<PAGE>
TCW/DW TERM TRUST 2000 Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS September 30, 1998
DEAR SHAREHOLDER:
For the fiscal year ended September 30, 1998, TCW/DW Term Trust 2000's net
asset value increased from $9.52 per share to $10.11 per share. Based on this
change, and including reinvestment of dividends totaling $0.56 per share, the
Trust's total return for the fiscal year was 12.75 percent. Over the same
period, the market price of the Trust's shares on the New York Stock Exchange
(NYSE) increased from $8.875 per share to $9.688 per share. Based on this
change and including reinvestment of dividends, the Trust's total return for
the fiscal year was 15.92 percent.
THE MARKET
International developments and the flow of capital played prominent roles in
the movement of the U.S. fixed-income markets over the past six months. A
seemingly endless stream of bad news out of the world's emerging markets
induced investors to seek the safety of the U.S. Treasury market. As a result,
U.S. Treasury yields plummeted and in late September the yield on the 30-year
U.S. Treasury bond broke through five percent for the first time since 1967.
Over the last five months, the yield on the 30-year U.S. Treasury bond has
fallen 100 basis points with the majority of the decline occurring since the
beginning of August, coinciding with the downturn in the U.S. stock market and
the increased turmoil in the global markets.
The economic collapse in Russia, threats to Latin America's stability and
Asia's persistent problems have some economists forecasting a global recession.
Indeed, the bailout of a prominent "hedge" fund, Long Term Capital Management,
was viewed by some observers as an indication of how fragile the financial
system has become. Despite the Federal Reserve Board's decision to cut the
federal-funds rate by 25 basis points (0.25 percentage points) at the end of
September, many investors remained concerned about the condition of financial
systems worldwide. However, concerns were eased somewhat when the central bank
initiated another 25 basis point cut less than a month later, suggesting a
commitment to keeping the U.S. financial system on track.
<PAGE>
TCW/DW TERM TRUST 2000
LETTER TO THE SHAREHOLDERS September 30, 1998, continued
According to the Trust's adviser, TCW Funds Management, Inc. (TCW), it is
highly unusual to see U.S. Treasury yields as far below the federal-funds rate
as they are currently. In TCW's view this scenario is an indication that the
market expects the central bank to continue cutting rates. Despite the turmoil
in many overseas economies and the very real possibility that these problems
may spill over into the United States, the domestic economy to date has been
strong. Unemployment is low, wages have been on an upswing and consumer
spending has been growing. Although some analysts feel that the recent decline
in the U.S. stock market and the uncertain political environment in Washington,
D.C. may slow the economy in the third and fourth quarters of 1998, consumer
confidence remains high. Inflation is below two percent and the federal budget
surplus is growing. In TCW's view, while this scenario could dampen enthusiasm
for further interest rate cuts, the recent easing is justified both as a
preemptive strike against both the increased likelihood of an economic slowdown
and the growing evidence of financial distress in the United States.
THE PORTFOLIO
Approximately 59 percent of the Trust's portfolio is invested in mortgage
pass-through and asset-backed securities issued by agencies of the U.S.
government or AAA-rated collateralized mortgage obligations (CMOs) with
durations, average lives or expected maturity dates that correspond closely to
the Trust's termination date. An additional 28 percent of the portfolio is
invested in inverse floating rate CMOs issued by U.S. government agencies. As a
reminder, inverse floaters have coupons that reset by a multiple in a direction
opposite to that of a specified index. Approximately 13 percent of the
portfolio 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 per share offering price to
shareholders at maturity. As of September 30, 1998, the Trust's degree of
leverage (the ratio of debt to assets) was 11.6 percent of total assets.
LOOKING AHEAD
The mortgage-backed sector has underperformed the fixed-income market as a
whole over the past several months. Refinancing activity has not yet surpassed
the peak levels recorded during the first quarter of 1998, but analysts expect
new records to be set in the next few weeks. Mortgage lenders have been unable
to sell mortgages in this environment and have had little incentive to lower
rates. As a result, mortgage rates have declined much slower than U.S. Treasury
yields and mortgage spreads are now wider than they have been in several years.
