TCW/DW TERM TRUST 2000
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
For the fiscal year ended September 30, 1996, TCW/DW Term Trust 2000's net
asset value per share increased from $8.71 to $8.81. Based on this change,
and including reinvestment of dividends totaling approximately $0.46 per
share, the Trust's total return for the fiscal year was 7.21 percent. Over
the same period, the market price of the Trust's shares on the New York Stock
Exchange (NYSE) increased from $7.50 to $7.875 per share. Based on this
change, and including reinvestment of dividends, the Trust's total return for
the fiscal year was 11.29 percent. The Trust's investment performance is
largely attributable to the narrowing of the market discount to net asset
value of the Trust's shares from 13.9 percent to 10.6 percent during the
fiscal year.
In response to increasing portfolio earnings, the Trust raised its monthly
dividend from $0.035 to $0.0375 per share in December 1995 and from $0.0375
to $0.044 per share in August 1996. The increase in portfolio earnings during
the period was largely the result of the Federal Reserve Board's decision to
cut short-term interest rates by 25 basis points in July and December 1995
and January of this year.
THE MARKET
Reports on the U.S. economy during the fourth quarter of 1995 and January
1996 indicated weaker overall economic conditions and prompted the Federal
Reserve Board to twice move to ease its monetary policy. In response, the
yield on three-month U.S. Treasury bills, a key short term interest rate
benchmark, declined 38 basis points (0.38 percentage points). However,
subsequently stronger gross domestic product, employment, housing and
consumer confidence data showed signs of a robust level of activity. These
stronger data resulted in higher long-term interest rates, as shown by a 52
basis point yield increase on 10 year U.S. Treasury notes.
Minutes of the August meeting of the Federal Reserve Board's Federal Open
Market Committee were interpreted by some investors as an indication that the
central bank was likely to tighten monetary policy before the end of the year
in response to the increase in economic activity. Accordingly, investors
anticipate a modest tightening of short-term rates while maintaining a
neutral outlook on intermediate to long term interest rates.
According to the Trust's investment adviser, TCW Funds Management, Inc.
(TCW) the recent rise in long-term interest rates reduced mortgage prepayment
risk, which aided the recent performance of mortgage-backed securities. The
issuance of new collateralized mortgage obligations (CMOs) is currently at a
fraction of the volume generated in previous years, lending support to
mortgage yield spreads.
THE PORTFOLIO
During the fiscal year ended September 30, 1996, the Trust sold
approximately half of its mortgage pass-through securities and a small
portion of its tax-exempt municipal bonds. The proceeds from these
transactions were used to repurchase the Trust's shares on the open market
and to purchase fixed-rate mortgage-backed securities. Additional portfolio
changes are expected to be made as market conditions and specific
opportunities warrant.
Approximately 65 percent of the Trust's assets is invested in AAA-rated
mortgage pass-through securities or CMOs with durations, average lives or
expected maturity dates that correspond closely to the
<PAGE>
Trust's termination date. An additional 22 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 remaining 13 percent is invested in AAA-rated municipal bonds and
short-term investments. The municipal bond holdings play an important role as
the Trust seeks to achieve its objective of returning the original $10
offering price to shareholders at maturity. On September 30, 1996, the
Trust's degree of leverage (the ratio of debt to assets) was 24 percent of
total assets.
LOOKING AHEAD
The Trust's adviser is generally positive regarding the mortgage-backed
sector over the long-term. Although signs of robust economic activity have
reappeared in recent months, real interest rates (interest rates minus
inflation) remain at historically high levels. (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 both 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 under review, the Trust purchased 3,070,900 shares of
beneficial interest at a weighted average market discount of 12.08 percent.
