ALL AMERICAN TERM TRUST INC, N-30D, 1995-10-02

ALL AMERICAN TERM TRUST INC
N-30D, 1995-10-02

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<PAGE>
ALL-AMERICAN TERM
TRUST INC.

SEMI-ANNUAL REPORT
JULY 31, 1995

<PAGE>
- --------------------------------------------------------------------------------
September 15, 1995

Dear Shareholder,

During the six months ended July 31, 1995, the pace of U.S. economic growth
appeared to have slowed in response to the Federal Reserve Board's repeated
increases in the benchmark Federal Funds rate, the rate banks charge each other
for overnight borrowing. After seven short-term interest rate hikes between
February 1994 and February 1995, the Federal Reserve Board increased the Federal
Funds rate to 6.0%, and effectively doubled short-term interest rates in twelve
months. However, on July 6, 1995, the Federal Reserve cut the benchmark Federal
Funds rate by 0.25%. This decrease, the first in nearly three years, signals
that the Federal Reserve Board believes that inflationary pressures have eased
enough to accommodate an adjustment in monetary conditions from restrictive
toward neutral.

ECONOMIC OVERVIEW

News concerning the economy during the six months ended July 31, 1995 was
dominated by debate over whether inflation was still a threat, discussions about
the dismal performance of the dollar and details of efforts in Washington to
implement a plan to balance the budget. Interest rates trended downward, as the
perception that the Federal Reserve had won its battle with inflation and that
the next policy action would be to lower short-term interest rates became
widespread. The U.S. bond and stock markets rallied in the first half of 1995,
as strength in corporate earnings pushed stock prices higher. Employment reports
indicated a slowing economy, with consumer spending declining significantly from
1994 and consumer credit reports showing high ratios of installment debt to
disposable income. Side effects of higher interest rates lingered, however.
Markets for new and existing homes were sluggish until the close of the
six-month period, despite historically attractive mortgage rates. Although the
U.S. economy appears to have been flat in the second quarter, the second half of
1995 should show signs of further, albeit slower, growth.

PORTFOLIO REVIEW

November 1994 marked the end of a difficult bear market period for fixed
income markets, as interest rates on government securities peaked and prices
bottomed. Although the Federal Reserve hiked short-term interest rates one more
time in February 1995, the six month period ended July 31, 1995 was marked by a
general decline in interest rates, culminating in a powerful bond market rally
in May. As economic growth slowed, the mood of the bond market changed from
gloom to euphoria, as investors no longer feared a continuing series of interest
rate hikes by the Federal Reserve and began looking forward to interest rate
cuts. Corporate bonds were strong performers during most of the period, as the

rally in Treasuries spurred a rally in corporates, with investors chasing
corporates' higher yields. As a result, All-American Term Trust Inc. (the
'Trust') had a total return for the six months ended July 31, 1995 of 9.31%
based on the Trust's net asset value and 6.78% based on the Trust's share price
on the New York Stock Exchange. During the six months ended July 31, 1995, the
Trust made distributions totalling $0.58 per share. As of July 31, 1995, the
Trust's net asset value per share was $14.05, while its share price on the New
York Stock Exchange was $12.38.
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<PAGE>
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The Trust seeks to provide a high level of current income consistent with
the preservation of capital. As described in the prospectus, the Trust will
terminate on or about January 31, 2003 and will liquidate all of its assets and
distribute the net proceeds to shareholders. While the portfolio is being
managed in an effort to return the initial offering price of $15.00 per share,
this is not guaranteed. The Trust maintains a diversified portfolio of
investment grade corporate bonds, mortgage-backed securities, high yield bonds
and AAA-rated zero coupon municipal bonds.

On July 31, 1995, the investment grade portion of the portfolio had a
weighted average maturity of 7.3 years in non-callable bonds in the industrial,
bank and finance sectors. We continued to believe these sectors offered the best
relative value and improving credit stories. The Trust's high yield component
continued to be focused primarily in single B securities in various industrial
sectors. During the six month period, the Trust remained fully invested with an
average maturity of 5.1 years as of July 31, 1995.

