TCW/DW TERM TRUST 2000
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
Over the six-month period ended March 31, 1996, TCW/DW Term Trust 2000's
net asset value increased from $8.71 to $8.82 per share. Based on this change,
and including reinvestment of income dividends totaling approximately $0.22
per share, the Trust's total return for the period was 4.00 percent. For the
same period, the market price of the Trust's shares on the New York Stock
Exchange (NYSE) decreased from $7.50 to $7.375 per share. On the basis of this
change, and including reinvestment of dividends, the Trust's total return for
the period was 1.11 percent.
In December 1995, the Trust raised its monthly dividend from $0.035 to
$0.0375 per share to reflect an increase in the Trust's portfolio earnings.
This increase in portfolio earnings is largely attributable to 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 early
1996 indicated weaker overall economic conditions and culminated in a decision
by the Federal Reserve Board to cut short-term interest rates in January.
Between early October 1995 and the end of January, the yield on the 5-year
U.S. Treasury note declined 79 basis points. However, strong employment
reports released during February and March prompted concerns over a stronger
economy and a return of inflationary fears. The stronger economic data
resulted in a sharp rise in interest rates during March, with intermediate
U.S. Treasury yields retreating to October 1995 levels.
Despite the mixed economic reports released during the last few months,
inflation reports have remained stable, a positive piece of economic news for
the bond market. Thus, the Federal Reserve Board 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), the recent rise in interest rates reduced mortgage prepayment risk
which aided the mortgage-backed sector's recent performance. 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 six-month period under review, 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
securities. Additional portfolio changes will be made as market conditions and
specific opportunities warrant.
Approximately 65 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
<PAGE>
of a specified index. The remaining 12 percent is invested in AAA-rated
municipal bonds and short-term investments. The portfolio's 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. As of
March 31, 1996, the Trust's degree of leverage (the ratio of debt to assets)
was 23 percent of total assets.
LOOKING AHEAD
TCW is generally positive regarding the mortgage-backed sector's long-term
prospects. Although hopes that Congress will pass a definitive
deficit-reduction plan have waned in recent months, real interest rates (minus
inflation) remain historically high. (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 six-month period under review, the Trust purchased 1,661,700 shares of
common stock at a weighted average market discount of 12.93 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
Results of Annual Meeting (unaudited)
- -----------------------------------------------------------------------------
* * *
On December 20, 1995, an annual meeting of the Trust's shareholders was held
for the purpose of voting on three separate matters, the results of which were
as follows:
(1)Election of Trustees:
John R. Haire
For ........................................................ 37,331,663
Withheld ................................................... 614,267
Dr. Manuel H. Johnson
For ........................................................ 37,265,112
Withheld ................................................... 680,818
John L. Schroeder
For ........................................................ 37,260,829
Withheld ................................................... 685,101
Marc I. Stern
For ........................................................ 37,250,758
Withheld ................................................... 695,172
The following Trustees were not standing for reelection at this
meeting: John C. Argue, Richard M. DeMartini, Charles A.
Fiumefreddo, Paul Kolton, Thomas E. Larkin, Jr. and Michael
E. Nugent.
(2)Continuance of the Currently Effective Investment Advisory
Agreement between the Trust and TCW Funds Management:
For ........................................................ 35,868,073
Against .................................................... 899,058
Abstain .................................................... 1,178,799
(3)Ratification of Price Waterhouse LLP as Independent
Accountants for the Fiscal Year ending September 30, 1996:
For ........................................................ 36,588,663
Against .................................................... 531,767
Abstain .................................................... 825,500
In addition, a shareholder proposal to amend the Trust's Declaration of Trust
to require each Trustee within 30 days of election to become a shareholder of
the Trust failed to obtain the necessary quorum of a majority of outstanding
shares in order to be presented at the Meeting.
