<PAGE>
AMERICAN
MUNICIPAL
TERM
TRUSTS
* * *
SEMIANNUAL
REPORT
1996
<PAGE>
TABLE OF CONTENTS
AVERAGE ANNUALIZED TOTAL RETURNS ................ 1
FUND PERFORMANCE ................................ 2
LETTER TO SHAREHOLDERS .......................... 3
FINANCIAL STATEMENTS AND NOTES .................. 8
INVESTMENTS IN SECURITIES
AXT ............................................ 21
BXT ............................................ 26
CXT ............................................ 30
AMERICAN MUNICIPAL TERM TRUSTS
American Municipal Term Trust (AXT), American Municipal Term Trust II (BXT),
and American Municipal Term Trust III (CXT) are diversified, closed-end
investment management companies. The investment objectives of AXT, BXT and CXT
are to provide high current income exempt from regular federal income tax and
to return $10 per share on or shortly before April 15, 2001; April 15, 2002;
and April 15, 2003, respectively - although each fund's termination may be
extended up to five years if necessary to assist the fund in reaching its $10
per share objective. To realize their objectives, the funds invest primarily
in high-quality municipal obligations, including municipal zero-coupon
securities. As with other investment companies, there can be no assurance
these funds will achieve their objectives. Since each fund's inception,
March 27, 1991; Sept. 26, 1991; and Nov. 27, 1992, respectively, they have been
rated AAf by Standard & Poor's Mutual Funds Rating Group (S&P).* Fund shares
trade on the New York Stock Exchange under the symbols AXT, BXT and CXT,
respectively.
*THE FUNDS ARE RATED AAF, WHICH MEANS INVESTMENTS IN EACH FUND HAVE AN OVERALL
CREDIT QUALITY OF AA. CREDIT QUALITIES ARE ASSESSED BY STANDARD & POOR'S
MUTUAL FUNDS RATING GROUP. S&P DOES NOT EVALUATE THE MARKET RISK OF AN
INVESTMENT WHEN ASSIGNING A CREDIT RATING. SEE STANDARD & POOR'S CORPORATE AND
MUNICIPAL RATING DEFINITIONS FOR AN EXPLANATION OF AA.
THE FUNDS ALSO HAVE BEEN GIVEN MARKET RISK RATINGS BY S&P, WHICH WE CANNOT
PUBLISH DUE TO NASD REGULATIONS. RISK RATINGS EVALUATE VARIOUS INVESTMENT
RISKS THAT CAN AFFECT THE PERFORMANCE OF A BOND FUND AND INDICATE THE FUNDS'
OVERALL STABILITY AND SENSITIVITY TO CHANGING MARKET CONDITIONS. THESE RATINGS
ARE AVAILABLE BY CALLING S&P AT 1 800 424-FUND.
CALL FOR MORE INFORMATION
If you would like to be put on our mailing list to receive quarterly fund
summaries for the American Municipal Term Trusts, call our Mutual Fund
Services Department at 1 800 866-7778. In addition, you can call that same
number and listen to portfolio manager commentaries for the funds, which will
be updated monthly.
<PAGE>
AVERAGE ANNUALIZED TOTAL RETURNS
AMERICAN MUNICIPAL TERM TRUST (AXT)
[GRAPH]
AMERICAN MUNICIPAL TERM TRUST II (BXT)
[GRAPH]
AMERICAN MUNICIPAL TERM TRUST III (CXT)
[GRAPH]
AVERAGE ANNUALIZED TOTAL RETURN FIGURES ARE THROUGH JUNE 30, 1996, ARE BASED
ON THE CHANGE IN NET ASSET VALUE (NAV) AND REFLECT THE REINVESTMENT OF
DISTRIBUTIONS BUT DO NOT REFLECT SALES CHARGES. NAV-BASED PERFORMANCE IS USED
TO MEASURE INVESTMENT MANAGEMENT RESULTS.
AVERAGE ANNUALIZED TOTAL RETURN FIGURES BASED ON THE CHANGE IN MARKET PRICE
FOR THE ONE-YEAR, FIVE-YEAR AND SINCE INCEPTION PERIODS ENDED JUNE 30, 1996,
WERE 8.71%, 7.89% AND 7.23% FOR AXT; THE ONE-YEAR, THREE-YEAR AND SINCE
INCEPTION FIGURES WERE 11.45%, 6.17% AND 7.14% FOR BXT; AND 14.59%, 4.23% AND
5.41% FOR CXT. THESE FIGURES ALSO ASSUME REINVESTED DISTRIBUTIONS AND DO NOT
REFLECT SALES CHARGES.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND
MARKET VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT FUND SHARES, WHEN SOLD,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THE LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX IS AN UNMANAGED INDEX THAT
REPRESENTS THE 7-YEAR, HIGH-QUALITY, TAX-EXEMPT BOND MARKET. IT ASSUMES ALL
DISTRIBUTIONS ARE REINVESTED.
THE SINCE INCEPTION NUMBERS FOR THE LEHMAN INDEX ARE CALCULATED FROM THE MONTH
END CLOSEST TO THE FUND'S INCEPTION THROUGH JUNE 30, 1996.
1
<PAGE>
FUND PERFORMANCE
NET ASSET VALUE SUMMARY PER SHARE
(COMMON SHARES)
<TABLE>
<CAPTION>
American American American
Municipal Municipal Municipal
Term Trust Term Trust II Term Trust III
INCEPTION INCEPTION INCEPTION
3/27/91 9/26/91 11/27/92
<S> <C> <C> <C>
Initial Offering Price ............................ $10.00 $10.00 $10.00
Initial Offering and Underwriting Expenses ........ -$0.67 -$0.66 -$0.67
(Common and Preferred Stock)
Accumulated Realized Gains or Losses
At 6/30/96 ........................................ $0.00 $0.00 -$0.02
------ ------ ------
SUBTOTAL .......................................... $ 9.33 $ 9.34 $ 9.31
Undistributed Net Investment Income
(Dividend Reserve) At 6/30/96 ..................... +$0.63 +$0.60 +$0.38
Unrealized Appreciation on Investments
At 6/30/96 ........................................ +$1.49 +$1.30 +$0.89
------ ------ ------
NET ASSET VALUE ON 6/30/96 ........................ $11.45 $11.24 $10.58
</TABLE>
DISTRIBUTION HISTORY
<TABLE>
<CAPTION>
American American American
Municipal Municipal Municipal
Term Trust Term Trust II Term Trust III
INCEPTION INCEPTION INCEPTION
3/27/91 9/26/91 11/27/92
<S> <C> <C> <C>
Total Monthly Income Dividends
Through 6/30/96
Common Shareholders ........................... $3.36 $2.90 $2.00
Preferred Shareholders
(On a Common Share Basis) ..................... $0.85 $0.74 $0.54
Total Capital Gains Distributions to Common
Shareholders Through 6/30/96 ..................... $0.00 $0.01 $0.00
</TABLE>
2
<PAGE>
AMERICAN MUNICIPAL TERM TRUSTS
[PHOTO]
FPO 55%
[PHOTO]
FPO 56%
DOUG WHITE, CFA, (TOP)
SHARES RESPONSIBILITY FOR THE MANAGEMENT OF THE AMERICAN MUNICIPAL TERM TRUSTS.
HE HAS 13 YEARS OF FINANCIAL EXPERIENCE.
RON REUSS, ISFA, (BOTTOM)
SHARES RESPONSIBILITY FOR THE MANAGEMENT OF THE AMERICAN MUNICIPAL TERM TRUSTS.
HE HAS 27 YEARS OF FINANCIAL EXPERIENCE.
August 15, 1996
Dear Shareholders:
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996, THE NET ASSET VALUE TOTAL
RETURNS FOR THE AMERICAN MUNICIPAL TERM TRUSTS (AXT, BXT, CXT) WERE -1.01%,
- -1.81% AND -2.63%, RESPECTIVELY.* Comparatively, the Lehman Brothers 7-Year
Municipal Bond Index had a total return of 0.07% during the same six-month
period. Based on market price, the funds' total returns for the period were
0.19%, 1.28% and -0.19%. (NAV and market price total returns listed assume
that distributions were reinvested and do not include sales charges.) During
the period, AXT, BXT and CXT maintained their common stock distribution yields
of 6.50%, 6.20% and 5.70%, respectively, which have been unchanged since each
fund's inception.**
TO EVALUATE THE FUNDS' PERFORMANCE, WE RECOMMEND THAT YOU REFER TO THE CHARTS
ON THE PAGE TO THE LEFT INSTEAD OF DRAWING COMPARISONS TO ANY BENCHMARK. The
charts show each fund's net asset value and the history of distributions paid
by each fund since inception. For many reasons, it is difficult to measure the
American Municipal Term Trusts' performance relative to a benchmark. These
funds are among a very small number of tax-exempt funds with defined
termination dates. Also, as they near their
* PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN
AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT FUND SHARES, WHEN
SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
** THESE FIGURES REPRESENT ANNUALIZED YIELDS FOR THE SIX-MONTH PERIOD ENDED
JUNE 30, 1996, BASED ON THE INITIAL OFFERING PRICE OF $10 PER SHARE. ACTUAL
YIELDS MAY DIFFER, DEPENDING ON THE INDIVIDUAL SHAREHOLDER'S COST BASIS. THESE
YIELD FIGURES REPRESENT PAST PERFORMANCE. YIELDS ON FUND SHARES MAY FLUCTUATE.
