BLACKROCK STRATEGIC TERM TRUST INC, N-30D, 1999-08-27

BLACKROCK STRATEGIC TERM TRUST INC
N-30D, 1999-08-27

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

July 31, 1999

Dear Shareholder:

Since the Trust's last report, interest rates rose sharply as U.S economic
growth remained strong, labor markets tightened and international markets began
to recover. In light of these factors, the Federal Reserve's Federal Open Market
Committee increased short-term interest rates by 25 basis points in June, citing
a concern that inflation might start to accelerate.

In tandem with the Fed's recent rate tightening, BlackRock has taken a
defensive interest rate stance. With the Treasury curve currently pricing in the
possibility of another Fed tightening by year-end, we believe that interest
rates will trade in a relatively narrow range until the economy shows signs of
slowing.

This report contains comments from your Trust's managers regarding the
markets and portfolio in addition to the Trust's semi-annual 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

<PAGE>

July 31, 1999

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, 1999.
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:

----------------------------------------------
6/30/99 12/31/98 CHANGE HIGH LOW
- --------------------------------------------------------------------------------
STOCK PRICE $9.0625 $ 9.1875 (1.36%) $ 9.31 $9.00
- --------------------------------------------------------------------------------
NET ASSET VALUE (NAV) $9.64 $10.08 (4.37%) $10.14 $9.55
- --------------------------------------------------------------------------------
5-YEAR U.S. TREASURY NOTE 5.65% 4.54% 24.45% 5.91% 4.46%
- --------------------------------------------------------------------------------

THE FIXED INCOME MARKETS

The past six months have witnessed continued rapid expansion of the U.S.
economy. GDP growth for the second quarter of 1999 is estimated at an annual
rate of 3.5%-4%, far exceeding the historical non-inflationary level of 2%.
While BlackRock believes that growth may slow down in the second half of 1999,
we anticipate GDP to remain above 3% for the year. In spite of strong domestic
economic growth, inflationary forces continue to remain contained; still, the
Federal Reserve chose to raise its target for the federal funds rate from 4.75%
to 5.00% at its June meeting. The Fed cited an easing of financial strain, tight
labor markets and a firming of foreign economies in the release accompanying the
move. The Fed dropped its tightening bias to a neutral bias, which should reduce
the likelihood of another hike at the August 24th meeting. However, an
additional 25-50 basis points of tightening by year end is possible, as the
combination of a very strong domestic economy and an improving situation in
Europe and Japan may allow for tighter monetary policy.

U.S. Treasury securities dramatically reversed their fourth quarter gains
in the first half of 1999. The yield of the 10-Year Treasury posted a net
decline of 118 basis points (1.18%), beginning 1999 at 4.65% and closing on June
30, 1999 at 5.78%. Strong economic numbers led the Federal Reserve to adopt a
tightening bias on May 18, 1999 and ultimately raised interest rates by 25 basis
points on June 30, 1999. The Federal Reserve eased rates by 0.75% in 1998
because of the global financial crisis but cited in their June 1999 meeting
"Since then much of the financial strain has eased, foreign economies have
firmed and economic activity in the U.S. has moved forward at a brisk pace." We
anticipate Treasuries will trade in a relatively narrow range for the balance of
1999 unless the Fed takes further action.

<PAGE>

As interest rates rose and alleviated prepayment fear, mortgage securities
outperformed the broader investment grade bond market. For the period ended June
30th the LEHMAN BROTHERS MORTGAGE INDEX posted a 0.53% total return versus
- -1.39% for the LEHMAN BROTHERS AGGREGATE INDEX. After significantly
underperforming Treasuries in 1998 mortgages experienced a significant rally
late in 1998 following through into the first quarter of 1999. Although yields
have tightened significantly from their crisis levels in 1998, mortgages remain
compelling as a record issuance has come to market and kept yields attractive.
Although higher mortgage rates have reduced prepayment fears, mortgage rates
still remain at historically low levels.

Investment grade corporate securities underperformed the broader
investment grade bond market, as corporates measured by the MERRILL LYNCH U.S.
CORPORATE MASTER INDEX returned -2.52%, as compared to the LEHMAN BROTHERS
AGGREGATE INDEX'S -1.39%. Corporate profitability continues to be the driving
factor of corporate bond performance and profit growth remains under pressure
from overseas markets and a strong labor market. Deteriorating fundamentals
(four times as many downgrades as upgrades in the first quarter according to
S&P) combined with weakening profit growth and increased issuance will continue
to pressure the corporate market. Investor appetite for credit and liquidity
risk remains suppressed after last year's volatility. We anticipate new supply
to start to taper off early in the fourth quarter and relieve some of the
pressure that investment grade corporates have been experiencing.

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 charts compare the Trust's current and December 31, 1998 asset
composition and credit rating.

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THE BLACKROCK STRATEGIC TERM TRUST INC.
- --------------------------------------------------------------------------------
COMPOSITION JUNE 30, 1999 DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Zero CouponBond 24% 24%
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Corporate Bonds 18% 17%
- --------------------------------------------------------------------------------
Interest-Only Mortgage-Backed Securities 10% 8%
- --------------------------------------------------------------------------------
U.S. Government Securities 10% 10%
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Mortgage Pass-Throughs 8% 7%
- --------------------------------------------------------------------------------
Asset-Backed Securities 7% 6%
- --------------------------------------------------------------------------------
Multiple Class Mortgage Pass-Throughs 7% 9%
- --------------------------------------------------------------------------------
Taxable Municipal Bonds 5% 4%
- --------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities 4% 5%
- --------------------------------------------------------------------------------
Principal-Only Mortgage-Backed Securities 3% 4%
- --------------------------------------------------------------------------------
Adjustable Rate Mortgages 1% 1%
- --------------------------------------------------------------------------------
CMO Residuals 1% 1%
- --------------------------------------------------------------------------------
FNMA Project Loans 1% 1%
- --------------------------------------------------------------------------------
Inverse-Floating Rate Mortgages 1% 3%
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<PAGE>

----------------------------------------------------------------------------
RATING % OF CORPORATES
--------------------------------------------
CREDIT RATING JUNE 30, 1999 DECEMBER 31, 1998
----------------------------------------------------------------------------
AAAor Equivalent 4% 5%
----------------------------------------------------------------------------
AAor Equivalent 22% 22%
----------------------------------------------------------------------------
Aor Equivalent 38% 34%
----------------------------------------------------------------------------
BBBor Equivalent 36% 39%
----------------------------------------------------------------------------

In accordance with the Trust's primary investment objective of returning
the initial offering price upon maturity, the Trust's portfolio management
activity focused on adding securities which offer attractive yield spreads over
Treasury securities and an emphasis on maturity dates approximating 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 in the asset-backed security (ABS) and corporate
sector. 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 Treasuries, in an effort to increase yield and reduce tail risk.
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.