<PAGE>
TCW/DW TERM TRUST 2000
Portfolio of Investments March 31, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- -------
<C> <S> <C> <C> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS (87.8%)
U.S. GOVERNMENT AGENCIES (42.6%)
$ 16,639 Federal Home Loan Mortgage Corp. 1513 O++ .................. 6.50 % 03/15/08 $ 16,301,818
15,043 Federal Home Loan Mortgage Corp. 1604 JD ................... 6.097+ 11/15/08 13,139,044
18,694 Federal Home Loan Mortgage Corp. 1609 LG (PAC) ............. 5.552+ 11/15/23 14,550,547
1,618 Federal Home Loan Mortgage Corp. 1625 SH (PAC)++ .......... 8.504+ 12/15/08 1,346,878
18,672 Federal Home Loan Mortgage Corp. 1635 IB (PAC)++ .......... 5.687+ 12/15/08 16,283,865
18,190 Federal Home Loan Mortgage Corp. 1635 P (TAC) .............. 6.781+ 12/15/08 14,554,484
9,122 Federal Home Loan Mortgage Corp. 1649 S .................... 7.511+ 12/15/08 7,343,125
26,140 Federal Home Loan Mortgage Corp. 1650 LB (PAC)++ .......... 6.50 06/15/22 24,596,277
7,243 Federal Home Loan Mortgage Corp. 1661 SB ................... 6.717+ 01/15/09 5,007,037
16,932 Federal Home Loan Mortgage Corp. 1661 SD ................... 3.337+ 01/15/09 6,878,549
13,742 Federal Home Loan Mortgage Corp. 1671 MB (PAC) ............. 9.668+ 02/15/24 11,094,455
13,740 Federal Home Loan Mortgage Corp. 1673 S .................... 6.73 + 10/15/22 8,888,066
9,467 Federal Home Loan Mortgage Corp. 1680 EA (PAC)++ .......... 6.50 02/15/24 9,192,065
13,997 Federal National Mortgage Assoc. 1993-170 SE ............... 7.07 + 09/25/08 10,930,287
11,763 Federal National Mortgage Assoc. 1993-188 AN (PAC)++ ...... 6.00 + 10/25/08 11,189,078
14,588 Federal National Mortgage Assoc. 1993-214 S (TAC) ......... 5.465+ 12/25/08 10,075,099
8,173 Federal National Mortgage Assoc. 1993-225 SU (PAC) ........ 5.72 + 12/25/23 7,130,970
10,027 Federal National Mortgage Assoc. 1994-17 S++ ............... 7.621+ 02/25/09 7,893,371
5,307 Federal National Mortgage Assoc. G1993-35 SB (PAC) ........ 11.812+ 11/25/23 4,791,009
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(IDENTIFIED COST $241,382,886) ................................................. 201,186,024
-------------
PRIVATE ISSUES (45.2%)
17,450 CMC Securities Corp. II 1993-E2 E2H (PAC) .................. 7.00 10/25/23 17,155,444
17,028 CMC Securities Corp. III 1994-A6 (PAC) ..................... 6.75 02/25/24 16,825,707
14,400 CountryWide Funding Corp. 1993-10 A3 (PAC) ................. 6.75 01/25/24 14,228,928
7,893 CountryWide Mortgage-Backed Securities, Inc.
1993-E A2 (PAC) ........................................... 6.50 01/25/24 7,770,659
23,439 General Electric Capital Mortgage Services, Inc.
1994-1 A5 (TAC) ........................................... 6.50 01/25/24 22,675,124
25,225 General Electric Capital Mortgage Services, Inc.
