-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VqC72hfx2p5gs5UsNyaMlFAcWGrsZvgizZ0YDgFVeBqLbo3JdI1bzNYJBu2ZBPLG YfS1w2Bi16fCJQtm/2CScw== 0000950136-02-001562.txt : 20020521 0000950136-02-001562.hdr.sgml : 20020521 20020521160053 ACCESSION NUMBER: 0000950136-02-001562 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCW DW TERM TRUST 2003 CENTRAL INDEX KEY: 0000896346 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07448 FILM NUMBER: 02658913 BUSINESS ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HARBORSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: (212) 869-6397 MAIL ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HARBORSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ ZIP: 07311 N-30D 1 file001.txt ANNUAL REPORT TCW/DW Term Trust 2003 LETTER TO THE SHAREHOLDERS [] MARCH 31, 2002 Dear Shareholder: For the 12-month period ended March 31, 2002, the net asset value of TCW/DW Term Trust 2003 increased from $10.75 to $11.01 per share. Based on this change, and including reinvestment of dividends totaling $0.56 per share, the Trust's total rate of return for the period was 7.95 percent. Over the same period, the market price of the Trust's shares on the New York Stock Exchange (NYSE) increased from $10.13 to $10.69 per share. Based on this change, and including reinvestment of dividends, the Trust's total return for the 12-month period was 10.91 percent. Market Overview The pronounced slowdown over the last year in the U.S. economy led the Federal Reserve Board to implement an unprecedented number of interest-rate cuts in 2001, lowering the federal funds rate 11 times and by 475 basis points, from 6.50 percent to 1.75 percent. The National Bureau of Economic Research reported that the economy went into a recession in March 2001, because of changes in business expectations concerning the near-term profitability of the Internet and related technologies. This change in expectations led to a decline in investment spending. The September terrorist attacks thwarted the economy's first attempts at recovery, but by early December many sectors appeared to be rebounding. Retail sales, industrial production and orders for durable goods, along with home sales and consumer confidence, posted increases. U.S. Treasury yields began rising sharply during the first quarter of 2002 in anticipation of a shift in monetary policy. As expected, the central bank voted unanimously in late March to leave its target short-term interest rate at 1.75 percent, declaring that the risks to the economy were now evenly balanced between weakness and inflation. The Fed also stated that its monetary policy would remain accommodative for the time being because the degree of strengthening in final demand was uncertain and continued to be a risk to the expansion. Short Treasuries benefited the most from the Fed's rate cuts in 2001. The yield on three-month Treasuries fell 250 basis points between March 31, 2001, and March 31, 2002. The two-year Treasury began the review period at 4.18 percent, declined to 2.30 percent in early November and then rose to 3.72 percent by the end of March. Yields on longer-dated Treasuries also reached their lows for the year in early November and then rebounded. The mortgage sector was one of the best-performing sectors in the fixed-income market during the period under review, due in part to its limited credit exposure, as the vast majority of mortgage-backed securities are in the upper tiers of credit quality. A decline in market volatility and the presence of favorable technical factors helped spreads between mortgages and Treasuries contract since year-end. Demand for mortgage product has been strong. The recent increase in mortgage rates has led to a decline in refinancing activity. The Portfolio According to TCW Investment Management Company (TCW), the Trust's adviser, approximately 58.3 percent of the Trust is invested in mortgage pass-through securities issued by agencies of the U.S. government or in AAA-rated collateralized mortgage obligations (CMOs) with durations, average lives or TCW/DW Term Trust 2003 LETTER TO THE SHAREHOLDERS [] MARCH 31, 2002 Continued expected maturity dates that correspond closely to the termination date of the Trust. An additional 15 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 to that of a specified index. Approximately 26.7 percent of the Trust 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. The remaining assets are invested in cash and other short-term securities. Looking Ahead Many economists expect GDP to exceed 4 percent in the first quarter of 2002, and some predict that the Fed will begin raising rates as early as May or June. TCW believes that continued strength in productivity may provide some support to the Treasury market and allow the Federal Reserve to keep interest rates lower in the face of growth as a result of lessened concern about inflation. Nonetheless, the Treasury market will remain vulnerable to further selling as evidence of economic strength accumulates. TCW believes that the mortgage sector is positioned to perform well in the coming months. TCW expects demand to remain strong and looks for additional declines in volatility to continue narrowing the spread between mortgages and Treasuries. According to TCW, the mortgage sector continues to offer investors high levels of liquidity and credit quality. The Trust's investment strategy remains focused on certain types of CMOs and other well-structured securities as a means of reducing portfolio exposure to prepayment risk. 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 over the term of the Trust and as the Trust approaches its termination on or about December 31, 2003. 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 2,007,600 shares of common stock at a weighted average market discount of 5.33 percent. We appreciate your ongoing support of TCW/DW Term Trust 2003 and look forward to continuing to serve your investment needs and objectives. Very truly yours, /s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin Charles A. Fiumefreddo Mitchell M. Merin Chairman of the Board President 2 TCW/DW Term Trust 2003 RESULTS OF ANNUAL MEETING * * * On October 23, 2001, an annual meeting of the Trust's shareholders was held for the purpose of electing Trustees, the results of which were as follows: (1) Election of Trustees: Edwin J. Garn For ............................................................. 65,751,631 Withheld ........................................................ 859,434 Michael E. Nugent For ............................................................. 65,757,740 Withheld ........................................................ 853,325 Philip J. Purcell For ............................................................. 65,572,426 Withheld ........................................................ 1,038,639