<PAGE>

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THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--139.7%
MORTGAGE PASS-THROUGHS--12.3%
Federal Home Loan Mortgage Corp.,
$16,717 6.50%, 11/01/25-01/01/28 .................... $16,138,095
390 7.50%, 11/01/10, 15 Year .................... 396,653
337 8.00%, 09/01/23 ............................. 345,733
574 9.00%, 11/01/05, 15 Year .................... 590,144
Federal National Mortgage Association,
43,609+ 6.50%, 05/01/26-07/01/29 .................... 42,068,745
5,543 7.25%, 01/01/23, Project 797 ............... 5,551,302
3,192 7.50%, 02/01/02-06/01/08 .................... 3,247,985
53 Government National Mortgage
Association,
9.00%, 11/15/16 ............................. 56,207
-----------
68,394,864
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MULTIPLE CLASS MORTGAGE
PASS-THROUGHS--11.9%
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage
Participation Certificates,
10,526+ Ser. 90, Class 90-G,
10/15/20 .................................. 10,905,318
3 Ser. 1360, Class 1360-PE,
12/15/17. ................................. 3,400
1,883 Ser. 1488, Class 1488-F,
09/15/06 .................................. 1,882,510
1,625 Ser. 1488, Class 1488-PF,
09/15/06 .................................. 1,639,268
271 Ser. 1590, Class 1590-K,
10/15/23 .................................. 270,982
1,400 Ser. 1601, Class 1601-PG,
12/15/06 .................................. 1,396,150
723 Ser. 1603, Class 1603-MB,
10/15/23 (ARM) ............................ 730,328
1,498 Ser. 1637, Class 1637-LF,
12/15/23 .................................. 1,507,222
2,327 Ser. 1684, Class 1684-OB,
03/15/24 .................................. 2,345,173
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
1,469 Trust G93-17, Class 17-SH,
04/25/23 (ARM) ............................ 1,253,513
15,801+ Trust 1992-43, Class 43-E,
04/25/22 .................................. 15,942,439
2,275 Trust 1992-129, Class 129-G,
06/25/18 .................................. 2,263,131
2,000 Trust 1992-155, Class 155-SB,
12/25/06 (ARM) ............................ 1,936,560
16,288++ Trust 1992-156, Class 156-H,
04/25/06 .................................. 16,048,688
500 Trust 1993-71, Class 71-PG,
07/25/07 .................................. 499,725
247 Trust 1993-117, Class 117-SA,
07/25/08 (ARM) ............................ 254,606
1,375++ Trust 1993-170, Class 170-SA,
09/25/08 (ARM) ............................ 1,378,003
703 Trust 1993-185, Class 185-SH,
04/25/19 .................................. 726,132
1,223 Trust 1993-225, Class 225-SB,
07/25/23. ................................. 1,132,632
2,205 Trust 1994-40, Class 40-H,
10/25/20 .................................. 2,170,999
784 Trust 1997-7, Class 7-WC,
04/25/22 .................................. 105,846
1,429 Government National Mortgage
Association,
Trust 1996-3, Class 3-C,
09/20/20 .................................. 1,448,227
-----------
65,840,852
-----------
INTEREST ONLY MORTGAGE-
BACKED SECURITIES--13.5%
AAA 91,405 CS First Boston Mortgage Securities,
Ser. 1997-C1, Class AX,
04/20/22 ** ............................... 8,301,567
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage
Participation Certificates,
1,605 Ser. G2, Class 2-M,
07/25/18 .................................. 70,446
11,301 Ser. G25, Class 25-S,
08/25/06 .................................. 264,100
1,572 Ser. G39, Class 39-J,
03/25/24 .................................. 191,940
10,815 Ser. 4, Class 4-S,
11/25/22 .................................. 510,317
201 Ser. 186, Class 186-J,
08/15/21 .................................. 34,285
4,007 Ser. 1055, Class 1055-I,
03/15/21 .................................. 941,646
3,929 Ser. 1215, Class 1215-P,
06/15/06 .................................. 332,534
180 Ser. 1375, Class 1375-H,
12/15/05 .................................. 17,791
3,990 Ser. 1379, Class 1379-FB,
08/15/18 .................................. 137,182
4,550 Ser. 1434, Class 1434-LA,
03/15/19 .................................. 270,840
10,967 Ser. 1472, Class 1472-S,
05/15/06 .................................. 347,640
14,606 Ser. 1496, Class 1496-GA,
03/15/19 .................................. 1,597,500

See Notes to Consolidated Financial Statements.

5
<PAGE>

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PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
- --------------------------------------------------------------------------------