As a result of uncertainty about the future rate of economic activity and
the level of the dollar, as well as a bond market that appears to have
discounted a possible recession, we have chosen a cautious stance. The Trust's
emphasis continues to be on security selection to minimize credit risk.

We value you as a shareholder and as a client, and thank you for your
continued support. We welcome any comments or questions you may have.

Sincerely,

/s/ Frank P.L. Minard /s/ Mary B. King

FRANK P.L. MINARD MARY B. KING
Chairman, Portfolio Manager,
Mitchell Hutchins Asset Management Inc. All-American Term Trust Inc.

/s/ Thomas J. Libassi

THOMAS J. LIBASSI
Portfolio Manager,
All-American Term Trust Inc.
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<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Portfolio of Investments
July 31, 1995 (unaudited)
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<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- -------------------- -------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 1.03%
$ 2,000 U.S. Treasury Bills (cost -- $1,988,890).......... 09/07/95 5.405% $ 1,988,890
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
CERTIFICATES -- 32.67%
34,977 GNMA II ARM....................................... 08/20/23 to 10/20/24 7.000 35,363,543
27,000 GNMA II ARM TBA................................... TBA 7.000 27,556,875
------------
Total Government National Mortgage Association Certificates
(cost -- $63,098,830)...................................... 62,920,418
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES -- 8.22%
15,423 FHLMC ARM (cost -- $15,828,004)................... 03/01/24 6.903 15,826,924
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES -- 3.96%
7,385 FNMA CMT ARM (cost -- $7,509,531)................. 03/01/23 7.855 7,632,711
------------
AGENCY BACKED COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.73%
15,353 FNMA Trust 1993-G8, Class PT...................... 01/25/21 8.000& 3,233,748
6,115 FNMA Trust 1993-41, Class H....................... 03/25/23 7.000& 2,017,922
------------
Total Agency Backed Collateralized Mortgage Obligations
(cost -- $6,368,560)....................................... 5,251,670
------------
CORPORATE BONDS -- 83.28%
AEROSPACE -- 0.91%
2,000 Sabreliner Corp. Series A......................... 04/15/03 12.500 1,740,000
------------
BANKING -- 6.64%
4,000 BankAmerica Corp. ................................ 10/15/02 7.500 4,094,704
3,000 Chemical Bank New York............................ 09/15/02 7.250 3,031,230
5,500 First Chicago Corp. .............................. 01/15/03 7.625 5,665,776
------------
12,791,710
------------

CABLE -- 11.80%
4,000# Australis Media................................... 05/15/03 14.000+ 2,280,000
4,000 Marcus Cable Co. ................................. 08/01/04 13.500+ 2,705,000
1,000 Mobile Telecommunications......................... 12/15/02 13.500 1,095,000
9,000 News America Holdings Inc. ....................... 02/01/03 8.625 9,639,540
7,000 Telecommunications Inc. .......................... 01/15/03 8.250 7,028,315
------------
22,747,855
------------
COMMUNICATIONS -- 4.51%
3,500 Comcast Cellular.................................. 03/05/00 0.000 2,572,500
2,400 Dial Page Inc. ................................... 02/15/00 12.250 2,604,000
2,000 PanAmSat Corp. ................................... 08/01/03 11.375+ 1,470,000
2,000 Peoples Telecommunications Co.**.................. 07/15/02 12.250 2,030,000
------------
8,676,500
------------
</TABLE>