The following Trustees were not standing for reelection at this meeting: Michael Bozic, Charles A. Fiumefreddo, Wayne E. Hedien, James F. Higgins, Dr. Manuel H. Johnson and John L. Schroeder. 3 TCW/DW Term Trust 2003 PORTFOLIO OF INVESTMENTS [] MARCH 31, 2002
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ----------- ------ -------- ----- Collateralized Mortgage Obligations (69.1%) U.S. Government Agencies (46.9%) $ 2,802 Federal Home Loan Mortgage Corp. 1409 S (PAC) ............... 19.04+% 11/15/07 $ 3,220,466 50,609 Federal Home Loan Mortgage Corp. 1465 G (PAC) ............... 7.00 12/15/07 52,285,385 9,700 Federal Home Loan Mortgage Corp. 1522 K ..................... 6.50 12/15/22 9,665,265 1,724 Federal Home Loan Mortgage Corp. 1539 SA .................... 14.629 + 06/15/08 1,836,688 38,006 Federal Home Loan Mortgage Corp. 1542 N (PAC) ............... 7.00 01/15/22 39,101,824 26,924 Federal Home Loan Mortgage Corp. 1543 UG (PAC) .............. 7.00 01/15/23 27,038,004 14,584 Federal Home Loan Mortgage Corp. 1544 M ..................... 14.144 + 07/15/08 15,454,555 803 Federal Home Loan Mortgage Corp. 1556 SA .................... 15.48 + 08/15/13 802,350 9,341 Federal Home Loan Mortgage Corp. 1563 SA .................... 12.408 + 08/15/08 9,932,277 770 Federal Home Loan Mortgage Corp. 1565 IB (TAC) .............. 13.05 + 08/15/08 788,222 5,235 Federal Home Loan Mortgage Corp. 1576 SA .................... 10.14 + 09/15/08 5,362,111 32,363 Federal Home Loan Mortgage Corp. 1602 PW (PAC) .............. 6.50 12/15/21 33,389,613 8,574 Federal Home Loan Mortgage Corp. 1993 G 15 PA ............... 7.00 12/25/21 8,588,212 6,710 Federal National Mortgage Assoc. 1993-101 SA (TAC) .......... 9.227 + 06/25/08 7,038,033 6,394 Federal National Mortgage Assoc. 1993-101 SB (TAC) .......... 20.571 + 06/25/08 7,188,841 2,268 Federal National Mortgage Assoc. 1993-114 SC ................ 9.00 + 07/25/08 2,364,142 30,066 Federal National Mortgage Assoc. 1993-21 H (PAC) ............ 7.00 03/25/22 30,549,812 15,898 Federal National Mortgage Assoc. 1993-135 S ................. 12.999 + 07/25/08 16,308,012 20,548 Federal National Mortgage Assoc. 1993-141 B ................. 7.00 04/25/23 20,609,927 2,681 Federal National Mortgage Assoc. 1993-165 SM (TAC) .......... 14.936 + 05/25/23 2,713,210 2,649 Federal National Mortgage Assoc. 1993-173 S ................. 14.625 + 09/25/08 2,858,244 20,612 Federal National Mortgage Assoc. 1993-206 N ................. 6.50 11/25/23 20,599,019 787 Federal National Mortgage Assoc. 1993-233 J ................. 6.00 06/25/08 800,299 14,901 Federal National Mortgage Assoc. 1993-41C (PAC) ............. 7.00 03/25/21 15,271,926 4,178 Federal National Mortgage Assoc. 1993-63 SD (TAC) ........... 11.842 + 05/25/08 4,286,545 3,627 Federal National Mortgage Assoc. 1993-65 SC ................. 12.985 + 06/25/12 3,937,751 9,923 Federal National Mortgage Assoc. 1993-72 SA ................. 13.995 + 05/25/08 10,740,372 7,979 Federal National Mortgage Assoc. 1993-72 S .................. 8.75 + 05/25/08 8,256,777 2,243 Federal National Mortgage Assoc. 1993-86 SD ................. 15.895 + 05/25/08 2,573,125 9,019 Federal National Mortgage Assoc. 1993-93 SA ................. 16.123 + 05/25/08 10,745,388 7,760 Federal National Mortgage Assoc. 1993-95 SE ................. 17.108 + 06/25/08 9,266,731 7,414 Federal National Mortgage Assoc. 1993-98 N .................. 7.00 06/25/23 7,510,365 4,832 Federal National Mortgage Assoc. 1993-196 SA ................ 15.467 + 10/25/08 5,342,914 3,722 Federal National Mortgage Assoc. 1993-26 A .................. 7.00 07/25/23 3,723,602 ------------ Total U.S. Government Agencies (Cost $378,677,867).................................... 400,150,007 ------------
See Notes to Financial Statements 4 TCW/DW Term Trust 2003 PORTFOLIO OF INVESTMENTS [] MARCH 31, 2002 Continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ----------- ------ -------- ----- Private Issues (22.2%) $ 7,165 Bear Stearns Mortgage Securities Inc. 1993-6 A7 (PAC) ............... 7.10 % 06/25/24 $ 7,149,325 14,026 Bear Stearns Mortgage Securities Inc. 1993-8 A7 (PAC) ............... 7.50 08/25/24 14,606,033 31,475 Bear Stearns Mortgage Securities Inc. 1993-8 A11 (TAC) .............. 7.50 08/25/24 31,864,723 21,020 Chase Mortgage Finance Corp.1993-G A10 (PAC) ........................ 7.00 05/25/24 21,217,557 4,082 First Boston Mortgage Securities Corp. 1993-5 A15 ................... 7.30 03/25/09 4,178,157 36,683 General Electric Capital Mortgage Services, Inc. 1994-1 A8 .......... 6.50 01/25/24 36,989,479 10,397 Prudential Home Mortgage Securities 1993-23 A12 (PAC) ............... 6.50 07/25/08 10,475,561 13,805 Prudential Home Mortgage Securities 1993-35 A12 ..................... 6.75 09/25/08 14,014,900 10,866 Prudential Home Mortgage Securities 1993-60 A3 (PAC) ................ 6.75 12/25/23 10,887,067 26,181 Resolution Funding Mortgage Securities I 1993-S40 A8 (TAC) .......... 6.75 11/25/23 26,487,867 5,315 Ryland Mortgage Securities Corp. 1993-3 7 (PAC) ..................... 6.712 08/25/08 5,324,134 6,124 Salomon Brothers Mortgage Securities VII Inc. 1993-5 A4 ............. 7.279* 09/25/23 6,208,751 ------------ Total Private Issues ($184,956,107).......................................................... 189,403,554 ------------ Total Collateralized Mortgage Obligations (Cost $563,633,974).......................................................................... 589,553,561 ------------ U.S. Government Agency Mortgage Pass-Through Securities (2.7%) 3,629 Federal Home Loan Mortgage Corp. PC Gold ............................ 6.00 06/01/08 3,708,967 930 Federal National Mortgage Assoc. .................................... 5.50 02/01/09 935,479 7,602 Federal National Mortgage Assoc. .................................... 6.745 08/01/30 7,729,787 4,529 Federal National Mortgage Assoc. ARM ................................ 