TCW/DW TERM TRUST 2000
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
For the fiscal year ended September 30, 1995, TCW/DW Term Trust 2000's net
asset value increased from $7.48 to $8.71 per share. Based on this net asset
value, and including reinvestment of income dividends totaling approximately
$0.49 per share, the Trust's total return for the fiscal year was 24.55
percent. As of September 30, 1995, the bond market's strength had not yet
been reflected in the market price of the Trust's shares on the New York
Stock Exchange (NYSE), which declined from $7.875 to $7.50 per share. Based
on this NYSE market price, and including reinvestment of income dividends,
the Trust's total return for the fiscal year was 1.87 percent. The Trust's
investment performance during the fiscal year is largely attributable to the
strength of the rebound in the mortgage-backed securities market and the
effect of leverage on the Fund, as well as to declining interest rates.
THE MARKET
After a difficult year in 1994, the U.S. bond market has staged an
impressive rally through the third quarter of this year. Between the
beginning of January and the end of June 1995, 3- and 5-year U.S. Treasury
yields declined more than 185 basis points, while 30-year yields fell 125
basis points. Yields rose in July and early August, however, as investors
overreacted to news of a recovering economy. Once these concerns subsided,
yields headed back down.
The Federal Reserve Board's decision in early July to cut short term
interest rates--an effort to keep the economy from falling into
recession--was widely anticipated. Recently, there have been signs of renewed
growth in the manufacturing sector, and the housing sector has shown
surprising strength. Despite this vigor, inflationary pressures have remained
stable, a positive piece of economic news for the bond market. Thus, the
central bank appears to be satisfied with current economic conditions and is
not expected to alter monetary policy for the short term.
According to the Trust's investment adviser, TCW Funds Management, Inc.
(TCW), lower volatility in the fixed-income market and greatly improved
liquidity helped the mortgage-backed sector's performance this year. The
issuance of new collateralized mortgage obligations (CMOs) has fallen to
one-tenth of the volume generated in previous years, lending support to
mortgage spreads. Prepayment rates tracked seasonal norms earlier in the year
and then began to accelerate as declining interest rates led to increased
refinancing activity and a recovery in the housing sector.
THE PORTFOLIO
Approximately 63 percent of the Trust is invested in AAA-rated fixed-rate
mortgage pass-through securities or CMOs with durations, average lives or
expected maturity dates that correspond closely to the termination date of
the Trust. An additional 23 percent is invested in inverse floating rate CMOs
issued by U.S. government agencies. Inverse floaters have coupons that reset
by a multiple in a direction opposite that of a specified index. The average
lives, durations and expected maturity dates of inverse floaters are more
sensitive to changes in prepayment rates and interest rates than are some
other types of CMOs. As interest rates fell during 1995, the value of these
securities increased. At the end of the fiscal year, 12 percent of the
portfolio was invested in AAA-rated zero coupon municipal bonds, and the
balance was invested in interest bearing municipal bonds and in short-term
investments. These holdings play an important role as the Trust
<PAGE>
seeks to achieve its objective of returning the original $10 offering price
to shareholders at maturity. At fiscal year end, the Trust's degree of
leverage (the ratio of debt to equity) had declined to 25 percent of total
gross assets. TCW will continue to use prepayments and a portion of the net
proceeds from the share repurchase plan to further pay down the Trust's
leverage factor.
LOOKING AHEAD
TCW is generally positive regarding the mortgage-backed sector. Although
Congress has yet to agree on a deficit reduction plan--which could renew
inflationary fears among investors--real interest rates are still high
historically. (In the past, periods of strong bond market performance have
correlated with high real rates of interest.) The Trust's net asset and NYSE
market values will continue to fluctuate as the prices of the securities held
in the portfolio respond to changes in market conditions and interest rates.
We would like to remind you that the Trustees have approved a procedure
whereby the Trust may attempt, when appropriate, to reduce or eliminate a
market value discount from net asset value by repurchasing shares in the open
market or in privately negotiated transactions at a price not above market
value or net asset value, whichever is lower at the time of purchase. During
the fiscal year, the Trust purchased 1,309,200 shares of common stock at a
weighted average market discount of 12.12 percent.
