<PAGE>
[GRAPHIC] 2000
Annual Report
American Municipal
Income Portfolio
XAA
[LOGO] FIRST AMERICAN-Registered Trademark-
ASSET MANAGEMENT
<PAGE>
[LOGO] FIRST AMERICAN-Registered Trademark-
ASSET MANAGEMENT
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CONTENTS
2 Fund Overview
6 Financial Statements and Notes
16 Investments in Securities
22 Independent Auditors' Report
23 Federal Income Tax Information
24 Shareholder Update
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AMERICAN MUNICIPAL INCOME PORTFOLIO
FUND OBJECTIVE
High current income exempt from regular federal income tax, consistent with
preservation of capital. The fund's income may be subject to state or local tax
and the federal alternative minimum tax. Investors should consult their tax
advisors. As with other investment companies, there can be no assurance this
fund will achieve its objective.
PRIMARY INVESTMENTS
A diverse range of municipal securities rated investment-grade or of comparable
quality when purchased. These securities may include municipal-derivative
securities, such as inverse floating-rate and inverse interest-only municipal
securities, which may be more volatile than traditional municipal securities in
certain market conditions.
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NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
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<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
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Based on net asset value for the periods ended January 31, 2000
[CHART]
<TABLE>
<CAPTION>
Since Inception
One Year Five Year 6/25/1993
<S> <C> <C> <C>
AMERICAN MUNICIPAL INCOME PORTFOLIO -9.88% 7.68% 4.76%
Lipper General Municipal Bond Funds:
Leveraged Average -9.94% 5.83% 4.24%
Lehman Brothers Municipal Long Bond Index -8.57% 6.26% 4.74%
</TABLE>
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Average annual total returns are through January 31, 2000, and are based on the
change in net asset value (NAV). They reflect the reinvestment of distributions
but do not reflect sales charges. NAV-based performance is used to measure
investment management results.
Average annual total returns based on the change in market price for the
one-year, five-year and since-inception periods ended January 31, 2000, were
- -10.81%, 6.54%, and 2.53%, respectively. These returns assume reinvestment of
all distributions and reflect sales charges on those distributions described in
the fund's dividend reinvestment plan, but not on initial purchases.
PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. 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 this fund, 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.
The Lipper General Municipal Bond Funds: Leveraged Average represents the
average annual total return, with distributions reinvested, of leveraged
perpetual and term-trust national closed-end municipal funds as characterized by
Lipper Inc. The Lehman Brothers Municipal Long Bond Index is comprised of
municipal bonds with more than 22 years to maturity and an average credit
quality of AA. The index is unmanaged and does not include any fees or expenses
in its total-return figures.
The since-inception numbers for the Lipper average and Lehman index are
calculated from the month end following the fund's inception through January 31,
2000.
1 2000 ANNUAL REPORT American Municipal Income Portfolio
<PAGE>
FUND
OVERVIEW
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FUND MANAGEMENT
TEAM LEADER
DOUG WHITE, CFA,
17 years of financial industry experience.
TEAM MEMBER
CATHERINE STIENSTRA
12 years of financial industry experience.
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March 15, 2000
AMERICAN MUNICIPAL INCOME PORTFOLIO PROVIDED A NET ASSET VALUE TOTAL RETURN OF
- -9.88%* FOR THE YEAR ENDED JANUARY 31, 2000. The fund's market price return was
- -10.81% over the same period. This compares to a -8.57% total return for the
fund's benchmark, the Lehman Brothers Municipal Long Bond Index. Over the same
period, the Lipper General Municipal Bond Funds: Leveraged Average had a total
return of -9.94%.
INTEREST RATES HAVE RISEN ALMOST STEADILY THROUGHOUT THE YEAR, NEGATIVELY
IMPACTING OUR RETURN. American Municipal Income Portfolio emphasizes bonds with
longer maturities, and was positioned to benefit from stable or declining
intermediate- and long-term interest rates. While our longer maturity has hurt
our performance this
*All returns assume reinvestment of all distributions and do not reflect sales
charges, except the fund's total return based on market price, which does
reflect sales charges on those distributions described in the fund's dividend
reinvestment plan, but not on initial purchases. 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.
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PORTFOLIO COMPOSITION
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As a percentage of total assets on January 31, 2000
[CHART]
<TABLE>
<S> <C>
Housing Revenue 19%
IDR Pollution Control Revenue 6%
Other Assets 1%
Recreation Authority Revenue 2%
Health Care Revenue 28%
Utility Revenue 13%
Certificates of Participation 4%
Municipal Bond Bank 1%
Education Revenue 3%
Building Revenue 2%
General Obligations 18%
Investment Companies 3%
</TABLE>
2 2000 ANNUAL REPORT American Municipal Income Portfolio
<PAGE>
FUND
OVERVIEW continued
- --------------------------------------------------------------------------------
period, municipal bonds with longer maturities usually offer higher yields.
