<PAGE>
---------------------------
1999
SEMIANNUAL REPORT
---------------------------
[GRAPHIC]
MINNESOTA MUNICIPAL
TERM TRUSTS
MNA
[GRAPHIC] MNB
[LOGO] FIRST AMERICAN
ASSET MANAGEMENT
<PAGE>
[LOGO] FIRST AMERICAN
ASSET MANAGEMENT
CONTENTS
2 Fund Overview
7 Financial Statements and Notes
Investments in Securities
18 MNA
22 MNB
MINNESOTA MUNICIPAL TERM TRUSTS
PRIMARY INVESTMENTS
Investment-grade, tax-exempt Minnesota municipal obligations including municipal
zero-coupon securities.
FUND OBJECTIVE
Minnesota Municipal Term Trust (MNA) and Minnesota Municipal Term Trust II (MNB)
are non-diversified, closed-end management investment companies. The investment
objectives of MNA and MNB are to provide high current income exempt from regular
federal income tax and Minnesota personal income tax and to return $10 per share
to investors on or before 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. Each fund's income
may be subject to federal and/or state of Minnesota alternative minimum taxes.
Investors should consult their tax advisors. As with other investment companies,
there can be no assurance that either fund will achieve its objective.
------------------------------------------------------
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
------------------------------------------------------
<PAGE>
AVERAGE ANNUALIZED TOTAL RETURNS
Based on net asset value for the periods ended June 30, 1999
[GRAPH]
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION
<S> <C> <C> <C>
MINNESOTA MUNICIPAL TERM TRUST 2.50% 6.69% 7.74%
(MNA, inception 9/26/1991)
MINNESOTA MUNICIPAL TERM TRUST II 2.02% 7.18% 7.40%
(MNB, inception 4/24/1992)
</TABLE>
All net asset value total returns are through June 30, 1999, and reflect the
reinvestment of distributions but not sales charges. Net asset value (NAV)-based
performance is used to measure investment management results. As noted in
earlier shareholder reports, we no longer compare the funds' NAV performance to
a market benchmark. This is because our primary goal is to meet the funds'
investment objectives of providing high current income exempt from regular
federal and state of Minnesota personal income tax and returning $10 per share
to investors at the funds' termination dates.
Average annualized total returns based on the change in market price for the
one-year, five-year and since-inception periods ended June 30, 1999, were 5.46%,
7.79% and 6.95% for MNA and 2.57%, 7.21% and 6.40% for MNB. These returns assume
reinvestment of all distributions and reflect sales charges on those
distributions as described in the funds' dividend reinvestment plan, but not on
initial purchases.
PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THESE INVESTMENTS. NEITHER SAFETY OF
PRINCIPAL NOR STABILITY OF INCOME IS GUARANTEED. 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. Closed-end funds, such as these funds, often
trade at discounts to net asset value. Therefore, you may be unable to realize
the full net asset value of your shares when you sell.
1 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FUND OVERVIEW
FUND MANAGEMENT
DOUG WHITE, CFA,
is responsible for the management of the Minnesota Municipal Term Trusts. He has
16 years of financial experience.
AUGUST 15, 1999
WE ARE PLEASED THAT THE MINNESOTA MUNICIPAL TERM TRUSTS (MNA AND MNB) REMAIN ON
TARGET TO MEET THEIR INVESTMENT OBJECTIVES OF PROVIDING HIGH TAX-EXEMPT INCOME
AND RETURNING $10 PER SHARE TO INVESTORS ON OR SHORTLY BEFORE THEIR TERMINATION
DATES. For the six months ended June 30, 1999, the funds continued to earn more
than their monthly common and preferred stock dividends and add to their
dividend reserves. The funds' net asset values remain above the $10 per share
objective. The net asset values for MNA and MNB as of June 30, 1999 were $10.72
and $10.52, respectively.
IN THE FIRST HALF OF THIS YEAR, MNA'S DIVIDEND RESERVE REACHED A LEVEL WHERE THE
FUND COULD NOT CONTINUE TO ACCUMULATE ADDITIONAL AMOUNTS. As a result, MNA paid
out an additional dividend in May. In the future, if the fund earns more than
its monthly common and preferred stock dividend, it may again become necessary
to pay the excess out as additional dividends rather than adding to the dividend
reserve.
INTEREST RATES HAVE RISEN THROUGHOUT MOST OF 1999. The yield on a 10-year U.S.
Treasury note rose from 4.65% on December 31, 1998, to 5.78% on June 30, 1999,
and the 10-year AAA municipal yield rose from 4.1% to 4.8%. This rise in rates
was largely the result of increased inflationary concerns during the eighth year
of what is becoming the longest post-war economic expansion. As a result of this
rise in rates, refundings are down by nearly 50% compared to 1998 levels and
total new issuance is down almost 25% nationally
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
BONDS MATURING LESS THAN A YEAR BEYOND THE FUNDS' TERMINATION DATES
- --------------------------------------------------------------------------------
MNA MNB
Inception Inception
9/26/1991 4/24/1992
<S> <C> <C>
At the Fund's Inception 0% 0%
- --------------------------------------------------------------------------------
As of June 30, 1999 65% 62%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
2 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FUND OVERVIEW CONTINUED
and 30% in Minnesota. As a result of continued strength in the economy, credit
quality in the municipals market remains strong, with upgrades outpacing
downgrades in the first half of 1999 by a ratio of more than four to one.
Minnesota's diverse economy remains especially strong as shown by unemployment
rates that are substantially below the national average.
THE DECREASED SUPPLY OF MUNICIPALS SLOWED OUR STRATEGY OF SELLING LONGER
MATURITY BONDS IN FAVOR OF THOSE CLOSER TO THE FUNDS' TERMINATION DATES. As
shown in the table on page 2, the percentage of bonds with maturity or refund
dates less than a year beyond the funds' termination dates continues to
increase, although at a slower pace. Please remember that restructuring may
generate capital gains, which are then distributed to shareholders annually.
Restructuring proceeds will also typically be reinvested at lower interest
rates, decreasing fund income.
