2002 TARGET TERM TRUST INC, DEF 14A, 2000-09-27

2002 TARGET TERM TRUST INC
DEF 14A, 2000-09-27

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<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

2002 TARGET TERM TRUST INC.
.................................................................
(Name of Registrant as Specified In Its Charter)

.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11

(1) Title of each class of securities to which transaction
applies:

............................................................

(2) Aggregate number of securities to which transaction
applies:

.......................................................

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):

.......................................................

(4) Proposed maximum aggregate value of transaction:

.......................................................

(5) Total fee paid:

.......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

.......................................................

(2) Form, Schedule or Registration Statement No.:

.......................................................

(3) Filing Party:

.......................................................

(4) Date Filed:

.......................................................

<PAGE>
2002 TARGET TERM TRUST INC.
----------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 2, 2000
----------------

TO THE SHAREHOLDERS:

The annual meeting of shareholders of 2002 Target Term Trust Inc. ('Fund')
will be held on November 2, 2000 at 10:00 a.m., Eastern time, at 1285 Avenue of
the Americas, 14th Floor, New York, New York 10019 for the following purposes:

(1) To elect nine (9) directors to serve until the annual meeting of
shareholders in 2001, or until their successors are elected and qualified;

(2) To ratify the selection of Ernst & Young LLP as the Fund's
independent auditors for the fiscal year ending November 30, 2000; and

(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.

You are entitled to vote at the meeting and any adjournments thereof if you
owned Fund shares at the close of business on September 25, 2000. If you attend
the meeting, you may vote your shares in person. IF YOU DO NOT EXPECT TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE PAID ENVELOPE.

By order of the board of directors,

DIANNE E. O'DONNELL
Secretary

September 27, 2000
51 West 52nd Street
New York, New York 10019-6114

--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN

PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE
AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED. If you sign, date and
return the proxy card but give no voting instructions, your shares will be
voted 'FOR' the nominees for director named in the attached proxy statement
and 'FOR' all other proposals noticed above. IN ORDER TO AVOID THE ADDITIONAL
EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR PROXY CARD PROMPTLY.
--------------------------------------------------------------------------------

<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general guidelines for signing proxy cards may be of
assistance to you and avoid the time and expense to the Fund in validating your
vote if you fail to sign your proxy card properly.

1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card.

2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.

3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration. For
example:

<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
Corporate Accounts

(1) ABC Corp....................................... ABC Corp.
John Doe, Treasurer

(2) ABC Corp....................................... John Doe, Treasurer

(3) ABC Corp. c/o John Doe, Treasurer.............. John Doe

(4) ABC Corp. Profit Sharing Plan.................. John Doe, Trustee

Partnership Accounts

(1) The XYZ Partnership............................ Jane B. Smith, Partner

(2) Smith and Jones, Limited Partnership........... Jane B. Smith, General Partner

Trust Accounts

(1) ABC Trust Account.............................. Jane B. Doe, Trustee

(2) Jane B. Doe, Trustee u/t/d 12/28/78............ Jane B. Doe

Custodial or Estate Accounts

(1) John B. Smith, Cust. f/b/o John B.
Smith, Jr. UGMA/UTMA........................... John B. Smith

(2) Estate of John B. Smith........................ John B. Smith, Jr.
Executor
</TABLE>

<PAGE>
2002 TARGET TERM TRUST INC.
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114

-------------------
PROXY STATEMENT
-------------------

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 2, 2000

This statement is furnished to the shareholders of 2002 Target Term Trust
Inc. ('Fund') in connection with the board of directors' solicitation of proxies
to be used at the annual meeting of shareholders of the Fund to be held on
November 2, 2000, or any adjournment or adjournments thereof. This proxy
statement and the related proxy card will first be mailed to shareholders on or
about September 27, 2000.

A majority of the shares outstanding on September 25, 2000, represented in
person or by proxy, must be present for the transaction of business at the
meeting. In the event that a quorum is not present at the annual meeting, or if
such a quorum is present at the annual meeting but sufficient votes to approve
any of the proposals are not received, the persons named as proxies may propose
one or more adjournments of the annual meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a majority of
those shares represented at the annual meeting in person or by proxy. The
persons named as proxies will vote those proxies which they are entitled to vote
FOR any such proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST any such proposal against such adjournment.
A shareholder vote may be taken on one or more of the proposals in this proxy
statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate.

Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
but will have no effect on Proposals 1 and 2, for which the required vote is a
plurality and majority, respectively, of the votes cast.

The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or your duly appointed agent or
attorney-in-fact. If you give no voting instructions, your shares will be voted
FOR the nine nominees for directors named herein and FOR the remaining proposals
described in this proxy statement. You may revoke any proxy card by giving
another proxy or by letter or telegram revoking the initial proxy. To be
effective, your revocation must be received by the Fund prior to the meeting and
must indicate your name and account number. In addition, if you attend the
annual meeting in person you may, if you wish, vote by ballot at the meeting,
thereby cancelling any proxy previously given.

As of the record date, September 25, 2000, the Fund had outstanding
7,692,567 shares of common stock. The solicitation of proxies, the cost of which
will be borne by the Fund, will be made primarily by mail but also may include
telephone or oral communications by regular employees of Mitchell Hutchins Asset
Management Inc. ('Mitchell Hutchins') or PaineWebber Incorporated
('PaineWebber'), who will not receive any compensation therefor from the Fund.
Each full share of the Fund outstanding is entitled to one vote and each
fractional share of the Fund outstanding is entitled to a proportionate share of
one vote for such purposes.

<PAGE>

Mitchell Hutchins serves as the Fund's investment adviser and administrator.
Mitchell Hutchins is a wholly owned asset management subsidiary of PaineWebber,
which is a wholly owned subsidiary of Paine Webber Group Inc. ('PW Group'), a
publicly held financial services holding company. The principal business address
of PaineWebber and PW Group is 1285 Avenue of the Americas, New York, New York
10019-6028. The principal address of Mitchell Hutchins is 51 West 52nd Street,
New York, New York 10019-6114. PW Group and UBS AG ('UBS') announced on
July 12, 2000 that they had entered into an agreement and plan of merger under
which PW Group will merge into a wholly owned subsidiary of UBS. If all required
approvals are obtained and the required conditions are satisfied, PW Group and
UBS expect to complete the transaction in the fourth quarter of 2000. UBS, with
headquarters in Zurich, Switzerland, is an internationally diversified
organization with operations in many areas of the financial services industry.

Goldman Sachs Funds Management, L.P. ('Sub-Adviser'), 85 Broad Street, New
York, New York 10004, serves as the Fund's investment sub-adviser. The
Sub-Adviser is a limited partnership indirectly controlled by Goldman Sachs
Group, Inc., 85 Broad Street, New York, New York 10004.

You may obtain a copy of the Fund's annual report for the fiscal year ended
November 30, 1999, and semi-annual report for the fiscal period ended June 30,
2000, without charge by calling toll-free 1-800-647-1568.

PROPOSAL 1. ELECTION OF DIRECTORS

Proposal 1 relates to the election of directors of the Fund. Management
proposes the election of the nine nominees named in the table below. Each
nominee, including those who are not 'interested persons' of the Fund as that
term is defined by the Investment Company Act of 1940 ('1940 Act') ('Independent
Directors'), has indicated his or her willingness to serve if elected. If
elected, each nominee will hold office until the next annual meeting of
shareholders or until his or her successor is elected and qualified. Unless you
give contrary instructions on the enclosed proxy card, your shares will be voted
FOR the election of the nine nominees. If any of the nominees should withdraw or
otherwise become unavailable for election, your shares will be voted FOR such
other nominee or nominees as management may recommend.

Mr. Bewkes has served as a director from the Fund's inception except for a
brief period in 1993. Messrs. Armstrong and Burt have served as directors of the
Fund since March 16, 1995. Other than Mr. Storms, each of the other directors
was first elected to the board on April 11, 1996. On May 13, 1999, the board
increased the number of board members to ten and appointed Mr. Storms to fill
the vacancy created by the expansion. Effective September 8, 2000, Ms. Farrell
resigned her position as a director. A nominee has not yet been selected to fill
the vacancy created by her resignation. Directors shall be elected by the
affirmative vote of the holders of a plurality of the shares of the Fund present
in person or by proxy and entitled to vote thereon, provided a quorum is
present. If each of the nine nominees is elected, one vacancy will remain on the
board of directors of the Fund. Proxies cannot be voted for a greater number of
persons than the number of nominees named. None of the current directors and
executive officers (16 persons) beneficially owned any shares of the Fund on
August 31, 2000.