3
<PAGE>
ALL-AMERICAN TERM TRUST INC.
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ENERGY -- 6.68%
1,500 Crown Central Petroleum........................... 02/01/05 10.875 1,590,000
2,000 Empire Gas Corporation............................ 07/15/04 12.625+ 1,660,000
3,000 Kelley Oil & Gas.................................. 06/15/99 13.500 2,940,000
5,000# Transamerican Refining Corp. ..................... 02/15/02 18.500+ 3,581,400
3,000 TransTexas Gas.................................... 06/15/02 11.500 3,097,500
------------
12,868,900
------------
FINANCE -- 11.40%
3,000 Comdisco Corp. MTN................................ 01/28/02 9.500 3,363,657
5,000 CS First Boston Inc. MTN.......................... 01/15/03 7.650 4,913,800
6,500 General Motors Acceptance Corp. .................. 01/01/03 8.500 6,979,928
7,000 Salomon Inc. MTN.................................. 01/15/03 7.150 6,699,063
------------
21,956,448
------------
FOOD & BEVERAGE -- 3.42%
2,000 Flagstar Corp. ................................... 12/01/02 10.875 1,880,000
4,000 Flagstar Corp. ................................... 11/01/04 11.250 1,670,000
1,000 RJR Nabisco Inc. ................................. 12/01/02 8.625 1,017,504
2,000 Specialty Foods Acquisition Corp. ................ 10/01/02 11.125 2,020,000
------------
6,587,504
------------
GAMING -- 2.67%
2,000 Harrahs Jazz...................................... 11/15/01 14.250 2,010,000
2,617 Hemmeter Enterprises**............................ 12/15/00 12.000 1,099,145
2,000 PRT Funding Corp. ................................ 04/15/04 11.625 1,780,000
1,000# Sam Houston Race Park............................. 07/15/99 11.750(a) 250,000
------------
5,139,145
------------
GENERAL INDUSTRIAL -- 8.29%
3,250 Alpine Group Inc.**............................... 07/15/03 12.250 2,973,750
2,000 Empresa Moderna................................... 11/12/97 10.250 1,920,000
5,000 Owens-Illinois Inc. .............................. 12/01/03 11.000 5,512,500
2,000 Poindexter JB Inc. ............................... 05/15/04 12.500 1,930,000
2,000# Terex Corp.**..................................... 05/15/02 13.750 1,620,000
2,000 Walbro Corp.**.................................... 07/15/05 9.875 2,000,000
------------
15,956,250
------------
HEALTHCARE -- 1.10%
2,000 Tenet HealthCare Corp. ........................... 09/01/02 9.625 2,120,000
------------
</TABLE>

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- -------------------- -------- ------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
HOTELS & LODGING -- 2.86%
$4,000 Hilton Hotels Corp. .............................. 07/15/02 7.700% $ 4,010,123
2,000 Kloster Cruise Ltd. .............................. 05/01/03 13.000 1,500,000
------------
5,510,123
------------
LEISURE & ENTERTAINMENT -- 1.74%
3,000 Time Warner Entertainment Inc. ................... 05/01/02 9.625 3,354,900
------------
MEDIA -- 1.05%
2,000 Pegasus Media & Communications**.................. 07/10/05 12.500 2,020,000
------------
OIL & GAS -- 3.18%
6,000 USX Corp. MTN..................................... 08/05/02 7.990 6,120,000
------------
PACKAGING -- 3.49%
2,000 Grupo Industrial Durango S.A. .................... 07/15/01 12.000 1,740,000
2,000 Indah Kiat International.......................... 06/15/02 11.875 2,030,000
1,335 Rainy River Forest Products....................... 10/15/01 10.750 1,415,100
1,500 RePap New Brunswick............................... 07/15/00 8.075 1,545,000
------------
6,730,100
------------
RETAIL -- 2.45%
1,000 Central Rents..................................... 12/15/03 12.875 1,005,000
2,000 County Seat....................................... 10/01/02 12.000 1,990,000
1,720 Wickes Lumber Co. ................................ 12/15/03 11.625 1,720,000
------------
4,715,000
------------
SUPERMARKETS & DRUGSTORES -- 2.64%
3,500 Di Giorgio Corp. ................................. 02/15/03 12.000 2,520,000
2,000 Duane Reade Corp. ................................ 09/15/02 12.000 1,660,000
1,000 Farm Fresh Holdings............................... 10/01/00 12.250 905,000
------------
5,085,000
------------

TEXTILES -- 1.53%
3,000 Westpoint Stevens Inc. ........................... 12/15/05 9.375 2,955,000
------------
Total Corporate Bonds (cost -- $161,447,325)................. 160,401,225
------------
CONVERTIBLE BONDS -- 0.61%
RETAIL -- 0.61%
1,975 Carter Hawley Hale Stores (cost -- $1,249,157).... 12/31/00 6.250 1,165,250
------------
</TABLE>

