2002 Target Term Trust Inc.-- Distribution Declarations, Portfolio Statistics and Quarterly Commentary.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 7, 2000 2002 Target Term Trust Inc. (NYSE NYSE See: New York Stock Exchange : TTR TTR Transthyretin TTR Ticket To Ride (World Snowboard Tour) TTR Transformer Turns Ratio (electric power transmission and distribution) TTR Time To Repair TTR Time to Read ), a diversified diversified (di·verˑ·s , 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 monthly dividends of $0.065 per share for the months of August, September, October and November. The dividends are payable on August 31, September 29, October 31 and November 30, 2000, respectively, to shareholders of record as of August 18, September 20, October 20 and November 20, 2000, respectively. The ex-dividend dates Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. are August 16, September 18, October 18, and November 16, 2000, respectively. In addition, the Trust has declared a special dividend of $0.10 payable on August 31, 2000 to shareholders of record as of August 18, 2000. The ex-dividend date is August 16, 2000. The accelerated declarations and the special dividend are to avoid corporate taxes on the Trust. All of the dividends are ordinary income derived from net investment income. The Trust will seek to liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the its assets and distribute the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to shareholders on or about November 30, 2002. While the portfolio is being managed in an effort to return the initial offering price of $15.00 per share, this is not guaranteed. Portfolio Statistics (% of total portfolio assets) as of July 31, 2000: Portfolio Composition Characteristics ------------------------------------- ----------------------------- Collateralized Mortgage Net Leverage 1.00% Obligations 50.6 Average Credit Quality AAA Agency CMOs 15.5% Convexity -0.63 Non-Agency CMOs 35.1% Weighted Avg Maturity 5.46 yrs Adjustable Rate Mortgages 9.2 Weighted Avg Duration 2.82 yrs Agency ARMs 7.1% Weighted Avg Coupon 7.09% Non-Agency ARMs 2.1% Net Asset Value $14.32 Collateral 32.5 Market Price $13.41 Mortgage-Backed Derivatives 2.7 ----------------------------- Agency MBD 2.0% Non-Agency MBD 0.7% Asset-Backed Securities 5.0 ------------------------------------- Total 100.0 Yields ------------------------------------- Market Yield 5.82% NAV Yield 5.45% IPO Yield 5.20% ------------------------------------- Market yield is calculated by multiplying the current month's distribution by 12 and dividing by the month-end market price. NAV See navigation system and navigation bar. yield is calculated by multiplying the current month's distribution by 12 and dividing by the month-end net asset value. IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. yield is calculated by multiplying the current month's distribution by 12 and dividing by the initial public offering price. Prices and yields will vary. The Fund is actively managed and its portfolio composition will vary over time. Quarterly Commentary In May the Federal Reserve (the "Fed") raised short-term rates by 50 basis points (bps: a basis point, equals one 1/100th of one percent). This was the sixth Fed hike since last June, though all the previous increases were in 25-bps increments. Uncertainty about the sizzling siz·zle intr.v. siz·zled, siz·zling, siz·zles 1. To make the hissing sound characteristic of frying fat. 2. To seethe with anger or indignation. 3. economy and future rate hikes led to a highly volatile fixed income market during the second quarter, and to severe spread widening among corporates, emerging markets and mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. . (The spread is the difference in yield or income that securities must pay to compensate investors for their greater risk relative to U.S. Treasurys U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. .) By quarter-end, the Fed's tight monetary policy appeared to be working, and resulting confidence that the Fed might be done raising rates produced a bond market rally. Portfolio Positioning The Trust seeks to add incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. return through sector allocation Sector allocation Investment of certain proportions of a portfolio in certain sectors. See: Industry allocation. and security selection primarily within the mortgage market. The Trust will seek to liquidate its assets and distribute the net proceeds to shareholders on or about November 30, 2002. While the portfolio is being managed in an effort to return the initial offering price of $15.00 per share, this is not guaranteed. During the period, within the mortgage sector, the Trust focused on CMOs and pass-throughs, because of the attractive technicals within these sub-sectors. Given recent spread widening, we continue to see attractive buying opportunities within the mortgage sector. Performance benefited from the Trust's underweighting in short-duration U.S. Treasurys, which underperformed in the rising rate environment. (Duration is a measure of a bond portfolio's sensitivity to interest rate changes.) The Trust's exposure to adjustable-rate mortgage Adjustable-rate mortgage (ARM) A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or securities also helped performance, as greater rate volatility increased demand for low duration, floating-rate securities. Outlook In general, our outlook for the market is positive. There is little on the immediate horizon likely to threaten the recent bond market rally. But we are wary of shorter-maturity credits, as we believe that the underlying trend of economic activity in the U.S. will remain robust and that short rates eventually will move higher than the market currently expects. The commentary reflects our views at the time of this writing. These views may change in response to changing circumstances. |
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