We appreciate your 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, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------------------------------------------------------- --------- ----------- ---------------
<S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS (85.4%)
U.S. GOVERNMENT AGENCIES (40.7%)
$ 10,946 Federal Home Loan Mortgage Corp. 1513 O++ .................. 6.50 % 03/15/08 $ 10,727,158
13,988 Federal Home Loan Mortgage Corp. 1604 JD ................... 5.909+ 11/15/08 12,289,479
18,298 Federal Home Loan Mortgage Corp. 1609 LG (PAC) ............. 5.416+ 11/15/23 13,603,743
1,618 Federal Home Loan Mortgage Corp. 1625 SH (PAC) ............. 8.504+ 12/15/08 1,274,576
16,583 Federal Home Loan Mortgage Corp. 1635 IB (PAC) ............. 5.423+ 12/15/08 14,546,807
18,024 Federal Home Loan Mortgage Corp. 1635 P (TAC) .............. 6.642+ 12/15/08 14,571,500
9,122 Federal Home Loan Mortgage Corp. 1649 S .................... 7.975+ 12/15/08 6,921,238
26,140 Federal Home Loan Mortgage Corp. 1650 LB (PAC)++ .......... 6.50 06/15/22 24,365,840
7,243 Federal Home Loan Mortgage Corp. 1661 SB ................... 7.413+ 01/15/09 4,690,136
16,932 Federal Home Loan Mortgage Corp. 1661 SD ................... 3.337+ 01/15/09 6,926,128
13,492 Federal Home Loan Mortgage Corp. 1671 MB (PAC) ............. 9.45 + 02/15/24 10,505,047
13,740 Federal Home Loan Mortgage Corp. 1673 S .................... 7.463+ 10/15/22 8,278,418
8,870 Federal Home Loan Mortgage Corp. 1680 EA (PAC)++ .......... 6.50 02/15/24 8,530,634
13,997 Federal National Mortgage Assoc. 1993-170 SE ............... 7.839+ 09/25/08 11,022,244
11,763 Federal National Mortgage Assoc. 1993-188 AN (PAC)++ ...... 6.00 10/25/08 11,008,877
14,588 Federal National Mortgage Assoc. 1993-214 S (TAC) ......... 6.06 + 12/25/08 9,446,043
7,404 Federal National Mortgage Assoc. 1993-225 SU (PAC) ........ 6.554+ 12/25/23 6,355,921
10,027 Federal National Mortgage Assoc. 1994-17 S ................. 7.458+ 02/25/09 7,888,758
4,488 Federal National Mortgage Assoc. G1993-35 SB (PAC) ........ 11.52 + 11/25/23 3,918,406
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(IDENTIFIED COST $229,776,408) .................................................. 186,870,953
---------------
PRIVATE ISSUES (44.7%)
17,450 CMC Securities Corp. II 1993-E2 E2H (PAC) .................. 7.00 10/25/23 16,986,353
17,028 CMC Securities Corp. III 1994-A6 (PAC) ..................... 6.75 02/25/24 16,740,567
14,400 CountryWide Funding Corp. 1993-10 A3 (PAC)++ ............... 6.75 01/25/24 14,156,928
7,893 CountryWide Mortgage-Backed Securities, Inc. 1993-E A2
(PAC) ..................................................... 6.50 01/25/24 7,616,745
23,134 General Electric Capital Mortgage Services, Inc. 1994-1 A5
(TAC) ..................................................... 6.50 01/25/24 21,893,171
26,053 General Electric Capital Mortgage Services, Inc. 1994-6 A9
(TAC) ..................................................... 6.50 09/25/22 22,592,082
8,883 General Electric Capital Mortgage Services, Inc. 1994-29 A1 8.30 11/25/24 8,912,093
14,996 General Electric Capital Mortgage Services, Inc. 1995-7 A1 7.50 09/25/25 15,028,481
27,083 Prudential Home Mortgage Securities 1993-34 C (PAC) ....... 7.00 08/25/23 26,941,534
25,000 Prudential Home Mortgage Securities 1993-47 A3 (PAC) ...... 6.75 12/25/23 22,962,648
22,561 Residential Funding Mortgage Securities I 1993-S43 A3 ..... 5.95 11/25/23 22,031,002
9,251 Securitized Asset Sales, Inc. 1995-6 A1 .................... 7.00 12/25/10 9,226,456
---------------
TOTAL PRIVATE ISSUES
(IDENTIFIED COST $212,715,122) .................................................. 205,088,060
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $442,491,530) .................................................. 391,959,013
---------------
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1996 (continued)
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------------------------------------------------------- --------- ----------- ---------------
U.S. GOVERNMENT AGENCIES MORTGAGE
PASS-THROUGH SECURITIES (28.5%)
$ 11,823 Federal Home Loan Mortgage Corp. PC Gold++ ................. 6.00 % 02/01/09 $ 11,220,968
106,431 Federal National Mortgage Assoc.++ ......................... 5.50- 08/01/01-
6.00 02/01/09 99,959,248
19,408 Government National Mortgage Assoc. II ..................... 7.125 06/20/25 19,708,349
---------------
TOTAL U.S. GOVERNMENT AGENCIES MORTGAGE
PASS-THROUGH SECURITIES (IDENTIFIED COST $136,039,357) .......................... 130,888,565
---------------
MUNICIPAL BONDS (16.4%)
ELECTRIC REVENUE (5.3%)
5,825 Owensboro, Kentucky, Electric Light & Power Refg Ser B
(AMBAC) ................................................... 0.00 01/01/02 4,503,249
Intermountain Power Agency, Utah,
3,255 Refg Ser A (AMBAC) ........................................ 0.00 07/01/01 2,584,795
22,000 Refg Ser B (AMBAC) ........................................ 0.00 07/01/01 17,470,200
---------------
24,558,244
---------------
OTHER REVENUE (5.4%)
10,000 North Slope Boro, Alaska, Ser B (MBIA) ..................... 0.00 01/01/01 8,078,800
2,000 Maricopa County Unified High School District #04, Arizona,
Glendale Refg (AMBAC) ..................................... 0.00 07/01/01 1,591,900