6.838 07/01/30 4,594,688 972 Federal National Mortgage Assoc. .................................... 7.00 08/01/08 1,013,836 2,608 Federal National Mortgage Assoc. ARM ................................ 7.21 07/01/30 2,655,248 2,186 Federal National Mortgage Assoc. ARM ................................ 7.366 07/01/30 2,256,825 ------------ Total U.S. Government Agency Mortgage Pass-Through Securities (Cost $22,311,809)........................................................................... 22,894,830 ------------ U.S. Government Agency Obligation (1.2%) 10,000 Federal Home Loan Mortgage Corp. (Cost $10,434,248).................. 6.375 11/15/03 10,432,140 ------------ Tax-Exempt Municipal Bonds (14.1%) Educational Facilities Revenue (3.6%) 5,000 Maricopa County Unified School District # 41, Arizona, Gilbert Refg (FGIC) ............................................................ 0.00 01/01/03 4,918,450 11,445 Houston Independent School District, Texas, Refg .................... 0.00 08/15/04 10,605,738 Spring Independent School District, Texas, 8,205 Refg Ser 1993 ..................................................... 0.00 02/15/03 8,038,274 8,100 Refg Ser 1993 ..................................................... 0.00 02/15/04 7,631,982 ------------ 31,194,444 ------------
See Notes to Financial Statements 5 TCW/DW Term Trust 2003 PORTFOLIO OF INVESTMENTS [] MARCH 31, 2002 Continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ----------- ------ -------- ----- Electric Revenue (3.4%) $ 12,840 Austin, Texas, Combined Ser A (MBIA) ........................... 0.00 % 11/15/02 $ 12,665,222 17,500 San Antonio, Texas, Electric & Gas Refg Ser A (Ambac) .......... 0.00 02/01/04 16,515,100 ------------ 29,180,322 ------------ General Obligation (4.3%) 19,650 North Slope Boro, Alaska, Ser 1992 A (MBIA) .................... 0.00 06/30/02 19,545,069 5,000 Scottsdale, Arizona, Refg (Secondary MBIA) ..................... 0.00 07/01/04 4,661,300 Port of Oakland, California, 3,000 Refg Ser 1993 F (MBIA) ....................................... 0.00 11/01/03 2,877,480 3,500 Refg Ser 1993 F (MBIA) ....................................... 0.00 11/01/04 3,237,255 6,500 New Orleans, Louisiana, Refg (Ambac) ........................... 0.00 09/01/04 6,018,350 ------------ 36,339,454 ------------ Hospital Revenue (1.1%) 10,000 California Statewide Communities Development Authority, UniHealth Ser A (Ambac) ...................................... 0.00 10/01/04 9,302,100 ------------ Other Revenue (0.6%) 5,460 Rosemont, Illinois, Tax Increment Ser C-3 (FGIC) ............... 0.00 12/01/03 5,213,755 ------------ Water & Sewer Revenue (1.1%) 10,000 Houston Texas, Water & Sewer Jr Lien Ser C (Ambac) ............. 0.00 12/01/03 9,540,800 ------------ Total Tax-Exempt Municipal Bonds (Cost $116,243,342)..................................................................... 120,770,875 ------------ Short-Term Investments (12.5%) Commercial Paper (a) (11.2%) Diversified Manufacturing (4.0%) 22,000 General Electric Co. ........................................... 1.80 05/28/02 21,932,900 12,000 General Electric Co. ........................................... 1.82 07/11/02 11,936,300 ------------ 33,869,200 ------------ Finance - Corporate (2.3%) 1,200 Ciesco, L.P. ................................................... 1.79 04/04/02 1,199,642 15,785 Ciesco, L.P. ................................................... 1.78 04/10/02 15,775,634 3,000 Ciesco, L.P. ................................................... 1.80 04/19/02 2,996,850 ------------ 19,972,126 ------------ Finance/Rental/Leasing (0.4%) 2,000 International Lease Finance Corp. .............................. 1.89 06/12/02 1,992,020 1,000 Paccar Finnacial Corp. ......................................... 1.82 04/15/02 999,141 ------------ 2,991,161 ------------
See Notes to Financial Statements 6 TCW/DW Term Trust 2003 PORTFOLIO OF INVESTMENTS [] MARCH 31, 2002 Continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ----------- ------ -------- ----- Foods & Beverages (1.2%) $ 3,000 Nestle Capital Corp. ......................................... 1.81 % 05/15/02 $ 2,992,911 7,000 Nestle Capital Corp. ......................................... 1.78 07/08/02 6,964,697 ------------ 9,957,608 ------------ Investment Banks/Brokers (2.9%) 25,000 Salomon Smith Barney Inc. .................................... 1.85 04/01/02 24,996,145 ------------ Pharmaceuticals: Major (0.4%) 2,500 Schering Corp. ............................................... 1.99 07/23/02 2,483,831 1,000 Schering Corp. ............................................... 2.00 08/01/02 993,000 ------------ 3,476,831 ------------ Total Commercial Paper (Cost $95,279,739)................................................ 95,263,071 ------------ U.S. Government Agencies (a) (0.8%) 5,000 Federal Farm Credit .......................................... 1.95 10/01/02 4,944,740 2,500 Federal Home Loan Banks ...................................... 1.88 09/04/02 2,479,111 ------------ Total U.S. Government Agencies (Cost $7,430,238)......................................... 7,423,851 ------------ Repurchase Agreement (0.5%) 4,064 The Bank of New York (dated 03/28/02; proceeds $4,065,167) (b) (Cost $4,064,434) .......................................... 1.625 04/01/02 4,064,434 ------------ Total Short-Term Investments (Cost $106,774,411)......................................... 106,751,356 ------------ Total Investments (Cost $819,397,784) (c).................................. 99.6% 850,402,762 Other Assets in Excess of Liabilities ..................................... 0.4 3,460,235 ------------ Net Assets ................................................................ 100.0% $853,862,997 ============
- ------------ ARM Adjustable Rate Mortgage. 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. Rate shown is the rate in effect at March 31, 2002. * Floating rate security. Rate shown is the rate in effect at March 31, 2002. (a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (b) Collateralized by $4,325,299 U.S. Treasury Note 3.50% due 11/15/06 valued at $4,145,731. (c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $31,021,085 and the aggregate gross unrealized depreciation is $16,107, resulting in net unrealized appreciation of $31,004,978. Bond Insurance: - -------------- Ambac Ambac Assurance Corporation. FGIC Financial Guaranty Insurance Company. MBIA Municipal Bond Investors Assurance Corporation. See Notes to Financial Statements 7 TCW/DW Term Trust 2003 FINANCIAL STATEMENTS Statement of Assets and Liabilities March 31, 2002
