2002 Target Term Trust Inc.--Quarterly Commentary.

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 29, 2000

2002 Target Term Trust Inc. (NYSE: TTR) is a closed-end management investment company investing in high quality fixed-income and adjustable-rate securities.

As described in the prospectus, 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.

Commentary

The economy remained robust over the quarter, with retail sales and industrial production figures coming in much stronger than expected. Tempering the economy, however, was a sharp widening in the real trade balance in October. The widening, the result of more U.S. investment abroad than foreign investment in U.S. goods, created a drag on domestic growth. Nonetheless, the Fed raised short-term interest rates by 25 basis points (0.25%) at its November 16 Federal Open Market Committee meeting.

Despite continued signs of very strong GDP growth following the November tightening, the Fed, as expected, left rates unchanged at its December 21 meeting. The Federal Reserve's desire to avoid pre-Y2K market disruptions was a main factor behind its decision not to tighten.

Within the fixed income arena, trading activity tapered off as the year drew to a close, as investor unwillingness to take positions before year-end combined with investor concerns over Y2K issues.

Because the economy remained robust, Treasury yields maintained an upward trend throughout the quarter. The year closed with 30-year Treasurys up 42 basis points (0.42%) over third quarter levels, to 6.48% at year-end.

Portfolio Positioning

The Trust continues to target a duration (a measure of a bond fund's interest rate sensitivity) equal to the Treasury benchmark (U.S. Treasury yielding 6.375% maturing August 2002). The Trust's long-term, strategic positions in the pass-through, collateralized mortgage obligation (CMO), adjustable-rate mortgage (ARM) and asset-backed (ABS) sectors remained relatively unchanged during the quarter.

We believe that the Trust's allocations will continue to benefit from spread tightening within the non-Treasury sectors in the new year, and still view many of these securities as being cheap when compared to their historical average spreads.

Outlook

The Federal Reserve Board adopted a neutral stance at its December Federal Open Market Committee and then raised rates by a quarter percentage point at the February 2 meeting. The Fed has indicated a willingness to consider tightening again in 2000.

We will continue to manage the Trust's portfolio opportunistically--reallocating assets only if and when our relative value analysis clearly dictates it is prudent.

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