INTEREST ONLY MORTGAGE-
BACKED SECURITIES--(CONTINUED)
$10,756 Ser. 1551, Class 1551-J,
07/15/08 ................................... $ 321,386
5,048 Ser. 1590, Class 1590-JC,
01/15/19 ................................... 249,262
3,939 Ser. 1626, Class 1626-PV,
12/15/08 ................................... 308,188
2,067 Ser. 1662, Class 1662-P,
11/15/07 ................................... 266,477
7,605 Ser. 1682, Class 1682-SB,
09/15/23 ................................... 397,343
82,282 Ser. 1954, Class 1954-BA,
04/15/21 ................................... 1,741,910
50,798 Ser. 1954, Class 1954-BB,
04/15/21 ................................... 454,640
22,536 Ser. 1954, Class 1954-LL,
05/15/21 ................................... 206,433
22,536 Ser. 1954, Class 1954-LM,
05/15/21 ................................... 206,433
18,431 Ser. 1954, Class 1954-MD,
03/15/16 ................................... 1,748,736
14,815 Ser. 2049, Class 2049-PK,
06/15/14 ................................... 1,171,748
22,670 Ser. 2054, Class 2054-PL,
10/15/19 ................................... 3,761,800
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
10,000 Trust G93-22, Class 22-P,
06/25/23 ................................... 3,217,160
3,795 Trust G93-25, Class 25-N,
12/25/19 ................................... 621,219
9,027 Trust G93-26, Class 26-PT,
12/25/17 ................................... 766,288
16,407 Trust G93-31, Class 31-PS,
08/25/18 ................................... 373,588
1,668 Trust 1991-49, Class 49-G,
05/25/06 ................................... 332,176
1,455 Trust 1992-82, Class 82-IO,
05/25/22 ................................... 360,648
2,402 Trust 1992-108, Class 108-L,
07/25/07 ................................... 552,558
1,752 Trust 1992-208, Class 208-S,
11/25/07 ................................... 324,185
17,128 Trust 1993-121, Class 121-PH,
01/25/19 ................................... 1,498,706
3,797 Trust 1993-226, Class 226-SB,
05/25/19 ................................... 121,170
3,448 Trust 1993-245, Class 245-JA,
03/25/19 ................................... 168,534
2,140 Trust 1994-42, Class 42-SO,
03/25/23 ................................... 251,200
20,598 Trust 1996-15, Class 15-SG,
08/25/08 ................................... 2,185,861
12,937 Trust 1996-20, Class 20-SB,
10/25/08 ................................... 3,612,155
4,484 Trust 1996-24, Class 24-SB,
10/25/08 ................................... 986,504
8,499 Trust 1996-24, Class 24-SJ,
01/25/22 ................................... 2,592,976
733 Trust 1996-54, Class 54-SM,
09/25/23 ................................... 143,468
231 Trust 1997-17, Class 17-PJ,
03/18/18 ................................... 1,183
1,820 Trust 1997-35, Class 35-PK,
09/18/21 ................................... 129,697
35,469 Trust 1997-35, Class 35-SB,
03/25/09 ................................... 872,882
24,000++ Trust 1997-44, Class 44-SC,
06/25/08 ................................... 1,514,592
22,411 Trust 1997-50, Class 50-HJ,
12/25/17 ................................... 1,452,474
43,826 Trust 1997-90, Class 90-L,
10/25/19 ................................... 3,992,253
AAA 116,537 First Union Lehman Brothers
Bank of America,
Ser. 1998-C2, Class IO,
05/18/28 ................................... 4,487,571
Government National Mortgage
Association,
1,870 Ser. 1997-16, Class 16-PR,
12/20/20 ................................... 142,738
16,824 Ser. 1998-26, Class 26-IO,
10/20/18 ................................... 1,629,804
Merrill Lynch Mortgage Investors Inc.,
AAA 105,166 Ser. 1997-C2, Class IO,
12/10/29 ................................... 7,189,470
AAA 73,094 Ser. 1998-C2, Class IO,
02/15/30 ................................... 5,519,925
AAA 97,146 Morgan Stanley Capital I,
Ser. 1998-HF1, Class X,
02/15/18 ................................... 5,823,442
N/R 930 Salomon Brothers Mortgage Securities,
Ser. 1987-3, Class B,
10/23/17 ................................... 240,940
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74,957,511
-----------
PRINCIPAL ONLY MORTGAGE-
BACKED SECURITIES--5.0%
AAA 1,882@ Collateralized Mortgage Obligation,
Trust 26, Class A,
04/23/17 ................................... 1,568,828
Federal Home Loan Mortgage Corp.,
Multiclass Mortgage
Participation Certificates,
361 Ser. 1373, Class 1373-B,
09/15/22 ................................... 346,705
2,269 Ser. 1597, Class 1597-H,
07/15/23 ................................... 1,444,452
2,691 Ser. 1662, Class 1662-PO,
01/15/09 ................................... 2,160,635
1,234 Ser. 2009, Class 2009-A,
12/15/22 ................................... 882,463

See Notes to Consolidated Financial Statements.

<PAGE>

================================================================================
PRINCIPAL
AMOUNT VALUE
RATING* (000) DESCRIPTION (NOTE 1)
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PRINCIPAL ONLY MORTGAGE-
BACKED SECURITIES--(CONTINUED)
Federal National Mortgage Association,
REMIC Pass-Through Certificates,
$ 648 Trust 225, Class 1,
06/01/23 ................................. $ 525,863
5,432++ Trust 1993-67, Class 67-B,
12/25/21 ................................. 5,144,828
2,617 Trust 1993-92, Class 92-G,
05/25/23 ................................. 1,847,019
1,684 Trust 1993-213, Class 213-H,
09/25/23 ................................. 1,663,816
1,225 Trust 1993-237, Class 237-C,
11/25/23 ................................. 1,070,349
800 Trust 1994-8, Class 8-D,
11/25/23 ................................. 706,248
4,046 Trust 1994-26, Class 26-G,
01/25/24 ................................. 3,398,412
550 Trust 1994-54, Class 54-E,
11/25/23 ................................. 478,643
2,659 Trust 1994-87, Class 87-E,
03/25/09 ................................. 2,067,095
1,879 Trust 1997-19, Class 19-C,
09/25/23 ................................. 1,541,153
1,127 Trust 1997-19, Class 19-H,
10/25/22 ................................. 747,993
AAA 2,102 Prudential Bache CMO Trust,
Ser. 10, Class H,
04/01/19 ................................. 1,912,810
-----------
27,507,312
-----------
COMMERCIAL MORTGAGE-BACKED
SECURITIES--6.2%
AAA 2,600 Aetna Commercial Mortgage
Trust, Ser. 1995-C5, Class B,
6.74%, 12/26/30 .......................... 2,623,210
Aa1 4,000 FDIC Trust,
Ser. 1994-C1, Class 2F,
8.70%, 09/25/25 .......................... 4,102,900
LTC Commercial Mortgage
Pass-Through Certificates,
BBB+ 1,000 Ser. 1993-1, Class D,
9.20%, 11/28/12 .......................... 1,020,625
AAA 3,998 Ser. 1996-1, Class A,
7.06%, 04/15/28 ** ....................... 3,993,099
A 2,290 Merrill Lynch Mortgage Investors Inc.,
Ser. 1995-C1, Class C,
7.597%, 05/25/15 ......................... 2,276,074
AAA 1,170 Morgan Stanley Capital Trust I,
Ser. 1995-GAL1, Class A1,
7.00%, 02/15/02 ** ....................... 1,178,710
Paine Webber Mortgage
Acceptance Corp.,
AAA 2,000 Ser. 1995-M1, Class A,
6.70%, 01/15/07 ** ....................... 2,005,985
BBB 1,656 Ser. 1995-M1, Class D,
7.30%, 01/15/07 ** ....................... 1,660,492
A 4,000 Resolution Trust Corp.,
Ser. 1994-C1, Class C,
8.00%, 06/25/26 .......................... 4,000,000
Aa2 2,589 Salomon Brothers Mortgage
Securities Trust VII,
Ser. 1997-TZH, Class A1,
7.15%, 03/25/22 ** ....................... 2,630,171
AAA 3,925 Structured Asset Securities Corp.,
Ser. 1996-CFL, Class B,
6.30%, 02/25/28 .......................... 3,950,741
A 4,500 TVO Southwest,
Ser. 1994-MF1, Class A2,
9.37%, 11/18/04 ** . .................... 4,705,789
-----------
34,147,796
-----------
ASSET-BACKED SECURITIES--10.4%
AAA 7,491 Brazos Student Loan Financial Corp.,
Ser. 1998-A, Class A1,
5.425%, 06/01/06 ......................... 7,473,582
Broad Index Secured Trust Offering,**
Baa2 5,000 Ser. 1998-1A, Class A,
6.58%, 03/26/01 .......................... 4,917,344
Baa2 5,000 Ser. 1998-4A, Class B2,
6.97%, 09/09/01 .......................... 4,978,500
AAA 20,545 Chase Credit Card Master Trust,
Ser. 1997-5, Class 5-A,
6.194%, 08/15/05 ......................... 20,332,659
N/R 2,952 Global Rated Eligible Asset Trust,
Ser. 1998-A,
7.33%, 09/15/07**/*** .................... 1,608,767
AAA 3,400 Health Care Rec Securitization Program,
Ser. 1999-1, Class A,
6.25%, 02/01/03** ........................ 3,360,688
AA 6,732 Pegasus Aviation Lease Securitization,
Ser. 1999-1A, Class A1,
6.30%, 03/25/29** ........................ 6,580,837
Structured Mortgage Asset
Residential Trust,**/***
N/R 4,077 Ser. 1997-2, Class 2,
8.24%, 03/15/06 .......................... 1,950,967
N/R 4,496 Ser. 1997-3,
8.724%, 04/15/06 ......................... 2,000,003
A1 4,500 Student Loan Marketing Association,
Trust 1995-1, Class CTFS,
10/25/09 ................................. 4,440,234
-----------
57,643,581
-----------
ZERO COUPON BONDS--34.0%
Financing Corp (FICO Strips),
18,000 03/07/02 ................................... 15,152,940
29,300 12/27/02 ................................... 23,350,049