WE EXPECT THAT THE FUNDS' NET ASSET VALUES WILL DECLINE AS THE FUNDS NEAR THEIR
TERMINATION DATES. Several events could cause this to occur. A number of bonds
currently have market values in excess of their maturity or refunding prices. As
the maturity and/or refunding dates of these bonds approach, their market prices
will converge toward prices that are at or near their maturity or refunding
prices.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
DISTRIBUTION HISTORY SINCE INCEPTION
- ---------------------------------------------------------------------------------------
MNA MNB
Inception Inception
9/26/1991 4/24/1992
<S> <C> <C>
Total Monthly Income Distributions Through June 30, 1999
- ----------------------------------------------------------------------------------------
Common Shareholders $4.76 $4.13
- ----------------------------------------------------------------------------------------
Preferred Shareholders (On a Common Share Basis) $1.16 $1.06
- ----------------------------------------------------------------------------------------
Total Capital Gains Distributions to Common
Shareholders Through June 30, 1999 $0.16 $0.15
- ----------------------------------------------------------------------------------------
</TABLE>
3 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FUND OVERVIEW CONTINUED
IN ADDITION, AS THE FUNDS APPROACH TERMINATION, AND AS OPPORTUNITIES ARISE, WE
MAY CONTINUE TO SELL LONGER MATURITY BONDS IN FAVOR OF BONDS WITH SHORTER
MATURITIES AND LOWER COUPONS THAT COME DUE CLOSER TO THE FUNDS' TERMINATION
DATES. Any gains realized as a result of these sales will be distributed to
shareholders, reducing net asset value. If the shorter-maturity bonds pay
insufficient income to maintain our current dividends, the funds' dividend
reserves may be used to supplement common and/or preferred stock dividends. See
the net asset value summary chart for each fund's current accumulated realized
gains, unrealized appreciation and current dividend reserve.
SHAREHOLDERS ALSO SHOULD REMEMBER THAT THE FUNDS ARE ALWAYS SUBJECT TO INTEREST
RATE RISK AND CREDIT RISK, WHICH CAN HAVE AN IMPACT ON NET ASSET VALUE. However,
we are optimistic about achieving the funds' objectives and do not anticipate
events that would cause us to change the funds' investment strategy as they move
toward termination.
THANK YOU FOR YOUR INVESTMENT IN THE MINNESOTA MUNICIPAL TERM TRUSTS. We remain
committed to providing you with quality service and look forward to helping you
achieve your investment goals.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NET ASSET VALUE SUMMARY OF COMMON SHARES
- ------------------------------------------------------------------------------------
MNA MNB
Inception Inception
9/26/1991 4/24/1992
<S> <C> <C>
Initial Offering Price $10.00 $10.00
- -------------------------------------------------------------------------------------
Initial Offering and Underwriting Expenses
(Common and Preferred Stock) -$0.66 -$0.67
- -------------------------------------------------------------------------------------
Accumulated Realized Gains or Losses at 6/30/1999 -$0.01 +$0.04
- -------------------------------------------------------------------------------------
SUBTOTAL $9.33 $9.37
- -------------------------------------------------------------------------------------
Dividend Reserve
(Undistributed Net Investment Income) at 6/30/1999 +$0.75 +$0.59
- -------------------------------------------------------------------------------------
Unrealized Appreciation on Investments at 6/30/1999 +$0.64 +$0.56
- -------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ON 6/30/1999 $10.72 $10.52
- -------------------------------------------------------------------------------------
</TABLE>
4 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FUND OVERVIEW CONTINUED
[GRAPH]
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- -------------------------------------------------------------------------------
As a percentage of total assets on June 30, 1999
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL TERM TRUST
<S> <C>
General Obligations 22%
Health Care Revenue 20%
Housing Revenue 18%
Utility Revenue 17%
Tax Revenue 5%
Certificates of Participation 4%
Short-Term Securities 4%
IDR Pollution Control Revenue 3%
Building Revenue 2%
Electric Revenue 2%
Other Assets 2%
Education Revenue 1%
<CAPTION>
MINNESOTA MUNICIPAL TERM TRUST II
<S> <C>
General Obligations 21%
Health Care Revenue 14%
Pollution Control Revenue 12%
Utility Revenue 12%
Housing Revenue 11%
Electric Revenue 10%
Building Revenue 6%
Education Revenue 6%
Industrial Development Revenue 4%
Short-Term Securities 2%
Other Assets 2%
</TABLE>
- -------------------------------------------------------------------------------
5 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FUND OVERVIEW CONTINUED
- -------------------------------------------------------------------------------
PREFERRED STOCK
- -------------------------------------------------------------------------------
The preferred stock issued by MNA and MNB 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.
- -------------------------------------------------------------------------------
6 1999 SEMIANNUAL REPORT MINNESOTA MUNICIPAL TERM TRUSTS
<PAGE>
FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES June 30, 1999
................................................................................
<TABLE>
<CAPTION>
MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL
TERM TRUST TERM TRUST II
------------- --------------
<S> <C> <C>
ASSETS:
Investments in securities at market value* (note 2) ........ $ 94,595,208 $ 58,225,369
Cash in bank on demand deposit ............................. 32,350 27,496
Accrued interest receivable ................................ 1,484,749 972,957
Other assets ............................................... 20,530 13,243
------------- --------------
Total assets ............................................. 96,132,837 59,239,065
------------- --------------
LIABILITIES:
Preferred stock dividends payable (note 3) ................. 3,156 10,980
Payable for investment securities purchased on a when-issued
basis (note 2) ........................................... 5,861,109 5,473,888
Accrued investment management fee .......................... 18,581 11,161
Accrued remarketing agent fee .............................. 5,704 4,409
Accrued administrative fee ................................. 11,149 6,697
------------- --------------
Total liabilities ........................................ 5,899,699 5,507,135
------------- --------------
Net assets applicable to outstanding capital stock ....... $ 90,233,138 $ 53,731,930
------------- --------------
------------- --------------
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital (common and
preferred stock) ......................................... $ 82,335,219 $ 49,636,308
Undistributed net investment income ........................ 4,286,741 2,029,158
Accumulated net realized gain (loss) on investments ........ (51,870) 143,583
Net unrealized appreciation of investments ................. 3,663,048 1,922,881
------------- --------------
Total - representing net assets applicable to outstanding
capital stock .......................................... $ 90,233,138 $ 53,731,930
------------- --------------
------------- --------------
* Investments in securities at identified cost ............. $ 90,932,160 $ 56,302,488
------------- --------------
------------- --------------
NET ASSET VALUE AND MARKET PRICE OF COMMON STOCK:
Net assets applicable to common stock ...................... $ 61,433,138 $ 36,381,930
Shares of common stock outstanding (authorized 200 million
shares for each fund of $0.01 par value) ................. 5,732,710 3,460,000
Net asset value ............................................ $ 10.72 $ 10.52
Market price ............................................... $ 10.63 $ 10.38
LIQUIDATION PREFERENCE OF PREFERRED STOCK:
Net assets applicable to preferred stock (note 3) .......... $ 28,800,000 $ 17,350,000
Shares of preferred stock outstanding (authorized 1 million
shares for each fund) .................................... 1,152 694
Liquidation preference per share ........................... $ 25,000 $ 25,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
1999 Semiannual Report 7 Minnesota Municipal Term Trusts
<PAGE>
FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 1999
................................................................................