1994-6 A9 (TAC) ........................................... 6.50 09/25/22 21,632,796
11,664 General Electric Capital Mortgage Services, Inc. 1994-29 A1 8.30 11/15/24 11,818,082
16,475 General Electric Capital Mortgage Services, Inc. 1995-7 A1 7.50 09/25/25 16,566,927
29,159 Prudential Home Mortgage Securities 1993-34 C (PAC) ....... 7.00 08/25/23 29,104,508
25,000 Prudential Home Mortgage Securities 1993-47 A3 (PAC) ...... 6.75 12/25/23 22,940,750
22,561 Residential Funding Mortgage Securites I 1993-S43 A3 ...... 5.95 11/25/23 22,048,640
10,715 Securitized Asset Sales, Inc. 1995-6 A1 .................... 7.00 12/25/10 10,666,898
-------------
TOTAL PRIVATE ISSUES
(IDENTIFIED COST $220,067,240) ................................................. 213,434,463
-------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $461,450,126) ................................................. 414,620,487
-------------
</TABLE>
<PAGE>
TCW/DW TERM TRUST 2000
Portfolio of Investments March 31, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- -------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES MORTGAGE
PASS-THROUGH SECURITIES (25.3%)
$ 12,583 Federal Home Loan Mortgage Corp. PC Gold++ ................. 6.00 % 02/01/09 $ 12,067,947
112,923 Federal National Mortgage Assoc.++ ......................... 5.50- 08/01/01-
6.00 02/01/09 107,296,011
------------
TOTAL U.S. GOVERNMENT AGENCIES MORTGAGE
PASS-THROUGH SECURITIES
(IDENTIFIED COST $123,517,415) ................................................. 119,363,958
------------
MUNICIPAL BONDS (15.8%)
ELECTRIC REVENUE (5.1%)
5,825 Owensboro, Kentucky, Electric Light & Power
Refg Ser B (AMBAC) ........................................ 0.00 01/01/02 4,428,398
Intermountain Power Agency, Utah,
3,255 Refg Ser A (AMBAC) ........................................ 0.00 07/01/01 2,534,213
22,000 Refg Ser B (AMBAC) ........................................ 0.00 07/01/01 17,128,320
------------
24,090,931
------------
OTHER REVENUE (5.2%)
10,000 North Slope Boro, Alaska, Ser B (MBIA) ..................... 0.00 01/01/01 8,010,300
2,000 Maricopa County Unified High School District #04, Arizona,
Glendale Refg (AMBAC) ..................................... 0.00 07/01/01 1,565,120
4,250 Boston, Massachusetts, Refg Ser A (AMBAC) .................. 4.30 07/01/01 4,176,432
13,650 Texas, Refg Ser A (AMBAC) .................................. 0.00 10/01/01 10,495,895
------------
24,247,747
------------
RESOURCE RECOVERY REVENUE (1.2%)
5,620 Westchester County Industrial Development Agency,
New York, Resco Co Ser A (AMBAC) .......................... 4.95 07/01/01 5,694,802
------------
TRANSPORTATION FACILITIES REVENUE (2.5%)
10,000 Kentucky Turnpike Authority, Economic Dev Road
Revitalization Refg (FGIC) ................................ 0.00 01/01/02 7,602,400
4,250 Harris County, Texas, Toll Road Sr Lien (AMBAC) ........... 4.45 08/15/01 4,214,555
------------
11,816,955
------------
WATER & SEWER REVENUE (1.8%)
10,855 New Jersey Wastewater Treatment, Ser A (FGIC) .............. 0.00 09/01/01 8,424,457
------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $72,803,336) .................................................. 74,274,892
------------
</TABLE>
<PAGE>
TCW/DW TERM TRUST 2000
Portfolio of Investments March 31, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- -------- ---------- -------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (0.7%)
REPURCHASE AGREEMENT
$ 3,461 The Bank of New York (dated 03/29/96; proceeds $3,462,145;
collateralized by $3,302,450 U.S. Treasury Bond 7.25% due
05/15/16 valued at $3,530,064) (Identified Cost
$3,460,847) ............................................... 4.50% 04/01/96 $ 3,460,847
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $661,231,724) (A) ................. 129.6% 611,720,184
LIABILITIES IN EXCESS OF OTHER ASSETS ................................ (29.6) (139,649,522)
------ -------------
NET ASSETS ........................................................... 100.0% $ 472,070,662
------ =============
<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 for federal income tax purposes is $661,231,724;
the aggregate gross unrealized appreciation is $2,561,305 and the
aggregate gross unrealized depreciation is $52,072,845, resulting
in net unrealized depreciation of $49,511,540.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
Financial Statements
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $661,231,724) ........... $611,720,184
Interest receivable ....................... 3,072,899
Deferred organizational expenses .......... 17,849
Prepaid expenses and other assets ........ 180,265
------------
TOTAL ASSETS ............................ 614,991,197
------------
LIABILITIES:
Reverse repurchase agreements ............. 142,046,000
Payable for:
Interest ................................. 341,306
Management fee ........................... 174,933
Shares of beneficial interest repurchased 130,135
Investment advisory fee .................. 116,622
Accrued expenses and other payables ...... 111,539
Contingencies (Note 9) .................... --
------------
TOTAL LIABILITIES ....................... 142,920,535
------------
NET ASSETS:
Paid-in-capital ........................... 513,362,644
Net unrealized depreciation ............... (49,511,540)
Accumulated undistributed net investment
income ................................... 11,639,581
Accumulated net realized loss ............. (3,420,023)
------------
NET ASSETS .............................. $472,070,662