History tells us that a bond portfolio that takes an aggressive stance in bond
maturities ultimately benefits from that position, even though it may be more
volatile in the short term. What's more, in a low-inflation environment such as
we've enjoyed for a number of years, bond yields tend to move favorably.
AS INTEREST RATES HAVE RISEN, THE SUPPLY OF MUNICIPAL BONDS HAS FALLEN. The
total supply of municipal bonds has gone down more than 21% from a year ago.
This is due to the fact that many government entities slowed debt issuance
either because higher yields made refunding issues unattractive or because
increasing tax revenues decreased the need to take on new debt.
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GEOGRAPHICAL DISTRIBUTION
- --------------------------------------------------------------------------------
As a percentage of total assets on January 31, 2000
[MAP]
<TABLE>
<S> <C>
Arizona 3%
Colorado (1)%
California 5%
Georgia 9%
Illinois 7%
Indiana 5%
Hawaii 2%
Iowa 1%
Kansas 1%
Kentucky 2%
Louisanna 5%
Maryland 2%
Michigan 9%
Minnesota 8%
Nebraska 1%
Nevada 2%
New Mexico 7%
New York 1%
Ohio 1%
South Dakota 4%
Tennessee 1%
Texas 8%
Utah 4%
Washington 3%
Wisconsin 4%
</TABLE>
3 2000 ANNUAL REPORT American Municipal Income Portfolio
<PAGE>
FUND
OVERVIEW continued
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WE HAVE MAINTAINED AN EFFECTIVE DURATION LONGER THAN THE BENCHMARK IN ORDER TO
SUSTAIN THE FUND'S INCOME. Our longer duration has allowed the fund to maintain
its competitive yield and enabled us to add slightly to its dividend reserve.
The recent increase in interest rates provides opportunities to realize tax
losses, to help offset potential future capital gains, and to purchase new bonds
at relatively higher yields. Therefore, we are not currently considering a shift
in the fund's strategy.
Thank you for your investment in American Municipal Income Portfolio. We remain
committed to providing you with quality service and look forward to helping you
achieve your investment goals.
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Preferred Stock
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The preferred stock issued by XAA 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.
4 2000 ANNUAL REPORT American Municipal Income Portfolio
<PAGE>
FUND
OVERVIEW continued
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TRIBUTE TO DAVID T. BENNETT
As friends and colleagues, the Board of Directors of the First American Funds
wishes to recognize David T. Bennett for the significant and lasting
contributions he made as a Director of the First American Funds. His services
were cut short by his recent and untimely death following a 13-year battle with
cancer.
David was an attorney with the law firm of Gray, Plant, Mooty, Mooty & Bennett
since graduating from law school in 1967. David was also a successful
entrepreneur, owning controlling interests in Highland Manufacturing, Kiefer
Built, and USL Products. He also devoted countless hours to numerous civic and
charitable groups, including the Minneapolis Institute of Arts, the Guthrie
Theater, the Nature Conservancy, and Dunwoody Institute.
His association with the funds began in 1987, when he joined the Board of
Directors of the Piper Jaffray Funds. The First American Funds have been the
beneficiary of David's experience, wisdom, and insight during challenging
periods of change and growth. His knowledge of the industry and mutual fund
board experience were invaluable during the critical transition period
integrating the Piper and First American Fund Families. David's abilities were
particularly appreciated by the Audit, Pricing, and Board Development Committees
on which he served. The Directors with whom he served value greatly their time
spent together.
We gratefully and sincerely recognize David's contributions and extend our
sincere condolences to David's family and friends.
