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SIGNATURE JULIAN SLUYTERS
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000893227
<NAME> PAINEWEBBER 2002 TARGET TERM TRUST INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 188465
<INVESTMENTS-AT-VALUE> 194572
<RECEIVABLES> 3707
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<TOTAL-LIABILITIES> 61650
<SENIOR-EQUITY> 0
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<SHARES-COMMON-STOCK> 9516
<SHARES-COMMON-PRIOR> 10757
<ACCUMULATED-NII-CURRENT> 1533
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (7323)
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<DIVIDEND-INCOME> 0
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<GROSS-EXPENSE> 4881
<AVERAGE-NET-ASSETS> 142627
<PER-SHARE-NAV-BEGIN> 12.70
<PER-SHARE-NII> 1.02
<PER-SHARE-GAIN-APPREC> 1.36
<PER-SHARE-DIVIDEND> (0.90)
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</TABLE>
The Board of Directors and Shareholders
2002 Target Term Trust Inc.
In planning and performing our audit of the financial statements of
2002 Target Term Trust Inc. for the year ended November 30, 1995,
we considered its internal control structure, including procedures
for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of the 2002 Target Term Trust Inc. is responsible for
establishing and maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal
control structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as defined
above as of November 30, 1995.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
ERNST & YOUNG LLP
January 22, 1996
Filing period ended: November 30, 1995 Exhibit 77E
File number: 811-7286
Mitchell Hutchins Asset Management Inc. ("MHAM"), PaineWebber Incorporated
("PW"), Goldman, Sachs & Co. ("GS"), Goldman Sachs Fund Management, L.P.
("GSFM") and several directors and/or officers of 2002 Target Term Trust, Inc.
(the "Trust") have been named as defendants in a putative class action,
Armbruster v. Bewkes, et al., 95-1393 (WGB), filed in March 1995 in federal
court in New Jersey. PW and GS, among others, acted as underwriters of the
initial public offering of the Trust, MHAM acted as investment advisor and
administrator of the Trust; GSFM is the sub-advisor to the Trust. The complaint
alleges various violations of the Securities Act of 1993, the Securities
Exchange Act of 1934, and a common law claim for negligent misrepresentation in
connection with the initial public offering of the Trust's shares as well as
purchases of the Trust's shares during the period December 23, 1992 through July
29, 1994. On September 8, 1995, all defendants moved to dismiss the complaint.
In lieu of responding to the motion to dismiss, plaintiff filed an amended
complaint; it adds no new parties, but purports to add, in addition to the
claims previously asserted, certain claims under the Investment Company Act of
1940 and the Investment Advisers Act of 1940 against all defendants. All
defendants filed a motion to dismiss the amended complaint on January 2, 1996.
Briefing on the motion is expected to be completed by February 15, 1996.
<PAGE>
For the year ended November 30, 1995 77Q(2)
File Number 811-7286
A Form 3 was filed late by the following officers as required by Section 16(a)
of the Exchange Act during the most recent or prior fiscal years.
NUMBER OF TRANSACTIONS
NUMBER OF NOT REPORTED ON TIMELY
NAME POSITION WITH FUND LATE REPORTS* BASIS
- ---- ------------------ ------------- ----------------------
Richard R. Burt Director 1 0
Richard Q. Armstrong Director 1 0
T. Kirkham Barneby Vice President 1 0
C. William Maher Vice President & 1 0
Assistant Treasurer
Margo N. Alexander President 1 0
Paul H. Schubert Vice President & 1 0
Assistant Treasurer
- -------------------------
* Each report related solely to such person having been elected an officer of
the Fund.