See Notes to Consolidated Financial Statements.

<PAGE>

ZERO COUPON BONDS--(CONTINUED)
Government Trust Certificates (Israel),
$19,432+ 05/15/02 .................................. $ 16,211,864
25,000 11/15/02 .................................. 20,158,750
10,000 Government Trust Certificates (Jordan),
05/15/02 .................................. 8,459,400
U.S. Treasury Strips,
74,550++ 08/15/02 .................................. 62,630,201
51,200++ 10/31/02 .................................. 42,470,912
-----------
188,434,116
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TAXABLE MUNICIPAL BONDS--6.7%
AAA 1,000 Kern County California,
Pension Obligation,
6.39%, 08/15/02 ......................... 1,006,050
AAA 3,510 Long Beach California,
Pension Obligation,
6.56%, 09/01/02 ......................... 3,548,294
AAA 5,000 Los Angeles County California,
Pension Obligation,
6.54%, 06/30/02 ......................... 5,049,650
AAA 10,000 New Jersey Economic
Development Auth., Zero Coupon,
02/15/03 ................................ 7,919,500
New York City G.O.,
A- 5,000 6.54%, 03/15/02 ........................... 5,017,650
A- 5,000 7.125%, 08/15/02 .......................... 5,101,650
A- 5,000 7.34%, 04/15/02 ........................... 5,118,350
BBB+ 1,235 New York St. Environ. Fac. Auth.,
6.73%, 09/15/02 ........................... 1,243,262
AAA 1,950 San Francisco California
International Airport,
6.35%, 05/01/02 ......................... 1,958,736
AA 1,000 St. Josephs Health System California,
G.O., 7.13%, 07/01/02 ................... 1,022,260

-----------
36,985,402
-----------
CORPORATE BONDS--24.7%
BANKING & FINANCE--11.2%
A3 4,900 Ahmanson HF & Co.,
8.25%, 10/01/02 ........................... 5,114,571
A3 1,700 Amsouth Bancorp.,
6.75%, 11/01/25 ........................... 1,681,691
A+ 5,000 Goldman Sachs Group L P,
6.25%, 02/01/03 ** ........................ 4,935,808
Lehman Brothers Holdings Inc.,
A 5,000 6.625%, 12/27/02 .......................... 4,944,850
A 875 6.75%, 09/24/01 ........................... 873,574
A 5,000 7.25%, 04/15/03 ........................... 5,034,300
AA- 1,665 Merrill Lynch & Co. Inc.,
5.75%, 11/04/02. .......................... 1,631,783
Nationsbank Corp.,
Aa2 5,000 6.65%, 04/09/02 ........................... 5,027,450
Aa2 5,000 7.00%, 09/15/01 ........................... 5,076,250
Paine Webber Group Inc.,
BBB+ 2,190 7.875%, 02/15/03 .......................... 2,256,269
BBB+ 7,790 8.25%, 05/01/02 ........................... 8,088,669
Salomon Smith Barney Holdings Inc.,
Aa3 3,000 5.875%, 02/01/01 .......................... 2,983,890
Aa3 1,500 7.00%, 05/15/00 ........................... 1,515,090
Aa3 4,500 7.98%, 03/01/00 ........................... 4,564,620
A- 8,500 Transamerica Finance Corp.,
6.75%, 06/01/00 ........................... 8,556,185
-----------
62,285,000
-----------
INDUSTRIAL--4.5%
A 1,000 Bass America Inc.,
8.125%, 03/31/02 .......................... 1,041,040
A1 1,000 Ford Motor Credit Co.,
8.00%, 06/15/02 ........................... 1,040,870
Baa2 5,425 Jones Apparel Group Inc.,
6.25%, 10/01/01 ........................... 5,336,735
BBB+ 5,000 Norfolk Southern Corp.,
6.95%, 05/01/02 ........................... 5,063,600
Baa1 5,265 Raytheon Co.,
6.45%, 08/15/02 ........................... 5,264,052
AA- 4,000 TCI Communications Inc.,
9.25%, 04/15/02 ........................... 4,295,040
Baa1 2,700 Tenneco Inc.,
8.075%, 10/01/02 .......................... 2,777,139
-----------
24,818,476
-----------
UTILITY--2.5%
A3 5,000@@ Columbia Energy Group.,
6.610%, 11/28/02 .......................... 4,994,750
A3 5,000 MCI Worldcom Inc.
6.125%, 04/15/02 .......................... 4,951,950
A 4,000 360 Communications,
7.125%, 03/01/03 .......................... 4,077,920
-----------
14,024,620
-----------
YANKEE--6.5%
AA1 5,000@@ African Development Bank,
7.75%, 12/15/01 ........................... 5,182,400
N/R 6,029 Banamex Remittance Master Trust,
Ser. 1996-1, 7.57%, 01/01/01** ............ 6,018,142
A3 5,000 Corporacion Andina De Fome,
7.10%, 02/01/03 ........................... 4,890,350
BBB- 3,500 Empresa Elec. Guacolda SA,
7.95%, 04/30/03 (Chile) ** ................ 3,179,930
BBB+ 1,650 Empresa Elec. Pehuenche,
7.30%, 05/01/03 (Chile) ................... 1,594,054
BBB- 2,000 Korea Development Bank,
6.50%, 11/15/02 ........................... 1,947,400
BBB- 5,000 Telecom Argentina,
9.75%, 07/12/01** ........................ 4,993,750
BBB- 5,000 Transpatadora de Gas Tragas,
10.25%, 04/25/01
(Argentina) ............................. 5,025,000