We appreciate your ongoing support of TCW/DW Term Trust 2000 and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON
THOUSANDS) RATE MATURITY DATE VALUE
- ----------- --------- ----------------- ---------------
<S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS (64.6%)
U.S. GOVERNMENT AGENCIES (40.5%)
$ 15,500 Federal Home Loan Mortgage Corp. 1604 JD .................. 4.597+% 11/15/08 $ 13,249,661
18,892 Federal Home Loan Mortgage Corp. 1609 LG (PAC) ........... 4.468+ 11/15/23 14,603,157
4,242 Federal Home Loan Mortgage Corp. 1625 SH (PAC) ........... 8.504+ 12/15/08 3,829,380
16,602 Federal Home Loan Mortgage Corp. 1629 MB (PAC)++ ......... 6.00 01/15/23 15,187,856
19,714 Federal Home Loan Mortgage Corp. 1635 IB (PAC) ........... 3.310+ 12/15/08 16,762,028
18,351 Federal Home Loan Mortgage Corp. 1635 P (TAC) ............. 5.674+ 12/15/08 14,559,704
9,122 Federal Home Loan Mortgage Corp. 1649 S ................... 7.271+ 12/15/08 7,246,160
26,140 Federal Home Loan Mortgage Corp. 1650 LB (PAC) ........... 6.50 06/15/22 24,912,042
7,243 Federal Home Loan Mortgage Corp. 1661 SB .................. 6.356+ 01/15/09 4,785,170
16,932 Federal Home Loan Mortgage Corp. 1661 SD .................. 1.112+ 01/15/09 6,735,645
13,959 Federal Home Loan Mortgage Corp. 1671 MB (PAC) ........... 7.918+ 02/15/24 11,319,709
15,692 Federal Home Loan Mortgage Corp. 1673 S ................... 6.351+ 10/15/22 11,401,136
9,762 Federal Home Loan Mortgage Corp. 1680 EA (PAC)++ ......... 6.50 02/15/24 9,500,031
13,997 Federal National Mortgage Assoc. 1993-170 SE .............. 6.671+ 09/25/08 9,596,280
14,588 Federal National Mortgage Assoc. 1993-214 S (TAC) ........ 5.157+ 12/25/08 9,860,794
8,471 Federal National Mortgage Assoc. 1993-225 SU (PAC) ....... 5.287+ 12/25/23 7,390,602
10,027 Federal National Mortgage Assoc. 1994-17 S ................10.66 + 02/25/09 8,001,466
6,063 Federal National Mortgage Assoc. G1993-35 SB (PAC) ....... 9.916+ 11/25/23 5,981,373
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(IDENTIFIED COST $236,346,600) ....................................................... 194,922,194
---------------
PRIVATE ISSUES (24.1%)
17,450 CMC Securities Corp. II 1993-E2 E2H (PAC) ................. 7.00 10/25/23 17,166,437
17,028 CMC Securities Corp. III 1994-A6 (PAC) .................... 6.75 02/25/24 16,862,999
14,400 CountryWide Funding Corp. 1993-10 A3 (PAC) ................ 6.75 01/25/24 14,260,464
23,662 General Electric Capital Mortgage Services, Inc. 1994-1 A5
(TAC) .................................................... 6.50 01/25/04 22,920,237
24,422 General Electric Capital Mortgage Services, Inc. 1994-6 A9 6.50 09/25/22 21,440,195
25,000 Prudential Home Mortgage Securities 1993-47 A3 (PAC) ..... 6.75 12/25/23 23,073,250
---------------
TOTAL PRIVATE ISSUES
(IDENTIFIED COST $120,889,033) ....................................................... 115,723,582
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $357,235,633) ....................................................... 310,645,776
---------------
U.S. GOVERNMENT AGENCIES MORTGAGE PASS-THROUGH SECURITIES
(49.1%)
13,168 Federal Home Loan Mortgage Corp. PC Gold++ ................ 6.00 02/01/09 12,768,544
234,701 Federal National Mortgage Assoc.++ ........................ 5.50 12/01/08-02/01/09 223,332,821
---------------
TOTAL U.S. GOVERNMENT AGENCIES MORTGAGE
PASS-THROUGH SECURITIES (IDENTIFIED COST $240,916,527) ............................... 236,101,365