4,250 Boston, Massachusetts, Refg Ser A (AMBAC) .................. 4.30 07/01/01 4,180,895
13,650 Texas, Refg Ser A (AMBAC) .................................. 0.00 10/01/01 10,771,761
---------------
24,623,356
---------------
RESOURCE RECOVERY REVENUE (1.2%)
5,620 Westchester County Industrial Development Agency, New York,
Resco Co Ser A (AMBAC) .................................... 4.95 07/01/01 5,683,618
---------------
TRANSPORTATION FACILITIES REVENUE (2.6%)
10,000 Kentucky Turnpike Authority, Economic Dev Road
Revitalization Refg (FGIC) ................................ 0.00 01/01/02 7,730,900
4,250 Harris County, Texas, Toll Road Sr Lien (AMBAC) ........... 4.45 08/15/01 4,214,215
---------------
11,945,115
---------------
WATER & SEWER REVENUE (1.9%)
10,855 New Jersey Wastewater Treatment, Ser A (FGIC) .............. 0.00 09/01/01 8,653,932
---------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $74,189,130) ................................................... 75,464,265
---------------
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1996 (continued)
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------------------------------------------------------- --------- ----------- ---------------
SHORT-TERM INVESTMENT (1.1%)
REPURCHASE AGREEMENT
$ 5,000 The Bank of New York (dated 09/30/96; proceeds $5,000,694;
collateralized by $5,114,386 U.S. Treasury Note 6.375% due
03/31/01 valued at $5,100,000) (Identified Cost
$5,000,000) .............................................. 5.00% 10/01/96 $ 5,000,000
---------------
TOTAL INVESTMENTS (IDENTIFIED COST $657,720,017) (a) ................. 131.4 % 603,311,843
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ....................... (31.4) (144,089,159)
------- ---------------
NET ASSETS ........................................................... 100.0 % $ 459,222,684
======= ===============
</TABLE>
- ------------
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 for federal income tax purposes approximates
identified cost; the aggregate gross unrealized appreciation is
$4,320,778 and the aggregate gross unrealized depreciation is
$58,728,952, resulting in net unrealized depreciation of
$54,408,174.
Bond Insurance:
- --------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $657,720,017) ........... $603,311,843
Cash ...................................... 479,050
Interest receivable ....................... 3,072,331
Deferred organizational expenses .......... 14,501
Prepaid expenses .......................... 44,863
--------------
TOTAL ASSETS ............................ 606,922,588
--------------
LIABILITIES:
Reverse repurchase agreements ............. 146,658,000
Payable for:
Interest ................................. 575,867
Management fee ........................... 139,213
Shares of beneficial interest repurchased 118,575
Investment advisory fee .................. 92,809
Accrued expenses and other payables ...... 115,440
Contingencies (Note 9) .................... --
--------------
TOTAL LIABILITIES ....................... 147,699,904
--------------
NET ASSETS:
Paid-in-capital ........................... 502,473,491
Net unrealized depreciation ............... (54,408,174)
Accumulated undistributed net
investment income ........................ 14,577,390
Accumulated net realized loss ............. (3,420,023)
--------------
NET ASSETS .............................. $459,222,684
==============
NET ASSET VALUE PER SHARE, 52,130,428
shares outstanding (unlimited shares
authorized of $.01 par value) ............ $8.81
=====
</TABLE>
STATEMENT OF OPERATIONS
For the year ended September 30, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME .................. $41,873,559
-------------
EXPENSES
Management fee .................. 1,712,925
Investment advisory fee ......... 1,141,950
Transfer agent fees and expenses 202,329
Professional fees ............... 111,257
Insurance expenses .............. 69,923
Shareholder reports and notices 55,688
Registration fees ............... 54,927
Custodian fees .................. 37,258
Trustees' fees and expenses .... 26,783
Pricing fees .................... 23,739
Organizational expenses ......... 6,700
Other ........................... 2,390
-------------
TOTAL OPERATING EXPENSES ...... 3,445,869
Interest expense ................ 7,862,201
-------------
TOTAL EXPENSES ................. 11,308,070
-------------
NET INVESTMENT INCOME .......... 30,565,489
-------------
NET REALIZED AND
UNREALIZED GAIN (LOSS):
Net realized gain ............... 25,414
Net change in unrealized
depreciation ................... (4,041,974)
-------------
NET LOSS ....................... (4,016,560)
-------------
NET INCREASE ................... $26,548,929
=============
</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 year ended For the year ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .............................. $ 30,565,489 $ 31,297,340
Net realized gain (loss) ........................... 25,414 (358,601)
Net change in unrealized depreciation .............. (4,041,974) 65,011,850
------------------ ------------------
Net increase ...................................... 26,548,929 95,950,589
Dividends from net investment income ................ (24,403,711) (27,762,577)