5
<PAGE>
ALL-AMERICAN TERM TRUST INC.
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<TABLE>
<CAPTION>
Principal
Amount Maturity Yield to
(000) Dates Maturity Value
- --------- -------- -------- ------------
<S> <C> <C> <C>
ZERO COUPON MUNICIPAL SECURITIES -- 8.88%
$ 650 Bolingbrook Illinois Park District................ 01/01/03 5.290% $ 441,298
995 Cook County Illinois High School District......... 12/01/02 5.170 684,311
4,500 Houston Texas Independent School District......... 08/15/02 5.020 3,174,255
7,000 Houston Texas Water & Sewer....................... 12/01/02 5.020 4,866,190
1,000 Maricopa County Arizona School District........... 01/01/02 5.020 727,500
3,895 Northeast Texas Independent School District....... 02/01/03 5.140 2,661,960
6,000 San Antonio Texas Electric & Gas.................. 02/01/03 5.140 4,100,580
650 William County Illinois Community School
District........................................ 12/15/02 5.170 446,154
------------
Total Zero Coupon Municipal Securities (cost -- $16,843,373) 17,102,248
------------
<CAPTION>
Number of
Warrants
- ---------
<S> <C>
WARRANTS -- 0.03%
AEROSPACE -- 0.01%
2,000 Sabreliner Corp. ......................................................... 20,000
------------
RETAIL -- 0.02%
1,000 Central Rents ............................................................ 35,000
------------
Total Warrants (cost -- $180,012).................................................... 55,000
------------

<CAPTION>
Principal
Amount Maturity Interest
(000) Date Rate
- --------- -------- --------
<S> <C> <C> <C>
REPURCHASE AGREEMENT -- 4.53%
$8,721 Repurchase Agreement dated 07/31/95, with Citicorp
Securities Inc., collateralized by $5,880,000
Treasury Bond, 11.25% due 02/15/15; proceeds:
$8,722,412 (cost -- $8,721,000)................... 08/01/95 5.830% 8,721,000
------------
Total Investments (cost -- $283,234,682) -- 145.94%.......... 281,065,336
Liabilities in excess of other assets -- (45.94%)............ (88,481,090)
------------
NET ASSETS -- 100.00%........................................ $192,584,246
------------
------------
</TABLE>
- ------------
& Planned amortization class interest security. This security entitles the
holder to receive interest payments from an underlying pool of mortgages.
The risk associated with this security is related to the speed of principal
paydowns outside a designated range. High prepayments would result in a
smaller amount of interest being received and cause the yield to decrease.
Low prepayments would result in greater amount of interest being received
and cause the yield to increase.

# Security represents a unit which is comprised of the stated bond with
attached warrants.

(a) Non-income producing security.

+ Denotes a step-up bond or zero coupon bond that converts to the noted fixed
rate at a designated future date.

** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

ARM--Adjustable Rate Mortgage

MTN--Medium Term Note

TBA--(To Be Announced) Securities are purchased on a forward commitment basis
with approximated (generally +/-2.5%) principal amount and no definite
maturity date. The actual principal amount and maturity date will be
determined upon settlement when specific mortgage pools are assigned.

See accompanying notes to financial statements

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Statement of Assets and Liabilities
July 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost --
$283,234,682)............................................. $281,065,336
Receivable for investments sold............................. 2,267,500
Interest receivable......................................... 3,541,921
Deferred organizational expenses............................ 118,842
Other assets................................................ 2,441
------------
Total assets............................................. 286,996,040
------------
LIABILITIES
Payable for investments purchased........................... 94,039,365
Payable to affiliate........................................ 147,280
Accrued expenses and other liabilities...................... 225,149
------------
Total liabilities........................................ 94,411,794
------------
NET ASSETS
Capital stock -- $0.001 par value; 100,000,000 shares
authorized; 13,706,667 shares issued and outstanding...... 205,597,650
Undistributed net investment income......................... 1,385,702
Accumulated net realized losses from investment
transactions.............................................. (12,229,760)
Net unrealized depreciation of investments.................. (2,169,346)
------------
Net assets applicable to shares outstanding................. $192,584,246
------------
------------
Net asset value per share................................... $14.05
------
------
</TABLE>