The combination of wider spreads and the threat of another wave of refinancing
activity have kept many investors temporarily out of the mortgage-backed
sector. Although dealer reluctance to take on additional risk in this
environment has slowed CMO issuance dramatically, new CMO issuance year-to-date
already exceeds last year's volume.
2
<PAGE>
TCW/DW TERM TRUST 2000
LETTER TO THE SHAREHOLDERS September 30, 1998, continued
Despite the possibility that mortgage spreads could widen further, TCW believes
that purchases made at current levels are poised to perform well over the
remainder of the Trust's life. Today's high yield levels, combined with the
Trust's continued focus on call protection, enables the portfolio management
team to maintain a positive outlook for the mortgage-backed sector in general
and the Trust in particular.
The Trust's net asset value and NYSE market values will continue to fluctuate
in response to changes in market conditions and interest rates. As stated in
the Trust's original prospectus, the Trust's income and dividends are expected
to decline to some extent over the term of the Trust and as the Trust
approaches its termination date.
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 period
under review, the Trust purchased 2,932,700 shares of common stock at a
weighted average market discount of 4.97 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,
[GRAPHIC OMITTED]
CHARLES A. FIUMEFREDDO
Chairman of the Board
3
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (72.6%)
U.S. GOVERNMENT AGENCIES (37.4%)
$ 8,871 Federal Home Loan Mortgage Corp. 1604 JD .................................. 5.534+% 11/15/08 $ 9,178,875
13,894 Federal Home Loan Mortgage Corp. 1609 LG (PAC) ............................ 5.145+ 11/15/23 14,224,355
8,528 Federal Home Loan Mortgage Corp. 1635 IB (PAC) ............................ 4.366+ 12/15/08 8,812,732
17,307 Federal Home Loan Mortgage Corp. 1635 P (TAC) ............................. 6.366+ 12/15/08 17,647,329
9,122 Federal Home Loan Mortgage Corp. 1649 S ................................... 7.776+ 12/15/08 8,962,262
7,243 Federal Home Loan Mortgage Corp. 1661 SB .................................. 7.114+ 01/15/09 6,836,010
16,932 Federal Home Loan Mortgage Corp. 1661 SD .................................. 2.225+ 01/15/09 12,010,921
9,076 Federal Home Loan Mortgage Corp. 1671 MB (PAC) ............................ 9.012+ 02/15/24 9,271,612
13,740 Federal Home Loan Mortgage Corp. 1673 S ................................... 7.148+ 10/15/22 11,872,281
3,267 Federal Home Loan Mortgage Corp. 1680 EA (PAC) ++ ......................... 6.50 02/15/24 3,366,243
16,260 Federal Home Loan Mortgage Corp. 1939 C ++ ................................ 7.00 05/15/17 16,310,650
13,997 Federal National Mortgage Assoc. 1993-170 SE .............................. 7.508+ 09/25/08 13,764,578
4,886 Federal National Mortgage Assoc. 1993-188 AN (PAC) ........................ 6.00 + 10/25/08 4,974,931
14,588 Federal National Mortgage Assoc. 1993-214 S (TAC) ......................... 5.804+ 12/25/08 13,621,997
3,743 Federal National Mortgage Assoc. 1993-225 SU (PAC) ........................ 6.195+ 12/25/23 3,448,317
8,655 Federal National Mortgage Assoc. 1994-17 S ................................ 7.052+ 02/25/09 8,701,335
9,414 Federal National Mortgage Assoc. 1997-41 C ................................ 7.25 12/18/16 9,445,847
1,862 Federal National Mortgage Assoc. 1993-35 SB (PAC) ......................... 10.791+ 11/25/23 1,843,421
------------
TOTAL U.S. GOVERNMENT AGENCIES (Identified Cost $176,314,319) .................................... 174,293,696
------------
PRIVATE ISSUES (35.2%)
17,028 CMC Securities Corp. III 1994-A6 (PAC) .................................... 6.75 02/25/24 17,639,816
14,400 CountryWide Funding Corp. 1993-10 A3 (PAC) ................................ 6.75 01/25/24 14,926,464
22,000 CountryWide Home Loans 1997-3 A2 (PAC) .................................... 7.50 06/25/27 22,577,500
7,893 CountryWide Mortgage-Backed Securities, Inc. 1993-E A2 (PAC) .............. 6.50 01/25/24 7,857,614
18,691 General Electric Capital Mortgage Services, Inc. 1994-1 A5 (TAC) .......... 6.50 01/25/24 18,694,338
29,643 General Electric Capital Mortgage Services, Inc. 1994-6 A9 (TAC) .......... 6.50 09/25/22 29,936,158