5 2000 ANNUAL REPORT American Municipal Income Portfolio
<PAGE>
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES January 31, 2000
................................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (note 2) ....... $118,045,738
Cash in bank on demand deposit ............................ 509
Dividends and accrued interest receivable ................. 1,343,881
------------
Total assets ............................................ 119,390,128
------------
LIABILITIES:
Preferred stock dividends payable (note 3) ................ 17,877
Accrued investment management fee ......................... 35,487
Accrued administrative fee ................................ 20,278
Other accrued expenses .................................... 6,167
------------
Total liabilities ........................................ 79,809
------------
Net assets applicable to outstanding capital stock ....... $119,310,319
============
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital (common and
preferred stock) ........................................ $124,031,021
Undistributed net investment income ....................... 385,229
Accumulated net realized loss on investments .............. (2,716,554)
Unrealized depreciation of investments .................... (2,389,377)
------------
Total - representing net assets applicable to capital
stock ................................................. $119,310,319
============
* Investments in securities at identified cost ............ $120,435,115
============
NET ASSET VALUE AND MARKET PRICE OF COMMON STOCK:
Net assets applicable to outstanding common stock ......... $ 75,810,319
Shares of common stock outstanding (authorized 200 million
shares of $0.01 par value) .............................. 5,756,267
Net asset value ........................................... $ 13.17
Market price .............................................. $ 11.75
LIQUIDATION PREFERENCE OF PREFERRED STOCK (NOTE 3):
Net assets applicable to outstanding preferred stock ...... $ 43,500,000
Shares of preferred stock outstanding (authorized 1 million
shares) ................................................. 1,740
Liquidation preference per share .......................... $ 25,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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2000 Annual Report 6 American Municipal Income Portfolio
<PAGE>
FINANCIAL STATEMENTS (continued)
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STATEMENT OF OPERATIONS For the Year Ended January 31, 2000
................................................................................
<TABLE>
<S> <C>
INCOME:
Interest ................................................... $ 6,604,289
Exempt-interest dividends from investment companies ........ 300,128
-----------
Total investment income .................................. 6,904,417
-----------
EXPENSES (NOTE 5):
Investment management fee ................................. 439,749
Administrative fee ........................................ 193,533
Remarketing agent fee ..................................... 108,752
Custodian and accounting fees ............................. 77,709
Transfer agent fees ....................................... 21,999
Reports to shareholders ................................... 23,703
Directors' fees ........................................... 3,000
Audit and legal fees ...................................... 55,498
Other expenses ............................................ 56,296
-----------
Total expenses .......................................... 980,239
Less expenses paid indirectly ......................... (5,450)
-----------
Total net expenses ...................................... 974,789
-----------
Net investment income ................................... 5,929,628
-----------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS:
Net realized loss on investments (note 4) ................. (216,626)
Net change in unrealized appreciation or depreciation of
investments ............................................. (12,845,247)
-----------
Net loss on investments ................................. (13,061,873)
-----------
Net decrease in net assets resulting from
operations .......................................... $(7,132,245)
===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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2000 Annual Report 7 American Municipal Income Portfolio
<PAGE>
FINANCIAL STATEMENTS (continued)
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STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
1/31/00 1/31/99
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 5,929,628 $ 5,878,972
Net realized gain (loss) on investments ................ (216,626) 912,077
Net change in unrealized appreciation or depreciation of
investments .......................................... (12,845,247) 1,158,526
------------ ------------
Net increase (decrease) in net assets resulting from
operations ......................................... (7,132,245) 7,949,575
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Common stock dividends ............................... (4,443,550) (4,339,248)
Preferred stock dividends ............................ (1,429,704) (1,528,693)
------------ ------------
Total distributions .................................. (5,873,254) (5,867,941)
------------ ------------
Total increase (decrease) in net assets .............. (13,005,499) 2,081,634
Net assets at beginning of year ........................ 132,315,818 130,234,184
------------ ------------
Net assets at end of year .............................. $119,310,319 $132,315,818
============ ============
Undistributed net investment income .................... $ 385,229 $ 329,280
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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2000 Annual Report 8 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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(1) ORGANIZATION
............................
American Municipal Income Portfolio Inc. (the fund) is
registered under the Investment Company Act of 1940 (as amended)
as a diversified, closed-end management investment company. The
fund invests in a diverse range of municipal securities rated
investment grade or of comparable quality when purchased. These
securities may include municipal derivative securities, such as
inverse floating rate and inverse interest-only municipal
securities. Fund shares are listed on the New York Stock
Exchange under the symbol XAA.
(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
fund's 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 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.
Pricing services value domestic equity securities traded on a
securities exchange or Nasdaq at the last reported sale price,
up to the time of valuation. If there are no reported sales of a
security on the valuation date, it is valued at the mean between
the published bid and asked prices reported by the exchange or
Nasdaq. If there are no sales and no published bid and asked
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2000 Annual Report 9 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
quotations for a security on the valuation date or the security
is not traded on an exchange or Nasdaq, the pricing service may
obtain market quotations directly from broker-dealers.
Securities transactions are accounted for on the date securities
are purchased or sold. Realized gains and losses are calculated
on the identified-cost basis. Distributions of short-term and
long-term realized gains received from closed-end investment
companies are recorded as realized gains. Interest income,
including amortization of bond discount and premium, is recorded
on an accrual basis.