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1995 (CONTINUED)
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON
THOUSANDS) RATE MATURITY DATE VALUE
- ----------- --------- ----------------- ---------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (18.2%)
ELECTRIC REVENUE (7.2%)
$ 5,825 Owensboro, Kentucky, Electric Light & Power
Refg Ser B (AMBAC Insured) ...............................0.00 % 01/01/02 $ 4,297,743
15,000 Austin, Texas, Combined Utility Ser A (MBIA Insured) .....0.00 11/15/01 11,202,900
Intermountain Power Agency, Utah,
3,255 Refg Ser A (AMBAC Insured) ...............................0.00 07/01/01 2,453,749
22,000 Refg Ser B (AMBAC Insured) ...............................0.00 07/01/01 16,584,480
---------------
34,538,872
---------------
OTHER REVENUE (5.7%)
10,000 North Slope Boro, Alaska, Ser B (MBIA Insured) ...........0.00 01/01/01 7,725,700
2,000 Maricopa County Unified High School District #04, Arizona,
Glendale Refg (AMBAC Insured) ............................0.00 07/01/01 1,520,440
5,000 Maricopa County Unified High School District #210,
Arizona, Phoenix Refg (Secondary MBIA Insured) ..........0.00 07/01/01 3,801,100
4,250 Boston, Massachusetts, Refg Ser A (AMBAC Insured) ........4.30 07/01/01 4,175,370
13,650 Texas, Refg Ser A (AMBAC Insured) .........................0.00 10/01/01 10,290,462
---------------
27,513,072
---------------
RESOURCE RECOVERY REVENUE (1.2%)
5,620 Westchester County Industrial Development Agency, New
York, Resco Co Ser A (AMBAC Insured) .....................4.95 07/01/01 5,715,203
---------------
TRANSPORTATION FACILITIES REVENUE (2.4%)
10,000 Kentucky Turnpike Authority, Economic Dev Road
Revitalization Refg (FGIC Insured) .......................0.00 01/01/02 7,378,100
4,250 Harris County, Texas, Toll Road Sr Lien (AMBAC Insured) ..4.45 08/15/01 4,223,735
---------------
11,601,835
---------------
WATER & SEWER REVENUE (1.7%)
10,855 New Jersey Wastewater Treatment, Ser A (FGIC Insured) ....0.00 09/01/01 8,287,033
---------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST $86,617,196) ................................... 87,656,015
---------------
SHORT-TERM INVESTMENT (0.1%)
REPURCHASE AGREEMENT
649 The Bank of New York (dated 09/29/95; proceeds $649,580;
collateralized by $683,785 U.S. Treasury Note 7.25% due
05/15/04 valued at $746,552) (Identified Cost $649,289) 5.375 10/02/95 649,289
---------------
TOTAL INVESTMENTS (IDENTIFIED COST $685,418,645) (A) ................ 132.0% 635,052,445
LIABILITIES IN EXCESS OF OTHER ASSETS ............................... (32.0) (154,096,389)
------------ ---------------
NET ASSETS .......................................................... 100.0% $ 480,956,056
============ ===============
<FN>
- ------------
PC Participation Certificate.
PAC Planned Amortization Class.
TAC Targeted Amortization Class.
+ Inverse floater: interest rate moves inversely to a designated index,
such as LIBOR (London Inter-Bank Offered Rate) or COFI (Cost of Funds
Index), typically at a multiple of the changes of the relevant index
rate.
++ Some or all of these securities are pledged in connection with
reverse repurchase agreements.
(a) The aggregate cost of investments for federal income tax purposes is
$685,418,645; the aggregate gross unrealized appreciation is
$2,983,008 and the aggregate gross unrealized depreciation is
$53,349,208, resulting in net unrealized depreciation of $50,366,200.