<TABLE>
<CAPTION>
MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL
TERM TRUST TERM TRUST II
------------ -------------
<S> <C> <C>
INCOME:
Interest .................................................. $ 2,589,121 $ 1,493,499
------------ -------------
EXPENSES (NOTE 5):
Investment management fee .................................. 113,948 67,984
Administrative fee ......................................... 68,369 40,790
Remarketing agent fee ...................................... 35,704 21,510
Custodian and accounting fees .............................. 32,507 23,771
Transfer agent fees ........................................ 1,240 1,091
Reports to shareholders .................................... 11,356 11,356
Directors' fees ............................................ 1,488 1,488
Audit and legal fees ....................................... 20,730 20,731
Other expenses ............................................. 18,397 11,313
------------ -------------
Total expenses ........................................... 303,739 200,034
Less expenses paid indirectly .......................... (4,336) (3,823)
------------ -------------
Total net expenses ....................................... 299,403 196,211
------------ -------------
Net investment income .................................... 2,289,718 1,297,288
------------ -------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on investments (note 4) ........... (70,031) 139,370
Net change in unrealized appreciation or depreciation of
investments .............................................. (2,146,736) (1,680,168)
------------ -------------
Net loss on investments .................................. (2,216,767) (1,540,798)
------------ -------------
Net increase (decrease) in net assets resulting from
operations ........................................... $ 72,951 $ (243,510)
------------ -------------
------------ -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
1999 Semiannual Report 8 Minnesota Municipal Term Trusts
<PAGE>
FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL MINNESOTA MUNICIPAL
TERM TRUST TERM TRUST II
------------------------------ -------------------------------
SIX MONTHS SIX MONTHS
ENDED 6/30/99 YEAR ENDED ENDED 6/30/99 YEAR ENDED
(UNAUDITED) 12/31/98 (UNAUDITED) 12/31/98
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 2,289,718 $ 4,912,766 $ 1,297,288 $ 2,753,880
Net realized gain (loss) on investments .................... (70,031) 736,084 139,370 280,832
Net change in unrealized appreciation or depreciation of
investments .............................................. (2,146,736) (1,134,304) (1,680,168) (218,871)
-------------- ------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations ............................................. 72,951 4,514,546 (243,510) 2,815,841
-------------- ------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Common stock dividends ................................... (1,986,383) (3,771,550) (851,160) (2,052,472)
Preferred stock dividends ................................ (411,440) (875,579) (235,561) (526,361)
From net realized gains:
Common stock dividends ................................... -- (600,788) -- (287,872)
Preferred stock dividends ................................ (1,292) (160,212) -- (74,802)
-------------- ------------- -------------- --------------
Total distributions ...................................... (2,399,115) (5,408,129) (1,086,721) (2,941,507)
-------------- ------------- -------------- --------------
Total decrease in net assets ........................... (2,326,164) (893,583) (1,330,231) (125,666)
Net assets at beginning of period .......................... 92,559,302 93,452,885 55,062,161 55,187,827
-------------- ------------- -------------- --------------
Net assets at end of period ................................ $ 90,233,138 $ 92,559,302 $ 53,731,930 $ 55,062,161
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
Undistributed net investment income ........................ $ 4,286,741 $ 4,394,846 $ 2,029,158 $ 1,818,591
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
1999 Semiannual Report 9 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
............................
Minnesota Municipal Term Trust Inc. (MNA) and Minnesota
Municipal Term Trust Inc. II (MNB) (the funds) are registered
under the Investment Company Act of 1940 (as amended) as
non-diversified, closed-end management investment companies. MNA
and MNB expect to terminate operations and distribute all of
their net assets to shareholders on or shortly before April 15,
2002, and April 15, 2003, respectively; although termination may
be extended to a date no later than April 15, 2007, and April
15, 2008, respectively. The funds invest primarily in investment
grade Minnesota municipal obligations including municipal
zero-coupon securities. Shares of Minnesota Municipal Term Trust
Inc. are listed on the New York Stock Exchange under the symbol
MNA; shares of Minnesota Municipal Term Trust Inc. II are listed
on the American Stock Exchange under the symbol MNB.
The funds concentrate their investments in Minnesota and,
therefore, may have more credit risk related to the economic
conditions of Minnesota than portfolios with a broader
geographical diversification.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
............................
INVESTMENTS IN SECURITIES
Portfolio securities for which market quotations are readily
available are valued at current market value. If market
quotations or valuations are not readily available, or if such
quotations or valuations are believed to be inaccurate,
unreliable or not reflective of market value, portfolio
securities are valued according to procedures adopted by the
funds' board of directors in good faith at "fair value", that
is, a price that the fund might reasonably expect to receive for
the security or other asset upon its current sale.
The current market value of certain fixed income securities is
provided by an independent pricing service. Fixed income
securities for which prices are not available from an
independent
- --------------------------------------------------------------------------------
1999 Semiannual Report 10 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
pricing service but where an active market exists are valued
using market quotations obtained from one or more dealers that
make markets in the securities or from a widely-used quotation
system. 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 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, is recorded on an
accrual basis.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been purchased by
the funds on a when-issued or forward-commitment 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. The funds segregate, with their custodian,
assets with a market value equal to the amount of their purchase
commitments. The purchase of securities on a when-issued or
forward-commitment basis may increase the volatility of the
funds' net asset values if the funds make such purchases while
remaining substantially fully invested. As of June 30, 1999,
Minnesota Municipal Term Trust Inc. and Minnesota Municipal Term
Trust Inc. II, had entered into outstanding when-issued or
forward commitments of $5,861,109 and $5,473,888, respectively.