Assets: Investments in securities, at value (cost $819,397,784)............................................... $850,402,762 Interest receivable ............................................... 4,168,643 Prepaid expenses .................................................. 15,918 ------------ Total Assets .................................................... 854,587,323 ------------ Liabilities: Payable for: Management fee ................................................... 338,924 Investment advisory fee .......................................... 225,949 Accrued expenses .................................................. 159,453 Contingencies (Note 8) ............................................ - ------------ Total Liabilities ............................................... 724,326 ------------ Net Assets ...................................................... $853,862,997 ============ Composition of Net Assets: Paid-in-capital ................................................... $751,850,094 Net unrealized appreciation ....................................... 31,004,978 Accumulated undistributed net investment income ................... 74,237,410 Accumulated net realized loss ..................................... (3,229,485) ------------ Net Assets ...................................................... $853,862,997 ============ Net Asset Value Per Share, 77,563,380 shares outstanding (unlimited shares authorized of $.01 per value ..................................................... 11.01 =====
See Notes to Financial Statements 8 TCW/DW Term Trust 2003 FINANCIAL STATEMENTS continued Statement of Operations For the year ended March 31, 2002
Net Investment Income: Interest Income ............................... $72,808,664 ----------- Expenses: Management fee ................................ 3,336,594 Investment advisory fee ....................... 2,224,396 Transfer agent fees and expenses .............. 243,635 Registration fees ............................. 68,723 Professional fees ............................. 64,306 Shareholder reports and notices ............... 62,233 Insurance expense ............................. 38,071 Trustees' fees and expenses ................... 13,822 Custodian fees ................................ 3,572 Other ......................................... 243,771 ----------- Total Operating Expenses .................... 6,299,123 Interest expense .............................. 5,879,301 ----------- Total Expenses .............................. 12,178,424 ----------- Net Investment Income ....................... 60,630,240 ----------- Net Realized and Unrealized Gain (Loss): Net realized loss ............................. (24,007) Net change in unrealized appreciation ......... 2,176,165 ----------- Net Gain .................................... 2,152,158 ----------- Net Increase .................................. $62,782,398 ===========
See Notes to Financial Statements 9 TCW/DW Term Trust 2003 FINANCIAL STATEMENTS continued Statement of Changes in Net Assets
FOR THE YEAR FOR THE YEAR ENDED ENDED MARCH 31, 2002 MARCH 31, 2001 ---------------- --------------- Increase (Decrease) in Net Assets: Operations: Net investment income ....................................................... $ 60,630,240 $ 52,168,908 Net realized loss ........................................................... (24,007) (297,559) Net change in unrealized appreciation/depreciation .......................... 2,176,165 61,485,693 ------------ ------------ Net Increase .............................................................. 62,782,398 113,357,042 Dividends to shareholders from net investment income ........................ (44,006,765) (48,052,393) Decrease from transactions in shares of beneficial interest ................. (20,550,386) (40,984,206) ------------ ------------ Net Increase (Decrease) ................................................... (1,774,753) 24,320,443 Net Assets: Beginning of period ......................................................... 855,637,750 831,317,307 ------------ ------------ End of Period (Including accumulated undistributed net investment income of $74,237,410 and $57,531,095, respectively)................................................... $853,862,997 $855,637,750 ============ ============
See Notes to Financial Statements 10 TCW/DW Term Trust 2003 FINANCIAL STATEMENTS continued Statement of Cash Flows For the year ended March 31, 2002
Increase (Decrease) in Cash: Cash Flows Provided by Operating Activities: Net increase in net assets from operations ................................................. $ 62,782,398 Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: Purchase of investments .................................................................... (10,445,700) Principal sales/prepayments of investments ................................................. 415,592,275 Net purchases of short-term investments .................................................... (104,344,934) Decrease in receivables and other assets related to operations ............................. 1,522,868 Decrease in payables related to operations ................................................. (814,801) Net amortization of discount/premium ....................................................... (9,071,125) Net realized loss on investments ........................................................... 24,007 Net unrealized appreciation on investments ................................................. (2,176,165) -------------- Net Cash Provided by Operating Activities ................................................ 353,068,823 -------------- Cash Flows Used for Financing Activities: Net payments for shares of beneficial interest repurchased ................................. (21,158,058) Net payments for maturities of reverse repurchase agreements ............................... (287,904,000) Dividends to shareholders from net investment income ....................................... (44,006,765) -------------- Net Cash Used for Financing Activities ................................................... (353,068,823) -------------- Net Increase (Decrease) in Cash ............................................................ - -------------- Cash Balance at Beginning of Period ........................................................ - -------------- Cash Balance at End of Period .............................................................. $ - ============== Cash paid during the period for interest ................................................... $ 6,751,553 ==============