3
<PAGE>
AMERICAN MUNICIPAL TERM TRUSTS
PORTFOLIO COMPOSITION
AMERICAN MUNICIPAL TERM TRUST (AXT)
JUNE 30, 1996
[GRAPH]
AMERICAN MUNICIPAL TERM TRUST II (BXT)
JUNE 30, 1996
[GRAPH]
termination dates, we will continue to shorten their average maturities to
reduce interest rate risk. We have used the Lehman index to provide
comparative information; however, we do not try to replicate the index's
performance. Instead, our primary goal is to meet the funds' investment
objectives of providing high current income exempt from regular federal income
tax and returning $10 per share to investors upon the funds' termination
dates. For these reasons, effective with the next reporting period, we will no
longer be comparing the funds' performance to a benchmark.
DURING THIS SIX-MONTH REPORTING PERIOD, BONDS GENERALLY HAD NEGATIVE RETURNS
BECAUSE OF THE RISE IN INTEREST RATES. However, municipal bonds, including
those in the American Municipal Term Trusts, performed better than most of
their taxable counterparts. Municipal prices fell less drastically for three
principal reasons: subsiding concerns about tax reform, a decreased supply of
new issues during the period, and favorable after-tax yields for municipal
bonds in comparison to taxable bonds.
THE VOLATILE BOND MARKET DURING THE PERIOD CAUSED THE FUNDS' NET ASSET VALUES TO
DECREASE. However, they all remained above their targeted
4
<PAGE>
AMERICAN MUNICIPAL TERM TRUSTS
PORTFOLIO COMPOSITION
AMERICAN MUNICIPAL TERM TRUST III (CXT)
JUNE 30, 1996
[GRAPH]
termination price of $10 per share. On June 30, 1996, the net asset values for
AXT, BXT and CXT were $11.45, $11.24 and $10.58, respectively. A number of bonds
in each fund's portfolio are currently trading above their par or premium call
or maturity values. However, as the funds approach maturity, these bonds will
amortize toward the par or premium call, thereby reducing net asset values. On
the other hand, the funds continue to earn more than their common and preferred
stock dividends and add to their dividend reserves. (Please remember these
reserves may be reduced or eliminated over time to pay dividends.)
WE MADE NO SUBSTANTIAL CHANGES TO THE FUNDS DURING THE SIX-MONTH PERIOD, BECAUSE
WE BELIEVE THEY ARE STRUCTURED APPROPRIATELY TO MEET THEIR INVESTMENT
OBJECTIVES, GIVEN THE CURRENT ENVIRONMENT. However, we continue to monitor the
funds' progress closely and will reduce average maturity, as appropriate, as the
funds near their termination dates. In reducing average maturity, we may sell
bonds. If we do so at a net gain, this may cause the funds to pay capital gains
distributions, which are taxable, to shareholders. As of the end of June, the
funds remained fully invested in investment-grade municipal bonds with higher
yields than those available today on bonds with similar quality and maturities.
In addition, the funds remain broadly invested across the United States.
5
<PAGE>
AMERICAN MUNICIPAL TERM TRUSTS
PERCENTAGE OF BONDS MATURING
WITHIN A YEAR OF TERMINATION
The graph below illustrates the percentage of bonds in each portfolio with
maturity dates within a year of their termination dates. As the funds near
termination, we continue to make reductions in longer-maturity bonds and
increase holdings in shorter-maturity bonds, which shortens the funds' average
maturities and reduces interest rate risk. However, the bonds will still be
subject to credit risk.
AT THE FUND'S AS OF
INCEPTION AUGUST 1, 1996
AXT 0% 52%
BXT 0% 41%
CXT 0% 10%
Their geographic focus continues to be on the central and northwestern United
States, with Illinois, Texas, Washington and Indiana representing the largest
state concentrations.
OUR STRATEGIES HAVE REMAINED THE SAME SINCE THE FUNDS' INCEPTIONS. IN AN EFFORT
TO RETURN $10 PER SHARE AT MATURITY, WE HAVE GRADUALLY REDUCED THE FUNDS'
HOLDINGS IN LONGER-MATURITY BONDS. (See chart at left.) The funds' average
maturities have been reduced since inception, primarily through the prerefunding
of bonds by their issuers. This has reduced the funds' interest rate risk - an
important part of our strategy as we move closer to the funds' termination
dates. When an issuer prerefunds a bond, the time until the bond matures is
reduced and the maturity or call price is established. The closer the maturity
date of a bond is to the fund's termination date, the more certain we can be of
the value of the bond at termination (in other words, the value of the bond will
be less affected by interest rates at the time of termination). Keep in mind,
however, that prior to their maturity dates, these prerefunded bonds are subject
to interest rate risk and will fluctuate in value.
6
<PAGE>
AMERICAN MUNICIPAL TERM TRUSTS
PREFERRED STOCK
Preferred stock pays dividends at a specified rate and has preference over
common stock in the payments of dividends and the liquidation of assets. Rates
paid on preferred stock are reset every seven days and are based on
short-term, tax-exempt interest rates. Preferred shareholders accept these
short-term rates in exchange for low credit risk (shares of preferred stock
are rated AAA by Moody's and S&P) and high liquidity (shares of preferred
stock trade at par and are remarketed every seven days). The proceeds from the
sale of preferred stock are invested at intermediate- and long-term tax-exempt
rates. Because these intermediate- and long-term rates are normally higher
than the short-term rates paid on preferred stock, common shareholders benefit
by receiving higher dividends and/or an increase to the dividend reserve.
However, the risk of having preferred stock is that if short-term rates rise
higher than intermediate- and long-term rates, creating an inverted yield
curve, common shareholders may receive a lower rate of return than if their
fund did not have any preferred stock outstanding. This type of economic
environment is unusual and historically has been short term in nature.
Investors should also be aware that the issuance of preferred stock results in
the leveraging of common stock which increases the volatility of both the net
asset value of the fund and the market value of shares of common stock.
LOOKING FORWARD, WE EXPECT THE SUPPLY OF OUTSTANDING MUNICIPAL BONDS TO SHRINK
FOR THE THIRD CONSECUTIVE YEAR IN 1996, WHICH SHOULD CAUSE TAX-FREE BONDS TO
CONTINUE TO OUTPERFORM TAXABLE BONDS. In this environment, we will continue to
try to selectively position the funds more defensively as they near their
termination dates.
Thank you for your investment in the American Municipal Term Trusts. We consider
it a privilege to manage your investment and remain committed to providing you
with the best service.