FEDERAL TAXES
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 typically required. However,
- --------------------------------------------------------------------------------
1999 Semiannual Report 11 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
Minnesota Municipal Term Trust Inc. and Minnesota Municipal Term
Trust II Inc. incurred federal excise taxes of $736 and $573,
respectively, during the 1998 excise tax year.
Net investment income and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of
market discount amortization and the non-deductibility of excise
tax payments made. 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 the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains or
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. Net realized gains distributions, if any,
will be made 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.
REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain broker-
dealers, the funds, along with other affiliated registered
investment companies, may transfer uninvested cash balances to a
joint trading account, the daily aggregate of which is invested
in repurchase agreements secured by U.S. government or agency
obligations. Securities pledged as collateral for all individual
and joint repurchase agreements are held by the funds' custodian
bank until maturity of the repurchase agreement. Provisions for
- --------------------------------------------------------------------------------
1999 Semiannual Report 12 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
all agreements ensure that the daily market value of the
collateral is in excess of the repurchase amount, including
accrued interest, to protect the funds in the event of a
default.
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
in the financial statements. Actual results could differ from
these estimates.
(3) REMARKETED
PREFERRED
STOCK
............................
Minnesota Municipal Term Trust Inc. and Minnesota Municipal Term
Trust Inc. II have issued and, as of June 30, 1999, have
outstanding 1,152 shares and 694 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, 1999, Minnesota Municipal Term Trust Inc. and
Minnesota Municipal Term Trust Inc. II had dividend rates of
4.00% and 3.85%, respectively.
RP is a registered trademark of Merrill Lynch & Company (Merrill
Lynch).
(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, 1999 were as follows:
<TABLE>
<CAPTION>
MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL
TERM TRUST TERM TRUST II
----------- --------------
<S> <C> <C>
Purchases .............................. $15,706,939 $9,096,591
Proceeds from sales .................... $12,802,077 $5,494,307
</TABLE>
(5) EXPENSES
............................
INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
On August 10, 1998, the funds entered into an investment
advisory agreement with U.S. Bank National Association (U.S.
- --------------------------------------------------------------------------------
1999 Semiannual Report 13 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
Bank), acting through its division, First American Asset
Management. Prior thereto, Piper Capital Management Incorporated
(Piper Capital), which was acquired by U.S. Bancorp on May 1,
1998, had served as the funds' advisor. U.S. Bank also serves as
the funds' administrator under an administration agreement
effective May 1, 1998. Prior thereto, Piper Capital provided
services under an administration agreement through April 30,
1998.
The investment advisory agreement provides the advisor with a
monthly investment management fee in an amount 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 advisor 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
will provide regulatory reporting and record-keeping services
for the funds.
REMARKETING AGENT FEE
The funds have entered into a remarketing agreement with Merrill
Lynch (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.
- --------------------------------------------------------------------------------
1999 Semiannual Report 14 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
OTHER FEES AND EXPENSES
In addition to the investment management, administrative and the
remarketing agent fees, the funds are responsible for paying
most 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 miscellaneous cash balances maintained by the
funds.
- --------------------------------------------------------------------------------
1999 Semiannual Report 15 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL
HIGHLIGHTS
............................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
MINNESOTA MUNICIPAL TERM TRUST
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/99 ---------------------------------------------------------
(UNAUDITED) 1998 (g) 1997 1996 1995 1994
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, common stock, beginning
of period ............................ $11.12 $11.28 $ 11.15 $ 11.31 $ 10.06 $ 11.33
------ ------ ------- ------- ------- -------
Operations:
Net investment income ................ 0.40 0.86 0.88 0.87 0.88 0.89
Net realized and unrealized gains
(losses) on investments ............ (0.38) (0.08) 0.07 (0.25) 1.17 (1.41)
------ ------ ------- ------- ------- -------
Total from operations .............. 0.02 0.78 0.95 0.62 2.05 (0.52)
------ ------ ------- ------- ------- -------
Distributions to shareholders:
From net investment income
Paid to common shareholders ........ (0.35) (0.66) (0.61) (0.61) (0.61) (0.61)
Paid to preferred shareholders ..... (0.07) (0.15) (0.16) (0.16) (0.19) (0.14)
From net realized gains
Paid to common shareholders ........ -- (0.10) (0.04) (0.01) -- --
Paid to preferred shareholders ..... -- (0.03) (0.01) -- -- --
------ ------ ------- ------- ------- -------
Total distributions to
shareholders ..................... (0.42) (0.94) (0.82) (0.78) (0.80) (0.75)
------ ------ ------- ------- ------- -------
Net asset value, common stock, end of
period ............................... $10.72 $11.12 $ 11.28 $ 11.15 $ 11.31 $ 10.06
------ ------ ------- ------- ------- -------
------ ------ ------- ------- ------- -------
Market value, common stock, end of
period ............................... $10.63 $11.44 $ 11.13 $ 10.50 $ 10.63 $ 9.25
------ ------ ------- ------- ------- -------
------ ------ ------- ------- ------- -------
SELECTED INFORMATION
Total return, common stock, net asset
value (a) . (0.51)% 5.47% 7.15% 4.23% 18.86% (6.01)%
Total return, common stock, market value
(b) .................................. (3.67)% 10.04% 12.48% 4.86% 21.91% (12.73)%
Net assets at end of period (in
millions) ............................ $ 90 $ 93 $ 93 $ 93 $ 94 $ 86
Ratio of expenses to average weekly net
assets applicable to common stock
(e) .................................. 0.97%(h) 0.96% 0.97% 0.99% 0.95% 0.92%
Ratio of net investment income to
average weekly net assets applicable
to common stock (c)(f) ............... 6.00%(h) 6.25% 6.37% 6.40% 6.38% 7.06%
Portfolio turnover rate (excluding
short-term securities) ............... 14% 11% 8% 2% 9% 2%
Remarketed preferred stock outstanding
end of period (in millions) .......... $ 29 $ 29 $ 29 $ 29 $ 29 $ 29
Asset coverage ratio (d) ............... 313% 321% 324% 322% 325% 300%
</TABLE>
(a) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE AND DOES NOT
REFLECT A SALES CHARGE.