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $685,418,645) .......... $635,052,445
Interest receivable ...................... 2,888,178
Deferred organizational expenses ........ 21,201
Prepaid expenses and other assets ....... 69,546
--------------
TOTAL ASSETS .......................... 638,031,370
--------------
LIABILITIES:
Reverse repurchase agreements ............ 156,205,000
Payable for:
Shares of beneficial interest
repurchased ............................ 243,460
Interest ................................ 233,702
Management fee .......................... 168,756
Investment advisory fee ................. 112,504
Accrued expenses and other payables ..... 111,892
Contingencies (Note 10) ..................
--------------
TOTAL LIABILITIES ..................... 157,075,314
--------------
NET ASSETS:
Paid-in-capital .......................... 526,352,081
Net unrealized depreciation .............. (50,366,200)
Accumulated undistributed net investment
income .................................. 8,415,612
Accumulated net realized loss ............ (3,445,437)
--------------
NET ASSETS ............................ $480,956,056
==============
NET ASSET VALUE PER SHARE, 55,201,328
shares outstanding (unlimited shares
authorized of $.01 par value) ........... $8.71
==============
</TABLE>
- -----------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended September 30, 1995
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ................... $45,582,307
-------------
EXPENSES
Management fee ................... 1,586,896
Investment advisory fee .......... 1,057,930
Professional fees ................ 287,775
Transfer agent fees and expenses 176,960
Registration fees ................ 72,659
Shareholder reports and notices . 70,174
Trustees' fees and expenses ..... 40,315
Custodian fees ................... 20,349
Organizational expenses .......... 6,687
Other ............................ 24,772
-------------
TOTAL OPERATING EXPENSES ....... 3,344,517
Interest expense ................. 10,940,450
-------------
TOTAL EXPENSES .................. 14,284,967
-------------
NET INVESTMENT INCOME ........... 31,297,340
-------------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized loss ................ (358,601)
Net change in unrealized
depreciation .................... 65,011,850
-------------
NET GAIN ........................ 64,653,249
-------------
NET INCREASE .................... $95,950,589
=============
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS (continued)
- ----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 30, 1993*
FOR THE YEAR ENDED THROUGH
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................... $ 31,297,340 $ 31,881,928
Net realized loss ................................... (358,601) (3,086,836)
Net change in unrealized depreciation ............... 65,011,850 (115,378,050)
------------------ ------------------
Net increase (decrease) ............................ 95,950,589 (86,582,958)
Dividends from net investment income ................. (27,762,577) (27,054,174)
Net increase (decrease) from transactions in shares
of beneficial interest .............................. (9,709,840) 536,015,000
------------------ ------------------
Total increase ..................................... 58,478,172 422,377,868
NET ASSETS:
Beginning of period .................................. 422,477,884 100,016
------------------ ------------------
END OF PERIOD (including undistributed net investment
income of $8,415,612 and $4,880,849, respectively) . $480,956,056 $ 422,477,884
================== ==================
</TABLE>
- ------------
* Commencement of operations.
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS (continued)
- ----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS For the year ended September 30, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income ........................................................ $ 31,297,340
Adjustments to reconcile net investment income to net cash provided by
operating activities:
Decrease in receivables and other assets related to operations ............ 730,520
Decrease in payables related to operations ................................ (103,756)
Net amortization of discount/premium ...................................... (5,580,940)
--------------
Net cash provided by operating activities ............................... 26,343,164
--------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments ..................................................... (1,530,584)
Principal prepayments/sales of investments ................................... 51,780,692
Net sales of short-term investments .......................................... 1,011,685
--------------
Net cash provided by investing activities ................................. 51,261,793
--------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net payment for shares of beneficial interest purchased ...................... (9,466,380)
Net payment for maturities of reverse repurchase agreements .................. (40,376,000)
Dividends from net investment income ......................................... (27,762,577)
--------------
Net cash used for financing activities .................................... (77,604,957)
--------------
Net increase in cash ...................................................... --
Cash at beginning of year ...................................................... --
--------------
$
CASH BALANCE AT END OF YEAR .................................................... --
==============
Cash paid during the year for interest ......................................... $ 11,038,198
==============