INVERSE FLOATERS
As part of its investment strategy, the fund may invest in
certain securities for which the potential income return is
inversely related to changes in a floating interest rate
("inverse floater"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase
when short-term interest rates decrease. Investments in inverse
floaters may be characterized as derivative securities and may
subject the fund to the risks of reduced or eliminated interest
payments and losses of invested principal. In addition, inverse
floaters have the effect of providing investment leverage and,
as a result, the market value of such securities will generally
be more volatile than that of fixed rate, tax-exempt securities.
To the extent the fund invests in inverse floaters, the net
asset value of the fund's shares may be more volatile than if
the fund did not invest in such securities. At January 31, 2000,
the fund had investments in inverse floaters with a value of
$1,159,950, which represents 1.0% of net assets.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been purchased by
the fund 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
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2000 Annual Report 10 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
market fluctuation, and may increase or decrease in value prior
to their delivery. The fund segregates, with its custodian,
assets with a market value equal to the amount of its purchase
commitments. The purchase of securities on a when-issued or
forward-commitment basis may increase the volatility of the
fund's net asset value if the fund makes such purchases while
remaining substantially fully invested. As of January 31, 2000,
the fund had no outstanding when-issued or forward commitments.
FEDERAL TAXES
The fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and
not be subject to federal income tax. Therefore, no income tax
provision is required. The fund intends to distribute its
taxable net investment income and realized gains, if any, to
avoid the payment of any federal excise taxes.
Net investment income and net realized gains and losses may
differ for financial statement and tax purposes primarily
because of market discount amortization. The character of
distributions made during the year from net investment income or
net realized gains may differ from its ultimate characterization
for federal income tax purposes. In addition, due to 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 fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, a reclassification adjustment
has been made to decrease undistributed net investment income
and decrease accumulated net realized loss on investments by
$425.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are made monthly for
common shareholders and weekly for preferred shareholders.
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2000 Annual Report 11 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
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 plan, reinvested in additional shares of the funds
common stock. Under the plan, common shares will be purchased in
the open market.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ from
these estimates.
(3) REMARKETED
PREFERRED
STOCK
............................
American Municipal Income Portfolio has issued and, as of
January 31, 2000, has outstanding 1,740 shares of remarketed
preferred stock (870 shares in class "T" and 870 shares in class
"TH") (RP) with a liquidation preference of $25,000 per share.
The dividend rate on the RP is adjusted every seven days (on
Tuesdays for class "T" and on Thursdays for class "TH"), as
determined by the remarketing agent. On January 31, 2000, the
dividend rates were 2.60% and 3.60% for class "T" and "TH",
respectively.
RP is a registered trademark of Merrill Lynch & Company (Merrill
Lynch).
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2000 Annual Report 12 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
(4) INVESTMENT
SECURITY
TRANSACTIONS
............................
Cost of purchases and proceeds from sales of securities, other
than temporary investments in short-term securities, for the
year ended January 31, 2000, aggregated $11,679,587 and
$13,676,158, respectively.
(5) EXPENSES
............................
INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
The fund has entered into the following agreements with U.S.
Bank National Association (U.S. Bank), acting through its
division, First American Asset Management (the advisor and
administrator):
The investment advisory agreement provides the advisor with a
monthly investment management fee equal to an annual rate of
0.35% of the fund's average weekly net assets (computed by
subtracting liabilities, which exclude preferred stock, from the
value of the total assets of the fund). For its fee, the advisor
provides investment advice and conducts the management and
investment activities of the fund.
The administration agreement provides the administrator with a
monthly fee based on an annual rate of the funds average weekly
net assets (computed by subtracting liabilities, which exclude
preferred stock, from the value of the total assets of the
fund). For its fee, the administrator provides reporting,
regulatory, and record-keeping services for the fund. For the
fiscal period from February 1, 1999, through December 31, 1999,
the fund paid the administrator a monthly fee in an amount equal
to an annual rate of 0.15% of the fund s average weekly net
assets. Effective January 1, 2000, the administrators fee
increased to an annual rate of 0.20% of the funds average weekly
net assets. The new administrative fee includes 0.05% for
accounting expenses which were previously charged to and paid
separately by the fund.
REMARKETING AGENT FEE
The fund has entered into a remarketing agent agreement with
Merrill Lynch (the remarketing agent). The remarketing
- --------------------------------------------------------------------------------
2000 Annual Report 13 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
agreement provides the remarketing agent with a monthly fee in
an amount equal to an annual rate of 0.25% of the fund's average
amount of RP outstanding. For its fee, the remarketing agent
will remarket shares of RP tendered to it on behalf of
shareholders and will determine the applicable dividend rate for
each seven-day dividend period.