<PAGE>

<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS AUGUST 31, 2000**
------------ ------------------------------------ -----------------
<S> <C> <C>
which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.
Richard Q. Armstrong; 65 Director. Mr. Armstrong is chairman and --
principal of R.Q.A. Enterprises (management
consulting firm) (since April 1991 and principal
occupation since March 1995). Mr. Armstrong was
chairman of the board, chief executive officer
and co-owner of Adirondack Beverages (producer
and distributor of soft drinks and spar-
kling/still waters) (October 1993-March 1995).
He was a partner of The New England Consulting
Group (management consulting firm) (December
1992-September 1993). He was managing director
of LVMH U.S. Corporation (U.S. subsidiary of the
French luxury goods conglomerate, Louis Vuitton
Moet Hennessey Corporation) (1987-1991) and
chairman of its wine and spirits subsidiary,
Schieffelin & Somerset Company (1987-1991). Mr.
Armstrong is a director or trustee of 29
investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
E. Garrett Bewkes, Jr.*; 74 Director and Chairman of the board of directors. --
Mr. Bewkes is a director of PaineWebber Group
Inc. ('PW Group') (holding company of
PaineWebber and Mitchell Hutchins). Prior to
1996, he was a consultant to PW Group. He serves
as a consultant to PaineWebber (since
May 1999). Prior to 1988, he was chairman of the
board, president and chief executive officer of
American Bakeries Company. Mr. Bewkes is a
director of Interstate Bakeries Corporation. Mr.
Bewkes is a director or trustee of 40 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.
Richard R. Burt; 53 Director. Mr. Burt is chairman of IEP Advisors, --
LLP (international investments and consulting
firm) (since March 1994) and a partner of
McKinsey & Company (management consulting firm)
(since 1991). He is also a director of
Archer-Daniels-Midland Co. (agricultural
commodities), Hollinger International Co.
(publishing), Homestake Mining Corp., (gold
mining), six investment companies in the
Deutsche Bank family of funds, nine investment
companies in the Flag Investors family of funds,
The Central European Fund, Inc. and The Germany
Fund, Inc., vice chairman of Anchor Gaming
(provides technology to gaming and wagering
industry) (since July 1999) and chairman of
Weirton Steel Corp. (makes and finishes steel
products) (since April 1996). He was the chief
negotiator in the Strategic Arms Reduction Talks
with the former Soviet Union (1989-1991) and the
U.S. Ambassador to the Federal Republic of
Germany (1985-1989). Mr. Burt is a director or
trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS AUGUST 31, 2000**
------------ ------------------------------------ -----------------
<S> <C> <C>
Meyer Feldberg; 58 Director. Mr. Feldberg is Dean and Professor of --
Management of the Graduate School of Business,
Columbia University. Prior to 1989, he was
president of the Illinois Institute of
Technology. Dean Feldberg is also a director of
Primedia Inc. (publishing), Federated Department
Stores, Inc. and Revlon, Inc. (cosmetics). Dean
Feldberg is a director or trustee of 37
investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
George W. Gowen; 71 Director. Mr. Gowen is a partner in the law firm --
of Dunnington, Bartholow & Miller. Prior to May
1994, he was a partner in the law firm of Fryer,
Ross & Gowen. Mr. Gowen is a director or trustee
of 37 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
Frederic V. Malek; 63 Director. Mr. Malek is chairman of Thayer --
Capital Partners (merchant bank) and chairman of
Thayer Hotel Investors II and Lodging
Opportunities Fund (hotel investment
partnerships). From January 1992 to November
1992, he was campaign manager of Bush-Quayle
'92. From 1990 to 1992, he was vice chairman
and, from 1989 to 1990, he was president of
Northwest Airlines Inc. and NWA Inc. (holding
company of Northwest Airlines Inc.). Prior to
1989, he was employed by the Marriott
Corporation (hotels, restaurants, airline
catering and contract feeding), where he most
recently was an executive vice president and
president of Marriott Hotels and Resorts. Mr.
Malek is also a director of Aegis
Communications, Inc. (tele-services), American
Management Systems, Inc. (management consulting
and computer related services), Automatic Data
Processing, Inc. (computing services), CB
Richard Ellis, Inc. (real estate services), FPL
Group, Inc. (electric services), Global Vacation
Group (packaged vacations), HCR/Manor Care, Inc.
(health care), SAGA Systems, Inc. (software
company) and Northwest Airlines Inc. Mr. Malek
is a director or trustee of 29 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.
Carl W. Schafer; 64 Director. Mr. Schafer is president of the --
Atlantic Foundation (charitable foundation
supporting mainly oceanographic exploration and
research). He is a director of Labor Ready, Inc.
(temporary employment), Roadway Express, Inc.
(trucking), The Guardian Group of Mutual Funds,
the Harding, Loevner Funds, E.I.I. Realty Trust
(investment company), Evans Systems, Inc. (motor
fuels, convenience store and diversified compa-
ny), Electronic Clearing House, Inc. (financial
transactions processing), Frontier Oil
Corporation and Nutraceutix, Inc. (biotechnology
company). Prior to January 1993, he was chairman
of the Investment Advisory Committee of the
Howard Hughes Medical
</TABLE>