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1995
- ----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- TCW/DW Term Trust 2000 (the
"Trust") is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company. The Trust was
organized as a Massachusetts business trust on June 16, 1993 and on November
17, 1993 issued 10,528 shares of beneficial interest for $100,016 to Dean
Witter InterCapital Inc. ("InterCapital"), an affiliate of Dean Witter
Services Company Inc. (the "Manager"), and commenced operations on November
30, 1993. The Trust will distribute substantially all of its net assets on or
about December 31, 2000 and will then terminate.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- (1) an equity security listed or traded
on the New York or American Stock Exchange is valued at its latest sale
price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid
price (in cases where a security is traded on more than one exchange,
the security is valued on the exchange designated as the primary market
by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at
the latest available bid price prior to the time of valuation; (3) when
market quotations are not readily available, including circumstances
under which it is determined by the Adviser that sale and bid prices are
not reflective of a security's market value, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees; (4)
certain of the Trust's portfolio securities may be valued by an outside
pricing service approved by the Trustees. The pricing service utilizes a
matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research and evaluations by its
staff, including review of broker-dealer market price quotations, if
available, in determining what it believes is the fair valuation of the
portfolio securities valued by such pricing service; and (5) short-term
debt securities having a maturity date of more than sixty days at time
of purchase are valued on a mark-to-market basis until sixty days prior
to maturity and thereafter at amortized cost based on their value on the
61st day. Short-term debt securities having a maturity date of sixty
days or less at the time of purchase are valued at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). Realized
gains and losses on security transactions are determined by the
identified cost method. The Trust amortizes premiums and accretes
discounts on fixed income securities. Interest income is accrued daily.
C. Federal Income Tax Status -- It is the Trust's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. Dividends and Distributions to Shareholders -- The Trust records
dividends and distributions to its shareholders on the record date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary
or permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the capital accounts based
on their federal tax-basis treatment; temporary differences do not
require reclassification. Dividends and distributions which exceed net
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1995 (continued)
- -----------------------------------------------------------------------------
investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of
net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
E. Organizational Expenses and Offering Costs -- InterCapital paid the
organizational expenses and offering costs of the Trust in the amounts
of approximately $33,500 and $735,000, respectively. The Trust has
reimbursed InterCapital for the organizational expenses which have been
deferred and are being amortized by the Trust on the straight line
method over a period not to exceed five years from the commencement of
operations. Offering costs were charged to capital at the time of
issuance of the Trust's shares.
2. MANAGEMENT AGREEMENT -- Pursuant to a Management Agreement, the Trust pays
its Manager a management fee, accrued weekly and payable monthly, by applying
the annual rate of 0.36% to the Trust's average weekly net assets.
Under the terms of the Management Agreement, the Manager maintains certain
of the Trust's books and records and furnishes, at its own expense, office
space, facilities, equipment, clerical, bookkeeping and certain legal
services and pays the salaries of all personnel, including officers of the
Trust who are employees of the Manager. The Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Trust.
3. INVESTMENT ADVISORY AGREEMENT -- Pursuant to an Investment Advisory
Agreement with TCW Funds Management, Inc. (the "Adviser"), the Trust pays its
Adviser an advisory fee, accrued weekly and payable monthly, by applying the
annual rate of 0.24% to the Trust's average weekly net assets.
Under the terms of the Investment Advisory Agreement, the Trust has
retained the Adviser to invest the Trust's assets, including placing orders
for the purchase and sale of portfolio securities. The Adviser obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Trust in a manner consistent with its
investment objective. In addition, the Adviser pays the salaries of all
personnel, including officers of the Trust who are employees of the Adviser.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales/prepayments of portfolio securities,
excluding short-term investments, for the year ended September 30, 1995 were
as follows:
<TABLE>
<CAPTION>
SALES/
PURCHASES PREPAYMENTS
------------ -------------
<S> <C> <C>
U.S. Government Agencies .......................... $ -- $51,350,167
Private Issue Collateralized Mortgage Obligations 1,530,584 430,525
</TABLE>
Dean Witter Trust Company, an affiliate of the Manager, is the Trust's
transfer agent. At September 30, 1995, the Trust had transfer agent fees and
expenses payable of approximately $15,000.