24,793 Norwest Asset Securities Corp. 1997-6 A1 (PAC) ............................ 7.50 05/25/27 25,435,883
13,233 Prudential Home Mortgage Securities 1993-34 C A1 (PAC) .................... 7.00 08/25/23 13,221,159
10,169 Residential Funding Mortgage Securities I 1993-S43 A3 ..................... 5.95 11/25/23 10,116,854
3,419 Securitized Asset Sales, Inc. 1995-6 A1 ................................... 7.00 12/25/10 3,414,387
------------
TOTAL PRIVATE ISSUES (Identified Cost $160,739,237)............................................... 163,820,173
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Identified Cost $337,053,556) ................................................................... 338,113,869
------------
ASSET-BACKED SECURITIES (5.1%)
23,664 Bear Asset Trust Securities 1997-1 A - 144A*
(Identified Cost $23,745,683).............................................. 6.686 06/15/03 23,841,820
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1998, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- -------------- ----------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH SECURITIES (20.4%)
$ 8,910 Federal Home Loan Mortgage Corp. PC Gold ................................. 6.00% 02/01/09 $ 9,010,550
78,214 Federal National Mortgage Assoc. ++ ...................................... 5.50- 08/01/01-
6.00 02/01/09 78,189,329
7,668 Government National Mortgage Assoc. II ARM ............................... 6.875 06/20/25 7,769,932
-------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH SECURITIES
(Identified Cost $93,477,875) .................................................................... 94,969,811
-------------
TAX-EXEMPT MUNICIPAL BONDS (12.9%)
Electric Revenue (1.7%)
5,825 Owensboro, Kentucky, Electric Light & Power Refg Ser B (AMBAC) ........... 0.00 01/01/02 5,160,251
3,255 Intermountain Power Agency, Utah, Refg Ser A (AMBAC) ..................... 0.00 07/01/01 2,932,202
-------------
8,092,453
-------------
Other Revenue (5.9%)
10,000 North Slope Boro, Alaska, Ser B (MBIA) ................................... 0.00 01/01/01 9,180,800
2,000 Maricopa County Unified High School District #40, Arizona, Glendale Refg
(AMBAC) ................................................................ 0.00 07/01/01 1,805,560
4,250 Boston, Massachusetts, Refg Ser A (AMBAC) ................................ 4.30 07/01/01 4,325,990
13,650 Texas, Refg Ser A (AMBAC) ................................................ 0.00 10/01/01 12,198,322
-------------
27,510,672
-------------
Resource Recovery Revenue (1.3%)
5,620 Westchester County Industrial Development Agency, New York, Resco Co
Ser A (AMBAC) .......................................................... 4.95 07/01/01 5,803,437
-------------
Transportation Facilities Revenue (1.9%)
10,000 Kentucky Turnpike Authority, Economic Development Road Revitalization
Refg (FGIC) ............................................................ 0.00 01/01/02 8,858,800
-------------
Water & Sewer Revenue (2.1%)
10,855 New Jersey Wastewater Treatment, Ser A (FGIC) ............................ 0.00 09/01/01 9,728,034
-------------
TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $56,836,451).................................... 59,993,396
-------------
SHORT-TERM INVESTMENTS (1.8%)
U.S. GOVERNMENT AGENCY (a) (0.8%)
4,000 Federal Home Loan Bank (Amortized Cost $3,991,989)........................ 5.15 10/15/98 3,991,989
-------------
REPURCHASE AGREEMENT (1.0%)
4,672 The Bank of New York (dated 09/30/98; proceeds $4,672,923) (b)
(Identified Cost $4,672,274) ........................................... 5.00 10/01/98 4,672,274
-------------
TOTAL SHORT-TERM INVESTMENTS (Identified Cost $8,664,263) ........................................ 8,664,263
-------------
TOTAL INVESTMENTS (Identified Cost $519,777,828) (c) .............................. 112.8 % 525,583,159
LIABILITIES IN EXCESS OF OTHER ASSETS ............................................. (12.8) (59,738,336)
------- -------------
NET ASSETS ........................................................................ 100.0 % $ 465,844,823
======= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
TCW/DW TERM TRUST 2000
PORTFOLIO OF INVESTMENTS September 30, 1998, continued
- ---------------
ARM Adjustable rate mortgage.