See accompanying notes to financial statements

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Statement of Operations
For the Six Months Ended July 31, 1995 (unaudited)
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest..................................................... $ 8,982,869
-----------
EXPENSES:
Investment advisory and administration....................... 848,587
Custody and accounting....................................... 39,706
Reports and notices to shareholders.......................... 29,025
Legal and audit.............................................. 24,011
Amortization of organizational expenses...................... 22,812
Transfer agency fees......................................... 5,982
Directors' fees.............................................. 3,000
Other expenses............................................... 14,741
-----------
987,864
-----------
NET INVESTMENT INCOME........................................... 7,995,005
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT
ACTIVITIES:
Net realized losses from investment transactions............. (3,388,223)
Net change in unrealized appreciation/depreciation of
investments................................................ 13,421,414
-----------
Net realized and unrealized gains from investment activities.... 10,033,191
-----------
Net increase in net assets resulting from operations............ $18,028,196
-----------
-----------
</TABLE>

See accompanying notes to financial statements

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Statement of Cash Flows
For the Six Months Ended July 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Interest received......................................... $ 9,365,510
Expenses paid............................................. (927,814)
Purchases of short-term portfolio investments, net........ (9,531,494)
Purchases of long-term portfolio investments.............. (512,165,708)
Sales of long-term portfolio investments.................. 521,140,840
-------------
Net cash provided by operating activities................. 7,881,334
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Dividends and distributions paid to shareholders.......... (7,881,334)
-------------
NET CHANGE IN CASH.......................................... 0
Cash at beginning of period............................... 0
-------------
Cash at end of period..................................... $ 0
-------------
-------------
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations...... 18,028,196
-------------
Increase in cost of investments........................... (3,477,568)
Decrease in net unrealized appreciation/depreciation...... (13,421,414)
Decrease in interest receivable........................... 529,314
Increase in receivable for investments sold............... (2,267,500)
Increase in payable for investments purchased............. 8,430,256
Decrease in deferred organization expenses................ 22,812
Decrease in other assets.................................. 3,715
Increase in payable to affiliate.......................... 9,071
Increase in accrued expenses and other liabilities........ 24,452
-------------
Total adjustments....................................... (10,146,862)
-------------
Net cash provided by operating activities.......... $ 7,881,334
-------------
-------------
</TABLE>

See accompanying notes to financial statements

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
July 31, 1995 January 31,
(unaudited) 1995
------------- ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.......................... $ 7,995,005 $ 17,056,119
Net realized losses from investment
transactions................................. (3,388,223) (7,819,054)
Net change in unrealized
appreciation/depreciation of investments..... 13,421,414 (19,811,269)
------------- ------------
Net increase (decrease) in net assets resulting
from operations.............................. 18,028,196 (10,574,204)
------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income..................... (7,881,334) (16,763,254)
------------- ------------
Net increase (decrease) in net assets.......... 10,146,862 (27,337,458)

NET ASSETS:
Beginning of period............................ 182,437,384 209,774,842
------------- ------------
End of period (including undistributed net
investment income of $1,385,702 and
$1,272,031, respectively).................... $ 192,584,246 $182,437,384
------------- ------------
------------- ------------
</TABLE>

See accompanying notes to financial statements

<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Notes to Financial Statements (unaudited)
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ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

All-American Term Trust Inc. (the 'Trust') was incorporated in Maryland on
November 19, 1992 as a closed-end diversified management investment company. The
Trust is anticipated to terminate on or about January 31, 2003. Prior to March
1, 1993, the Trust had no activities other than organizational matters and the
sale to Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'),
investment adviser and administrator of the Trust, of 6,667 shares of common
stock for a total of $100,005. Organizational costs of $230,000 have been
deferred and are being amortized on the straight line method over a period not
to exceed 60 months from the date the Trust commenced operations.

Valuation of Investments -- Where market quotations are readily available,
portfolio securities are valued thereon, provided such quotations adequately
reflect, in the judgment of Mitchell Hutchins, the fair value of the securities.
When market quotations are not readily available, securities are valued based
upon appraisals derived from information concerning those securities or similar
securities received from recognized dealers in those securities. All other
securities are valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Directors. The amortized cost method of
valuation, which approximates market value, is used to value debt obligations
with 60 days or less remaining to maturity, unless the Trust's Board of
Directors determines that this does not represent fair value.