(b) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
(c) RATIO REFLECTS TOTAL NET INVESTMENT INCOME LESS DIVIDENDS PAID TO PREFERRED
SHAREHOLDERS FROM NET INVESTMENT INCOME DIVIDED BY NET ASSETS APPLICABLE TO
COMMON SHARES.
(d) REPRESENTS TOTAL NET ASSETS DIVIDED BY REMARKETED PREFERRED STOCK.
(e) RATIO OF EXPENSES TO TOTAL AVERAGE WEEKLY NET ASSETS IS 0.67% (ANNUALIZED),
0.66%, 0.67%, 0.68%, 0.65% AND 0.62% FOR THE SIX MONTHS ENDED JUNE 30,
1999, FISCAL YEARS 1998, 1997, 1996, 1995 AND 1994, RESPECTIVELY. DIVIDENDS
PAID TO PREFERRED SHAREHOLDERS ARE NOT CONSIDERED AN EXPENSE.
(f) RATIO OF NET INVESTMENT INCOME TO TOTAL AVERAGE WEEKLY NET ASSETS IS 5.02%
(ANNUALIZED), 5.26%, 5.41%, 5.42%, 5.57% AND 5.69% FOR THE SIX MONTHS ENDED
JUNE 30, 1999, FISCAL YEARS 1998, 1997, 1996, 1995, AND 1994, RESPECTIVELY.
(g) EFFECTIVE AUGUST 10, 1998, THE ADVISOR CHANGED FROM PIPER CAPITAL TO U.S.
BANK.
(h) ANNUALIZED.
- --------------------------------------------------------------------------------
1999 Semiannual Report 16 Minnesota Municipal Term Trusts
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
(6) FINANCIAL
HIGHLIGHTS
............................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
MINNESOTA MUNICIPAL TERM TRUST II
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/99 ---------------------------------------------------------
(UNAUDITED) 1998 (g) 1997 1996 1995 1994
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, common stock, beginning
of period ............................ $10.90 $10.94 $ 10.71 $ 10.89 $ 9.48 $ 10.92
------ ------ ------- ------- ------- -------
Operations:
Net investment income ................ 0.38 0.80 0.81 0.82 0.83 0.83
Net realized and unrealized gains
(losses) on investments ............ (0.44) -- 0.23 (0.24) 1.37 (1.54)
------ ------ ------- ------- ------- -------
Total from operations .............. (0.06) 0.80 1.04 0.58 2.20 (0.71)
------ ------ ------- ------- ------- -------
Distributions to shareholders:
From net investment income
Paid to common shareholders ........ (0.25) (0.59) (0.59) (0.59) (0.59) (0.59)
Paid to preferred shareholders ..... (0.07) (0.15) (0.16) (0.16) (0.19) (0.14)
From net realized gains
Paid to common shareholders ........ -- (0.08) (0.05) (0.01) (0.01) --
Paid to preferred shareholders ..... -- (0.02) (0.01) -- -- --
------ ------ ------- ------- ------- -------
Total distributions to
shareholders ..................... (0.32) (0.84) (0.81) (0.76) (0.79) (0.73)
------ ------ ------- ------- ------- -------
Net asset value, common stock, end of
period ............................... $10.52 $10.90 $ 10.94 $ 10.71 $ 10.89 $ 9.48
------ ------ ------- ------- ------- -------
------ ------ ------- ------- ------- -------
Market value, common stock, end of
period ............................... $10.38 $11.31 $ 10.69 $ 10.25 $ 10.38 $ 8.63
------ ------ ------- ------- ------- -------
------ ------ ------- ------- ------- -------
SELECTED INFORMATION
Total return, common stock, net asset
value (a) . (1.27)% 5.95% 8.34% 4.04% 21.57% (7.91)%
Total return, common stock, market value
(b) .................................. (5.79)% 12.56% 10.78% 4.88% 27.63% (19.55)%
Net assets at end of period (in
millions) ............................ $ 54 $ 55 $ 55 $ 54 $ 55 $ 50
Ratio of expenses to average weekly net
assets applicable to common stock
(e) .................................. 1.08%(h) 1.06% 1.09% 1.07% 1.06% 1.03%
Ratio of net investment income to
average weekly net assets applicable
to common stock (c)(f) ............... 5.72%(h) 5.87% 6.06% 6.20% 6.10% 6.78%
Portfolio turnover rate (excluding
short-term securities) ............... 10% 9% 10% 4% 9% 4%
Remarketed preferred stock outstanding
end of period (in millions) .......... $ 17 $ 17 $ 17 $ 17 $ 17 $ 17
Asset coverage ratio (d) ............... 310% 317% 318% 314% 317% 289%
</TABLE>
(a) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE AND DOES NOT
REFLECT A SALES CHARGE.
(b) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
(c) RATIO REFLECTS TOTAL NET INVESTMENT INCOME LESS DIVIDENDS PAID TO PREFERRED
SHAREHOLDERS FROM NET INVESTMENT INCOME DIVIDED BY NET ASSETS APPLICABLE TO
COMMON SHARES.
(d) REPRESENTS TOTAL NET ASSETS DIVIDED BY REMARKETED PREFERRED STOCK.
(e) RATIO OF EXPENSES TO TOTAL AVERAGE WEEKLY NET ASSETS IS 0.74% (ANNUALIZED),
0.73%, 0.74%, 0.73%, 0.72% AND 0.69% FOR THE SIX MONTHS ENDED JUNE 30,
1999, FISCAL YEARS 1998, 1997, 1996, 1995 AND 1994, RESPECTIVELY. DIVIDENDS
PAID TO PREFERRED SHAREHOLDERS ARE NOT CONSIDERED AN EXPENSE.
(f) RATIO OF NET INVESTMENT INCOME TO TOTAL AVERAGE WEEKLY NET ASSETS IS 4.78%
(ANNUALIZED), 4.98%, 5.13%, 5.25%, 5.36% AND 5.51% FOR THE SIX MONTHS ENDED
JUNE 30, 1999, FISCAL YEARS 1998, 1997, 1996, 1995 AND 1994, RESPECTIVELY.
(g) EFFECTIVE AUGUST 10, 1998, THE ADVISOR CHANGED FROM PIPER CAPITAL TO U.S.
BANK.
(h) ANNUALIZED.