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1995 (continued)
- -----------------------------------------------------------------------------
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
PAR VALUE IN EXCESS OF
SHARES OF SHARES PAR VALUE
------------- ----------- -------------
<S> <C> <C> <C>
Balance, November 30, 1993 (Note 1) ................................. 10,528 $ 105 $ 99,911
Shares issued at close of public offering on November 30, 1993* .... 50,000,000 500,000 473,765,000
Shares issued pursuant to an over-allotment on the public offering
on December 13, 1993 ............................................... 5,500,000 55,000 52,195,000
Shares issued pursuant to an over-allotment on the public offering
on January 10, 1994 ................................................ 1,000,000 10,000 9,490,000
Reclassification due to permanent book/tax
differences ........................................................ -- -- (53,095)
------------- ----------- -------------
Balance, September 30, 1994 ......................................... 56,510,528 565,105 535,496,816
Treasury shares purchased and retired
(weighted average discount 12.12%)** ............................... (1,309,200) (13,092) (9,696,748)
------------- ----------- -------------
Balance, September 30, 1995 ......................................... 55,201,328 $552,013 $525,800,068
============= =========== =============
<FN>
- ------------
* Net of offering costs of $735,000.
** The Trustees have voted to retire the shares purchased.
</TABLE>
6. FEDERAL INCOME TAX STATUS -- At September 30, 1995, the Trust had a net
capital loss carryover of approximately $3,087,000 which will be available to
offset future capital gains to the extent provided by regulations.
Capital losses incurred after October 31 ("post-October" losses) within
the taxable year are deemed to arise on the first business day of the Trust's
next taxable year. The Trust incurred and will elect to defer net capital
losses of approximately $359,000 during fiscal 1995. As of September 30,
1995, the Trust had temporary book/tax differences primarily attributable to
post-October losses.
7. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS -- Reverse repurchase and
dollar roll agreements involve the risk that the market value of the
securities the Trust is obligated to repurchase under the agreement may
decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase or dollar roll agreement files for bankruptcy or
becomes insolvent, the Trust's use of proceeds may be restricted pending a
determination by the other party, its trustee or receiver, whether to enforce
the Trust's obligation to repurchase the securities.
Reverse repurchase agreements are collateralized by Trust securities with
a market value in excess of the Trust's obligation under the contract. At
September 30, 1995, securities valued at $163,323,172 were pledged as
collateral.
At September 30, 1995, the reverse repurchase agreements outstanding were
$156,205,000 with a weighted interest rate of 5.81% maturing within 59 days.
The maximum and average daily amounts outstanding during the period were
$224,053,287 and $218,184,059, respectively. The weighted average interest
rate during the period was 5.87%.
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1995 (continued)
- -------------------------------------------------------------------------------
8. SELECTED QUARTERLY FINANCIAL DATA -- (unaudited)
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------------
9/30/95 6/30/95 3/31/95 12/31/94
------------------ ------------------ ------------------ -------------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
--------- ------- --------- ------- --------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ......... $10,741 $ 0.20 $ 10,715 $ 0.20 $ 11,965 $ 0.21 $ 12,161 $ 0.22
Net investment income ........... 7,179 0.13 7,049 0.13 8,284 0.15 8,785 0.15
Net realized and unrealized gain
(loss) ......................... 4,682 0.09 41,448 0.75 37,402 0.65 (18,879) (0.33)
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------------------------------------------
9/30/94 6/30/94 3/31/94 12/31/93+
------------------- -------------------- -------------------- ------------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
--------- -------- ---------- -------- ---------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ......... $13,948 $ 0.25 $ 14,045 $ 0.25 $ 10,675 $ 0.19 $1,684 $ 0.03
Net investment income ........... 10,716 0.19 10,897 0.19 8,887 0.16 1,382 0.02
Net realized and unrealized loss (778) (0.01) (80,325) (1.42) (36,790) (0.65) (572) (0.01)
<FN>
- ------------
* Amounts in thousands.
+ For the period November 30, 1993 through December 31, 1993.