============
NET ASSET VALUE PER SHARE,
53,539,628 shares outstanding
(unlimited shares authorized of $.01 par
value) ................................... $8.82
=====
</TABLE>
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the six months ended March 31, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ................... $20,723,481
-----------
EXPENSES
Management fee ................... 884,896
Investment advisory fee .......... 589,931
Transfer agent fees and expenses 111,601
Professional fees ................ 76,147
Insurance expenses ............... 44,926
Registration fees ................ 30,197
Shareholder reports and notices . 26,173
Custodian fees ................... 20,681
Trustees' fees and expenses ..... 9,690
Organizational expenses .......... 3,353
Other ............................ 6,837
-----------
TOTAL OPERATING EXPENSES ....... 1,804,432
Interest expense ................. 3,853,689
-----------
TOTAL EXPENSES .................. 5,658,121
-----------
NET INVESTMENT INCOME ........... 15,065,360
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ................ 25,414
Net change in unrealized
depreciation .................... 854,660
-----------
NET GAIN ........................ 880,074
-----------
NET INCREASE .................... $15,945,434
===========
</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 SIX FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
-------------- ------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ............................... $ 15,065,360 $ 31,297,340
Net realized gain (loss) ............................ 25,414 (358,601)
Net change in unrealized depreciation ............... 854,660 65,011,850
-------------- ------------------
Net increase ....................................... 15,945,434 95,950,589
Dividends from net investment income ................. (11,841,391) (27,762,577)
Net decrease from transactions in shares of
beneficial interest ................................. (12,989,437) (9,709,840)
-------------- ------------------
Total increase (decrease) .......................... (8,885,394) 58,478,172
NET ASSETS:
Beginning of period .................................. 480,956,056 422,477,884
-------------- ------------------
END OF PERIOD (Including undistributed net investment
income of $11,639,581 and $8,415,612, respectively) $472,070,662 $480,956,056
============== ==================
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
Financial Statements (continued)
- -----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS For the six months ended March 31, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income .............................................. $ 15,065,360
Adjustments to reconcile net investment income to net cash provided
by operating activities:
Increase in receivables and other assets related to operations .... (292,088)
Increase in payables related to operations ........................ 117,546
Net amortization of discount/premium .............................. (2,673,405)
-------------
Net cash provided by operating activities ....................... 12,217,413
-------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments ........................................... (164,528,734)
Principal prepayments/sales of investments ......................... 194,175,304
Net purchases of short-term investments ............................ (2,760,830)
-------------
Net cash provided by investing activities ....................... 26,885,740
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net payments for shares of beneficial interest repurchased ......... (13,102,762)
Net payments for maturities of reverse repurchase agreements ....... (14,159,000)
Dividends to shareholders from net investment income ............... (11,841,391)
-------------
Net cash used for financing activities .......................... (39,103,153)
-------------
Net increase in cash ............................................ --
Cash at beginning of period ........................................... --
-------------
CASH BALANCE AT END OF PERIOD ......................................... $ --
=============
Cash paid during the period for interest .............................. $ 3,746,085
=============
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW TERM TRUST 2000
Notes to Financial Statements March 31, 1996 (unaudited)
- -----------------------------------------------------------------------------
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 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 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 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
<PAGE>
TCW/DW TERM TRUST 2000
Notes to Financial Statements March 31, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
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
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 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 six months ended March 31, 1996 were
as follows:
<TABLE>
<CAPTION>
PURCHASES SALES/PREPAYMENTS
--------- -----------------
<S> <C> <C>
U.S. Government Agencies .......................... $ 63,380,011 $176,559,122
Private Issue Collateralized Mortgage Obligations . 101,148,723 2,072,732
Municipal Bonds ................................... -- 15,543,450
</TABLE>
Dean Witter Trust Company, an affiliate of the Manager, is the Trust's
transfer agent. At March 31, 1996, the Trust had transfer agent fees and
expenses payable of approximately $24,600.