OTHER FEES AND EXPENSES
In addition to the investment management, administrative, and
remarketing agent fees, the fund is 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 and
auditing services; insurance; interest; taxes and other
miscellaneous expenses. During the year ended January 31, 2000,
the fund paid $6,124 for custody services to U.S. Bank.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on miscellaneous cash balances maintained by the
fund.
(6) CAPITAL LOSS
CARRYOVER
............................
For federal income tax purposes, the fund had capital loss
carryovers at January 31, 2000, which, if not offset by
subsequent capital gains, will expire on the fund's fiscal year-
ends as indicated below. It is unlikely the board of directors
will authorize a distribution of any net realized capital gains
until the available capital loss carryovers have been offset or
expire.
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER EXPIRATION
------------ ----------
<S> <C> <C>
$ 942,779 2003
1,557,574 2004
216,201 2008
----------
$2,716,554
==========
</TABLE>
- --------------------------------------------------------------------------------
2000 Annual Report 14 American Municipal Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
(7) FINANCIAL
HIGHLIGHTS
............................
Per-share data for a share of common stock outstanding
throughout each period and selected information for each period
are as follows:
AMERICAN MUNICIPAL INCOME PORTFOLIO
<TABLE>
<CAPTION>
Year Ended January 31,
-----------------------------------------------
2000 1999(g) 1998 1997 1996
------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, common stock,
beginning of period ............. $15.43 $15.07 $13.98 $14.42 $11.97
------ ------ ------ ------ ------
Operations:
Net investment income ........... 1.03 1.02 1.00 1.07 1.07
Net realized and unrealized gains
(losses) on investments ....... (2.27) 0.36 1.12 (0.50) 2.52
------ ------ ------ ------ ------
Total from operations ......... (1.24) 1.38 2.12 0.57 3.59
------ ------ ------ ------ ------
Distributions to shareholders from
net investment income:
Paid to common shareholders ..... (0.77) (0.75) (0.76) (0.75) (0.85)
Paid to
preferred shareholders ........ (0.25) (0.27) (0.27) (0.26) (0.29)
------ ------ ------ ------ ------
Total distributions to
shareholders ................ (1.02) (1.02) (1.03) (1.01) (1.14)
------ ------ ------ ------ ------
Net asset value, common stock, end
of period ....................... $13.17 $15.43 $15.07 $13.98 $14.42
====== ====== ====== ====== ======
Market value, common stock, end
of period ....................... $11.75 $14.00 $13.44 $12.13 $12.50
====== ====== ====== ====== ======
SELECTED INFORMATION
Total return, common stock, net
asset value (a) ................. (9.88)% 7.62% 13.63% 2.41% 28.31%
Total return, common stock, market
value (b) ....................... (10.81)% 10.07% 17.53% 3.29% 15.21%
Net assets at end of period
(in millions) ................... $ 119 $ 132 $ 130 $ 124 $ 127
Ratio of expenses to average weekly
net assets applicable to common
stock (c) ....................... 1.20% 1.13% 1.19% 1.22% 1.20%
Ratio of net investment income to
average weekly net assets
applicable to common
stock (d)(e) .................... 5.49% 5.02% 5.10% 5.90% 5.81%
Portfolio turnover rate (excluding
short-term securities) .......... 10% 19% 46% 28% 54%
Remarketed preferred stock
outstanding end of period
(in millions) ................... $ 44 $ 44 $ 44 $ 44 $ 44
Asset coverage per share (in
thousands) (f) .................. $ 69 $ 76 $ 75 $ 71 $ 73
Liquidation preference and market
value per share of preferred
stock (in thousands) ............ $ 25 $ 25 $ 25 $ 25 $ 25
</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 OF EXPENSES TO TOTAL AVERAGE WEEKLY NET ASSETS IS 0.78%, 0.75%,
0.78%, 0.78% AND 0.77%, IN FISCAL YEARS 2000, 1999, 1998, 1997, AND 1996,
RESPECTIVELY. DIVIDENDS PAID TO SHAREHOLDERS ARE NOT CONSIDERED AN EXPENSE.
(d) RATIO REFLECTS TOTAL NET INVESTMENT INCOME LESS DIVIDENDS PAID TO PREFERRED
SHAREHOLDERS FROM NET INVESTMENT INCOME DIVIDED BY AVERAGE WEEKLY NET
ASSETS APPLICABLE TO COMMON STOCK.
(e) RATIO OF NET INVESTMENT INCOME TO TOTAL AVERAGE WEEKLY NET ASSETS IS 4.72%,
4.52%, 4.58%, 5.02% AND 5.13% IN FISCAL YEARS 2000, 1999, 1998, 1997, AND
1996, RESPECTIVELY.
(f) REPRESENTS TOTAL NET ASSETS DIVIDED BY PREFERRED STOCK OUTSTANDING.