See Notes to Consolidated Financial Statements.

<PAGE>

YANKEE--(CONTINUED)
Baa1 $ 3,248 YPF Sociedad Anonima,
7.50%, 10/26/02 (Argentina) ............... $ 3,266,811
------------
36,097,837
------------
Total corporate bonds ....................... 137,225,933
------------
UNITED STATES GOVERNMENT
SECURITIES--14.3%
85,000+ United States Treasury Bond,
5.5%, 08/15/28 ............................ 77,827,700
1,680 United States Treasury Notes,
6.125%, 08/15/07 .......................... 1,698,110
------------
79,525,810
------------
COLLATERALIZED MORTGAGE
OBLIGATION RESIDUALS *** --0.5%
10 Federal Home Loan Mortgage Corp.,
Ser. 1016, Class 1016-R,
11/15/20 ................................ 69,600
Federal National Mortgage Association,
REMIC,
1 Trust 1991-9, Class 9-R,
02/25/06 ................................ 484,900
1 Trust 1991-9, Class 9-RL,,
02/25/06 ................................ 1,000
1 Trust 1991-48, Class 48-R,
05/25/06 ................................ 1,481,000
1 Trust 1991-48, Class 48-RL,
05/25/06 ................................ 97
8 Trust 1991-50, Class 50-R,
05/25/06 ................................ 550,260
------------
2,586,857
------------

NOTIONAL
AMOUNT
(000)
-------
CALL OPTIONS PURCHASED--0.2%
$68,000 Interest Rate Swap,
3 Month LIBOR over 5.85%,
expires 08/07/00 ......................... 563,669
85,000 Interest Rate Swap,
3 Month LIBOR over 5.60%,
expires 08/07/00 ......................... 455,864
-----------
1,019,533
------------
Total long -term investments
(cost $802,394,594) ....................... $774,269,567

PRINCIPAL
AMOUNT
(000)
-------

SHORT-TERM INVESTMENTS--4.5%
United States Government Agency
$25,160 Federal Home Loan Mortgage Corp.,
4.60%, due 07/01/99
(amortized cost $25,160,000) .............. 25,160,000
------------

Total investments before
outstanding call option written
and investments sold short--144.2%
(cost $827,554,594). ...................... $799,429,567
------------

CALL OPTION WRITTEN--(0.0%)
$(136,000) Interest Rate Swap,
3 Month LIBOR over 5.50%,
expires 08/10/99
(premium received $ 833,000) ............ (299)
------------

PRINCIPAL
AMOUNT
(000)
-------

INVESTMENTS SOLD SHORT--(12.4%)
$ (75,000) U.S. Treasury Bond,
5.25%, 02/15/29 ........................... (67,383,000)
(1,700) U.S. Treasury Note,
4.75%, 11/15/08 ............................. (1,561,076)
------------
(proceeds received $67,894,210) ........... (68,944,076)
------------

Total investments net of
call option written and
investments sold
short--131.8%
(cost $758,827,384) ....................... 730,485,192
------------

Liabilities in excess of other
assets--(31.8%) ........................... (176,179,814)
------------
NET ASSETS--100% ............................ $554,305,378
============

- ----------------
*Using the higher of Standard & Poor's, Moody's or Fitch's rating.
**Security restricted as to resale.
***Illiquid securities representing 1.5% of portfolio assets.
+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
@Partial principal amount pledged as collateral for financial futures
contracts.
@@Entire principal amount pledged as collateral for financial futures
contracts.

KEY TO ABBREVIATIONS
ARM - Adjustable Rate Mortgage
CMO - Collateralized Mortgage Obligation
G.O. - General Obligation
LIBOR - London InterBank Offer Rate
REMIC - Real Estate Mortgage Investment Conduit

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED STATEMENT OF
ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------

ASSETS
Investments, at value (cost $827,554,594)
(Note 1) ................................................... $799,429,567
Deposit with broker for investments sold short
(Note 1) ................................................... 69,524,250
Interest receivable .......................................... 8,594,918
Receivable for investments sold 5,172,975
Unrealized appreciation on interest rate swap
(Note 1 & 3) ............................................... 2,543
Other assets ................................................. 209,590
------------
882,933,843
------------
LIABILITIES
Reverse repurchase agreement (Note 4) ........................ 247,740,750
Investments sold short, at value
(proceeds $67,894,210) (Note 1) ............................ 68,944,076
Payable for investments purchased ............................ 7,603,962
Interest payable ............................................. 2,946,556
Due to broker--variation margin .............................. 539,607
Due to custodian ............................................. 505,050
Advisory fee payable (Note 2) ................................ 225,484
Administration fee payable (Note 2) .......................... 122,681
Swap option written, at value
(proceeds $833,000 (Note 1) ................................ 299
------------
328,628,465
------------
NET ASSETS ................................................... $554,305,378
============