<PAGE>
TCW/DW TERM TRUST 2000
Notes to Financial Statements March 31, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
5. SHARES OF BENEFICIAL INTEREST --Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAR VALUE PAID IN
OF EXCESS OF
SHARES 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 12.93%)* (1,661,700) (16,617) (12,972,820)
----------- --------- -------------
Balance, March 31, 1996 .............. 53,539,628 $535,396 $512,827,248
=========== ========= =============
<FN>
- ------------
* 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 such 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 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 March
31, 1996, securities valued at $152,143,838 were pledged as collateral.
At March 31, 1996, the reverse repurchase agreements outstanding were
$142,046,000 with a weighted interest rate of 5.36% maturing within 60 days.
The maximum and average daily amounts outstanding during the period were
$158,070,582 and $132,976,457, respectively. The weighted average interest
rate during the period was 5.70%.
<PAGE>
TCW/DW TERM TRUST 2000
Notes to Financial Statements March 31, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
8. DIVIDENDS -- The Trust declared the following dividends from net investment
income payable to shareholders of record subsequent to March 31, 1996:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER RECORD PAYABLE
DATE SHARE DATE DATE
---- ----- ---- ----
<S> <C> <C> <C>
March 26, 1996 $0.0375 April 4, 1996 April 19, 1996
April 23, 1996 $0.0375 May 3, 1996 May 17, 1996
</TABLE>
9. 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 Advisor, 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 Advisor, 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. All defendants except two of the
Trustees have filed answers and affirmative defenses to the consolidated
amended complaint. The two Trustees have an indefinite extension in which to
respond to the complaint.
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 SIX FOR THE NOVEMBER 30, 1993*
MONTHS ENDED YEAR ENDED THROUGH
MARCH 31, 1996 SEPTEMBER 1995++++ SEPTEMBER 30, 1994
-------------- ------------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $ 8.71 $ 7.48 $ 9.50
------ ------ ------
Net investment income ............................. 0.28 0.56 0.56
Net realized and unrealized gain (loss) .......... 0.01 1.14 (2.09)
------ ------ ------
Total from investment operations .................. 0.29 1.70 (1.53)
------ ------ ------
Less dividends from net investment income ........ (0.22) (0.49) (0.48)
Anti-dilutive effect of acquiring treasury shares 0.04 0.02 --
Less offering costs charged against capital ...... -- -- (0.01)
------ ------ ------
Net asset value, end of period .................... $ 8.82 $ 8.71 $ 7.48
====== ====== ======
Market value, end of period ....................... $7.375 $ 7.50 $7.875
====== ====== ======
TOTAL INVESTMENT RETURN+ .......................... 1.11%(1) 1.87% (16.87)%(1)
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ................................ 0.74%(2) 0.76% 0.74%(2)
Interest expense .................................. 1.57%(2) 2.49% 1.41%(2)
Total expenses .................................... 2.31%(2) 3.25% 2.15%(2)
Net investment income ............................. 6.16%(2) 7.12% 8.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $472,071 $480,956 $422,478
Portfolio turnover rate ........................... 27%(1) -- %++ 48%(1)
<FN>
- ------------
* 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.
</TABLE>
See Notes to Financial Statements
<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.
The financial statements included herein have been taken from the records of
the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
T C W / D W
TERM TRUST
2000
SEMIANNUAL REPORT
MARCH 31, 1996