Net decrease from transactions in shares of
beneficial interest ................................ (23,878,590) (9,709,840)
------------------ ------------------
Total increase (decrease) ......................... (21,733,372) 58,478,172
NET ASSETS:
Beginning of period ................................. 480,956,056 422,477,884
------------------ ------------------
END OF PERIOD (Including undistributed net
investment income of $14,577,390 and $8,415,612,
respectively) ....................................... $459,222,684 $480,956,056
================== ==================
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS For the year ended September 30, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH:
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income .......................................................... $ 30,565,489
Adjustments to reconcile net investment income to net cash provided by
operating activities:
Increase in receivables and other assets related to operations ............... (152,770)
Increase in payables related to operations .................................... 296,475
Net amortization of discount/premium .......................................... (4,322,630)
---------------
Net cash provided by operating activities ................................... 26,386,564
---------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments ....................................................... (185,997,798)
Principal prepayments/sales of investments ..................................... 222,331,599
Net purchases of short-term investments ........................................ (4,287,129)
---------------
Net cash provided by investing activities ................................... 32,046,672
---------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net payments for shares of beneficial interest repurchased ..................... (24,003,475)
Net payments for maturities of reverse repurchase agreements ................... (9,547,000)
Dividends to shareholders from net investment income ........................... (24,403,711)
---------------
Net cash used for financing activities ...................................... (57,954,186)
---------------
Net increase in cash ........................................................ 479,050
Cash at beginning of year ....................................................... --
---------------
CASH BALANCE AT END OF YEAR ..................................................... $ 479,050
===============
Cash paid during the year for interest .......................................... $ 7,520,036
===============
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1996
- -----------------------------------------------------------------------------
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's
investment objective is to provide a high level of current income and return
$10 per share to shareholders on the termination date. The Trust seeks to
achieve its objective by investing in high quality fixed-income securities.
The Trust was organized as a Massachusetts business trust June 16, 1993 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 preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies:
A. Valuation of Investments -- (1) 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; (2) 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; (3)
certain 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 (4) 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 over the life of the respective 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
investment income and net realized capital gains for financial reporting
purposes but not for tax
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1996 (continued)
- ------------------------------------------------------------------------------
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 --Dean Witter InterCapital Inc., an affiliate
of Dean Witter Services Company Inc. (the "Manager"), paid the
organizational expenses of the Trust in the amount of approximately
$33,500 which have been reimbursed for the full amount thereof. Such
expenses have been deferred and are being amortized on the straight-line
method over a period not to exceed five years from the commencement of
operations.
2. MANAGEMENT AGREEMENT -- Pursuant to a Management Agreement, the Trust pays
the Manager a management fee, accrued weekly and payable monthly, by applying
the annual rate of 0.36% to the Trust's 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 the
Adviser an advisory fee, accrued weekly and payable monthly, by applying the
annual rate of 0.24% to the Trust's 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, 1996 were
as follows:
<TABLE>
<CAPTION>
Sales/
Purchases Prepayments
------------- --------------
<S> <C> <C>
U.S. Government Agencies .......................... $ 84,020,428 $196,676,588
Private Issue Collateralized Mortgage Obligations 101,977,370 10,111,561
Municipal Bonds ................................... -- 15,543,450
</TABLE>
Dean Witter Trust Company, an affiliate of the Manager, is the Trust's
transfer agent. At September 30, 1996, the Trust had transfer agent fees and
expenses payable of approximately $14,000.