The ability of the issuers of the debt securities held by the Trust to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.

Investment Transactions and Investment Income -- Investment transactions
are recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost method. Interest income is
recorded on an accrual basis. Discounts are accreted and premiums are amortized
as adjustments to interest income and the identified cost of investments. The
Trust may enter into transactions in which the Trust sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date (the 'roll period'). During the roll period, the Trust forgoes
principal and interest paid on the securities. The Trust is compensated by the
interest earned on the cash proceeds on the initial sale and by fee income or a
lower repurchase price.

Repurchase Agreements -- The Trust's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligations to repurchase, the Trust has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in

11
<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Notes to Financial Statements -- (continued)
- --------------------------------------------------------------------------------
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.

Federal Tax Status -- The Trust intends to distribute all of its taxable
income and to comply with the other requirements of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision for
federal income taxes is required. In addition, to the extent that the Trust
distributes during each calendar year substantially all of its taxable net
investment income, capital gains and certain other amounts, if any, the Trust
may not be subject to a federal excise tax.

Dividends and Other Distributions -- Dividends and distributions are
recorded on the ex-dividend date. The Trust intends to pay monthly dividends at
a constant rate that over time will result in the distribution of substantially
all of the Trust's net investment income. The amount of dividends and
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital. On or about January 31, 2003, the Trust will liquidate its
assets and will declare and make a termination distribution to its shareholders
in an aggregate amount equal to the net proceeds of such liquidation after
payment of the Trust's expenses and liabilities, including amounts owed on any
outstanding borrowings by the Trust.

INVESTMENT ADVISER AND ADMINISTRATOR

The Trust has entered into an Investment Advisory and Administration
Contract ('Advisory Contract') with Mitchell Hutchins. The Advisory Contract
provides Mitchell Hutchins with an investment advisory and administration fee,
computed weekly and paid monthly, at an annual rate of 0.90% of the Trust's
average weekly net assets.

12
<PAGE>
ALL-AMERICAN TERM TRUST INC.
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Notes to Financial Statements -- (concluded)
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES

For federal income tax purposes, the cost of securities owned at July 31,
1995 was substantially the same as the cost of securities for financial
statement purposes.

At July 31, 1995, the components of net unrealized depreciation of
investments were as follows:

<TABLE>
<S> <C>
Gross appreciation (from investments having an excess of
value over cost).......................................... $ 3,238,982
Gross depreciation (from investments having an excess of
cost over value).......................................... (5,408,328)
------------
Net unrealized depreciation of investments.................. $ (2,169,346)
------------
------------
</TABLE>

For the six months ended July 31, 1995, total aggregate purchases and sales
of portfolio securities excluding short-term securities, were $520,581,156 and
$523,347,650, respectively.

CAPITAL STOCK

There are 100,000,000 shares of $0.001 par value common stock authorized.
Of the 13,706,667 shares outstanding at July 31, 1995, Mitchell Hutchins owned
6,667 shares.

FEDERAL TAX STATUS

At January 31, 1995, the Trust had a net capital loss carryforward of
$5,276,006. The loss carryforward is available as a reduction, to the extent
provided in the regulations, of future net realized capital gains, and will
expire January 31, 2003.

<PAGE>
ALL-AMERICAN TERM TRUST INC.
- --------------------------------------------------------------------------------
Quarterly Results of Operations (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED NET INCREASE
GAINS/(LOSSES) (DECREASE)
FROM IN NET ASSETS
NET INVESTMENT INVESTMENT RESULTING FROM
INCOME ACTIVITIES OPERATIONS
---------------- ------------------ ------------------
TOTAL PER TOTAL PER TOTAL PER
QUARTER ENDED (000'S) SHARE (000'S) SHARE (000'S) SHARE
- -------------------- ------- ----- -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
July 31, 1995....... $ 3,929 $0.28 $ 3,108 $ 0.23 $ 7,037 $ 0.51
April 30, 1995...... 4,066 0.30 6,925 0.51 10,991 0.81
------- ----- -------- ------ -------- ------
Total.......... $ 7,995 $0.58 $ 10,033 $ 0.74 $ 18,028 $ 1.32
------- ----- -------- ------ -------- ------
------- ----- -------- ------ -------- ------