Net assets were comprised of:
Common stock, at par (Note 5) .............................. 575,106
Paid-in capital in excess of par . ......................... 535,541,670
------------
536,116,776
Undistributed net investment income ........................ 49,338,472
Accumulated net realized loss .............................. (2,006,730)
Net unrealized depreciation ................................ (29,143,140)
------------
Net assets, June 30, 1999 .................................. $554,305,378
============
Net asset value per share:
($554,305,378 / 57,510,639 shares of
common stock issued and outstanding) ....................... $9.64
=====

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------

NET INVESTMENT INCOME
Income
Interest (net of premium
amortization of $2,928,686 and
interest expense of $8,503,826) .......................... $32,968,566
-----------
Operating expenses
Investment advisory ........................................ 1,269,021
Administration ............................................. 352,506
Transfer agent ............................................. 90,000
Directors .................................................. 62,000
Audit ...................................................... 54,000
Custodian .................................................. 42,000
Reports to shareholders .................................... 35,000
Registration ............................................... 20,000
Legal ...................................................... 14,000
Miscellaneous .............................................. 101,379
-----------
Total operating expenses ................................. 2,039,906
-----------
Net investment income before excise tax ...................... 30,928,660
Excise tax ................................................. 125,000
-----------
Net investment income ........................................ 30,803,660
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Net realized gain (loss) on:
Investments ................................................ (1,302,793)
Futures .................................................... (3,177,875)
Short sales ................................................ 458,496
Swaps ...................................................... (304,247)
-----------
............................................................. (4,326,419)
-----------
Change in net unrealized appreciation
(depreciation) on:
Investments ................................................ (41,017,145)
Options written ............................................ 3,019,445
Futures .................................................... (1,026,185)
Short sales ................................................ (1,055,018)
Swaps ...................................................... (463,394)
-----------
(40,542,297)
-----------
Net loss on investments ...................................... (44,868,716)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................................ ($14,065,056)
===========

See Notes to Consolidated Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------

RECONCILIATION OF NET DECREASE IN
NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH FLOWS
PROVIDED BY OPERATING ACTIVITIES
Net decrease in net assets resulting
from operations ............................................ ($ 14,065,056)
-------------
Decrease in investments ...................................... 65,718,345
Net realized loss ............................................ 4,326,419
Decrease in unrealized appreciation .......................... 40,542,297
Decrease in unrealized appreciation
on interest rate swap ...................................... 463,394
Decrease in receivable for
investments sold ........................................... 32,968,734
Decrease in receivable for
variation margin ........................................... 674,950
Increase in interest receivable .............................. (309,361)
Increase in other assets ..................................... (209,590)
Decrease in payable for
investments purchased ...................................... (76,224,068)
Decrease in swap option written ............................. (3,019,445)
Increase in deposits with broker
for short sales ............................................ (67,796,624)
Increase in payable for securities
sold short ................................................. 67,230,799
Increase in interest payable ................................. 1,244,266
Decrease in accrued expenses
and other liabilities ...................................... (153,783)
-------------
Total adjustments .......................................... 65,456,333
-------------
Net cash flows provided by
operating activities ....................................... $ 51,391,277
=============

INCREASE (DECREASE) IN CASH
Net cash flows provided by
operating activities ....................................... $ 51,391,277
-------------
Cash flows used for financing
activities:
Decrease in reverse repurchase
agreements ................................................. (38,267,550)
Cash dividends paid .......................................... (13,658,623)
-------------
Net cash flows used for
financing activities ....................................... (51,926,173)
-------------
Net decrease in cash ......................................... (534,896)
Cash at beginning of period .................................. 534,896
-------------
Cash at end of period ........................................ $ --
=============

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN NET ASSETS (Unaudited)
- --------------------------------------------------------------------------------

SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1999 1998
------------- ------------
INCREASE (DECREASE) IN NET ASSETS

Operations:

Net investment income ..................... $ 30,803,660 $ $41,426,604

Net realized gain (loss)
on investments .......................... (4,326,419) 7,649,729

Net change in unrealized
appreciation/(depreciation)
on investments .......................... (40,542,297) 9,477,287
------------ ------------

Net increase (decrease) in net
assets resulting from
operations .............................. (14,065,056) 58,553,620

Dividends from net
investment income ....................... (11,382,179) (27,317,150)
------------ ------------
Total increase (decrease) ................. (25,447,235) 31,236,470

NET ASSETS
Beginning of period ....................... 579,752,613 548,516,143
------------ ------------
End of period ............................. $554,305,378 $579,752,613
============ ============

See Notes to Consolidated Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERM TRUST INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----- ------ ------ ------ ----- -----
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......................... $ 10.08 $ 9.54 $ 9.15 $ 9.32 $ 8.12 $ 9.36
-------- -------- -------- -------- -------- --------
Net investment income
(net of interest expense
of $0.15, $0.23, $0.18,
$0.19, $0.34 and $0.19,
respectively) .............................. 0.54 0.72 0.67 0.58 0.62 0.46
Net realized and unrealized
gain (loss) on investments .................. (0.78) 0.30 0.20 (0.22) 1.14 (1.07)
-------- -------- -------- -------- -------- --------
Net increase (decrease)
from investment operations .................. (0.24) 1.02 0.87 0.36 1.76 (0.61)
-------- -------- -------- -------- -------- --------
Dividends from net investment
income ...................................... (.20) (0.48) (0.48) (0.53) (0.56) (0.49)
Distributions in excess of
net investment income ....................... -- -- -- -- -- (0.14)
-------- -------- -------- -------- -------- --------
Net asset value, end of period* .... $ 9.64 $ 10.08 $ 9.54 $ 9.15 $ 9.32 $ 8.12
======== ======== ======== ======== ======== ========
Market value, end of period* ....... $ 9.06 $ 9.19 $ 8.50 $ 8.00 $ 7.63 $ 7.13
======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:+ .......... 1.21% 14.02% 12.56% 11.79% 14.68% (20.28%)
RATIOS TO AVERAGE NET ASSETS:
Operating Expenses** ............... 0.72%+++ 0.75% 0.73% 0.74% 0.78% 0.98%
Net Investment Income .............. 10.92%+++ 7.35% 6.84% 6.39% 7.13% 5.32%
SUPPLEMENTAL DATA:
Average net assets (000) ........... $567,125 $563,470 $531,101 $518,963 $501,869 $491,747
Portfolio turnover rate ............ 9% 61% 110% 107% 135% 133%
Reverse repurchase agreements
outstanding, end of period (000) . $247,741 $286,008 $212,244 $213,085 $232,396 $184,672
Asset coverage++ ................... $ 3,237 $ 3,027 $ 3,584 $ 3,469 $ 3,305 $ 3,529