PC Participation Certificate.
PAC Planned Amortization Class.
TAC Targeted Amortization Class.
* Resale is restricted to qualified institutional investors.
+ 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) Security was purchased on a discount basis. The interest rate shown
has been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $4,709,004 Federal Home Loan Bank 6.00% due at
07/23/01 valued at $4,765,719.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$12,026,835 and the aggregate gross unrealized depreciation is
$6,221,504, resulting in net unrealized appreciation of $5,805,331.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1998
<TABLE>
<S> <C>
ASSETS :
Investments in securities, at value
(identified cost $519,777,828) ....................................... $525,583,159
Interest receivable .................................................... 2,333,552
Deferred organizational expenses ....................................... 1,101
Prepaid expenses and other assets ...................................... 16,038
------------
TOTAL ASSETS ....................................................... 527,933,850
------------
LIABILITIES :
Reverse repurchase agreements .......................................... 60,906,000
Payable for :
Shares of beneficial interest repurchased ........................... 457,988
Interest ............................................................ 342,539
Management fee ..................................................... 150,747
Investment advisory fee ............................................ 100,498
Payable to bank ....................................................... 1,515
Accrued expenses ....................................................... 129,740
Contingencies (Note 9) ................................................. --
------------
TOTAL LIABILITIES ................................................... 62,089,027
------------
NET ASSETS .......................................................... $465,844,823
============
COMPOSITION OF NET ASSETS :
Paid-in-capital ........................................................ $448,977,741
Net unrealized appreciation ........................................... 5,805,331
Accumulated undistributed net investment income ........................ 14,502,561
Accumulated net realized loss .......................................... (3,440,810)
------------
NET ASSETS .......................................................... $465,844,823
============
NET ASSET VALUE PER SHARE,
46,077,428 shares outstanding (unlimited shares authorized of $.01 par
value) ............................................................... $10.11
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended September 30, 1998
<TABLE>
<S> <C>
NET INVESTMENT INCOME :
INTEREST INCOME ............................... $36,366,844
-----------
EXPENSES
Management fee ................................ 1,665,585
Investment advisory fee ....................... 1,110,390
Transfer agent fees and expenses .............. 173,946
Professional fees ............................ 145,482
Shareholder reports and notices .............. 54,834
Registration fees ............................. 43,701
Insurance expenses ............................ 37,634
Custodian fees ................................ 36,136
Trustees' fees and expenses ................... 32,364
Organizational expenses ...................... 6,700
Other ......................................... 38,256
-----------
TOTAL OPERATING EXPENSES ................... 3,345,028
Interest expense .............................. 6,057,234
-----------
TOTAL EXPENSES ............................. 9,402,262
-----------
NET INVESTMENT INCOME ...................... 26,964,582
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) :
Net realized loss ............................. (311,800)
Net change in unrealized depreciation ......... 26,319,081
-----------
NET GAIN ................................... 26,007,281
-----------
NET INCREASE .................................. $52,971,863
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
-------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
OPERATIONS :
Net investment income .................................. $ 26,964,582 $ 29,275,364
Net realized gain (loss) ............................... (311,800) 291,013
Net change in unrealized depreciation .................. 26,319,081 33,894,424
------------- -------------
NET INCREASE ........................................ 52,971,863 63,460,801
Dividends from net investment income ................... (26,457,101) (29,857,674)
Net decrease from transactions in shares of beneficial
interest ............................................. (27,094,074) (26,401,676)
------------- -------------
NET INCREASE (DECREASE) ............................. (579,312) 7,201,451
NET ASSETS :
Beginning of period .................................... 466,424,135 459,222,684
------------- -------------
END OF PERIOD
(Including undistributed net investment income of