</TABLE>
9. DIVIDENDS -- The Trust has declared the following dividends from net
investment income payable to shareholders of record subsequent to September
30, 1995:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER
DATE SHARE RECORD DATE PAYABLE DATE
- ------------------ ------------- ----------------- -----------------
<S> <C> <C> <C>
September 26, 1995 $.035 October 6, 1995 October 20, 1995
October 31, 1995 $.035 November 10, 1995 November 24, 1995
</TABLE>
10. LITIGATION -- Two purported class action lawsuits, which have been
consolidated for pretrial purposes, were instituted during 1994 in the United
States District Court, Southern District of New York, against the Trust, some
of its Trustees and officers, one of its underwriters, the lead
representative of its underwriters, the Adviser, the Manager, and other
defendants, by certain shareholders of the Trust. The plaintiffs in these
actions generally allege that the defendants made inadequate and misleading
disclosures in the prospectus for the Trust, in particular, as such
disclosure relates to the nature and risks of "inverse floaters," the Trust's
investments in those securities, and the weighted average maturity of the
Trust's portfolio. Damages, including punitive damages, are sought in an
unspecified amount. The defendants have moved to dismiss both complaints for
failure to state a cause of action.
In addition, four purported class actions have been filed in the Superior
Court for the State of California, County of Orange, against some of the
Trust's Trustees and officers, one of its underwriters, the lead
representative of its underwriters, the Adviser, the Manager and other
defendants - but not against the Trust - by certain shareholders of the Trust
and other trusts for which the defendants act in similar capacities. These
plaintiffs generally allege violations of state statutory and common law in
connection with the marketing of the Trust to customers of one of the
underwriters. Damages, including punitive damages, are sought in an
unspecified amount. On or about October 20, 1995, plaintiffs filed an amended
complaint consolidating these four actions. No defendant has yet responded.
Certain of the defendants in these suits have asserted their right to
indemnification from the Trust.
The ultimate outcome of these matters is not presently determinable, and
no provision has been made in the Trust's financial statements for the
effect, if any, of such matters.
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 30, 1993*
FOR THE YEAR ENDED THROUGH
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ....... $ 7.48 $ 9.50
------------------ ------------------
Net investment income ....................... 0.56 0.56
Net realized and unrealized gain (loss) .... 1.16 (2.09)
------------------ ------------------
Total from investment operations ............ 1.72 (1.53)
------------------ ------------------
Less dividends from net investment income .. (0.49) (0.48)
Less offering costs charged against capital -- (0.01)
------------------ ------------------
Net asset value, end of period .............. $ 8.71 $ 7.48
================== ==================
Market value, end of period ................. $ 7.50 $ 7.875
================== ==================
TOTAL INVESTMENT RETURN+ .................... 1.87% (16.87)%(1)
RATIOS TO AVERAGE NET ASSETS:
Operating expenses .......................... 0.76% 0.74%(2)
Interest expense ............................ 2.49% 1.41%(2)
Total expenses .............................. 3.25% 2.15%(2)
Net investment income ....................... 7.12% 8.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .... $480,956 $422,478
Portfolio turnover rate ..................... -- %++ 48%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Total investment return is based upon the current market value on the
first day of each period reported. Dividends are assumed to be
reinvested at the prices obtained under the Trust's reinvestment
plan. Total investment return does not reflect sales charges or
brokerage commissions.
++ Less than 0.5%.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
REPORT OF INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
To the Shareholders and Trustees of TCW/DW Term Trust 2000
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations, of changes in net assets, and of cash flows and the financial
highlights present fairly, in all material respects, the financial position
of TCW/DW Term Trust 2000 (the "Trust") at September 30, 1995, the results of
its operations and its cash flows for the year then ended, and the changes in
its net assets and the financial highlights for the year then ended and for
the period November 30, 1993 (commencement of operations) through September
30, 1994, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
As discussed in Note 10 to the financial statements, the Trust is one of
several defendants in litigation. The ultimate outcome of the litigation
cannot be determined at present. No provision for any liability that may
result upon resolution of the matters has been made in the accompanying
financial statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 8, 1995
<PAGE>
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
Philip A. Barach
Vice President
Jeffrey E. Gundlach
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
T C W / D W
TERM TRUST
2000
ANNUAL REPORT
SEPTEMBER 30, 1995