Sincerely,
/s/ Douglas J. White
Douglas J. White
Portfolio Manager
/s/ Ronald R. Reuss
Ronald R. Reuss
Portfolio Manager
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
American American
American Municipal Municipal
Municipal Term Trust Term Trust
Term Trust II III
-------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities at market value* (note 2) .... $ 136,608,025 117,746,171 81,259,208
Cash in bank on demand deposit ........................... 132,963 61,659 34,378
Receivable for investment securities sold ................ -- -- 100,248
Other assets ............................................. 8,333 8,333 8,333
Accrued interest receivable .............................. 2,627,587 1,969,939 1,326,385
-------------- ------------ ------------
Total assets ......................................... 139,376,908 119,786,102 82,728,552
-------------- ------------ ------------
LIABILITIES:
Preferred stock dividends payable (note 3) ............... 16,767 22,504 18,620
Accrued investment management fee ........................ 28,406 24,386 16,789
Accrued remarketing agent fee ............................ 3,247 8,476 4,616
Accrued administrative fee ............................... 17,044 14,631 10,074
Other accrued expenses ................................... 11,362 14,631 10,073
-------------- ------------ ------------
Total liabilities .................................... 76,826 84,628 60,172
-------------- ------------ ------------
Net assets applicable to outstanding capital stock ....... $ 139,300,082 119,701,474 82,668,380
-------------- ------------ ------------
-------------- ------------ ------------
REPRESENTED BY:
Preferred stock - authorized 1 million shares for each
fund of $25,000 liquidation preference per share;
outstanding, 1,700; 1,480 and 1,064 shares, respectively
(note 3) ............................................. $ 42,500,000 37,000,000 26,600,000
-------------- ------------ ------------
Common stock - authorized 200 million shares for each fund
of $0.01 par value; outstanding, 8,455,000; 7,355,820
and 5,300,000, respectively ............................ 84,550 73,558 53,000
Additional paid-in capital ............................... 78,849,154 68,704,232 49,431,420
Undistributed net investment income ...................... 5,325,355 4,390,858 2,037,309
Accumulated net realized loss on investments ............. (75,312) (29,738) (131,212)
Unrealized appreciation of investments ................... 12,616,335 9,562,564 4,677,863
-------------- ------------ ------------
Total - representing net assets applicable to
outstanding common stock ........................... 96,800,082 82,701,474 56,068,380
-------------- ------------ ------------
Total net assets ................................... $ 139,300,082 119,701,474 82,668,380
-------------- ------------ ------------
-------------- ------------ ------------
Net asset value per share of outstanding common stock (net
assets divided by 8,455,000; 7,355,820 and 5,300,000
shares of common stock outstanding, respectively) ...... $ 11.45 11.24 10.58
-------------- ------------ ------------
-------------- ------------ ------------
* Investments in securities at identified cost ........... $ 123,991,690 108,183,607 76,581,345
-------------- ------------ ------------
-------------- ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
American American
American Municipal Municipal
Municipal Term Trust Term Trust
Term Trust II III
----------- ------------ ------------
<S> <C> <C> <C>
INCOME:
Interest ............................................... $ 4,396,602 3,703,367 2,481,535
----------- ------------ ------------
EXPENSES (NOTE 5):
Investment management fee ................................ 174,862 150,456 103,920
Administrative fee ....................................... 104,917 90,273 62,352
Remarketing agent fee .................................... 53,716 46,763 33,619
Custodian, accounting and transfer agent fees ............ 28,995 40,409 21,656
Reports to shareholders .................................. 7,373 11,272 7,939
Directors' fees .......................................... 5,756 5,756 5,756
Audit and legal fees ..................................... 18,646 28,613 20,288
Other expenses ........................................... 20,909 15,796 17,694
----------- ------------ ------------
Total expenses ....................................... 415,174 389,338 273,224
Less expenses paid indirectly ............................ (3,898) (3,736) (3,144)
----------- ------------ ------------
Total net expenses ................................... 411,276 385,602 270,080
----------- ------------ ------------
Net investment income ................................ 3,985,326 3,317,765 2,211,455
----------- ------------ ------------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS:
Net realized loss on investments (note 4) ................ (2,805) (29,738) --
Net change in unrealized appreciation or depreciation of
investments ............................................ (4,135,241) (4,160,575) (3,294,101)
----------- ------------ ------------
Net loss on investments ................................ (4,138,046) (4,190,313) (3,294,101)
----------- ------------ ------------
Net decrease in net assets resulting from
operations ....................................... $ (152,720) (872,548) (1,082,646)
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
AMERICAN MUNICIPAL TERM TRUST
<TABLE>
<CAPTION>
Six Months
Ended
6/30/96 Year Ended
(Unaudited) 12/31/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 3,985,326 7,934,990
Net realized loss on investments ......................... (2,805) (51,340)
Net change in unrealized appreciation or depreciation of
investments ............................................ (4,135,241) 10,386,266
------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................... (152,720) 18,269,916
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Common stock dividends ................................. (2,291,305) (5,499,132)
Preferred stock dividends .............................. (756,238) (1,690,429)
------------ ------------
Total distributions .................................. (3,047,543) (7,189,561)
------------ ------------
Total increase (decrease) in net assets ............ (3,200,263) 11,080,355
Net assets at beginning of period .......................... 142,500,345 131,419,990
------------ ------------
Net assets at end of period .............................. $ 139,300,082 142,500,345
------------ ------------
------------ ------------
Undistributed net investment income ...................... $ 5,325,355 4,387,572
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
AMERICAN MUNICIPAL TERM TRUST II
<TABLE>
<CAPTION>
Six Months
Ended
6/30/96 Year Ended
(Unaudited) 12/31/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 3,317,765 6,648,396
Net realized gain (loss) on investments .................. (29,738) 118,989
Net change in unrealized appreciation or depreciation of
investments ............................................ (4,160,575) 9,879,162
------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................... (872,548) 16,646,547
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Common stock dividends ................................. (1,901,480) (4,563,551)
Preferred stock dividends .............................. (655,133) (1,455,027)
From net realized gains:
Common stock dividends ................................. -- (44,282)
Preferred stock dividends .............................. -- (14,060)
------------ ------------
Total distributions .................................. (2,556,613) (6,076,920)
------------ ------------
Total increase (decrease) in net assets ............ (3,429,161) 10,569,627
Net assets at beginning of period .......................... 123,130,635 112,561,008
------------ ------------
Net assets at end of period .............................. $ 119,701,474 123,130,635
------------ ------------
------------ ------------
Undistributed net investment income ...................... $ 4,390,858 3,629,706
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
AMERICAN MUNICIPAL TERM TRUST III
<TABLE>
<CAPTION>
Six Months
Ended
6/30/96 Year Ended
(Unaudited) 12/31/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 2,211,455 4,397,900
Net realized loss on investments ......................... -- (5,681)
Net change in unrealized appreciation or depreciation of
investments ............................................ (3,294,101) 9,213,825
------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................... (1,082,646) 13,606,044
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Common stock dividends ................................. (1,258,751) (3,021,000)
Preferred stock dividends .............................. (478,724) (1,030,403)
------------ ------------
Total distributions .................................. (1,737,475) (4,051,403)
------------ ------------
Total increase (decrease) in net assets ............ (2,820,121) 9,554,641
Net assets at beginning of period .......................... 85,488,501 75,933,860
------------ ------------
Net assets at end of period .............................. $ 82,668,380 85,488,501
------------ ------------
------------ ------------
Undistributed net investment income ...................... $ 2,037,309 1,563,329
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) ORGANIZATION
American Municipal Term Trust Inc., American Municipal Term
Trust Inc. II, and American Municipal Term Trust Inc. III (the
funds) are registered under the Investment Company Act of 1940
(as amended) as diversified, closed-end investment management
companies. American Municipal Term Trust Inc., American
Municipal Term Trust Inc. II, and American Municipal Term Trust
Inc. III expect to terminate operations and distribute all of
their net assets to shareholders on or shortly before April 15,
2001, April 15, 2002, and April 15, 2003, respectively, although
termination may be extended to a date no later than April 15,
2006, April 15, 2007, and April 15, 2008, respectively. The
funds invest primarily in high-quality municipal obligations
including municipal zero-coupon securities. Fund shares are
listed on the New York Stock Exchange under the symbols AXT, BXT
and CXT, respectively.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS IN SECURITIES
The values of fixed income securities are determined using
pricing services or prices quoted by independent brokers.
Exchange-listed options are valued at the last sales price, and
open financial futures contracts are valued at the last
settlement price. When market quotations are not readily
available, securities are valued at fair value according to
methods selected in good faith by the board of directors.
Short-term securities with maturities of 60 days or less are
valued at amortized cost which approximates market value.
Securities transactions are accounted for on the date the
securities are purchased or sold. Realized gains and losses are
calculated on the identified-cost basis. Interest income,
including amortization of bond discount and premium computed on
a level-yield basis, is accrued daily.
FUTURES TRANSACTIONS
In order to gain exposure to or protect from changes in the
market, the funds may buy and sell financial futures contracts
and related options. Risks of entering into futures contracts
and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the
underlying securities.
Upon entering into a futures contract, the funds are required to
deposit either cash or securities in an amount (initial margin)
equal
13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
to a certain percentage of the contract value. Subsequent
payments (variation margin) are made or received by the funds
each day. The variation margin payments are equal to the daily
changes in the contract value and are recorded as unrealized
gains and losses. The funds recognize a realized gain or loss
when the contract is closed or expires.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been purchased by
the funds on a forward-commitment or when-issued basis can take
place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior
to their delivery. Each fund maintains, in segregated accounts
with the custodian, assets with a market value equal to the
amount of its purchase commitments. The purchase of securities
on a when-issued or forward-commitment basis may increase the
volatility of each fund's net asset value if the funds make such
purchases while remaining substantially fully invested.
As of June 30, 1996, the funds had no outstanding when-issued or
forward-commitments.
FEDERAL TAXES
Each fund is treated separately for federal income tax purposes.
Each fund intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies and not be subject to federal income tax. Therefore,
no income tax provision is required. In addition, on a
calendar-year basis, the funds will distribute substantially all
of their taxable net investment income and realized gains, if
any, to avoid the payment of any federal excise taxes.
Net investment income and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of
market discount amortization.
The character of distributions made during the year from net
investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. In
addition, due to
14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income
or realized gains (losses) were recorded by the funds.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are made monthly for
common shareholders and weekly for preferred shareholders.
Common stock distributions are recorded as of the close of
business on the ex-dividend date and preferred stock dividends
are accrued daily. Realized capital gains, if any, will be
distributed at least annually. Distributions are payable in cash
or, for common shareholders pursuant to the funds' dividend
reinvestment plans, reinvested in additional shares of the
funds' common stock. Under the plans, common shares will be
purchased in the open market.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities. Management is also required to make
disclosures of contingent assets and liabilities at the date of
the financial statements and the reported results of operations
during the reporting period. Actual results could differ from
those estimates.