(g) EFFECTIVE AUGUST 10, 1998, THE ADVISOR CHANGED FROM PIPER CAPITAL
MANAGEMENT TO U.S. BANK.
- --------------------------------------------------------------------------------
2000 Annual Report 15 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
<TABLE>
AMERICAN MUNICIPAL INCOME PORTFOLIO January 31, 2000
.....................................................................................
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 (93.7%):
MUNICIPAL BONDS (92.7%)
ARIZONA (3.2%):
Pima County United School District (FGIC),
8.38%, 7/1/13 .............................. $ 3,000,000(b) $ 3,775,500
------------
CALIFORNIA (4.6%):
Duarte Redevelopment Agency (Escrowed to
maturity), 6.88%, 11/1/11 .................. 5,000,000(d) 5,649,350
------------
COLORADO (0.4%):
Water Reserve and Power Development (Callable
9/1/06 at 101), 5.90%, 9/1/16 .............. 500,000 501,305
------------
GEORGIA (9.1%):
Municipal Electrical Authority (FGIC)
(Callable 1/1/03 at 102), 6.50%, 1/1/12 .... 10,000,000(b)(d) 10,801,600
------------
HAWAII (2.1%):
State Department of Budget and Finance,
6.40%, 7/1/13 .............................. 2,415,000 2,454,002
------------
ILLINOIS (6.6%):
Augustana College Revenue (Callable 10/01/07
at 100), 5.70%, 10/1/11 .................... 500,000 497,850
Chicago State University Revenue (MBIA)
(Prerefunded to 12/1/04 at 102),
6.00%, 12/1/12 ............................. 1,000,000(b)(e) 1,060,050
Health Facility Authority-Lutheran General
Hospital, 7.00%, 4/1/08-4/1/14 ............. 1,500,000 1,631,095
Health Facility Authority-Lutheran General
Hospital (Prerefunded to 1/01/02 at 102),
6.80%, 1/1/22 .............................. 1,000,000(e) 1,052,340
Kane County School District (FGIC)
(Prerefunded to 2/1/05 at 100),
5.75%, 2/1/15 .............................. 1,000,000(b)(e) 1,031,930
Rochelle Electric Systems (AMBAC) (Callable
5/1/06 at 102), 5.20%, 5/1/16 .............. 750,000(b) 678,585
Rockford Multifamily Housing Revenue (Callable
1/20/08 at 102), AMT, 5.88%, 1/20/38 ....... 2,215,000(b) 2,038,132
------------
7,989,982
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
2000 Annual Report 16 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (continued)
- --------------------------------------------------------------------------------
AMERICAN MUNICIPAL INCOME PORTFOLIO
(CONTINUED)
<TABLE>
Principal Market
Description of Security Amount Value (a)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
INDIANA (4.9%):
Health Facility Authority-Columbus Hospital
(FSA), 7.00%, 8/15/15 $ 2,670,000(b) $ 2,971,870
Health Facility Authority-Greenwood Village
South (Callable 5/15/08 at 101),
5.50%, 5/15/18 ............................. 2,280,000 1,822,176
Municipal Bond Bank (Callable 2/1/04 at 102),
6.00%, 2/1/16 .............................. 1,000,000 1,001,490
------------
5,795,536
------------
IOWA (0.8%):
Sheldon Health Care Facilities (Callable
3/1/04 at 101), 6.15%, 3/1/16 .............. 1,000,000 980,950
------------
KANSAS (0.9%):
Kansas City Utility Systems Revenue (FGIC)
(Callable 9/1/04 at 102), 6.25%, 9/1/14 .... 1,000,000(b) 1,039,780
------------
KENTUCKY (2.4%):
State Housing Authority (Callable 11/01/29 at
100), 6.08%, 1/1/30 ........................ 3,000,000 2,876,430
------------
LOUISIANA (4.5%):
De Soto Parish Pollution Control (MBIA)
(Callable 1/1/03 at 102), 7.60%, 1/1/19 .... 5,000,000(b) 5,378,450
------------
MARYLAND (2.2%):
Baltimore Parking Revenue - Series A (FGIC),
5.90%, 7/1/13 .............................. 2,500,000(b) 2,581,875
------------
MICHIGAN (9.3%):
Comstock Park Public Schools (FGIC) (Callable
1/1/03 at 102), 7.88%, 5/1/11 .............. 3,145,000(b)(d) 3,771,358
Hospital Financing Authority-Daughters of
Charity (Escrowed to maturity),
5.25%, 11/1/15 ............................. 3,000,000 2,824,920
Kent Hospital Financial Authority-Michigan
Hospitals (MBIA) (Callable 1/15/08 at 100),
7.25%, 1/15/13 ............................. 4,000,000(b)(d) 4,546,240
------------
11,142,518
------------
MINNESOTA (6.9%):
Eden Prairie Multifamily Housing Revenue
