unrealized appreciation for federal income tax purposes was
$17,582,291 (gross

<PAGE>

unrealized appreciation -- $31,433,426; gross unrealized depreciation --
$13,851,135).

For federal income tax purposes, the Trust has a capital loss carryforward as
of December 31, 1997 of approximately $7,465,000 which expires at the
termination of the Trust.

Details of open financial futures contracts at June 30, 1998 were as follows:

VALUE AT VALUE AT UNREALIZED
NUMBER OF EXPIRATION TRADE JUNE 30, APPRECIATION
CONTRACTS TYPE DATE DATE 1998 (DEPRECIATION)
- ---------- -------- ----------- ------- --------- -------------
Long positions:
10 Yr.
195 T-Note Sep. 1998 $21,944,471 $22,199,531 $255,060
Short positions:
30 Yr.
(540) T-Bond Sep. 1998 66,585,915 66,740,625 (154,710)
(80) Eurodollar Sep. 1998 18,691,455 18,861,000 (169,545)
(75) Eurodollar Dec. 1998 17,504,606 17,675,625 (171,019)
--------
($240,214)
========
Details of open interest rate caps at June 30, 1998 are as follows:

NOTIONAL VALUE AT
AMOUNT FIXED FLOATING TERMINATION COST/ JUNE 30, UNREALIZED
(000) RATE RATE DATE PREMIUM 1998 DEPRECIATION
- --------- ------- -------- ----------- -------- --------- -------------
60,000 6.00% 3 month LIBOR 02/19/02 $1,407,896 $530,400 ($877,496)

Details of open interest rate swaps at June 30, 1998 are as follows:

NOTIONAL UNREALIZED
AMOUNT FIXED FLOATING TERMINATION APPRECIATION
(000) TYPE RATE RATE DATE (DEPRECIATION)
- ---------- -------- ---------- --------- ----------- -------------
(150,000) Interest Rate 6.421% 3 month LIBOR 07/27/01 ($2,187,900)
218,250 Interest Rate 6.365% 3 month LIBOR 07/27/00 2,001,353
115,000 Basis 0.000% 3 month LIBOR 05/28/03 (250,700)
---------
($437,247)
=========

NOTE 4. BORROWINGS REVERSE REPURCHASE
AGREEMENTS: The Trust may
enter into reverse repurchase agreements with qualified, third party
broker-dealers as determined by and under the direction of the Trust's board of
directors. Interest on the value of the reverse repurchase agreements issued and
outstanding will be based upon competitive market rates at the time of issuance.
At the time the Trust enters into a reverse repurchase agreement, it will
establish and maintain a segregated account with the lender the value of which
at least equals the principal amount of the reverse repurchase transaction,
including accrued interest.

The average daily balance of reverse repurchase agreements outstanding during
the six months ended June 30, 1998 was $27,848,832 at a weighted average
interest rate of approximately 5.40%. The maximum amount of reverse repurchase
agreements outstanding at any month-end during the period ended June 30, 1998
was $256,431,550 as of January 31, 1998 which was 28% of total assets.

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

The average monthly balance of dollar rolls outstanding during the six months
ended June 30, 1998 was approximately $18,200,000. The maximum amount of dollar
rolls outstanding at any month-end during the period was $18,442,188 as of June
30, 1998 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 June 30, 1998, the
Adviser owned 10,724 shares.

NOTE 6. DIVIDENDS Subsequent to June 30, 1998
the Board of Directors of the
Trust declared dividends from undistributed earnings of $0.039583 per share
payable July 31, 1998 to shareholders of record on July 15, 1998.

<PAGE>

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

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

The Annual Meeting of Trust Shareholders was held May 6, 1998 to vote on
the following matters:

(1) To elect three Directors as follows:

Director Class Term Expiring
------- ----- ----- -------
Richard E. Cavanagh ........... I 3 years 2001
James Grosfeld ................ I 3 years 2001
James Clayburn La Force, Jr. .. I 3 years 2001

Directors whose term of office continues beyond this meeting are Andrew F.
Brimmer, Kent Dixon, Laurence D. Fink, Frank J. Fabozzi, Ralph
L. Schlosstein and Walter F. Mondale.