(3) REMARKETED PREFERRED STOCK
American Municipal Term Trust Inc., American Municipal Term
Trust Inc. II, and American Municipal Term Trust Inc. III have
issued and, as of June 30, 1996, have outstanding 1,700 shares,
1,480 shares, and 1,064 shares, respectively, of remarketed
preferred stock (RP) with a liquidation preference of $25,000
per share for each fund. The dividend rate on the RP is adjusted
every seven days as determined by the remarketing agent. On June
30, 1996, the dividend rates were 3.64%, 3.70% and 3.65% for
American Municipal Term Trust Inc., American Municipal Term
Trust Inc. II, and American Municipal Term Trust Inc. III,
respectively. Remarketed preferred stock (RP) is a registered
trademark of Merrill Lynch & Co., Inc.
15
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(4) INVESTMENT SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities, other
than temporary investments in short-term securities, for the six
months ended June 30, 1996, were as follows:
<TABLE>
<CAPTION>
American American American
Municipal Municipal Municipal
Term Trust Term Trust II Term Trust III
---------- ------------- --------------
<S> <C> <C> <C>
Purchases ............................ $ 353,607 304,596 242,475
Proceeds from sales .................. $ 70,000 1,163,863 --
</TABLE>
For the six months ended June 30, 1996, no brokerage commissions
were paid to Piper Jaffray Inc., an affiliated broker.
(5) EXPENSES
The funds have entered into the following agreements with Piper
Capital Management Incorporated (the adviser and administrator):
The investment advisory agreement provides the adviser with a
monthly investment management fee equal to an annualized rate of
0.25% of the funds' average weekly net assets (computed by
subtracting liabilities, which exclude preferred stock, from the
value of the total assets of the funds). For its fee, the
adviser provides investment advice and, in general, conducts the
management and investment activity of the funds.
The administration agreement provides the administrator with a
monthly fee in an amount equal to an annualized rate of 0.15% of
the funds' average weekly net assets (computed by subtracting
liabilities, which exclude preferred stock, from the value of
the total assets of the funds). For its fee, the administrator
provides certain reporting, regulatory and record-keeping
services for the funds.
The funds have entered into a remarketing agent agreement with
Merrill Lynch, Pierce, Fenner & Smith (the remarketing agent).
The remarketing agreement provides the remarketing agent with a
monthly fee in an amount equal to an annualized rate of 0.25% of
the funds' average amount of RP outstanding. For its fee, the
remarketing agent will remarket shares of RP tendered to it, on
behalf of shareholders thereof, and will determine the
applicable dividend rate for each seven-day dividend period.
In addition to the investment management, administrative and the
remarketing agent fees, the funds are responsible for paying
most
16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
other operating expenses including: outside directors' fees and
expenses; custodian fees; registration fees; printing and
shareholder reports; transfer agent fees and expenses; legal,
auditing and accounting services; insurance; interest; taxes and
other miscellaneous expenses.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on cash balances maintained by the funds.
(6) CAPITAL LOSS CARRYOVER
For federal income tax purposes, the following funds had capital
loss carryovers at December 31, 1995, which, if not offset by
subsequent capital gains, will expire as noted. It is unlikely
the board of directors will authorize a distribution of any net
realized capital gains until the available capital loss
carryovers have been offset or expired.
<TABLE>
<CAPTION>
Capital
Loss Expiration
Carryovers Date
-------- ------------------
<S> <C> <C>
American Municipal Term Trust ............. $ 72,507 2002 through 2004
American Municipal Term Trust III ......... $ 131,212 2002 and 2003
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(7) FINANCIAL HIGHLIGHTS
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
AMERICAN MUNICIPAL TERM TRUST
<TABLE>
<CAPTION>
Six months
ended Fiscal year ended December 31, Period
6/30/96 ------------------------------------------- ended
(Unaudited) 1995 1994 1993 1992 12/31/91 (e)
----------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, common stock, beginning of
period .................................. $ 11.83 10.52 11.89 10.57 9.99 9.44
----------- ------- ------- ------- ------- ------
Operations:
Net investment income ..................... 0.47 0.94 0.93 0.92 0.92 0.65
Net realized and unrealized gains (losses)
on investments .......................... (0.49) 1.22 (1.50) 1.17 0.47 0.63
----------- ------- ------- ------- ------- ------
Total from operations ................... (0.02) 2.16 (0.57) 2.09 1.39 1.28
----------- ------- ------- ------- ------- ------
Distributions to shareholders:
From net investment income
Paid to common shareholders ............. (0.27) (0.65) (0.65) (0.65) (0.65) (0.49)
Paid to preferred shareholders .......... (0.09) (0.20) (0.15) (0.12) (0.16) (0.13)
----------- ------- ------- ------- ------- ------
Total distributions to shareholders (0.36) (0.85) (0.80) (0.77) (0.81) (0.62)
----------- ------- ------- ------- ------- ------
Offering costs and underwriting discounts
associated with the remarketed preferred
stock ..................................... -- -- -- -- -- (0.11)
----------- ------- ------- ------- ------- ------
Net asset value, common stock, end of
period .................................. $ 11.45 11.83 10.52 11.89 10.57 9.99
----------- ------- ------- ------- ------- ------
----------- ------- ------- ------- ------- ------
Market value, common stock, end of
period .................................. $ 10.75 11.00 10.00 10.88 10.50 10.13
----------- ------- ------- ------- ------- ------
----------- ------- ------- ------- ------- ------
SELECTED INFORMATION
Total return, common stock, net asset value
(a) ....................................... (1.01%) 18.93% (6.34%) 18.98% 12.68% 11.25%
Total return, common stock, market value
(b) ....................................... 0.19% 16.91% (2.11%) 9.83% 10.26% 6.21%
Net assets at end of period (in
millions) ............................... $ 139 143 131 143 132 127
Ratio of expenses to average weekly net
assets (c) ................................ 0.59%(f) 0.61% 0.58% 0.59% 0.62% 0.56%(f)
Ratio of net investment income to average
weekly net assets ......................... 5.70%(f) 5.72% 5.80% 5.65% 6.03% 6.27%(f)
Portfolio turnover rate (excluding short-term
securities) ............................... 0% 1% 1% 2% 4% 24%
Remarketed preferred stock outstanding end of
period (in millions) .................... $ 43 43 43 43 43 43
Asset coverage ratio (d) .................... 328% 335% 309% 336% 310% 299%
</TABLE>
(A) BASED ON THE CHANGE IN NET ASSET VALUE OF A COMMON SHARE DURING THE PERIOD
AND ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
(B) BASED ON THE CHANGE IN MARKET PRICE OF A COMMON SHARE DURING THE PERIOD AND
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S REINVESTMENT PLAN.
(C) BEGINNING IN FISCAL 1995, THE EXPENSE RATIOS REFLECT THE EFFECT OF GROSS
EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIOS HAVE NOT
BEEN ADJUSTED.
(D) REPRESENTS TOTAL NET ASSETS DIVIDED BY REMARKETED PREFERRED STOCK.
(E) COMMENCEMENT OF OPERATIONS WAS MARCH 27, 1991.
(F) ADJUSTED TO AN ANNUAL BASIS.