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1996 (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, 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
Treasury shares purchased and retired
(weighted average discount 12.08%)* (3,070,900) (30,709) (23,847,881)
------------- ----------- --------------
Balance, September 30, 1996 .......... 52,130,428 $521,304 $501,952,187
============= =========== ==============
</TABLE>
- ------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS -- At September 30, 1996, the Trust had a net
capital loss carryover of approximately $3,420,000 to offset future capital
gains to the extent provided by regulations.
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, 1996, securities valued at $153,390,000 were pledged as
collateral.
At September 30, 1996, the reverse repurchase agreements outstanding were
$146,658,000 with a weighted interest rate of 5.51% maturing within 45 days.
The maximum and average daily amounts outstanding during the period were
$157,327,000 and $139,401,164, respectively. The weighted average interest
rate during the period was 5.76%.
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1996 (continued)
- -------------------------------------------------------------------------------
8. DIVIDENDS -- The Trust declared the following dividends from net
investment income payable to shareholders of record subsequent to September
30, 1996:
<TABLE>
<CAPTION>
Declaration Amount per Record Payable
Date Share Date Date
- ------------------ ------------- ---------------- ----------------
<S> <C> <C> <C>
September 24, 1996 $0.044 October 4, 1996 October 18, 1996
October 30, 1996 $0.044 November 8, 1996 November 22, 1996
</TABLE>
9. LITIGATION -- Two purported class action lawsuits, which were 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 and another trust for which the defendants act in
similar capacities. The plaintiffs in these actions generally alleged that
the defendants made inadequate and misleading disclosures in the prospectus
for the Trust, in particular, as such disclosures relate 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, were sought in an unspecified amount. On August 16, 1996,
the actions were dismissed with prejudice for failure to state a claim.
Plaintiffs did not file a notice of appeal and their time to do so has
expired.
In addition, four purported class action lawsuits 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, the plaintiffs filed an
amended complaint consolidating these four actions. All defendants except two
of the Trustees have filed answers and affirmative defenses to the
consolidated amended complaint. The two Trustees have moved to dismiss the
complaint against them. 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
For the For the November 30, 1993*
year ended year ended through
September 30, 1996 September 30, 1995++++ September 30, 1994
------------------ ---------------------- ------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $ 8.71 $ 7.48 $ 9.50
------------------ ---------------------- ------------------
Net investment income ............................. 0.59 0.56 0.56
Net realized and unrealized gain (loss) .......... (0.09) 1.14 (2.09)
------------------ ---------------------- ------------------
Total from investment operations .................. 0.50 1.70 (1.53)
------------------ ---------------------- ------------------
Less dividends from net investment income ........ (0.46) (0.49) (0.48)
Anti-dilutive effect of acquiring treasury shares 0.06 0.02 --
Less offering costs charged against capital ...... -- -- (0.01)
------------------ ---------------------- ------------------
Net asset value, end of period .................... $ 8.81 $ 8.71 $ 7.48
================== ====================== ==================
Market value, end of period ....................... $7.875 $ 7.50 $7.875
================== ====================== ==================
TOTAL INVESTMENT RETURN+ .......................... 11.29% 1.87% (16.87)%(1)
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ................................ 0.73% 0.76% 0.74%(2)
Interest expense .................................. 1.66% 2.49% 1.41%(2)
Total expenses .................................... 2.39% 3.25% 2.15%(2)
Net investment income ............................. 6.46% 7.12% 8.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .......... $459,223 $480,956 $422,478
Portfolio turnover rate ........................... 31% -- %++ 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 and distributions are
assumed to be reinvested at the prices obtained under the Trust's
reinvestment plan. Total investment return does not reflect brokerage
commissions.
++ Less than 0.5%.
++++Restated for comparative purposes.
(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, 1996, the results of
its operations and its cash flows for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period 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, 1996 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Our report on the September 30, 1995 financial statements referred to certain
pending litigation, the status of which is described in Note 9 to these
financial statements. Because of changes to professional auditing standards
recently adopted by the American Institute of Certified Public Accountants,
our report on the September 30, 1996 financial statements is no longer
required to refer to uncertainties such as this litigation.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 7, 1996
<PAGE>
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
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.
TCW/DW
TERM TRUST
2000
ANNUAL REPORT
SEPTEMBER 30, 1996
