2002 Target Term Trust Inc. -- Distribution Declaration and Commentary.

NEW YORK--(BUSINESS WIRE)--June 7, 1999--

2002 Target Term Trust Inc. (NYSE: TTR), a closed-end management investment company investing in high quality fixed-income and adjustable-rate securities, today announced that the Trust's Board of Directors has declared the Trust's monthly dividend from net investment income of $0.0718 per share. The dividend is payable on June 30, 1999 to shareholders of record as of June 21, 1999. The ex-dividend date is June 17, 1999. As described in the prospectus, the Trust matures in November 2002 and will liquidate all of its assets and distribute the net proceeds to shareholders. While the portfolio is being managed in an effort to return the initial offering price of $15.00 per share, this is not guaranteed.

Total Portfolio Assets as of May 31, 1999:

 Portfolio Composition
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Collateralized Mortgage Obligations             60.3%
Agency Mortgage-Backed Securities               24.5
Adjustable Rate CMOs                            12.0
Other                                            3.2
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Total                                          100.0%

Weighted Average Duration                        2.7Yrs
Average Credit Quality                           AAA

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Commentary

The first four months of 1999 marked a pause in, if not an end to, last year's powerful Treasury rally. Interest rates rose an average of 0.45-0.50% and the yield curve steepened in the wake of continued economic strength and reduced global volatility. As a result, most securities and portfolios with duration longer than two years posted losses for the period. Yields on non-Treasurys rose less than Treasurys of equal duration. Consequently, spreads narrowed substantially, particularly among lower credit quality sectors like emerging market debt, high yield debt and lower-tier (Baa) investment grade corporates. (The "spread" is the premium in yield or income over Treasurys that securities must pay to compensate for their additional risk.)

Collateralized mortgage obligations (CMOs) outperformed pass-through securities again in March, and remained stable relative to on-the-run Treasurys in April.1 Restored investor confidence has continued to boost liquidity and reduce available yield premiums in the sector. As a result, many securities are now trading close to levels that prevailed one year ago. Adjustable rate mortgage securities (ARMs) spreads tightened further through March, and continued to post strong performance results in April. Limited supply coupled with strong investor demand for short duration and floating rate product supported the sector. Fully indexed, seasoned conventional ARMs benefited from slower prepayment rates and attractive valuations relative to fixed-rate mortgages. We believe that ARMs should continue to outperform given their spread advantage relative to other high-quality, short-duration assets and the slower prepayment environment going forward.

Mortgage pass-through securities finished strong, with lower coupons being the best performers. Fifteen-year mortgages slightly trailed 30-year mortgages year to date through April 30, 1999. In general, mortgage spreads appear fairly valued given current volatility and Treasury rates. However, at an average option-adjusted spread of 63 basis points, we prefer mortgages to Treasurys. Looking ahead, we expect mortgages to continue to outperform, especially if swap and agency debenture spreads tighten or if volatility declines as we expect to occur in the summer.

Asset-backed securities (ABS) spreads were generally unchanged despite heavy issuance in March, with the exceptions of seven- and 10-year home equity securities. At current spreads we see modest upside potential for most sectors. We believe non-benchmark securities and sectors--where comparably rated bonds with strong credit enhancement still trade at significant discounts to benchmark issues--offer the most attractive opportunities over the next few months. As liquidity continues to improve, these discounts should narrow, leading to stronger relative performance.

The commentary reflects our views at the time of this writing. These views may change in response to changing circumstances.