18
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(7) FINANCIAL HIGHLIGHTS
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
AMERICAN MUNICIPAL TERM TRUST II
<TABLE>
<CAPTION>
Six months
ended Fiscal year ended December 31, Period
6/30/96 ------------------------------------------- ended
(Unaudited) 1995 1994 1993 1992 12/31/91 (e)
----------- ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, common stock, beginning of
period .................................. $ 11.71 10.27 11.66 10.26 9.71 9.45
----------- ------- ------- ------- ------- -----
Operations:
Net investment income ..................... 0.45 0.90 0.90 0.89 0.89 0.19
Net realized and unrealized gains (losses)
on investments .......................... (0.57) 1.37 (1.52) 1.25 0.44 0.36
----------- ------- ------- ------- ------- -----
Total from operations ................... (0.12) 2.27 (0.62) 2.14 1.33 0.55
----------- ------- ------- ------- ------- -----
Distributions to shareholders:
From net investment income
Paid to common shareholders ............. (0.26) (0.62) (0.62) (0.62) (0.62) (0.16)
Paid to preferred shareholders .......... (0.09) (0.20) (0.15) (0.12) (0.16) (0.02)
From net realized gains
Paid to common shareholders ............. -- (0.01) -- -- -- --
Paid to preferred shareholders .......... -- -- -- -- --
----------- ------- ------- ------- ------- -----
Total distributions to shareholders (0.35) (0.83) (0.77) (0.74) (0.78) (0.18)
----------- ------- ------- ------- ------- -----
Offering costs and underwriting discounts
associated with the remarketed preferred
stock ..................................... -- -- -- -- -- (0.11)
----------- ------- ------- ------- ------- -----
Net asset value, common stock, end of
period .................................. $ 11.24 11.71 10.27 11.66 10.26 9.71
----------- ------- ------- ------- ------- -----
----------- ------- ------- ------- ------- -----
Market value, common stock, end of
period .................................. $ 10.50 10.63 9.63 10.75 10.38 9.88
----------- ------- ------- ------- ------- -----
----------- ------- ------- ------- ------- -----
SELECTED INFORMATION
Total return, common stock, net asset value
(a) ....................................... (1.81)% 20.48% (6.80%) 20.03% 12.41% 4.42%
Total return, common stock, market value
(b) ....................................... 1.28% 17.28% (4.83%) 9.74% 11.59% 0.30%
Net assets at end of period (in
millions) ............................... $ 120 123 113 123 112 108
Ratio of expenses to average weekly net
assets (c) ................................ 0.65%(f) 0.62% 0.60% 0.60% 0.64% 0.58%(f)
Ratio of net investment income to average
weekly net assets ......................... 5.51%(f) 5.58% 5.72% 5.51% 5.92% 6.24%(f)
Portfolio turnover rate (excluding short-term
securities) ............................... 0% 3% 0% 2% 11% 18%
Remarketed preferred stock outstanding end of
period (in millions) .................... $ 37 37 37 37 37 37
Asset coverage ratio (d) .................... 324% 333% 304% 332% 304% 293%
</TABLE>
(A) BASED ON THE CHANGE IN NET ASSET VALUE OF A COMMON SHARE DURING THE PERIOD
AND ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
(B) BASED ON THE CHANGE IN MARKET PRICE OF A COMMON SHARE DURING THE PERIOD AND
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S REINVESTMENT PLAN.
(C) BEGINNING IN FISCAL 1995, THE EXPENSE RATIOS REFLECT THE EFFECT OF GROSS
EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIOS HAVE NOT
BEEN ADJUSTED.
(D) REPRESENTS TOTAL NET ASSETS DIVIDED BY REMARKETED PREFERRED STOCK.
(E) COMMENCEMENT OF OPERATIONS WAS SEPTEMBER 26, 1991.
(F) ADJUSTED TO AN ANNUAL BASIS.
19
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(7) FINANCIAL HIGHLIGHTS
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
AMERICAN MUNICIPAL TERM TRUST III
<TABLE>
<CAPTION>
Six months Fiscal year ended December 31,
ended Period
6/30/96 -------------------------------- ended
(Unaudited) 1995 1994 1993 12/31/92 (e)
------------ ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, common stock, beginning of
period .................................. $ 11.11 9.31 10.95 9.57 9.44
------ ------- -------- ------- ------
Operations:
Net investment income ..................... 0.42 0.83 0.83 0.81 0.04
Net realized and unrealized gains (losses)
on investments .......................... (0.62) 1.73 (1.75) 1.36 0.14
------ ------- -------- ------- ------
Total from operations ................... (0.20) 2.56 (0.92) 2.17 0.18
------ ------- -------- ------- ------
Distributions to shareholders:
From net investment income
Paid to common shareholders ............. (0.24) (0.57) (0.57) (0.57) (0.05)
Paid to preferred shareholders .......... (0.09) (0.19) (0.15) (0.11) --
------ ------- -------- ------- ------
Total distributions to shareholders ..... (0.33) (0.76) (0.72) (0.68) (0.05)
------ ------- -------- ------- ------
Offering costs and underwriting discounts
associated with the remarketed preferred
stock ..................................... -- -- -- (0.11) --
------ ------- -------- ------- ------
Net asset value, common stock, end of period$ 10.58 11.11 9.31 10.95 9.57
------ ------- -------- ------- ------
------ ------- -------- ------- ------
Market value, common stock, end of
period .................................. $ 9.88 10.13 8.50 10.13 9.88
------ ------- -------- ------- ------
------ ------- -------- ------- ------
SELECTED INFORMATION
Total return, common stock, net asset value
(a) (2.63)% 25.93% (10.04%) 20.74% 1.88%
Total return, common stock, market value
(b) ....................................... (0.19)% 26.32% (10.93%) 8.35% (0.78%)
Net assets at end of period (in
millions) ............................... $ 83 85 76 85 51
Ratio of expenses to average weekly net
assets (c) ................................ 0.66%(f) 0.66% 0.64% 0.61% 0.60%(f)
Ratio of net investment income to average
weekly net assets ......................... 5.32%(f) 5.38% 5.53% 5.34% 4.90%(f)
Portfolio turnover rate (excluding short-term
securities) ............................... 0% 5% 3% 1% 0%
Remarketed preferred stock outstanding end of
period (in millions) .................... $ 27 27 27 27 0
Asset coverage ratio (d) .................... 311% 321% 285% 318% 0%
</TABLE>
(A) BASED ON THE CHANGE IN NET ASSET VALUE OF A COMMON SHARE DURING THE PERIOD
AND ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
(B) BASED ON THE CHANGE IN MARKET PRICE OF A COMMON SHARE DURING THE PERIOD AND
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S REINVESTMENT PLAN.
(C) BEGINNING IN FISCAL 1995, THE EXPENSE RATIOS REFLECT THE EFFECT OF GROSS
EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIOS HAVE NOT
BEEN ADJUSTED.
(D) REPRESENTS TOTAL NET ASSETS DIVIDED BY REMARKETED PREFERRED STOCK.
(E) COMMENCEMENT OF OPERATIONS WAS NOVEMBER 27, 1992.
(F) ADJUSTED TO AN ANNUAL BASIS.
20
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (Unaudited)
AMERICAN MUNICIPAL TERM TRUST
JUNE 30, 1996
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
MUNICIPAL LONG-TERM SECURITIES (97.3%):
Colorado (1.5%):
Health Care Facility (FSA) (Prerefunded to 2/15/01),
7.25%, 2/15/16 ..................................... $ 1,925,000(e) 2,156,751
------------
District Of Columbia (3.4%):
General Obligation (MBIA), 6.75%, 6/1/08 .............. 4,400,000 4,719,968
------------
Florida (2.4%):
Jacksonville Electric Authority (Prerefunded to
10/1/00), 7.00%, 10/1/12 ............................. 3,000,000(e) 3,306,840
------------
Georgia (2.3%):
Municipal Electric Authority (MBIA) (Prerefunded to
1/1/01), 7.00%, 1/1/16 ............................... 2,840,000(e) 3,146,834
------------
Illinois (15.3%):
Chicago Motor Fuel Tax (AMBAC) (Prerefunded to 1/1/01),
7.10%, 1/1/11 ........................................ 1,525,000(e) 1,695,236
Development Financial Authority, 7.38%, 7/1/21 ........ 1,000,000 1,085,060
Health Facilities Authority, Evangelical Hospital
(FSA), 7.13%, 1/1/21 ................................. 2,500,000 2,697,850
Kankakee General Obligation (FGIC), 6.88%-7.00%,
5/1/11-5/1/16 ........................................ 3,000,000 3,270,720
Rochelle Water and Sewer Revenue, 7.15%, 5/1/14 ....... 1,000,000 1,074,890
State Dedicated Tax-Civic Center (AMBAC), 7.00%,
12/15/13 ............................................. 4,500,000 4,889,520