(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1998.

Shareholders elected the three Directors and ratified the selection of
Deloitte & Touche LLP. The results of the voting was as follows:

Votes For Votes Against Abstentions
--------- ------------- -----------
Richard E. Cavanagh ....... 36,963,804 0 8,341,240
James Grosfeld ............ 36,923,915 0 8,381,129
James Clayburn La Force, Jr. 36,984,381 0 8,320,663
Ratification of
Deloitte & Touche LLP ... 44,409,929 183,443 711,672

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

THE TRUST'S INVESTMENT OBJECTIVE
The BlackRock Strategic Term Trust Inc.'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 an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $119
billion on behalf of tax tax-exempt clients worldwide. Strategies include fixed
income, equity and cash any may incorporate both domestic and international
securities. Domestic fixed income strategies utilize the government, mortgage,
corporate and municipal bond sectors.BlackRock manages twenty-one closed-end
funds that are traded on either the New York or American stock exchanges, and a
$23 billion family of open-end equity and bond funds. Current institutional
clients number 334, domiciled in the United States and overseas.

WHAT CAN THE TRUST INVEST IN?
The Trust may invest in all fixed income securities rated investment grade or
higher ("AAA", "AA", "A" or "BBB"). Examples of securities in which the Trust
may invest include U.S. government and government agency securities, zero coupon
securities, mortgage-backed securities, corporate debt securities, asset-backed
securities, U.S. dollar-denominated foreign debt securities and municipal
securities. Under current market conditions, BlackRock expects that the primary
investments of the Trust will be U.S. government securities, securities backed
by government agencies (such as mortgage-backed securities) and corporate debt
securities.

WHAT IS THE ADVISER'S INVESTMENT STRATEGY?
The Adviser will seek to meet the Trust's investment objective by managing the
assets of the Trust so as to return the initial offering price ($10 per share)
at maturity. The Trust will implement a conservative strategy that will seek to
closely match the maturity of the assets of the portfolio with the future return
of the initial investment at the end of 2002. At the Trust's termination,
BlackRock expects that the value of the securities which have matured, combined
with the value of the securities that are sold will be sufficient to return the
initial offering price to investors. On a continuous basis, the Trust will seek
its objective by actively managing its assets in relation to market conditions,
interest rate changes and, importantly, the remaining term to maturity of the
Trust.

In addition to seeking the return of the initial offering price, the Adviser
also seeks to provide high monthly income to investors. The portfolio managers
will attempt to achieve this objective by investing in securities that provide
competitive income. In addition, leverage will be used (in an amount up to
331/3% of total assets) to enhance the income of the portfolio. In order to
maintain competitive yields as the Trust approaches maturity and depending on
market conditions, the Adviser will attempt to purchase securities with call
protection or maturities as close to the Trust's maturity date as possible.
Securities with call protection should provide the portfolio with some degree of
protection against reinvestment risk during times of lower prevailing interest
rates. Since the Trust's primary goal is to return the initial offering price at
maturity, any cash that the Trust receives prior to its maturity date (i.e. cash
from early and regularly scheduled payments of principal on mortgage-backed
securities) will be reinvested in securities with maturities which coincide with
the remaining term of the Trust. Since shorter-term securities typically yield
less than longer-term securities, this strategy will likely result in a decline
in the Trust's income over time. However, the Adviser will attempt to maintain a
yield which is competitive with a comparable maturity Treasury at the same point
on the yield curve (i.e. if the Trust has three years left until its maturity,
the Adviser will attempt to maintain a yield at a spread over a 3-year
Treasury). It is important to note that the Trust will be managed so as to
preserve the integrity of the return of the initial offering price.

<PAGE>

HOW ARE THE TRUST'S SHARES PURCHASED AND SOLD?
DOES THE TRUST PAY DIVIDENDS REGULARLY?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial adviser. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional shares of the fund through the Trust's transfer agent, Dean Witter
Trust Company. Investors who wish to hold shares in a brokerage account should
check with their financial adviser to determine whether their brokerage firm
offers dividend reinvestment services.