- --------------------------------------------------------------------------------
1999 Semiannual Report 17 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL TERM TRUST June 30, 1999
.......................................................................................
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
MUNICIPAL LONG-TERM SECURITIES (100.4%):
ECONOMIC DEVELOPMENT REVENUE (1.0%):
Minneapolis Community Development Authority (Callable
12/1/01 at 102), 7.15%-7.35%, 12/1/03-12/1/09 ..... $ 835,000 $ 887,027
------------
EDUCATION REVENUE (0.9%):
Higher Education Facility - College of St. Benedict,
4.50%, 3/1/00-3/1/02 .............................. 810,000 810,043
------------
ELECTRIC REVENUE (8.4%):
Anoka County Resource Recovery, 3.95%-4.05%,
12/1/00-12/1/01 ................................... 3,525,000(e) 3,508,552
Northern Municipal Power (FSA), 4.70%, 1/1/02 ....... 1,605,000 1,621,210
Northern Municipal Power, Zero-Coupon (AMBAC),
6.38%-6.93%, 1/1/06-1/1/10 ........................ 3,340,000(b) 2,032,470
Western Municipal Power Agency (AMBAC), 4.80%,
1/1/02 ............................................ 465,000 471,343
------------
7,633,575
------------
GENERAL OBLIGATIONS (23.2%):
Dakota County General Obligation, 4.50%,
2/1/02-2/1/03 ..................................... 2,300,000(e) 2,307,462
Delano Independent School District (AMBAC) (Crossover
refunded to 2/1/01), 7.25%, 2/1/11 ................ 300,000(d) 314,247
Mankato School District (FSA) (Crossover refunded to
2/1/02), 6.35%, 2/1/13 ............................ 1,000,000(d) 1,048,870
Minneapolis and St. Paul Metropolitan Council
(Crossover refunded to 9/1/00), 6.75%, 9/1/08 ..... 2,990,000(d) 3,092,707
State General Obligation, 4.75%-5.00%,
11/1/01-11/1/08 ................................... 6,070,000 6,184,774
State General Obligation (Prerefunded to 8/1/01),
6.70%, 8/1/10 ..................................... 5,000,000(d) 5,266,400
State General Obligation, Zero-Coupon, 6.01%,
8/1/01 ............................................ 3,000,000(b) 2,755,320
------------
20,969,780
------------
HEALTH CARE REVENUE (20.1%):
Agricultural and Economic Development Board Health
Care System, Fairview Hospital (MBIA), 4.90%-5.00%,
11/15/01-11/15/02 ................................. 1,635,000 1,662,770
Apple Valley Nursing Home (GNMA) (Callable 8/16/99 at
102), 4.60%, 12/1/00 .............................. 185,000 185,599
Bemidji Hospital Facilities (Prerefunded to 9/1/01),
7.00%, 9/1/21 ..................................... 3,200,000(d) 3,444,960
Burnsville Hospital System, Zero-Coupon (Escrowed to
maturity to 5/1/12), 6.75%, 5/1/12 ................ 1,000,000(b) 456,210
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
1999 Semiannual Report 18 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
MINNESOTA MUNICIPAL TERM TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
Cuyuna Range Hospital District Health Facilities,
4.00%, 6/1/00 ..................................... $ 380,000 $ 378,366
Minneapolis and St. Paul Health One Obligated Group
(Prerefunded to 8/15/00), 8.00%, 8/15/14 .......... 2,000,000(d) 2,133,640
Minneapolis Hospital Facilities - Children's Medical
Center (Prerefunded to 6/1/01), 7.00%, 12/1/20 .... 2,000,000(d) 2,144,580
Monticello - Big Lake Community Hospital District
(MBIA), 4.00%-4.60%, 12/1/99-12/1/02 .............. 525,000 522,842
St. Louis Park Hospital Facility (AMBAC) (Crossover
refunded to 7/1/00), 7.25%, 7/1/15 ................ 1,300,000(d) 1,370,213
St. Louis Park Hospital Facility (AMBAC) (Prerefunded
to 7/1/00), 7.25%, 7/1/15 ......................... 5,500,000(d) 5,806,625
------------
18,105,805
------------
HEALTH/HOSPITAL FACILITIES REVENUE (1.5%):
Buffalo Covenant Retirement Communities, 4.30%-4.55%,
12/1/02-12/1/05 ................................... 1,350,000 1,328,488
------------
HOUSING REVENUE (18.6%):
Burnsville Oak Leaf Apartments (GNMA) (Callable
7/1/01 at 103), 7.05%-7.15%, 1/1/12-1/1/25 ........ 3,710,000 3,891,260
City of Coon Rapids (FHA) (Callable 2/1/02 at 102),
AMT, 6.75%, 8/1/23 ................................ 1,300,000(f) 1,359,904
Minneapolis Housing-Churchill Apartments (Callable
10/1/01 at 102), 7.05%, 10/1/22 ................... 3,645,000 3,870,225
St. Paul Housing and Redevelopment Authority
(Callable 12/1/01 at 102), 6.90%,
12/1/11-12/1/21 ................................... 357,000 373,109
State Housing and Finance Agency (Callable 2/1/01 at
102), 6.95%, 2/1/14 ............................... 3,400,000 3,582,342
State Housing and Finance Agency (Callable 2/1/02 at
102), 6.90%, 8/1/12 ............................... 495,000 523,017
State Housing and Finance Agency, AMT, 4.00%-4.40%,
7/1/02-7/1/05 ..................................... 3,180,000(f) 3,148,814
------------
16,748,671
------------
IDR - SOLID WASTE DISPOSAL (2.4%):
Anoka County Solid Waste Disposal Revenue (CFC)
(Callable 6/1/00 at 102), AMT, 6.95%, 12/1/08 ..... 2,100,000(f) 2,196,537
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
1999 Semiannual Report 19 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
MINNESOTA MUNICIPAL TERM TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
LEASING REVENUE (6.0%):
Hennepin County Certificates of Participation
(Prerefunded to 11/15/01), 6.70%-6.75%,
11/15/09-11/15/11 ................................. $ 4,085,000(d) $ 4,327,802
Washington County Jail Facility (MBIA) (Prerefunded