State Sales Tax Revenue (Prerefunded to 6/15/01),
6.90%, 6/15/12-6/15/13 ............................... 2,300,000(e) 2,551,160
State Sales Tax Revenue (Prerefunded to 6/15/99),
7.25%,
6/15/14 .............................................. 3,650,000(e) 3,993,246
------------
21,257,682
------------
Indiana (8.8%):
Hamilton S.E. School Building Corporation (AMBAC),
7.00%, 7/1/08 ........................................ 3,445,000 3,762,732
Marion County Convention Center (AMBAC), 7.00%,
6/1/10 ............................................... 345,000 378,993
Marion County Convention Center (AMBAC) (Prerefunded to
6/1/01), 7.00%, 6/1/10 ............................... 870,000(e) 968,623
Rockport Pollution Control Revenue (FGIC), 7.60%,
3/1/16 ............................................... 3,500,000 3,923,395
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
21
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
St. Joseph County Hospital Authority (MBIA), 7.00%,
8/15/11 ............................................ $ 3,000,000 3,260,100
------------
12,293,843
------------
Iowa (0.8%):
Dubuque Hospital Revenue, 6.88%, 1/1/12 ............... 1,000,000 1,055,660
------------
Louisiana (0.2%):
Parrish of St. Martin, Cargill Inc. Project, 6.63%,
10/1/12 .............................................. 200,000(c) 209,614
------------
Maine (2.4%):
Municipal Bond Bank (Prerefunded 11/1/01), 7.20%,
11/1/13 .............................................. 3,000,000(e) 3,375,210
------------
Minnesota (0.8%):
East Grand Forks Industrial Development Revenue, 8.00%,
4/1/11 ............................................... 1,000,000 1,070,900
------------
Nebraska (0.8%):
Hospital Lease Investment Financing (MBIA), 7.00%,
3/1/06 ............................................... 1,000,000 1,095,830
------------
Nevada (6.1%):
Clark County School District (MBIA) (Prerefunded to
6/1/01), 7.00%, 6/1/09 ............................... 3,000,000(e) 3,303,810
University of Nevada Revenue (AMBAC) (Prerefunded to
7/1/00), 7.13%, 7/1/16 ............................... 2,720,000(e) 2,994,666
Washoe County Limited Tax General Obligation,
Zero-Coupon (MBIA), 7.12%, 7/1/06 .................... 3,725,000(b) 2,168,397
------------
8,466,873
------------
Pennsylvania (3.1%):
Higher Education-Duquesne University (MBIA), 7.00%,
4/1/10 ............................................... 1,000,000 1,081,250
Sayre Healthcare Facility (AMBAC), 7.00%, 3/1/11 ...... 3,000,000 3,279,600
------------
4,360,850
------------
South Dakota (3.7%):
Health and Education Facility Revenue, 7.00%,
11/1/07 .............................................. 3,000,000 3,198,540
Rapid City Area School District (MBIA) (Prerefunded to
1/1/02), 7.20%, 1/1/11 ............................... 1,770,000(e) 1,971,214
------------
5,169,754
------------
Tennessee (2.3%):
Bristol Health and Education Facility (FGIC)
(Prerefunded to 3/1/01), 7.00%, 9/1/11 ............... 1,000,000(e) 1,110,870
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
22
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Housing Development Authority (FSA), 7.60%, 7/1/16 ...$ 2,050,000 2,160,146
------------
3,271,016
------------
Texas (18.2%):
Austin Utility System Revenue (MBIA) (Prerefunded to
5/15/01), 8.00%, 11/15/16 ............................ 500,000(e) 569,890
Corpus Christi Utility System Revenue (FGIC), 7.00%,
7/15/10 .............................................. 1,500,000 1,634,655
Harris County Health Facilities (FSA), 6.85%,
10/1/06 .............................................. 2,000,000 2,176,100
Harris County Toll Road, 6.75%, 8/1/14 ................ 1,500,000 1,610,835
Houston Hotel Occupancy (FGIC) (Prerefunded to 7/1/01),
7.00%, 7/1/15 ........................................ 4,700,000(e) 5,165,347
Houston Water and Sewer, Zero-Coupon (AMBAC), 7.14%,
8/15/06 .............................................. 4,285,000(b) 2,473,088
Lower Colorado River Authority (AMBAC), 7.00%,
1/1/11 ............................................... 415,000 453,628
Lower Colorado River Authority (AMBAC) (Prerefunded to
1/1/01), 7.00%, 1/1/11 ............................... 585,000(e) 648,203
Lower Colorado River Authority, Zero-Coupon (AMBAC),
7.17%, 1/1/06 ........................................ 765,000(b) 460,928
Municipal Power Agency, Zero-Coupon (AMBAC), 7.11%,
9/1/06 3,000,000(b) 1,727,280
San Antonio Electric and Gas, Zero-Coupon (FGIC),
7.11%, 2/1/06 ........................................ 3,000,000(b) 1,782,810
Trinity River Authority (AMBAC) (Prerefunded to
8/1/00), 7.10%, 8/1/16 ............................... 2,250,000(e) 2,449,192
Weatherford Utility System, Water Revenue (MBIA),
7.00%, 9/1/11 ........................................ 3,750,000 4,131,862
------------
25,283,818
------------
Washington (18.7%):
Chelan County Public Utilities District, 7.60%,
7/1/25 ............................................... 3,375,000 3,775,309
King and Snohomish Counties School District (FGIC)
(Prerefunded to 12/1/00), 7.00%, 12/1/09 ............. 1,450,000(e) 1,582,080
Port Longview Industrial Development Revenue, 7.45%,
2/1/13 ............................................... 5,400,000 5,844,150
Public Power Supply System (Prerefunded to 1/1/00),
7.25%, 7/1/15 ........................................ 1,435,000(e) 1,579,160
Public Power Supply System (Prerefunded to 1/1/01),
7.63%, 7/1/10 ........................................ 5,000,000(e) 5,654,900
Public Power Supply System (Prerefunded to 7/1/00),
7.38%, 7/1/12 ........................................ 1,550,000(e) 1,719,896
Public Power Supply System, Zero-Coupon (BIG), 7.15%,
7/1/06 ............................................... 1,500,000(b) 856,335
Public Power Supply System, Zero-Coupon (FGIC), 7.17%,
7/1/06 ............................................... 5,000,000(b) 2,854,450
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
23
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- ------------
<S> <C> <C>
Seattle Water Revenue (Prerefunded to 5/1/00), 7.25%,
5/1/17 ............................................. $ 2,000,000(e) 2,211,020
------------
26,077,300
------------
West Virginia (3.5%):
School Building Authority (MBIA) (Prerefunded to
7/1/00), 7.25%, 7/1/15 ............................... 4,000,000(e) 4,435,880
State Water Development Authority (CGIC), 7.00%,
11/1/11 .............................................. 500,000 551,900
------------
4,987,780
------------
Wisconsin (3.0%):
Health and Education Facilities-Waukesha Hospital
(AMBAC), 7.25%, 8/15/19 .............................. 105,000 113,843
Health and Education Facilities-Waukesha Hospital
(AMBAC) (Prerefunded to 8/15/00), 7.25%, 8/15/19 ..... 1,570,000(e) 1,744,835
Health and Education Facility (MBIA) (Prerefunded to
6/1/00), 7.00%, 6/1/20 ............................... 1,600,000(e) 1,757,392
Neenah Industrial Development Revenue, 6.75%,
6/1/12 ............................................... 650,000 685,432
------------
4,301,502
------------
Total Municipal Long-Term Securities
(cost: $122,991,690) ................................ 135,608,025
------------
MUNICIPAL SHORT-TERM SECURITIES (0.8%):
Illinois (0.7%):
Illinois Health Facilities Authority, 3.50%, 2/1/15 ... 900,000(d) 900,000
------------
Indiana (0.1%):
Indiana Hospital Equipment Finance Authority, 3.55%,
12/1/15 .............................................. 100,000(d) 100,000
------------
Total Municipal Short-Term Securities
(cost: $1,000,000) .................................. 1,000,000
------------
Total Investments in Securities
(cost: $123,991,690) (f) .......................... $ 136,608,025
------------
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
24
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
<TABLE>
<S> <C> <C>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(C) SECURITIES PURCHASED WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM AND MAY
BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER ACCREDITED INVESTORS.
(D) VARIABLE DEMAND RATE NOTE. INTEREST RATE VARIES TO REFLECT CURRENT MARKET
CONDITIONS; RATE SHOWN IS THE EFFECTIVE RATE ON JUNE 30, 1996. THE MATURITY
DATE SHOWN REPRESENTS FINAL MATURITY.
(E) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. THESE BONDS
ARE CALLED AND MATURE AT THE CALL DATE INDICATED.