(Callable 1/20/08 at 102),
5.50%-5.60%, 1/20/18-7/20/28 ............... 1,400,000 1,277,189
Minneapolis Special School District #1 (MBIA)
(Callable 2/1/03 at 100), 5.45%, 2/1/15 .... 3,630,000(b) 3,460,552
Moorhead Golf Course Revenue (Callable 12/1/08
at 100), 5.88%, 12/1/21 .................... 2,890,000 2,590,278
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
2000 Annual Report 17 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (continued)
- --------------------------------------------------------------------------------
AMERICAN MUNICIPAL INCOME PORTFOLIO
(CONTINUED)
<TABLE>
Principal Market
Description of Security Amount Value (a)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
State Housing and Finance Agency (Callable
7/1/02 at 102), AMT, 6.85%, 1/1/24 ......... $ 840,000(b) $ 853,314
------------
8,181,333
------------
NEBRASKA (1.4%):
Educational Financial Authority Revenue
(Callable 12/15/08 at 100),
5.35%, 12/15/18 ............................ 2,040,000 1,705,175
------------
NEVADA (2.5%):
Washoe County School District (MBIA) (Callable
6/1/04 at 101), 5.75%, 6/1/12 .............. 3,000,000(b) 3,013,950
------------
NEW MEXICO (7.4%):
Mortgage Finance Authority,
6.40%-6.88%, 7/1/15-7/1/25 ................. 8,485,000 8,821,124
------------
OHIO (0.7%):
Franklin County Health Care Facility Revenue
(Callable 8/15/08 at 101),
5.25%, 8/15/12 ............................. 1,000,000 854,130
------------
SOUTH DAKOTA (3.6%):
Health & Education Facilities Authority -
Prairie Crossings (Callable at 11/01/29 at
102), 6.00%, 11/1/19 ....................... 2,000,000 1,945,700
Housing and Development Authority (Callable
5/1/04 at 102), 5.80%, 5/1/14 .............. 1,270,000 1,261,847
Sioux Falls Health Facilities-Evangelical
Lutheran (AMBAC) (Callable 6/1/08 at 102),
5.35%, 6/1/23 .............................. 1,250,000(b) 1,085,987
------------
4,293,534
------------
TENNESSEE (0.8%):
Shelby County Health Education and Housing
Facilities Board Revenue (Callable 7/01/09
at 102), 5.50%, 7/1/20 ..................... 1,000,000 905,560
------------
TEXAS (8.3%):
Abilene Health Facility Development (Callable
11/15/08 at 101), 5.88%, 11/15/18 .......... 1,150,000 956,099
Arlington Independent School District
(Callable 2/15/05 at 100),
6.00%, 2/15/15 ............................. 670,000 680,432
Arlington Independent School District (PSF)
(Prerefunded to 2/15/05 at 100),
6.00%, 2/15/05 ............................. 1,605,000(b)(e) 1,674,946
Fort Bend Independent School District
(Escrowed to maturity), 5.00%, 2/15/14 ..... 2,000,000 1,875,100
Houston Water Conveyance System (AMBAC),
7.50%, 12/15/16 ............................ 745,000(b) 868,581
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
2000 Annual Report 18 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (continued)
- --------------------------------------------------------------------------------
AMERICAN MUNICIPAL INCOME PORTFOLIO
(CONTINUED)
<TABLE>
Principal Market
Description of Security Amount Value (a)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
North Central Health Facilities Development
Revenue (Callable 11/15/09 at 102),
7.25%, 11/15/19 ............................ $ 3,000,000 $ 2,755,590
United Independent School District (Callable
8/15/06 at 100), 5.00%, 8/15/14 ............ 1,150,000 1,038,416
------------
9,849,164
------------
UTAH (3.8%):
Municipal Power-San Juan Project (MBIA)
(Prerefunded to 6/1/04 at 102),
6.25%, 6/1/14 .............................. 1,300,000(b)(e) 1,387,542
NEBO County School District (FGIC)
(Prerefunded to 6/15/04 at 100),
5.75%, 6/15/14 ............................. 3,000,000(b)(e) 3,095,970
------------
4,483,512
------------
WASHINGTON (2.3%):
Douglas County Public Utility District (MBIA)
(Callable 1/1/05 at 102), 6.00%, 1/1/15 .... 1,000,000(b) 1,003,860
State Public Power Supply (FSA) (Callable
7/1/07 at 102), 5.25%, 7/1/16 .............. 1,000,000(b) 902,000
State Public Power Supply (Callable 7/1/08 at
102), 5.13%, 7/1/18 ........................ 1,000,000 854,490