to 2/1/02), 7.00%, 2/1/12 ......................... 1,000,000(d) 1,068,070
------------
5,395,872
------------
PARKING REVENUE (1.2%):
St. Paul Housing and Finance Authority (Prerefunded
to 8/1/00), 6.55%, 8/1/12 ......................... 1,000,000(d) 1,050,530
------------
TAX REVENUE (4.9%):
Minneapolis Community Development Authority,
Zero-Coupon (MBIA), 6.70%-7.01%, 3/1/07-3/1/09 .... 6,685,000(b) 4,444,844
------------
WATER/POLLUTION CONTROL REVENUE (12.2%):
State Public Facilities Authority, 4.30%, 3/1/08 .... 445,000 427,636
State Public Facilities Authority (Prerefunded to
3/1/01), 6.65%-6.70%, 3/1/08-3/1/13 ............... 10,000,000(d) 10,616,400
------------
11,044,036
------------
Total Municipal Long-Term Securities
(cost: $86,952,160) ............................ 90,615,208
------------
SHORT-TERM SECURITIES (4.4%):
Bloomington Multifamily Revenue, 3.70%, 12/1/25 ..... 1,800,000(c) 1,800,000
Maple Grove Multifamily, 3.60%, 11/1/31 ............. 1,200,000(c) 1,200,000
Minneapolis General Revenue, 3.90%, 4/1/14 .......... 580,000(c) 580,000
Minneapolis General Revenue, 2.80%, 12/1/16 ......... 400,000(c) 400,000
------------
Total Short-Term Securities
(cost: $3,980,000) ............................. 3,980,000
------------
Total Investments in Securities
(cost: $90,932,160) (g) ......................... $ 94,595,208
------------
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
1999 Semiannual Report 20 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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) FLOATING OR VARIABLE RATE OBLIGATION MATURING IN MORE THAN ONE YEAR. THE
INTEREST RATE, WHICH IS BASED ON SPECIFIC, OR AN INDEX OF, MARKET INTEREST
RATES, IS SUBJECT TO CHANGE PERIODICALLY AND IS THE EFFECTIVE RATE ON JUNE
30, 1999. THIS INSTRUMENT MAY ALSO HAVE A DEMAND FEATURE WHICH ALLOWS THE
RECOVERY OF PRINCIPAL AT ANY TIME, OR AT SPECIFIED INTERVALS NOT EXCEEDING
ONE YEAR, ON UP TO 30 DAYS NOTICE. MATURITY DATE SHOWN REPRESENTS FINAL
MATURITY.
(d) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. CROSSOVER
REFUNDED ISSUES ARE BACKED BY THE CREDIT OF THE REFUNDING ISSUER. IN BOTH
CASES THE BONDS ARE CALLED AND MATURE AT THE CALL DATE INDICATED.
(e) ON JUNE 30, 1999, THE TOTAL COST OF INVESTMENTS PURCHASED ON A WHEN-ISSUED
BASIS WAS $5,861,109.
(f) AMT - ALTERNATIVE MINIMUM TAX. AS OF JUNE 30, 1999, THE AGGREGATE MARKET
VALUE OF SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX IS $6,705,255,
WHICH REPRESENTS 7.4% OF NET ASSETS.
(g) 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>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 4,049,087
GROSS UNREALIZED DEPRECIATION ...... (386,039)
------------
NET UNREALIZED APPRECIATION ...... $ 3,663,048
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
1999 Semiannual Report 21 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL TERM TRUST II June 30, 1999
.......................................................................................
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
MUNICIPAL LONG-TERM SECURITIES (105.8%):
ECONOMIC DEVELOPMENT REVENUE (0.3%):
Minneapolis Community Development Authority (Callable
12/1/01 at 102), 7.10%, 12/1/02 ................... $ 175,000 $ 183,111
------------
EDUCATION REVENUE (6.1%):
Higher Education Facility-Augsburg College,
3.90%-4.40%, 10/1/00-10/1/05 ...................... 2,115,000 2,079,583
Higher Education Facility-Macalester College
(Prerefunded to 3/1/02), 6.30%, 3/1/14 ............ 1,125,000(d) 1,182,622
------------
3,262,205
------------
ELECTRIC REVENUE (23.7%):
Anoka County Resource Recovery, 4.15%-4.25%,
12/1/02-12/1/03 ................................... 4,100,000(f) 4,023,126
Northern Municipal Power (FSA), 4.75%, 1/1/03 ....... 2,000,000 2,021,840
Northern Municipal Power, Zero-Coupon (AMBAC),
6.49%-6.50%, 1/1/09-1/1/10 ........................ 9,690,000(b) 5,660,487
Western Municipal Power Agency (AMBAC), 4.90%,
1/1/03 ............................................ 1,000,000 1,017,370
------------
12,722,823
------------
GENERAL OBLIGATIONS (23.9%):
Braham Independent School District (AMBAC) (Crossover
refunded to 2/1/01), 6.25%, 2/1/14 ................ 350,000(d) 361,302
Dakota County General Obligation, 4.50%, 2/1/04 ..... 1,350,000(f) 1,348,596
Hopkins Blake School Project (Prerefunded to 9/1/04),
6.45%, 9/1/13-9/1/14 .............................. 385,000(d) 418,329
Mankato School District (FSA) (Crossover refunded to
2/1/02), 6.35%, 2/1/13 ............................ 2,300,000(d) 2,412,401
Metropolitan Council (Crossover refunded to 9/1/00),
6.75%, 9/1/10-9/1/11 .............................. 2,500,000(d) 2,585,875
St. Paul Independent School District (Prerefunded to
2/1/01), 6.45%-6.50%, 2/1/09-2/1/10 ............... 875,000(d) 907,388
State General Obligation, 5.00%, 8/1/03-6/1/08 ...... 4,170,000 4,257,171
Willmar Independent School District (AMBAC)
(Crossover refunded to 2/1/02), 6.25%, 2/1/15 ..... 500,000(d) 523,225
------------
12,814,287
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
1999 Semiannual Report 22 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
MINNESOTA MUNICIPAL TERM TRUST II
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
HEALTH CARE REVENUE (11.4%):
Agricultural and Economic Development Board Health
Care System, Fairview Hospital (MBIA), 5.00%,
11/15/03 .......................................... $ 695,000 $ 708,073
Duluth Health Care Facilities, Benedictine - St.