See Notes to Financial Statements 11 TCW/DW Term Trust 2003 NOTES TO FINANCIAL STATEMENTS [] MARCH 31, 2002 1. Organization and Accounting Policies TCW/DW Term Trust 2003 (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 on January 20, 1993 and commenced operations on April 29, 1993. The Trust will distribute substantially all of its net assets on or about December 31, 2003 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 Investment Management Company (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. 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 substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. 12 TCW/DW Term Trust 2003 NOTES TO FINANCIAL STATEMENTS [] MARCH 31, 2002 continued D. Dividends and Distributions to Shareholders - The Trust records dividends and distributions to its shareholders on the ex-dividend 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 realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. 2. Management/Investment Advisory Agreements Pursuant to a Management Agreement, the Trust pays Morgan Stanley Services Company Inc. (the "Manager") a management fee, accrued weekly and payable monthly, by applying the annual rate of 0.39% to the Trust's weekly net assets. 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 0.26% to the Trust's weekly net assets. 3. 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 March 31, 2002 were as follows:
PURCHASES SALES/PREPAYMENTS -------------- ------------------ U.S. Government Agencies ................................... $10,445,700 $331,335,586 Private Issue Collateralized Mortgage Obligations .......... - 84,256,689
Morgan Stanley Trust, an affiliate of the Manager, is the Trust's transfer agent. At March 31, 2002, the Trust had transfer agent fees and expenses payable of approximately $7,300. 13 TCW/DW Term Trust 2003 NOTES TO FINANCIAL STATEMENTS [] MARCH 31, 2002 continued 4. Shares of Beneficial Interest Transactions in shares of beneficial interest were as follows:
CAPITAL PAID IN PAR VALUE EXCESS OF SHARES OF SHARES PAR VALUE --------------- ----------- ---------------- Balance, March 31, 2000 ................................................. 83,895,940 $ 838,959 $ 812,770,235 Treasury shares purchased and retired (weighted average discount 7.00%)* (4,324,960) (43,249) (40,940,957) ---------- --------- ------------- Balance, March 31, 2001 ................................................. 79,570,980 795,710 771,829,278 Treasury shares purchased and retired (weighted average discount 5.33%)* (2,007,600) (20,076) (20,530,310) ---------- --------- ------------- Balance, March 31, 2002 ................................................. 77,563,380 $ 775,634 $ 751,298,968 ========== ========= =============
- ------------ * The Trustees have voted to retire the shares purchased. 5. Federal Income Tax Status During the year ended March 31, 2002, the Fund utilized approximately $104,000 of its net capital loss carryover. At March 31, 2002 the Trust had a net capital loss carryover of approximately $3,229,000 of which $2,650,000 will be available through March 31, 2003 and $579,000 will be available through the termination date of the Trust to offset future capital gains to the extent provided by regulations. To the extent that this carryover loss is used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders. As of March 31, 2002, the Trust had permanent book/tax differences attributable to gains on paydowns and a nondeductible expense. To reflect reclassifications arising from these differences, paid-in-capital was charged $224,508, accumulated undistributed net investment income was credited $82,840 and accumulated net realized loss was credited $141,668. 6. 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, or its trustee or receiver, whether to enforce the Trust's obligation to repurchase the securities. Reverse repurchase agreements are collateralized by Trust securities with market values in excess of the Trust's obligation under the contract. At March 31, 2002, there were no reverse repurchase agreements or dollar rolls outstanding. The maximum and average daily amounts outstanding during the period were $278,050,000 and $149,471,321, respectively. The weighted average interest rate during the period was 3.93%. 14 TCW/DW Term Trust 2003 NOTES TO FINANCIAL STATEMENTS [] MARCH 31, 2002 continued 7. Dividends The Trust declared the following dividends from net investment income:
DECLARATION AMOUNT RECORD PAYABLE DATE PER SHARE DATE DATE -------------- --------- ------------- -------------- March 26, 2002 $ 0.047 April 5, 2002 April 19, 2002
8. Litigation 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 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 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 plaintiffs' 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 litigation filed motions for judgment on the pleadings, seeking dismissal of all of the claims asserted against them. The defendants' 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 judgment 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 plaintiff's motion for class certification. The Court ruled that plaintiff's motion was "granted as to [a California] statewide class," but was "denied as to a nationwide class." The case has been settled subject to judicial approval following a fairness hearing. On October 13, 1998, three separate class actions alleging similar claims on behalf of the residents of the states of Florida, New Jersey and New York were filed in the state courts of those states. The defendants removed the Florida action to federal court and the plaintiff's motion to remand the action to the state court was denied. Motions to dismiss were filed by the defendants in the Florida action on August 30, 1999, in the New Jersey action on July 26, 1999 and in the New York action on September 10, 1999. The New Jersey action was dismissed by the court with prejudice and no appeal was filed. The motion to dismiss the Florida action was denied January 27, 2000. The case was subsequently removed to Florida state court and the litigation remains pending. The Supreme Court of the State of New York dismissed the New York action with prejudice on April 25, 2000 and no appeal was filed. 