(F) ALSO APPROXIMATES COST FOR FEDERAL INCOME TAX PURPOSES. THE AGGREGATE GROSS
UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED
ON THIS COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 12,622,917
GROSS UNREALIZED DEPRECIATION ...... (6,582)
-----------
NET UNREALIZED APPRECIATION .... $ 12,616,335
-----------
-----------
</TABLE>
25
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (Unaudited)
AMERICAN MUNICIPAL TERM TRUST II
JUNE 30, 1996
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
MUNICIPAL LONG-TERM SECURITIES (95.7%):
Florida (6.7%):
Manatee County, Zero-Coupon (MBIA), 6.91%, 10/1/07 ...$ 2,995,000(b) 1,625,956
Sumter County School District (CGIC), 7.15%,
11/1/15 .............................................. 2,045,000 2,417,660
University Community Hospital (FSA) (Prerefunded to
9/1/00), 7.50%, 9/1/11 ............................... 3,500,000(e) 3,932,740
-----------
7,976,356
-----------
Illinois (24.3%):
Belleville General Obligation (FGIC), 7.13%,
12/1/08 .............................................. 1,000,000 1,096,600
Carbondale General Obligation (FGIC) (Prerefunded to
5/1/01), 6.90%, 5/1/12 ............................... 3,200,000(e) 3,492,032
Central Lake County, Zero-Coupon (MBIA), 6.98%,
5/1/07 ............................................... 2,370,000(b) 1,295,418
Chicago Motor Fuel Tax (AMBAC) (Prerefunded to 1/1/01),
7.10%, 1/1/11 ........................................ 1,500,000(e) 1,667,445
Chicago Waste Water Revenue (FGIC) (Prerefunded to
11/15/00), 6.75%, 11/15/20 ........................... 2,000,000(e) 2,192,700
Commonwealth Edison Pollution Control (MBIA), 7.25%,
6/1/11 . 3,000,000 3,329,310
Cook County General Obligation (AMBAC) (Prerefunded to
11/1/01), 6.75%, 11/1/18 ............................. 5,000,000(e) 5,540,550
Decatur, Zero-Coupon (AMBAC), 6.98%, 10/1/07 .......... 1,250,000(b) 667,550
Health Facilities Authority, Evangelical Hospital,
6.75%, 4/15/12-4/15/17 ............................... 3,500,000 3,630,460
Kane County Public Building Authority (MBIA), 6.88%,
12/1/10 .............................................. 1,000,000 1,053,640
Kendall, Kane, and Will Counties, Zero-Coupon (FGIC),
6.96%, 3/1/07 ........................................ 975,000(b) 537,898
Lake County Water and Sewer System (AMBAC) (Prerefunded
to 12/1/01), 6.75%, 12/1/08-12/1/09 .................. 4,215,000(e) 4,610,662
-----------
29,114,265
-----------
Indiana (12.4%):
Boonville School Building Corporation, 6.90%,
7/1/09 ............................................... 2,000,000 2,203,460
Indiana University, Zero-Coupon (AMBAC), 7.07%,
8/1/07 ............................................... 3,180,000(b) 1,717,804
Lake Central Multi-District School Building Corporation
(Prerefunded to 7/15/01), 7.00%, 1/15/14-1/15/18 ..... 2,500,000(e) 2,777,850
Noblesville/Hamilton County School Building Corporation
(Prerefunded to 2/1/01), 7.00%, 2/1/13 ............... 1,000,000(e) 1,107,690
Port Commission, Cargill Inc. Project, 6.88%,
5/1/12 ............................................... 450,000(c) 484,960
Purdue University (AMBAC) (Prerefunded to 7/1/01),
7.00%, 7/1/14 ........................................ 3,000,000(e) 3,344,430
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
26
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST II
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
St. Joseph County Hospital Authority (MBIA), 7.00%,
12/1/12 ............................................ $ 3,000,000 3,246,510
-----------
14,882,704
-----------
Iowa (2.9%):
Mason City Hospital Facilities (FSA), 6.88%,
8/15/09 .............................................. 1,265,000 1,370,046
Polk County Health Facilities (MBIA), 7.10%,
11/1/09 .............................................. 1,895,000 2,086,907
-----------
3,456,953
-----------
Kentucky (0.8%):
Owensboro Electric Light and Power, Zero-Coupon
(AMBAC), 6.91%, 1/1/07 ............................... 1,775,000(b) 1,005,715
-----------
Louisiana (2.5%):
New Orleans General Obligation, Zero-Coupon (AMBAC),
7.01%, 9/1/07 ........................................ 5,000,000(b) 2,703,150
Parrish of St. Martin, Cargill Inc. Project, 6.63%,
10/1/12 .............................................. 300,000(c) 314,421
-----------
3,017,571
-----------
Michigan (0.9%):
State Housing Development Authority (FSA), 6.85%,
10/15/18 ............................................. 1,000,000 1,046,000
-----------
Montana (2.7%):
State Board of Investment, 6.88%, 6/1/20 .............. 845,000 923,754
State Board of Investment (MBIA), 6.88%, 6/1/20 ....... 2,155,000 2,319,730
-----------
3,243,484
-----------
New Hampshire (0.8%):
New Hampshire Single Family Housing Authority, 5.85%,
7/1/10 . 1,000,000 994,330
-----------
New Jersey (1.8%):
State Educational Facilities Authority, 6.88%,
7/1/10 ............................................... 2,000,000 2,117,060
-----------
North Dakota (4.8%):
Bismark Hospital Revenue (AMBAC), 6.90%, 5/1/06 ....... 4,300,000 4,667,349
Grand Forks Health Care Authority (MBIA), 6.63%,
12/1/10 .............................................. 1,000,000 1,074,560
-----------
5,741,909
-----------
South Carolina (3.2%):
Lexington County Health Services (FSA), 6.75%,
10/1/18 .............................................. 3,600,000 3,840,624
-----------
Texas (10.9%):
Harris County Health Facilities (FSA), 7.00%,
10/1/14 .............................................. 2,225,000 2,412,523
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
27
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST II
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
Houston Hotel Occupancy (FGIC) (Prerefunded to 7/1/01),
7.00%, 7/1/15 ...................................... $ 5,095,000(e) 5,599,456
Houston Water and Sewer, Zero-Coupon (AMBAC), 6.91%,
12/1/07 .............................................. 3,000,000(b) 1,596,180
Sabine River Authority, 8.25%, 10/1/20 ................ 3,200,000 3,468,576
-----------
13,076,735
-----------
Washington (15.8%):
Chelan County Public Utilities District, 7.60%,
7/1/25 ............................................... 3,000,000 3,355,830
Clark County Public Utility District (FGIC), 6.50%,
1/1/11 ............................................... 2,000,000 2,096,480
King and Snohomish Counties School District (FGIC),
6.63%, 12/1/12 ....................................... 900,000 946,431
Public Power Supply System, 6.75%-7.00%, 7/1/11 ....... 2,050,000 2,143,324
Public Power Supply System (Prerefunded to 1/1/00),
7.25%, 7/1/15 ........................................ 3,875,000(e) 4,264,283
Public Power Supply System (Prerefunded to 7/1/00),
7.38%, 7/1/12 ........................................ 4,525,000(e) 5,020,985
Snohomish County Solid Waste Revenue (MBIA), 7.00%,
12/1/10 1,000,000 1,098,480
-----------
18,925,813
-----------
West Virginia (4.1%):
School Building Authority (MBIA), 6.75%, 7/1/17 ....... 2,500,000 2,651,725
State Water Development Authority, 7.30%, 11/1/11 ..... 1,000,000 1,126,500
State Water Development Authority (Prerefunded to
11/1/01), 7.40%, 11/1/19 ............................. 1,000,000(e) 1,130,740
-----------
4,908,965
-----------
Wisconsin (1.1%):
Neenah Industrial Development Revenue, 6.75%,
6/1/12 ............................................... 1,150,000 1,212,687
-----------
Total Municipal Long-Term Securities
(cost: $104,998,607) ................................ 114,561,171
-----------
MUNICIPAL SHORT-TERM SECURITIES (2.7%):
Illinois (0.7%):
Illinois Health Facilities Authority, 3.55%, 1/1/16 ... 800,000(d) 800,000
-----------
Indiana (0.7%):
Indiana Hospital Equipment Finance Authority, 3.55%,
12/1/15 .............................................. 850,000(d) 850,000
-----------
Michigan (0.9%):
Michigan Hospital Building Authority, 3.55%, 7/1/15 ... 1,135,000(d) 1,135,000
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
28
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST II
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
Wisconsin (0.3%):
Wisconsin State Health Facility, 3.45%, 1/1/16 ...... $ 400,000(d) 400,000
-----------
Total Municipal Short-Term Securities
(cost: $3,185,000) .................................. 3,185,000
-----------
Total Investments in Securities
(cost: $108,183,607) (f) .......................... $ 117,746,171
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(C) SECURITIES PURCHASED WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM AND MAY
BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER ACCREDITED INVESTORS.
(D) VARIABLE DEMAND RATE NOTE. INTEREST RATE VARIES TO REFLECT CURRENT MARKET
CONDITIONS; RATE SHOWN IS THE EFFECTIVE RATE ON JUNE 30, 1996. THE MATURITY
DATE SHOWN REPRESENTS FINAL MATURITY.
(E) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. THESE BONDS
ARE CALLED AND MATURE AT THE CALL DATE INDICATED.