Mary's Project (Prerefunded to 2/15/00), 8.38%,
2/15/20 ........................................... 2,000,000(d) 2,099,960
Duluth Hospital Facility, St. Luke's (Connie Lee)
(Callable 5/1/02 at 102), 6.40%, 5/1/10 ........... 300,000 319,182
Minneapolis and St. Paul Health Care Facilities
(MBIA) (Prerefunded to 8/15/00), 6.75%, 8/15/14 ... 2,500,000(d) 2,633,775
Monticello - Big Lake Community Hospital District,
4.70%, 12/1/03 .................................... 125,000 123,618
Red Wing Health Care Facility (Callable 9/1/03 at
102), 6.40%, 9/1/12 220,000 230,454
------------
6,115,062
------------
HEALTH/HOSPITAL FACILITIES REVENUE (3.9%):
New Hope Housing & Health Care-Masonic Home North
Ridge, 4.20%-4.80%, 3/1/00-3/1/03 ................. 2,105,000 2,090,777
------------
HOUSING REVENUE (12.1%):
St. Paul Housing and Redevelopment Authority
(Callable 12/1/01 at 102), 6.90%, 12/1/11 ......... 6,000 6,084
State Housing and Finance Agency, 4.85%-5.05%,
7/1/02-7/1/04 ..................................... 1,440,000 1,464,079
State Housing and Finance Agency (Callable 1/1/03 at
102), AMT, 6.50%, 1/1/26 .......................... 365,000(g) 380,374
State Housing and Finance Agency (Callable 2/1/01 at
102), 6.85%, 2/1/07 ............................... 2,945,000 3,098,493
State Housing and Finance Agency (Callable 7/1/02 at
102), AMT, 6.75%-6.85%, 7/1/12-1/1/24 ............. 1,475,000(g) 1,541,640
------------
6,490,670
------------
IDR - MISCELLANEOUS PROJECTS (6.7%):
Duluth Seaway Port Authority, Cargill Inc. Project
(Callable 5/1/02 at 102), 6.80%, 5/1/12 ........... 2,090,000(e) 2,222,193
East Grand Forks, Pollution Control (Callable 4/1/01
at 102), 7.75%, 4/1/18 ............................ 1,300,000 1,378,754
------------
3,600,947
------------
LEASING REVENUE (1.9%):
Olmsted County Housing Redevelopment Authority
(Callable 2/1/02 at 100), 6.10%, 2/1/13 ........... 1,000,000 1,035,520
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
1999 Semiannual Report 23 Minnesota Municipal Term Trusts
<PAGE>
INVESTMENTS IN SECURITIES (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
MINNESOTA MUNICIPAL TERM TRUST II
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security Amount Value (a)
- --------------------------------------------------------- ----------- ------------
<S> <C> <C>
OTHER REVENUE (0.2%):
Moorhead Gross Revenue, 5.00%, 12/1/02 .............. $ 125,000 $ 125,111
------------
PARKING REVENUE (4.7%):
St. Paul Housing and Finance Authority (Prerefunded
to 8/1/00), 6.55%, 8/1/12 ......................... 2,415,000(d) 2,537,030
------------
WATER/POLLUTION CONTROL REVENUE (10.9%):
State Public Facilities Authority (Callable 3/2/09 at
100), 5.13%, 3/1/13 ............................... 800,000 798,776
State Public Facilities Authority (Prerefunded to
3/1/02), 6.50%, 3/1/14 ............................ 4,695,000(d) 5,049,050
------------
5,847,826
------------
Total Municipal Long-Term Securities
(cost: $54,902,488) ............................ 56,825,369
------------
SHORT-TERM SECURITIES (2.6%):
Bloomington Multifamily Revenue, 3.70%, 12/1/25 ..... 100,000(c) 100,000
Minneapolis General Revenue, 2.80%, 12/1/16 ......... 1,300,000(c) 1,300,000
------------
Total Short-Term Securities
(cost: $1,400,000) ............................. 1,400,000
------------
Total Investments in Securities (h)
(cost: $56,302,488) ............................ $ 58,225,369
------------
------------
</TABLE>
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) FLOATING OR VARIABLE RATE OBLIGATION MATURING IN MORE THAN ONE YEAR. THE
INTEREST RATE, WHICH IS BASED ON SPECIFIC, OR AN INDEX OF, MARKET INTEREST
RATES, IS SUBJECT TO CHANGE PERIODICALLY AND IS THE EFFECTIVE RATE ON JUNE
30, 1999. THIS INSTRUMENT MAY ALSO HAVE A DEMAND FEATURE WHICH ALLOWS THE
RECOVERY OF PRINCIPAL AT ANY TIME, OR AT SPECIFIED INTERVALS NOT EXCEEDING
ONE YEAR, ON UP TO 30 DAYS NOTICE. MATURITY DATE SHOWN REPRESENTS FINAL
MATURITY.
(d) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. CROSSOVER
REFUNDED ISSUES ARE BACKED BY THE CREDIT OF THE REFUNDING ISSUER. IN BOTH
CASES THE BONDS ARE CALLED AND MATURE AT THE CALL DATE INDICATED.
(e) SECURITIES PURCHASED AS PART OF A PRIVATE PLACEMENT WHICH HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933 AND ARE CONSIDERED TO BE ILLIQUID. ON JUNE 30, 1999, THE TOTAL
MARKET VALUE OF THESE INVESTMENTS WAS $2,222,193 OR 4.1% OF NET ASSETS.
(f) ON JUNE 30, 1999, THE TOTAL COST OF INVESTMENTS PURCHASED ON A WHEN-ISSUED
BASIS WAS $5,473,888.
(g) AMT - ALTERNATIVE MINIMUM TAX. AS OF JUNE 30, 1999, THE AGGREGATE MARKET
VALUE OF SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX IS $1,922,014,
WHICH REPRESENTS 3.6.% OF NET ASSETS.
(h) 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>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 2,238,473
GROSS UNREALIZED DEPRECIATION ...... (315,592)
------------
NET UNREALIZED APPRECIATION ...... $ 1,922,881
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
1999 Semiannual Report 24 Minnesota Municipal Term Trusts
<PAGE>
[LOGO] FIRST AMERICAN
ASSET MANAGEMENT
AMERICAN MUNICIPAL TERM TRUSTS
1999 SEMIANNUAL REPORT
[GRAPHIC]This document is printed on paper
made from 100% total recovered fiber,
including 15% post-consumer waste.
8/1999 323-99