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

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

SPECIAL CONSIDERATIONS AND RISK FACTORS RELEVANT TO TERM TRUSTS
THE TRUST IS INTENDED TO BE A LONG-TERM INVESTMENT AND IS NOT A SHORT-TERM
TRADING VEHICLE.

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

COLLATERALIZED Mortgage-backed securities which separate mortgage
pools into short-, medium-, and long-term
securities with different priorities for receipt
of principal and interest. Each class is paid a
fixed or floating rate of interest at regular
intervals. Also known as multiple-class mortgage
pass-throughs.

DISCOUNT: When a fund's net asset value is greater than its
stock price the fund is said to be trading at a
discount.

DIVIDEND: This is income generated by securities in a
portfolio and distributed to shareholders after
deduction of expenses. This Trust declares and
pays dividends on a monthly basis.

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

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

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

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

GNMA: Government National Mortgage Association, a U.S.
Government agency that facilitates a secondary
mortgage market by providing an agency that
guarantees timely payment of interest and
principal on mortgages. GNMA's obligations are
supported by the full faith and credit of the U.S.
Treasury. Also known as Ginnie Mae.

GOVERNMENT SECURITIES: Securities issued or guaranteed by the U.S.
government, or one of its agencies or
instrumentalities, such as GNMA (Government
National Mortgage Association), FNMA (Federal
National Mortgage Association) and FHLMC (Federal
Home Loan Mortgage Corporation).

<PAGE>

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 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.

<PAGE>

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

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

MATURITY
PERPETUAL TRUSTS STOCK SYMBOL DATE
---------- ------
<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>

<PAGE>

- --------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
- --------------------------------------------------------------------------------

BlackRock Financial Management, Inc. ("BlackRock") is an SEC-registered
investment adviser. BlackRock and its affiliates currently manage over $119
billion on behalf of taxable and tax-exempt clients worldwide. Strategies
include fixed income, equity and cash and may incorporate both domestic and
international securities. BlackRock manages twenty-one closed-end funds that are
traded on either the New York or American stock exchanges, and a $23 billion
family of open-end equity and bond funds. Current institutional clients number
334, domiciled in the United States and overseas.

BlackRock's fixed income product was introduced in 1988 by a team of
highly seasoned fixed income professionals. These professionals had extensive
experience creating, analyzing and trading a variety of fixed income
instruments, including the most complex structured securities. In fact, several
individuals at BlackRock were responsible for developing many of the major
innovations in the mortgage-backed and asset-backed securities markets,
including the creation of the first CMO, the floating rate CMO, the
senior/subordinated pass-through and the multi-class asset-backed security.

BlackRock is unique among asset management and advisory firms in the
emphasis it places on the development of proprietary analytical capabilities.
Over one quarter of the firm's professionals is dedicated to the design,
maintenance and use of these systems, which are not otherwise available to
investors. BlackRock's proprietary analytical tools are used for evaluating, and
designing fixed income investment strategies for client portfolios. Securities
purchased include mortgages, corporate bonds, municipal bonds and a variety of
hedging instruments.

BlackRock has developed investment products that respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. In fact, BlackRock introduced the first closed-end mortgage fund, the
first taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAA rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
Currently, BlackRock's closed-end funds have dividend reinvestment plans, which
are designed to provide ongoing demand for the stock in the secondary market.
BlackRock manages a wide range of investment vehicles, each having specific
investment objectives and policies.

In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
that you may have about your BlackRock funds and we thank you for the continued
trust that you place in our abilities.

IF YOU WOULD LIKE FURTHER INFORMATION
PLEASE DO NOT HESITATE TO CALL BLACKROCK AT (800) 227-7BFM

23
<PAGE>

BlackRock

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

OFFICERS
Ralph L. Schlosstein, PRESIDENT
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
Morgan Stanley Dean Witter Advisors 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
Morgan Stanley Dean Witter FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311-3977
(800) 526-3143

INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434

LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022

The accompanying financial statements as of
June 30, 1998 were not audited and accordingly,
no opinion is expressed on them.

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

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

9247P-10-8

Printed on recycled paper

BlackRock

THE
STRATEGIC TERM
TRUST INC.
==========================
SEMI-ANNUAL REPORT
JUNE 30, 1998

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