</TABLE>

- --------------------
* Net asset value and market value are published in BARRON'S each Saturday,
THE NEW YORK TIMES and THE WALL STREET JOURNAL each Monday.
** The ratios of operating expenses, including interest expense, to average
net assets, were 3.74%+++, 3.12%, 3.05%, 3.87%, 4.68% and 3.18% for the
periods indicated above, respectively. The ratios of operating expenses,
including interest expense and excise tax, to average net assets, were
3.78%+++, 3.19%, 3.05%, 3.87%, 4.68% and 3.18% 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. Total
investment returns for periods of less than one full year are not
annualized.
++ Per $1,000 of reverse repurchase agreement outstanding.
+++ Annualized.

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

See Notes to Consolidated Financial Statements.

<PAGE>

- --------------------------------------------------------------------------------
THE BLACKROCK STRATEGIC TERMTRUST INC.
CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------

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

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

SECURITIES VALUATION: The Trust values mortgage-backed, asset-backed, municipal
and other debt securities, interest rate swaps, caps, floors and non-exchange
traded options 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, or collections of 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 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

<PAGE>

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. Interest 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 selling or purchasing the right to buy or sell a security, the writer
or purchaser of the swap option is granting or buying 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 are recorded as liabilities or assets and are subsequently adjusted to
the current market value of the option written or purchased. Premiums received
or paid from writing or purchasing options which expires 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 commission, 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 loss on investment transactions.

The main risk that is associated with purchasing swap options is that the
swap option expires without being exercised. In this case, the option expires
worthless and the premium paid for the swap option is considered the loss. The
main risk that is associated with the writing of a swap option is the market
risk of an unfavorable change in the value of the interest rate swap underlying
the written swap option.

Swap options may be used by the Trust to manage the duration of the Trust's
portfolio in a manner similar to more generic options described above.

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

<PAGE>

because of an illiquid secondary market. In addition, since futures are used to
shorten or lengthen a portfolio's duration, there is a risk that the portfolio
may have temporarily performed better without the hedge or that the Trust may
lose the opportunity to realize appreciation in the market price of the
underlying positions.

SHORT SALES: The Trust may make short sales of securities
as a method of hedging potential price declines in similar securities owned.
When the Trust makes a short sale, it may borrow the security sold short and
deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the
sale. The Trust may have to pay a fee to borrow the particular securities and
may be obligated to pay over any payments received on such borrowed securities.
A gain, limited to the price at which the Trust sold the security short, or a
loss, unlimited as to dollar amount will be recognized upon the termination of a
short sale if the market price is less or greater than the proceeds originally
received.

SECURITIES LENDING: The Trust may lend its portfolio securities to
qualified institutions. The loans are secured by collateral at least equal, at
all times, to the market value of the securities loaned. The Trust may bear the
risk of delay in recovery of, or even loss of rights in, the securities loaned
should the borrower of the securities fail financially. The Trust receives
compensation for lending its securities in the form of interest on the loan. The
Trust also continues to receive interest on the securities loaned, and any gain
or loss in the market price of the securities loaned that may occur during the
term of the loan will be for the account of the Trust.

INTEREST RATE CAPS: Interest rate caps are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
excess, if any, of a floating rate over a specified fixed or floating rate.

Interest rate caps are intended to both manage the duration of the Trust's
portfolio and its exposure to changes in short term rates. Owning interest rate
caps reduces the portfolio's duration, making it less sensitive to changes in
interest rates from a market value perspective. The effect on income involves
protection from rising short term rates, which the Trust experiences primarily
in the form of leverage.

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

Transactions fees paid or received by the Trust are recognized as assets or
liabilities and amortized or accreted into interest expense or income over the
life of the interest rate cap. The asset or liability is subsequentlyadjusted to
the current market value of the interest rate cap purchased or sold. Changes in
the value of the interest rate cap are recognized as unrealized gains and
losses.

INTEREST RATE FLOORS: Interest rate floors are similar to interest rate swaps,
except that one party agrees to pay a fee, while the other party pays the
deficiency, if any, of a floating rate under a specified fixed or floating rate.

Interest rate floors are used by the Trust to both manage the duration of
the portfolio and its exposure to changes in short-term interest rates. Selling
interest rate floors reduces the portfolio's duration, making it less sensitive
to changes in interest rates from a market value perspective. The Trust's
leverage provides extra income in a period of falling rates. Selling floors
reduces some of the advantage by partially monetizing it as an up front payment
which the Trust receives.

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

Transactions fees paid or received by the Trust are recognized as assets or
liabilities and amortized or accreted into interest expense or income over the
life of the interest rate floor. The asset or liability is subsequently adjusted
to the current market value of the interest rate floor purchased or sold.
Changes in the value of the interest rate floor are recognized as unrealized
gains and losses.

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.

<PAGE>

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
BlackRockAdvisors, Inc., which is an indirect majority-owned subsidiary of PNC
Bank, N.A., and an Administration Agreement with MorganStanley 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 SECURITIES
Purchases and sales of investment securities, other than for short-term
investments, for the six months ended June 30, 1999, aggregated $74,243,223 and
$47,809,200, 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, 1999, the Trust held
12% 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, 1999
was substantially the same as the basis for financial reporting, and,
accordingly, net unrealized depreciation for federal income tax purposes was
$28,125,027 (gross unrealized appreciation--$19,312,729; gross unrealized
depreciation--$47,437,756).