<PAGE>

---------

* Mrs. Alexander, Mr. Bewkes and Mr. Storms are 'interested persons' of the
Fund, as defined by the 1940 Act, by virtue of their positions with Mitchell
Hutchins, PaineWebber, and/or PW Group.

** Unless otherwise stated, as of the date indicated, each director had sole
voting and investment power of any shares owned.

The board of directors of the Fund met six times during the fiscal year
ended November 30, 1999. Each of the directors attended 75% or more of the board
meetings during the last fiscal year. The board has established an Audit
Committee that acts pursuant to a written charter and is responsible for
overseeing the Fund's accounting and financial reporting policies, practices and
internal controls. Each member of the Fund's Audit Committee is also a member of
a similar committee established by the boards of other investment companies for
which Mitchell Hutchins or PaineWebber serves as investment adviser. The Audit
Committee currently consists of Messrs. Armstrong, Burt, Feldberg, Gowen, Malek
and Schafer, none of whom have any relationship that would interfere with the
exercise of their independence from management or the Fund and who are
independent as defined under listing standards of the New York Stock Exchange.
The Audit Committee met once during the fiscal year ended November 30, 1999 and
each member attended that meeting.

The board does not have a standing nominating or compensation committee. The
Fund pays the Independent Directors $1,000 annually and up to $150 for each
board meeting and for each separate meeting of a board committee. The chairmen
of the audit and contract review committees of individual funds within the
PaineWebber fund complex receive additional compensation aggregating $15,000
annually each from the relevant funds. Directors of the Fund who are 'interested
persons' as defined by the 1940 Act receive no compensation from the Fund.
Directors are reimbursed for any expenses incurred in attending meetings. Each
director will be subject to mandatory retirement at the end of the year in which
he or she becomes 72 years old. The board has waived this requirement with
respect to Mr. Bewkes for the next year. The table below includes certain
information relating to the compensation of the Fund's directors.

<PAGE>

COMPENSATION TABLE'D'

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM THE
NAME OF FROM FUND AND THE
PERSON, POSITION THE FUND* FUND COMPLEX**
------------------------------------------------------------ ------------ --------------
<S> <C> <C>
Richard Q. Armstrong, Director.............................. $1,780 $104,650
Richard R. Burt, Director................................... $1,750 $102,850
Meyer Feldberg, Director.................................... $2,432 $143,650
George W. Gowen, Director................................... $1,780 $138,400
Frederic V. Malek, Director................................. $1,780 $104,650
Carl W. Schafer, Director................................... $1,780 $104,650
</TABLE>

---------

'D' Only independent members of the board are compensated by the Fund and
identified above; directors who are 'interested persons,' as defined by the
1940 Act, do not receive compensation.

* Represents fees paid to each director during the fiscal year ended November
30, 1999.

** Represents total compensation paid to each director by 31 investment
companies (34 in the case of Mr. Feldberg and Gowen) for which Mitchell
Hutchins, PaineWebber or one of their affiliates served as investment
adviser during the twelve months ended December 31, 1999; no fund within the
complex has a bonus, pension, profit sharing or retirement plan.