$14,502,561 and $13,995,080, respectively) .......... $ 465,844,823 $ 466,424,135
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
TCW/DW TERM TRUST 2000
FINANCIAL STATEMENTS, continued
STATEMENT OF CASH FLOWS
For the year ended September 30, 1998
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income ................................................. $ 26,964,582
Adjustments to reconcile net investment income to net cash provided by
operating activities:
Decrease in receivables and other assets related to operations ......... 494,842
Increase in payables related to operations ............................. 7,280
Net amortization of discount/premium ................................... (3,569,079)
------------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................... 23,897,625
------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments .............................................. (26,937,530)
Principal prepayments/sales of investments ............................. 128,786,963
Net purchases of short-term investments ............................... (6,221,983)
------------
NET CASH PROVIDED BY INVESTING ACTIVITIES ........................... 95,627,450
------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net payments for shares of beneficial interest repurchased ............. (26,769,974)
Net payments for maturities of reverse repurchase agreements ........... (66,298,000)
Dividends to shareholders from net investment income .................. (26,457,101)
------------
NET CASH USED FOR FINANCING ACTIVITIES .............................. (119,525,075)
------------
NET INCREASE (DECREASE) IN CASH ........................................ --
CASH BALANCE AT BEGINNING OF PERIOD .................................... --
------------
CASH BALANCE AT END OF PERIOD .......................................... $ --
============
Cash paid during the period for interest ............................... $ 6,090,269
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1998
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 TCW Funds Management, Inc. (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 may utilize 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.
11
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1998, continued
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 -- Morgan Stanley Dean Witter Advisors Inc.,
formerly Dean Witter InterCapital Inc., an affiliate of Morgan Stanley 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, 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.
12
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1998, continued
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,
1998 were as follows:
<TABLE>
<CAPTION>
SALES/
PURCHASES PREPAYMENTS
-------------- --------------
<S> <C> <C>
U.S. Government Agencies .................................. -- $61,301,141
Private Issue Collateralized Mortgage Obligations ......... $26,937,530 44,019,402
Municipal Bonds ........................................... -- 23,466,420
</TABLE>
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager, is the
Trust's transfer agent. At September 30, 1998, the Trust had transfer agent
fees and expenses payable of approximately $900.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE EXCESS OF
SHARES OF SHARES PAR VALUE
--------------- ----------- ---------------
<S> <C> <C> <C>
Balance, September 30, 1996 ............................................. 52,130,428 $ 521,304 $ 501,952,187
Treasury shares purchased and retired (weighted average discount 7.49%)* (3,120,300) (31,203) (26,370,473)
---------- --------- -------------
Balance, September 30, 1997 ............................................. 49,010,128 490,101 475,581,714
Treasury shares purchased and retired (weighted average discount 4.97%)* (2,932,700) (29,327) (27,064,747)
---------- --------- -------------
Balance, September 30, 1998 ............................................. 46,077,428 $ 460,774 $ 448,516,967
========== ========= =============
</TABLE>
- ---------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS
During the year ended September 30, 1998, the Trust utilized approximately
$291,000 of its net capital loss carryover. At September 30, 1998, the Trust
had a net capital loss carryover of approximately $3,129,000 which will be
available to offset future capital gains to the extent provided by regulations.
13
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1998, continued
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 $312,000 during fiscal 1998.
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, 1998 securities valued at $63,031,490 were pledged as collateral.
At September 30, 1998, the reverse repurchase agreements outstanding were
$60,906,000 with a weighted interest rate of 5.55% maturing within 43 days. The
maximum and average daily amounts outstanding during the period were
$127,204,000 and $105,897,271, respectively. The weighted average interest rate
during the period was 5.64%.