For federal income tax purposes, the Trust has a capital loss carryforward
as of December 31, 1998 of approximately $7,584,199 of which $2,265,008 expires
in 2001 and $5,319,191 expires at the termination of the Trust. Details of open
financial futures contracts at June 30, 1999 were as follows:

VALUE AT VALUE AT
NUMBER OF EXPIRATION TRADE JUNE 30, UNREALIZED
CONTRACTS TYPE DATE DATE 1999 DEPRECIATION
- -------- ----- ---------- ------- --------- ------------
Short position:
(750) 30-Yr T-Bond Sep. 1999 $(86,126,197) $(86,929,688) $(803,491)
=========

The Trust had no open interest rate caps as of June 30, 1999. Details of
open interest rate swaps at June 30, 1999 were as follows:

NOTIONAL FLOATING/
AMOUNT FIXED FLOATING TERMINATION UNREALIZED
(000) TYPE RATE RATE DATE APPRECIATION
- -------- ---- ------- ------ ----------- -------------
35,000 Floating Rate 3 Mo. T-Bill 3 Mo. LIBOR 9/10/03 $1,463
+80.25 bps
30,000 Floating Rate 3 Mo. T-Bill 3 Mo. LIBOR 9/10/03 1,080
+81.75 bps -------
$2,543
=======

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, 1999 was $273,006,611 at a weighted average
interest rate of

<PAGE>

approximately 4.62%. The maximum amount of reverse repurchase agreements
outstanding at any month-end during the period was $283,912,000 as of January
31, 1999 which was 30.9% 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, 1999 was approximately $7,500,000. The maximum amount of
dollar rolls outstanding at any month-end during the period was $45,393,750 as
of January 31, 1999 which was 4.9% 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, 1999, the Adviser owned 10,724 shares.

NOTE 6. DIVIDENDS
Since June 30, 1999, the Board of Directors of the Trust declared dividends from
undistributed earnings of $0.03958 per share payable July 30, 1999 to
shareholders of record on July 15, 1999.

<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
reinvested by Morgan Stanley Dean Witter FSB (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 or elsewhere 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.

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.

<PAGE>

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

YEAR 2000 READINESS DISCLOSURE. The Trust is currently in the process of
evaluating its information technology infrastructure for Year 2000 compliance.
Substantially all of the Trust's information systems are supplied by the
Adviser. The Adviser has advised the Trust that it is currently evaluating
whether such systems are year 2000 compliant and that it expects to incur costs
of up to approximately five hundred thousand dollars to complete such evaluation
and to make any modifications to its systems as may be necessary to achieve Year
2000 compliance. The Adviser has advised the Trust that it has fully tested its
systems for Year 2000 compliance. The Trust may be required to bear a portion of
such cost incurred by the Adviser in this regard. The Adviser has advised the
Trust that it does not anticipate any material disruption in the operations of
the Trust as a result of any failure by the Adviser to achieve Year 2000
compliance. There can be no assurance that the costs will not exceed the amount
referred to above or that the Trust will not experience a disruption in
operations.

The Adviser has advised the Trust that it is in the process of evaluating
the Year 2000 compliance of various suppliers of the Adviser and the Trust. The
Adviser has advised the Trust that it has communicated with such suppliers to
determine their Year 2000 compliance status and the extent to which the Adviser
or the Trust could be affected by any supplier's Year 2000 compliance issues. To
date, the Adviser has received responses from all such suppliers with respect to
their Year 2000 compliance, and there can be no assurance that the systems of
such suppliers, who are beyond the Trust's control, will be Year 2000 compliant.
In the event that any of the Trust's significant suppliers do not successfully
and timely achieve Year 2000 compliance, the Trust's business or operations
could be adversely affected. The Adviser has advised the Trust that it is in the
process of preparing a contingency plan for Year 2000 compliance by its
suppliers. There can be no assurance that such contingency plan will be
successful in preventing a disruption of the Trust's operations.

The Trust is designating this disclosure as its Year 2000 readiness
disclosure for all purposes under the Year 2000 Information and Readiness
Disclosure Act and the foregoing information shall constitute a Year 2000
statement for purposes of that Act.

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

The Annual Meeting of Trust Shareholders was held May 19, 1999 to vote on
the following matters:
(1) To elect three Directors as follows:

DIRECTOR CLASS TERM EXPIRING
-------- ------ ----- -------
Frank J. Fabozzi .............. I 3 years 2002
Walter F. Mondale ............. I 3 years 2002
Ralph L. Schlosstein .......... I 3 years 2002

Directors whose term of office continues beyond this meeting are Andrew F.
Brimmer, Richard E. Cavanagh, Kent Dixon, Laurence D. Fink, James Grosfeld
and James Clayburn La Force, Jr.

(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending December 31, 1999.

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
--------- ------------- -----------
Frank J. Fabozzi 34,825,284 -- 5,724,299
Walter F. Mondale 34,681,007 -- 5,868,576
Ralph L. Schlosstein 34,819,760 -- 5,729,823
Ratification of
Deloitte & Touche LLP 39,929,104 156,634 463,845

<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 $141
billion on behalf of taxable and 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 $25 billion family of open-end funds. BlackRock manages
over 470 accounts, 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 Adviser 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.

INTEREST-ONLY SECURITIES (IO). The yield to maturity on an IOclass is extremely
sensitive to the rate of principal payments (including prepayments) on the
related underlying Mortgage Assets, and a repaid rate of principal payments may
have a material adverse effect on such security's yield to maturity. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, the Trust may fail to recoup fully its initial investment in these
securities even if the securities are rated AAA by S&P or Aaa by Moody's.

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.

COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS):
Mortgage-backed securities secured or backed by mortgage loans on commercial
properties.

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
share-holders 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
second-ary 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.

<PAGE>

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).

INVERSE-FLOATINGRATE 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:
Mortgage securities including CMBS 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, THE NEW
YORK TIMES and THE WALL STREET JOURNAL each Monday.

PRINCIPAL-ONLY SECURITIES:
Mortgage securities that receive only the principal cash flows from an
underlying pool of mortgage loans or underlying pass-through securities. PROJECT
LOANS: Mortgages for multi-family, low- to middle-income housing.

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

REMIC:
A real estate mortgage investment conduit is a multiple-class security backed by
mortgage-backed securities or whole mortgage loans and formed as a trust,
corporation, partnership, or segregated pool of assets that elects to be treated
as a REMIC for federal tax purposes. Generally, Fannie Mae REMICs are formed as
trusts and are backed by mortgage-backed securities.

RESIDUALS:
Securities issued in connection with collateralized mortgage obligations that
generally represent the excess cash flow from the mortgage assets underlying the
CMO after payment of principal and interest on the other CMO securities and
related administrative expenses.

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

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

<PAGE>

BLACKROCK

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

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

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

ADMINISTRATOR
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, 1999 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

Printed on recycled paper 9247P-10-8

THE BLACKROCK
STRATEGIC TERM
TRUST INC.
- --------------
CONSOLIDATED
SEMI-ANNUAL REPORT
JUNE 30, 1999