PROPOSAL 2. RATIFICATION OF SELECTION OF AUDITORS

The Fund's financial statements for the fiscal year ended November 30, 1999
were audited by Ernst & Young LLP, independent auditors. In addition, Ernst &
Young LLP prepares the Fund's federal and state annual income tax returns.

The board of directors of the Fund has selected Ernst & Young LLP as the
independent auditors for the Fund for the fiscal year ending November 30, 2000,
subject to ratification by shareholders of the Fund at the annual meeting. Ernst
& Young LLP has been the Fund's independent auditors since its inception in
December 1992. The ratification of Ernst & Young LLP as independent auditors is
to be voted upon at the annual meeting, and it is intended that the persons
named in the accompanying proxy will vote FOR such ratification unless contrary
instructions are given. Ernst & Young LLP has informed the Fund that it has no
material direct or indirect financial interest in the Fund. The affirmative vote
of the holders of a majority of the shares of the Fund cast at the annual
meeting is required for ratification, provided a quorum is present.

Representatives of Ernst & Young LLP are not expected to be present at the
meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' PROPOSAL 2.

EXECUTIVE OFFICERS

Officers of the Fund are appointed by the directors and serve at the
pleasure of the board. None of the Fund's officers currently receives any
compensation from the Fund. The executive officers of the Fund, in addition to
Mrs. Alexander (about whom information is given previously), are:

T. KIRKHAM BARNEBY, age 54, vice president of the Fund (appointed
September 1995). Mr. Barneby is a managing director and chief investment
officer -- quantitative investments of Mitchell

<PAGE>

Hutchins. Mr. Barneby is a vice president of seven investment companies for
which Mitchell Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.

JOHN J. LEE, age 32, vice president and assistant treasurer of the Fund
(appointed May 1998). Mr. Lee is a vice president and a manager of the
mutual fund finance department of Mitchell Hutchins. Prior to September
1997, he was an audit manager in the financial services practice of Ernst &
Young LLP. Mr. Lee is a vice president and assistant treasurer of 30
investment companies for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.

KEVIN J. MAHONEY, age 35, vice president and assistant treasurer of the
Fund (appointed May 1999). Mr. Mahoney is a first vice president and a
senior manager of the mutual fund finance department of Mitchell Hutchins.
From August 1996 through March 1999, he was the manager of the mutual fund
internal control group of Salomon Smith Barney. Prior to August 1996, he was
an associate and assistant treasurer for BlackRock Financial Management L.P.
Mr. Mahoney is a vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

ANN E. MORAN, age 43, vice president and assistant treasurer of the Fund
(appointed June 1993). Ms. Moran is a vice president and a manager of the
mutual fund finance department of Mitchell Hutchins. Ms. Moran is also a
vice president and assistant treasurer of 30 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates serves as
investment adviser.

DIANNE E. O'DONNELL, age 48, vice president and secretary of the Fund
(appointed November 1992). Ms. O'Donnell is a senior vice president and
deputy general counsel of Mitchell Hutchins. Ms. O'Donnell is a vice
president and secretary of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates serves as investment
adviser.

PAUL H. SCHUBERT, age 37, vice president (appointed September 1994) and
treasurer (appointed May 1997) of the Fund. Mr. Schubert is a senior vice
president and the director of the mutual fund finance department of Mitchell
Hutchins. Mr. Schubert is a vice president and treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

BARNEY A. TAGLIALATELA, age 39, vice president and assistant treasurer
of the Fund (appointed May 1997). Mr. Taglialatela is a vice president and a
manager of the mutual fund finance department of Mitchell Hutchins. Mr.
Taglialatela is a vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.

KEITH A. WELLER, age 39, vice president and assistant secretary of the
Fund (appointed September 1995). Mr. Weller is a first vice president and
associate general counsel of Mitchell Hutchins. Mr. Weller is a vice
president and assistant secretary of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates serves as an
investment adviser.