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 TCW/DW Term Trust 2003 FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE YEAR ENDED MARCH 31, -------------------------------------------------------------------------- 2002 2001 2000 1999 1998 -------------- ------------- --------------- --------------- ------------- Selected Per Share Data: Net asset value, beginning of period .................. $ 10.75 $ 9.91 $ 10.36 $ 10.11 $ 8.97 --------- --------- -------- -------- -------- Income (loss) from investment operations: Net investment income ................................ 0.78* 0.63* 0.73* 0.74 0.70 Net realized and unrealized gain (loss) .............. 0.03 0.76 (0.57) 0.09 1.01 --------- --------- -------- -------- -------- Total income from investment operations ............... 0.81 1.39 0.16 0.83 1.71 --------- --------- -------- -------- -------- Less dividends from net investment income ............. (0.56) (0.59) (0.64) (0.63) ( 0.63) --------- --------- -------- -------- -------- Anti-dilutive effect of acquiring treasury shares ..... 0.01 0.04 0.03 0.05 0.06 --------- --------- -------- -------- -------- Net asset value, end of period ........................ $ 11.01 $ 10.75 $ 9.91 $ 10.36 $ 10.11 ========= ========= ======== ======== ======== Market value, end of period ........................... $ 10.69 $ 10.13 $ 8.875 $ 9.375 $ 9.063 ========= ========= ======== ======== Total Return+ ........................................ 10.91% 21.43% 1.46% 10.56% 23.65% Ratios to Average Net Assets: Operating expenses .................................... 0.74% 0.73% 0.73% 0.74% 0.74% Interest expense ...................................... 0.69% 2.62% 2.38% 2.40% 2.54% Total expenses ........................................ 1.43% 3.35% 3.11% 3.14% 3.28% Net investment income ................................. 7.09% 6.21% 7.31% 6.93% 6.97% Supplemental Data: Net assets, end of period, in thousands ............... $853,863 $855,638 $831,317 $905,779 $934,981 Portfolio turnover rate ............................... 1% 5% 6% - 2%
- ------------ * The per share amounts were computed using an average number of shares outstanding during the period. + Total return is based upon the current market value on the last day of each period reported. Dividends and distributions are assumed to be reinvested at the prices obtained under the Trust's dividend reinvestment plan. Total return does not reflect brokerage commissions. See Notes to Financial Statements 16 TCW/DW Term Trust 2003 INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Trustees of TCW/DW Term Trust 2003: We have audited the accompanying statement of assets and liabilities of TCW/DW Term Trust 2003 (the "Trust"), including the portfolio of investments, as of March 31, 2002, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 2002, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of TCW/DW Term Trust 2003 as of March 31, 2002, 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 five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP New York, New York May 13, 2002 17 TCW/DW Term Trust 2003 TRUSTEE AND OFFICER INFORMATION Independent Trustees:
Term of Office and Position(s) Length of Name, Age and Address of Held with Time Independent Trustee Registrant Served* - ------------------------------------- ------------- ---------------- Michael Bozic (61) Trustee Trustee since c/o Mayer, Brown, Rowe & Maw April 1994 Counsel to the Independent Trustees 1675 Broadway New York, NY Edwin J. Garn (69) Trustee Trustee since c/o Summit Ventures LLC January 1993 1 Utah Center 201 S. Main Street Salt Lake City, UT Wayne E. Hedien (68) Trustee Trustee since c/o Mayer, Brown, Rowe & Maw September 1997 Counsel to the Independent Trustees 1675 Broadway New York, NY Number of Portfolios in Fund Complex Name, Age and Address of Overseen Independent Trustee Principal Occupation(s) During Past 5 Years by Trustee** - ------------------------------------- ------------------------------------------------ -------------- Michael Bozic (61) Retired; Director or Trustee of the Morgan 129 c/o Mayer, Brown, Rowe & Maw Stanley Funds and the TCW/DW Term Trusts; Counsel to the Independent Trustees formerly Vice Chairman of Kmart Corporation 1675 Broadway (December 1998-October 2000), Chairman and New York, NY Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co. Edwin J. Garn (69) Director or Trustee of the Morgan Stanley 129 c/o Summit Ventures LLC Funds and the TCW/DW Term Trusts; formerly 1 Utah Center United States Senator (R-Utah) (1974-1992) 201 S. Main Street and Chairman, Senate Banking Committee Salt Lake City, UT (1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman, Huntsman Corporation (chemical company); member of the Utah Regional Advisory Board of Pacific Corp. Wayne E. Hedien (68) Retired; Director or Trustee of the Morgan 129 c/o Mayer, Brown, Rowe & Maw Stanley Funds and the TCW/DW Term Trusts; Counsel to the Independent Trustees formerly associated with the Allstate 1675 Broadway Companies (1966-1994), most recently as New York, NY Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994). Name, Age and Address of Independent Trustee Other Directorships Held by Trustee - ------------------------------------- ------------------------------------------------ Michael Bozic (61) Director of Weirton Steel Corporation. c/o Mayer, Brown, Rowe & Maw Counsel to the Independent Trustees 1675 Broadway New York, NY Edwin J. Garn (69) Director of Franklin Covey (time management c/o Summit Ventures LLC systems), BMW Bank of North America, Inc. 1 Utah Center (industrial loan corporation), United Space 201 S. Main Street Alliance (joint venture between Lockheed Martin Salt Lake City, UT and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the board of various civic and charitable organizations. Wayne E. Hedien (68) Director of The PMI Group Inc. (private c/o Mayer, Brown, Rowe & Maw mortgage insurance); Director of The PMI Group Inc. (private mortgage insurance); Trustee and Vice Chairman of The Field Museum of Natural History; director of various other business and charitable organizations.