January 31, 1995.... $ 4,089 $0.30 $ (1,707) $(0.13) $ 2,382 $ 0.17
October 31, 1994.... 4,284 0.31 (6,907) (0.50) (2,623) (0.19)
July 31, 1994....... 4,356 0.31 (2,454) (0.17) 1,902 0.14
April 30, 1994...... 4,327 0.32 (16,562) (1.21) (12,235) (0.89)
------- ----- -------- ------ -------- ------
Total.......... $17,056 $1.24 $(27,630) $(2.01) $(10,574) $(0.77)
------- ----- -------- ------ -------- ------
------- ----- -------- ------ -------- ------

January 31, 1994.... $ 3,895 $0.29 $ 1,634 $ 0.11 $ 5,529 $ 0.40
October 31, 1993.... 4,442 0.32 145 0.01 4,587 0.33
July 31, 1993....... 4,541 0.33 3,682 0.28 8,223 0.61
April 30, 1993*..... 2,304 0.17 (1,674) (0.13) 630 0.04
------- ----- -------- ------ -------- ------
Total.......... $15,182 $1.11 $ 3,787 $ 0.27 $ 18,969 $ 1.38
------- ----- -------- ------ -------- ------
------- ----- -------- ------ -------- ------
</TABLE>
- ------------------
* For the period March 1, 1993 (commencement of operations) to April 30, 1993.

<PAGE>
ALL-AMERICAN TERM TRUST INC.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of common stock outstanding for each of the
periods represented below:

<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 1, 1993
FOR THE SIX (COMMENCEMENT
MONTHS ENDED FOR THE YEAR OF OPERATIONS)
JULY 31, 1995 ENDED TO
(UNAUDITED) JANUARY 31, 1995 JANUARY 31, 1994
------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period.... $ 13.31 $ 15.30 $ 15.00
------------- ---------------- ----------------
Net investment income................... 0.58 1.24 1.11
Net realized and unrealized gains
(losses) on investment transactions... 0.74 (2.01) 0.27
------------- ---------------- ----------------
Net increase (decrease) in net asset
value resulting from operations....... 1.32 (0.77) 1.38
------------- ---------------- ----------------
Less dividends and distributions:
Dividends from net investment income.... (0.58) (1.22) (1.06)
Distributions in excess of net realized
gains from investment transactions.... -- -- (0.02)
------------- ---------------- ----------------
Total dividends and distributions....... (0.58) (1.22) (1.08)
------------- ---------------- ----------------
------------- ---------------- ----------------
Net asset value, end of period.......... $ 14.05 $ 13.31 $ 15.30
------------- ---------------- ----------------
------------- ---------------- ----------------
Per share market value, end of period... $ 12.38 $ 12.13 $ 14.38
------------- ---------------- ----------------
------------- ---------------- ----------------
Total investment return(1).............. 6.78% (7.13)% 3.04%
------------- ---------------- ----------------
------------- ---------------- ----------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 192,584 $182,437 $209,775
Ratio of expenses to average net
assets................................ 1.05%* 1.05% 1.04%*
Ratio of net investment income to
average net assets.................... 8.48%* 8.95% 8.02%*
Portfolio turnover rate................. 194% 383% 416%
</TABLE>
- ------------------
* Annualized

(1) Total investment return is calculated assuming a purchase of one share of
common stock at the current market price on the first day of each period
reported and a sale at the current market price on the last day of each
period reported, and assuming reinvestment of dividends to common
stockholders at prices obtained under the Trust's Dividend Reinvestment
Plan. Total investment return does not reflect brokerage commissions and
has not been annualized for periods of less than one year.