(F) ALSO APPROXIMATES COST FOR FEDERAL INCOME TAX PURPOSES. THE AGGREGATE GROSS
UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED
ON THIS COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 9,562,564
GROSS UNREALIZED DEPRECIATION ...... 0
-----------
NET UNREALIZED APPRECIATION .... $ 9,562,564
-----------
-----------
</TABLE>
29
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (Unaudited)
AMERICAN MUNICIPAL TERM TRUST III
JUNE 30, 1996
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
MUNICIPAL LONG-TERM SECURITIES (98.1%):
Alabama (0.6%):
Agricultural and Mechanical University Revenue (MBIA),
6.45%, 11/1/17 ..................................... $ 500,000 524,360
-----------
Colorado (1.2%):
Snowmass Village Multifamily Housing (FSA), 6.25%,
12/15/16 ............................................. 1,000,000 1,019,030
-----------
District Of Columbia (1.2%):
Catholic University of America (Connie Lee), 6.30%,
10/1/13 .............................................. 1,000,000 1,017,050
-----------
Florida (0.6%):
Broward County School District, Zero-Coupon (MBIA),
6.55%, 2/15/08 ....................................... 1,000,000(b) 525,450
-----------
Illinois (20.7%):
Chicago Waste Water Revenue (FGIC), 6.35%, 1/1/22 ..... 1,000,000 1,092,510
Health Facility-Alexian Brothers Medical Center (MBIA),
6.38%, 1/1/15 ........................................ 1,125,000 1,154,633
Health Facility-Elmhurst Memorial Hospital (FGIC),
6.50%, 1/1/12 1,190,000 1,237,552
Health Facility-Lutheran General Systems (FSA), 6.13%,
4/1/12 ............................................... 1,000,000 1,017,160
Health Facility-Wyndemere Retirement Home (MBIA),
5.75%, 11/1/22 ....................................... 1,000,000 956,200
Henry Hospital District (AMBAC), 6.60%, 12/1/17 ....... 2,000,000 2,076,560
Lake County Housing and Finance Corporation (FHA),
6.70%, 11/1/14 ....................................... 2,000,000 2,057,880
Rochelle Water and Sewer Revenue, 7.15%, 5/1/14 ....... 2,000,000 2,149,780
State General Obligation (CGIC), 6.25%, 10/1/12 ....... 3,370,000 3,484,782
State Sales Tax Revenue, 5.50%, 6/15/20 ............... 2,000,000 1,879,740
-----------
17,106,797
-----------
Indiana (19.9%):
Crawfordsville School Building Corporation, 6.25%,
7/1/11 ............................................... 1,500,000 1,564,755
Freemont Middle School Building (AMBAC) (Prerefunded to
3/15/02), 6.75%, 3/15/13 ............................. 3,000,000(d) 3,307,980
Health Facilities-Community Hospital Project (AMBAC),
5.75%, 9/1/15 ........................................ 1,750,000 1,705,235
Health Facilities-Community Hospital Project (MBIA),
6.40%, 5/1/12 ........................................ 5,000,000 5,200,750
Indianapolis Public Improvement Bonds, 6.75%,
2/1/20 ............................................... 2,250,000 2,426,625
Lake County Redevelopment Authority, 6.45%, 2/1/11 .... 1,600,000 1,694,992
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
30
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST III
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
Patoka Lake Regional Water and Sewer District (AMBAC),
6.45%, 1/1/15 ...................................... $ 500,000 520,730
-----------
16,421,067
-----------
Iowa (1.5%):
Cedar Rapids Hospital Facilities (FGIC), 6.13%,
8/15/13 .............................................. 1,200,000 1,231,092
-----------
Kansas (1.6%):
Kansas City Utility Systems, Zero-Coupon (AMBAC),
6.40%, 3/1/08 ........................................ 2,575,000(b) 1,352,991
-----------
Maine (2.6%):
Water and Sewer Revenue, 6.60%, 11/1/15 ............... 2,000,000 2,129,600
-----------
Michigan (1.8%):
Municipal Bond Authority Revenue, 6.50%, 5/1/16 ....... 1,000,000 1,049,390
State Building Authority, 6.25%, 10/1/12 .............. 400,000 411,240
-----------
1,460,630
-----------
New Mexico (1.3%):
Las Cruces Health Facility-Evangelical Lutheran Project
(CGIC), 6.45%, 12/1/17 ............................... 1,000,000 1,041,770
-----------
North Dakota (3.8%):
Mercer County Pollution Control Revenue (AMBAC), 7.20%,
6/30/13 .............................................. 2,700,000 3,159,702
-----------
Rhode Island (1.5%):
State Health and Education Building Corporation (Connie
Lee), 6.38%, 4/1/12 .................................. 1,200,000 1,237,176
-----------
South Carolina (2.0%):
Piedmont Municipal Power Agency (MBIA), 6.30%,
1/1/14 ............................................... 1,600,000 1,655,840
-----------
South Dakota (7.4%):
Heartland Consumers Power District (FSA), 6.00%,
1/1/12-1/1/17 . 2,085,000 2,160,762
State Building Authority (AMBAC) (Escrowed to
maturity), 6.63%, 9/1/12 ............................. 3,600,000 3,941,640
-----------
6,102,402
-----------
Texas (19.7%):
Austin Utility System Revenue, Zero-Coupon (MBIA),
6.53%, 11/15/08 ...................................... 5,000,000(b) 2,493,300
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
31
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
AMERICAN MUNICIPAL TERM TRUST III
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
Houston Water and Sewer Revenue (FSA), 6.38%,
12/1/14 ............................................ $ 2,000,000 2,052,240
Montgomery County Hospital District (FSA) (Prerefunded
to 4/1/02), 6.63%, 4/1/17 ............................ 3,300,000(d) 3,645,378
Pflugerville Independent School District, 5.75%,
8/15/15 .............................................. 975,000 975,868
San Antonio Electric and Gas, Zero-Coupon (FGIC),
6.40%, 2/1/08 ........................................ 4,500,000(b) 2,345,715
San Antonio Water System Revenue (MBIA), 6.50%,
5/15/10 .............................................. 3,000,000 3,178,710
State Capital Appreciation, Zero-Coupon (FGIC), 6.43%,
4/1/08 ............................................... 3,100,000(b) 1,600,871
-----------
16,292,082
-----------
Washington (7.5%):
Public Power Supply System, 6.25%-6.50%,
7/1/12-7/1/18 ........................................ 6,070,000 6,159,968
-----------
West Virginia (3.2%):
Clarksburg Water Revenue (Asset Guaranty), 6.25%,
9/1/14 ............................................... 2,620,000 2,622,201
-----------
Total Municipal Long-Term Securities
(cost: $76,381,345) ................................. 81,059,208
-----------
MUNICIPAL SHORT-TERM SECURITIES (0.2%):
Indiana (0.2%):
Indiana Hospital Equipment Finance Authority, 3.55%,
12/1/15
(cost: $200,000) ..................................... 200,000(c) 200,000
-----------
Total Investments in Securities
(cost: $76,581,345) (e) ........................... $ 81,259,208
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
32
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
<TABLE>
<S> <C> <C>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(C) VARIABLE DEMAND RATE NOTE. INTEREST RATE VARIES TO REFLECT CURRENT MARKET
CONDITIONS; RATE SHOWN IS THE EFFECTIVE RATE ON JUNE 30, 1996. THE MATURITY
DATE SHOWN REPRESENTS FINAL MATURITY.
(D) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. THESE BONDS
ARE CALLED AND MATURE AT THE CALL DATE INDICATED.
(E) ALSO APPROXIMATES COST FOR FEDERAL INCOME TAX PURPOSES. THE AGGREGATE GROSS
UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED
ON THIS COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 4,677,863
GROSS UNREALIZED DEPRECIATION ...... 0
-----------
NET UNREALIZED APPRECIATION .... $ 4,677,863
-----------
-----------
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
DIRECTORS David T. Bennett, CHAIRMAN, HIGHLAND HOMES, INC.,
USL PRODUCTS, INC., KIEFER BUILT, INC., OF
COUNSEL, GRAY, PLANT, MOOTY, MOOTY & BENNETT,
P.A.
Jaye F. Dyer, PRESIDENT, DYER MANAGEMENT COMPANY
William H. Ellis, PRESIDENT, PIPER JAFFRAY
COMPANIES INC., PIPER CAPITAL MANAGEMENT
INCORPORATED
Karol D. Emmerich, PRESIDENT, THE PARACLETE GROUP
Luella G. Goldberg, DIRECTOR, TCF FINANCIAL,
RELIASTAR FINANCIAL CORP., HORMEL FOODS CORP.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL
EQUITY FUNDS
OFFICERS William H. Ellis, CHAIRMAN OF THE BOARD
Paul A. Dow, PRESIDENT
Robert H. Nelson, SENIOR VICE PRESIDENT AND
TREASURER
Susan S. Miley, SECRETARY
INVESTMENT ADVISER Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804
CUSTODIAN AND Investors Fiduciary Trust Company
TRANSFER AGENT 127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
LEGAL COUNSEL Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
34
<PAGE>
----------------
PIPER CAPITAL BULK RATE
MANAGEMENT U.S. POSTAGE
PAID
Permit No. 3008
PIPER CAPITAL MANAGEMENT INCORPORATED Mpls., MN
222 SOUTH NINTH STREET ----------------
MINNEAPOLIS, MN 55402-3804
THIS DOCUMENT IS PRINTED ON PAPER MADE FROM
[LOGO] 100% TOTAL RECOVERED FIBER, INCLUDING 15% POST-CONSUMER WASTE.
In an effort to reduce costs to our shareholders, we have
implemented a process to reduce duplicate mailings of
the fund's shareholder reports. This householding
process should allow us to mail one report to each
address where one or more registered shareholders with
the same last name reside. If you would like to have
additional reports mailed to your address, please call our
Shareholder Services area at 1 800 866-7778, or mail
your request to:
Piper Capital Management
Attn: Communications Department
222 South Ninth Street
Minneapolis, MN 55402-3804
#21200 8/1996 188-96