18 TCW/DW Term Trust 2003 TRUSTEE AND OFFICER INFORMATION continued
Term of Office and Position(s) Length of Name, Age and Address of Held with Time Independent Trustee Registrant Served* - --------------------------------------- ------------- --------------- Dr. Manuel H. Johnson (53) Trustee Trustee since c/o Johnson Smick International, Inc. July 1991 1133 Connecticut Avenue, N.W. Washington, D.C. Michael E. Nugent (65) Trustee Trustee since c/o Triumph Capital, L.P. July 1991 237 Park Avenue New York, NY John L. Schroeder (71) Trustee Trustee since c/o Mayer, Brown, Rowe & Maw April 1994 Counsel to the Independent Trustees 1675 Broadway New York, NY Number of Portfolios in Fund Complex Name, Age and Address of Overseen Independent Trustee Principal Occupation(s) During Past 5 Years by Trustee** - --------------------------------------- ------------------------------------------------ -------------- Dr. Manuel H. Johnson (53) Chairman of the Audit Committee and Director 129 c/o Johnson Smick International, Inc. or Trustee of the Morgan Stanley Funds and the 1133 Connecticut Avenue, N.W. TCW/DW Term Trusts; Senior Partner, Johnson Washington, D.C. Smick International, Inc., a consulting firm; Co-Chairman and a founder of the Group of Seven Council (G7C), an international economic commission; formerly Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. Michael E. Nugent (65) Chairman of the Insurance Committee and 207 c/o Triumph Capital, L.P. Director or Trustee of the Morgan Stanley 237 Park Avenue Funds and the TCW/DW Term Trusts; director/ New York, NY trustee of various investment companies managed by Morgan Stanley Investment Management Inc. and Morgan Stanley Investments LP (since July 2001); General Partner, Triumph Capital, L.P., a private investment partnership; formerly Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988). John L. Schroeder (71) Retired; Chairman of the Derivatives Committee 129 c/o Mayer, Brown, Rowe & Maw and Director or Trustee of the Morgan Stanley Counsel to the Independent Trustees Funds and the TCW/DW Term Trusts; formerly 1675 Broadway Executive Vice President and Chief Investment New York, NY Officer of the Home Insurance Company (August 1991-September 1995). Name, Age and Address of Independent Trustee Other Directorships Held by Trustee - --------------------------------------- ---------------------------------------------- Dr. Manuel H. Johnson (53) Director of NVR, Inc. (home construction); c/o Johnson Smick International, Inc. Chairman and Trustee of the Financial 1133 Connecticut Avenue, N.W. Accounting Foundation (oversight organization Washington, D.C. of the Financial Accounting Standards Board). Michael E. Nugent (65) Director of various business organizations. c/o Triumph Capital, L.P. 237 Park Avenue New York, NY John L. Schroeder (71) Director of Citizens Communications Company c/o Mayer, Brown, Rowe & Maw (telecommunications company). Counsel to the Independent Trustees 1675 Broadway New York, NY
19 TCW/DW Term Trust 2003 TRUSTEE AND OFFICER INFORMATION continued Interested Trustees:
Term of Office and Position(s) Length of Name, Age and Address of Held with Time Interested Trustee Registrant Served* - ------------------------------ ----------------------- --------------- Charles A. Fiumefreddo (68) Chairman, Director or Trustee since c/o Morgan Stanley Trust Trustee and Chief July 1991 Harborside Financial Center, Executive Officer Plaza Two, Jersey City, NJ James F. Higgins (54) Trustee Trustee since c/o Morgan Stanley Trust June 2000 Harborside Financial Center, Plaza Two, Jersey City, NJ Philip J. Purcell (58) Trustee Trustee since 1585 Broadway April 1994 New York, NY Number of Portfolios in Fund Complex Name, Age and Address of Overseen Interested Trustee Principal Occupation(s) During Past 5 Years by Trustee** - ------------------------------ ------------------------------------------------- -------------- Charles A. Fiumefreddo (68) Chairman, Director or Trustee and Chief 129 c/o Morgan Stanley Trust Executive Officer of the Morgan Stanley Funds Harborside Financial Center, and the TCW/DW Term Trusts; formerly Plaza Two, Chairman, Chief Executive Officer and Director Jersey City, NJ of the Investment Manager, the Distributor and Morgan Stanley Services, Executive Vice President and Director of Morgan Stanley DW, Chairman and Director of the Transfer Agent, and Director and/or officer of various Morgan Stanley subsidiaries (until June 1998). James F. Higgins (54) Senior Advisor of Morgan Stanley (since 129 c/o Morgan Stanley Trust August 2000); Director of the Distributor and Harborside Financial Center, Dean Witter Realty Inc.; Director or Trustee of Plaza Two, the Morgan Stanley Funds and the TCW/DW Jersey City, NJ Term Trusts (since June 2000); previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999). Philip J. Purcell (58) Director or Trustee of the Morgan Stanley 129 1585 Broadway Funds and the TCW/DW Term Trusts; Chairman New York, NY of the Board of Directors and Chief Executive Officer of Morgan Stanley and Morgan Stanley DW; Director of the Distributor; Chairman of the Board of Directors and Chief Executive Officer of Novus Credit Services Inc.; Director and/or officer of various Morgan Stanley subsidiaries. Name, Age and Address of Interested Trustee Other Directorships Held by Trustee - ------------------------------ -------------------------------------------- Charles A. Fiumefreddo (68) None c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ James F. Higgins (54) None c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ Philip J. Purcell (58) Director of American Airlines, Inc. and its 1585 Broadway parent company, AMR Corporation. New York, NY