15
<PAGE>
ALL-AMERICAN TERM TRUST INC.
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------
THE TRUST

All American Term Trust Inc. (the 'Trust') is a diversified, closed-end
management investment company whose shares trade on the New York Stock Exchange
('NYSE'). The Trust's investment objective is to provide a high level of current
income, consistent with the preservation of capital. The Trust will terminate on
or about January 31, 2003 and, in conjunction therewith, will liquidate all of
its assets and distribute the net proceeds to shareholders. The Trust will be
managed in an effort to return the initial offering price of $15.00 per share
and will normally be invested in a diversified portfolio of investment grade and
high-yield corporate bonds, mortgage-backed securities, triple-A rated zero
coupon municipal bonds. The Trust's investment adviser and administrator is
Mitchell Hutchins Asset Management Inc., a wholly owned subsidiary of
PaineWebber Incorporated ('PaineWebber'), which has over $44 billion in assets
under management as of August 31, 1995.

SHAREHOLDER INFORMATION

The NYSE ticker symbol for the Trust is AAT. Weekly comparative net asset
value and market price information about the Trust is published each Monday in
The Wall Street Journal and The New York Times and each Saturday in Barron's, as
well as other newspapers.

The annual meeting of shareholders of the Trust was held on May 18, 1995.
At the meeting, Richard Q. Armstrong, E. Garrett Bewkes, Jr., Richard R. Burt,
John R. Torell III and William D. White were elected as directors to serve
without limit in time, subject to resignation, retirement or removal. The
selection of Ernst & Young LLP as the Fund's independent auditors was ratified.

The votes were as follows:

<TABLE>
<CAPTION>
SHARES SHARES
VOTED FOR WITHHOLD AUTHORITY
---------- ------------------
<S> <C> <C>
Richard Q. Armstrong...... 13,075,495 145,466
E. Garrett Bewkes, Jr. ... 13,089,194 131,767
Richard R. Burt........... 13,100,868 120,093
John R. Torell III........ 13,103,328 117,633
William D. White.......... 13,082,455 138,506
</TABLE>

<TABLE>
<CAPTION>
SHARES SHARES SHARES
VOTED FOR VOTED AGAINST WITHHOLD AUTHORITY
---------- ------------- ------------------
<S> <C> <C> <C>
Ratification of the selection
of Ernst & Young LLP......... 13,094,285 42,878 83,797
</TABLE>

Broker non-votes and abstentions are included within the 'Shares Withhold
Authority' totals.

16
<PAGE>
ALL-AMERICAN TERM TRUST INC.
- --------------------------------------------------------------------------------
General Information -- (concluded)
- --------------------------------------------------------------------------------
DISTRIBUTION POLICY

The Trust has established a Dividend Reinvestment Plan (the 'Plan') under
which all shareholders whose shares are registered in their own names, or in the
name of PaineWebber or its nominee, will have all dividends and other
distributions on their shares automatically reinvested in additional shares,
unless such shareholders elect to receive cash. Shareholders who elect to hold
their shares in the name of another broker or nominee should contact such broker
or nominee to determine whether, or how, they may participate in the Plan.
Additional shares acquired under the Plan will be purchased in the open market,
on the NYSE or otherwise, at prices that may be higher or lower than the net
asset value per share at the time of the purchase. The Trust will not issue any
new shares in connection with its Plan.

<PAGE>
-----------------------------------------
DIRECTORS
E. Garrett Bewkes, Jr., Chairman
Richard Q. Armstrong
Richard R. Burt
John R. Torell III
William D. White
-----------------------------------------
PRINCIPAL OFFICERS
Margo N. Alexander
President

Victoria E. Schonfeld
Vice President

Dianne E. O'Donnell
Vice President and Secretary

Julian F. Sluyters
Vice President and Treasurer
-----------------------------------------
INVESTMENT ADVISER AND
ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
-----------------------------------------

Notice is hereby given in accordance
with Section 23(c) of the Investment
Company Act of 1940 that from time
to time the Trust may purchase at
market prices shares of its common
stock in the open market.

The financial information included
herein is taken from the records of
the Trust without examination by
independent auditors, who do not
express an opinion thereon.

This report is sent to the
shareholders of the Trust for their
information. It is not a prospectus,
circular or representation intended
for use in the purchase or sale of
shares of the Trust or of any
securities mentioned in the report.

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