8. DIVIDENDS
The Trust declared the following dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER RECORD PAYABLE
DATE SHARE DATE DATE
- --------------------- -------------- ------------------ ------------------
<S> <C> <C> <C>
September 29, 1998 $ 0.0465 October 9, 1998 October 23, 1998
October 27, 1998 $ 0.0465 November 6, 1998 November 20, 1998
</TABLE>
9. LITIGATION
Four purported class actions 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
14
<PAGE>
TCW/DW TERM TRUST 2000
NOTES TO FINANCIAL STATEMENTS September 30, 1998, continued
amended complaint consolidating these four actions. The defendants thereafter
filed answers and affirmative defenses to the consolidated amended complaint.
The defendants' answers deny all of the material allegations of the plaintiff's
complaint. In 1996, the plaintiffs voluntarily dismissed, without prejudice,
their claims against two defendants who were independent Trustees of the Trust.
In March 1997, all of the remaining defendants in the litigation filed motions
for judgment on the pleadings, seeking dismissal of all of the claims against
them. The defendant's motions were fully briefed by all parties and were the
subject of a hearing before the Court on April 18, 1997. In July 1997, the
Court denied the motion for judgement on the pleadings. In August, 1997,
plaintiffs filed a motion for class certification. In their motion, the
plaintiffs requested certification of a "nationwide" class of Term Trust
purchasers. On June 1, 1998, the Court granted in part and denied in part the
plaintiffs' motion for class certification. The Court ruled that plaintiffs'
motion was "granted as to [a California] statewide class," but was "denied as
to a nationwide class." 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.
15
<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 YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1998 1997 1996 1995
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ...................... $ 9.52 $ 8.81 $ 8.71 $ 7.48
------- ------- ------- ------
Net investment income ..................................... 0.59 0.60 0.59 0.56
Net realized and unrealized gain (loss) ................... 0.53 0.66 (0.09) 1.14
------- ------- -------- ------
Total from investment operations .......................... 1.12 1.26 0.50 1.70
------- ------- -------- ------
Less dividends from net investment income ................. (0.56) (0.59) (0.46) (0.49)
-------- -------- -------- -------
Anti-dilutive effect of acquiring treasury shares ......... 0.03 0.04 0.06 0.02
-------- -------- -------- -------
Less offering costs charged against capital ............... -- -- -- --
-------- -------- -------- -------
Net asset value, end of period ............................ $ 10.11 $ 9.52 $ 8.81 $ 8.71
======== ======== ======== =======
Market value, end of period ............................... $ 9.688 $ 8.875 $ 7.875 $ 7.50
======== ======== ======== =======
TOTAL INVESTMENT RETURN+ .................................. 15.92% 20.80% 11.29% 1.87%
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ........................................ 0.73% 0.71% 0.73% 0.76%
Interest expense .......................................... 1.31% 1.69% 1.66% 2.49%
Total expenses ............................................ 2.04% 2.40% 2.39% 3.25%
Net investment income ..................................... 5.84% 6.33% 6.46% 7.12%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................... $465,845 $466,424 $459,223 $480,956
Portfolio turnover rate ................................... 5% 13% 31% --++
<CAPTION>
FOR THE PERIOD
NOVEMBER 30, 1993*
THROUGH
SEPTEMBER 30, 1994
-------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ...................... $ 9.50
--------
Net investment income ..................................... 0.56
Net realized and unrealized gain (loss) ................... (2.09)
--------
Total from investment operations .......................... (1.53)
--------
Less dividends from net investment income ................. (0.48)
--------
Anti-dilutive effect of acquiring treasury shares ......... --
--------
Less offering costs charged against capital ............... (0.01)
--------
Net asset value, end of period ............................ $ 7.48
========
Market value, end of period ............................... $ 7.875
========
TOTAL INVESTMENT RETURN+ .................................. (16.87)%(1)
RATIOS TO AVERAGE NET ASSETS:
Operating expenses ........................................ 0.74%(2)
Interest expense .......................................... 1.41%(2)
Total expenses ............................................ 2.15%(2)
Net investment income ..................................... 8.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................... $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 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%.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
16
<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, 1998, 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 four 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
November 6, 1998
17
<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
Barry Fink
Vice President, Secretary and
General Counsel
Philip A. Barach
Vice President
Jeffrey E. Gundlach
Vice President
Frederick H. Horton
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Morgan Stanley Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
TCW/DW
TERM TRUST
2000
[GRAPHIC]
Annual Report
September 30, 1998