- ------------ * Each Trustee serves an indefinite term, until his or her successor is elected. ** The Fund Complex includes all open and closed-end funds (including all of their portfolios) advised by Morgan Stanley Investment Advisors Inc. and any funds that have an investment advisor that is an affiliated person of Morgan Stanley Investment Advisors Inc. (including but not limited to, Morgan Stanley Investment Management Inc., Morgan Stanley Investments LP and Van Kampen Asset Management Inc.). 20 TCW/DW Term Trust 2003 TRUSTEE AND OFFICER INFORMATION continued Officers:
Term of Office and Position(s) Length of Name, Age and Address of Held with Time Executive Officer Registrant Served* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ----------------------------- ----------------- ----------------- ----------------------------------------------------------- Mitchell M. Merin (48) President President since President and Chief Operating Officer of Morgan Stanley 1221 Avenue of the Americas May 1999 Investment Management (since December 1998); President, New York, NY Director (since April 1997) and Chief Executive Officer (since June 1998) of the Investment Manager and Morgan Stanley Services; Chairman, Chief Executive Officer and Director of the Distributor (since June 1998); Chairman and Chief Executive Officer (since June 1998) and Director (since January 1998) of the Transfer Agent; Director of various Morgan Stanley subsidiaries; President of the Morgan Stanley Funds and TCW/DW Term Trusts (since May 1999); Trustee of various Van Kampen investment companies (since December 1999); previously Chief Strategic Officer of the Investment Manager and Morgan Stanley Services and Executive Vice President of the Distributor (April 1997-June 1998), Vice President of the Morgan Stanley Funds (May 1997-April 1999), and Executive Vice President of Morgan Stanley. Barry Fink (47) Vice President, Vice President, General Counsel (since May 2000) and Managing Director 1221 Avenue of the Americas Secretary and Secretary (since December 2000) of Morgan Stanley Investment New York, NY General Counsel and General Management; Managing Director (since December 2000), Counsel since and Secretary and General Counsel (since February 1997) February 1997 and Director (since July 1998) of the Investment Manager and Morgan Stanley Services; Assistant Secretary of Morgan Stanley DW; Vice President, Secretary and General Counsel of the Morgan Stanley Funds and TCW/DW Term Trusts (since February 1997); Vice President and Secretary of the Distributor; previously, Senior Vice President, Assistant Secretary and Assistant General Counsel of the Investment Manager and Morgan Stanley Services. Thomas F. Caloia (56) Treasurer Treasurer since First Vice President and Assistant Treasurer of the c/o Morgan Stanley Trust April 1989 Investment Manager, the Distributor and Morgan Stanley Harborside Financial Center, Services; Treasurer of the Morgan Stanley Funds. Plaza Two Jersey City, NJ Philip A. Barach (49) Vice President Over 5 years Managing Director of Trust Company of the West, TCW Asset 865 South Figueroa Street Management Company and TCW Investment Management Company for Los Angeles, CA over 5 years. Jeffrey E. Gundlach (42) Vice President Over 5 years Managing Director of Trust Company of the West, TCW Asset 865 South Figueroa Street Management Company and TCW Investment Management Company for Los Angeles, CA over 5 years. Frederick H. Horton (43) Vice President Over 5 years Managing Director of Trust Company of the West, TCW Asset 865 South Figueroa Street Management Company and TCW Investment Management Company for Los Angeles, CA over 5 years.
- ------------ * Each Officer serves an indefinite term, until his or her successor is elected. 21 (This page has been left blank intentionally) (This page has been left blank intentionally) TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS Charles A. Fiumefreddo [TCW/DW logo] Chairman and Chief Executive Officer TERM TRUST 2003 Mitchell M. Merin President [GRAPHIC OMITTED] Barry Fink Vice President, Secretary and General Counsel Phillip A. Branch Vice President Jeffrey E. Gundlach Vice President Frederick H. Horton Vice President ANNUAL REPORT Thomas F. Caloia MARCH 31, 2002 Treasurer TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center -- Plaza Two Jersey City, New Jersey 07311 INDEPENDENT AUDITORS Deloitte & Touche LLP Two World Financial Center New York, New York 10281 MANAGER Morgan Stanley Services Company Inc. c/o Morgan Stanley Trust Harborside Financial Center -- Plaza Two Jersey City, New Jersey 07311 ADVISER TCW Investment Management Company 865 South Figueroa Street, Suite 1800 Los Angles, CA 90017 37932 -----END PRIVACY-ENHANCED MESSAGE-----