OTHER INFORMATION

BENEFICIAL OWNERSHIP OF SHARES

Based on a Schedule 13D submitted to the Fund and filed with the Securities
and Exchange Commission, the following shareholder owned more than 5% of the
Fund's shares as of the date indicated:

<PAGE>

<TABLE>
<CAPTION>
NUMBER AND PERCENTAGE OF SHARES
BENEFICIALLY OWNED AS OF
NAME AND ADDRESS SEPTEMBER 7, 2000
---------------- -----------------------------------------
<S> <C> <C>
Karpus Management, Inc. .................................. 542,505 6.95%
</TABLE>

The shareholder may be contacted c/o Mitchell Hutchins Asset Management
Inc., 51 West 52nd Street, New York, NY 10019-6114. Management does not know of
any other person who owns beneficially 5% or more of the shares of the Fund.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Fund is not aware of any outstanding report required to be filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934.

SHAREHOLDER PROPOSALS

Any shareholder who wishes to submit proposals to be considered at the
Fund's 2001 annual meeting of shareholders should send such proposals to the
Fund at 51 West 52nd Street, New York, New York 10019-6114. In order to be
considered at that meeting, shareholder proposals must be received by the Fund a
reasonable time before the Fund mails its proxy materials and must satisfy the
other requirements of the federal securities laws. The Fund anticipates mailing
its proxy materials for its 2001 annual meeting of shareholders in February
2001.

OTHER BUSINESS

Management knows of no business to be presented at the meeting other than
the matters set forth in this proxy statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote thereon according
to their best judgment in the interest of the Fund.

By order of the board of directors,

DIANNE E. O'DONNELL
Secretary

September 27, 2000

--------------------------------------------------------------------
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
--------------------------------------------------------------------

<PAGE>

---------------------------------
2002 TARGET
TERM TRUST INC.
---------------------------------

PROXY
STATEMENT

---------------------------------
2002 TARGET
TERM TRUST INC.
---------------------------------

------------------
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
NOVEMBER 2, 2000
AND
PROXY STATEMENT
------------------

<PAGE>

PROXY

APPENDIX 1

2002 TARGET TERM TRUST INC.
ANNUAL MEETING OF SHAREHOLDERS -- NOVEMBER 2, 2000

The undersigned hereby appoints as proxies Scott Griff and Victoria Drake and
each of them (with power of substitution) to vote for the undersigned all shares
of common stock of the undersigned at the aforesaid meeting and any adjournment
thereof with all the power the undersigned would have if personally present. The
shares represented by this proxy will be voted as instructed. UNLESS INDICATED
TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE 'FOR' ALL
PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF 2002
TARGET TERM TRUST INC.

YOUR VOTE IS IMPORTANT

Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to: PFPC Inc., P.O. Box 9426, Wilmington, DE 19809-9938. PFPC
Inc. has been engaged to forward the enclosed proxy material and to tabulate
proxies returned by mail.

PLEASE INDICATE YOUR VOTE BY AN 'X' IN THE APPROPRIATE BOX BELOW. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE 'FOR'.

<TABLE>
<CAPTION>
FOR
FOR ALL WITH-
ALL OR EXCEPT OR HOLD
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW AND MARK CENTER
BOX TO RIGHT.)
Margo N. Alexander, Richard Q. Armstrong, E. Garrett Bewkes, Jr.,
Richard R. Burt, Meyer Feldberg, George W. Gowen,
Frederic V. Malek, Carl W. Schafer, Brian M. Storms.

FOR AGAINST ABSTAIN
2. To ratify the selection of Ernst & Young LLP as the Fund's independent auditors [ ] [ ] [ ]
for the fiscal year ending November 30, 2000.

</TABLE>

Continued and to be signed on reverse side

<PAGE>

This proxy will not be voted unless it is dated and signed exactly as
instructed below:

If shares are held by an individual, sign
your name exactly as it appears on this
card. If shares are held jointly, either
party may sign, but the name of the party
signing should conform exactly to the name
shown on this proxy card. If shares are
held by a corporation, partnership or
similar account, the name and the capacity
of the individual signing the proxy card
should be indicated unless it is reflected
in the form of registration. For example:
'ABC Corp., John Doe, Treasurer.'

Sign exactly as name appears hereon.

____________________________________ (L.S.)

Date _______________________________ , 2000

STATEMENT OF DIFFERENCES
------------------------

The dagger symbol shall be expressed as................................... 'D'