------------
2,760,350
------------
WISCONSIN (4.0%):
Amery Apple River Hospital Project (Callable
6/1/08 at 100), 5.70%, 6/1/13 .............. 1,440,000 1,292,630
Health and Education Facilities-Beloit
Hospital (Callable 7/1/03 at 102),
5.80%-5.90%, 7/1/09-7/1/11 ................. 1,180,000 1,102,592
Health and Education Facilities-Waukesha
Hospital (AMBAC) (Callable 8/15/06 at 102),
5.50%, 8/15/15 ............................. 1,000,000(b) 942,190
State Health & Educational Facility Authority
Revenue (Callable 11/15/08 at 102),
5.75%, 11/15/27 ............................ 1,800,000 1,418,454
------------
4,755,866
------------
Total Municipal Bonds
(cost: $112,273,283) ..................... 110,590,976
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- --------------------------------------------------------------------------------
2000 Annual Report 19 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (continued)
- --------------------------------------------------------------------------------
AMERICAN MUNICIPAL INCOME PORTFOLIO
(CONTINUED)
<TABLE>
Shares/
Principal Market
Description of Security Amount Value (a)
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
MUNICIPAL DERIVATIVE SECURITIES (1.0%):
INVERSE FLOATER
Duluth, Minnesota, Health Care Trust
Certificate, Series F2, 10.36%, 5/1/18
(cost: $1,145,692) ......................... $ 1,110,000(b)(d) $ 1,159,950
------------
Total Municipal Long-Term Securities
(cost: $113,418,975) .................... 111,750,926
------------
COMMON STOCK (3.4%):
CLOSED-END INVESTMENT COMPANIES (3.4%):
Blackrock Investment Quality
Municipal Trust ............................ 72,600 925,650
Van Kampen Advantage Municipal Trust II ...... 15,400 178,062
Van Kampen Municipal Opportunity Trust ....... 35,100 467,269
Van Kampen Municipal Trust ................... 165,800 2,186,487
Van Kampen Value Municipal Trust Income ...... 28,950 351,019
------------
Total Common Stock
(cost: $4,829,815) ....................... 4,108,487
------------
MUNICIPAL SHORT-TERM SECURITIES (1.6%):
NEW YORK (0.8%):
New York City, Subseries A-10, VRDN,
3.65%, 8/1/16 .............................. $ 500,000(b)(c) 500,000
New York City, Series C, 3.65%, 10/1/23 ...... $ 400,000(c) 400,000
------------
900,000
------------
WASHINGTON (0.8%):
Washington State Healthcare Facilities
Authority Revenue, VRDN, 3.65%, 1/1/23 ..... $ 1,000,000(b)(c) 1,000,000
------------
Total Municipal Short-Term Securities
(cost: $1,900,000) ....................... 1,900,000
------------
RELATED PARTY MONEY MARKET FUND (0.2%):
First American Tax Free Obligations Fund
(cost: $286,325) ........................... 286,325(f) 286,325
------------
Total Investments in Securities
(cost: $120,435,115)(g) ................. $118,045,738
============
</TABLE>
- --------------------------------------------------------------------------------
2000 Annual Report 20 American Municipal Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (continued)
- --------------------------------------------------------------------------------
NOTES TO INVESTMENTS IN SECURITIES
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) PORTFOLIO ABBREVIATIONS AND DEFINITIONS:
AMBAC - AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT - ALTERNATIVE MINIMUM TAX. AS OF JANUARY 31, 2000, THE AGGREGATE
MARKET VALUE OF SECURITIES SUBJECT TO THE ALTERNATIVE MINIMUM TAX IS
$2,891,446, WHICH REPRESENTS 2.4% OF NET ASSETS.
FGIC - FINANCIAL GUARANTY INSURANCE CORPORATION
FSA - FINANCIAL SECURITY ASSURANCE
MBIA - MUNICIPAL BOND INSURANCE ASSOCIATION
PSF - PERMANENT SCHOOL FUNDING
VRDN - VARIABLE RATE DEMAND NOTE
INVERSE FLOATER - REPRESENTS SECURITIES THAT PAY INTEREST AT RATES THAT
INCREASE (DECREASE) IN THE SAME MAGNITUDE AS, OR IN A MULTIPLE OF, A
DECREASE (INCREASE) IN THE MARKET RATE PAID ON A RELATED, FLOATING
RATE SECURITY. INTEREST RATES DISCLOSED ARE IN EFFECT ON JANUARY 31,
2000.
(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
JANUARY 31, 2000. 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) SECURITIES PURCHASED AS PART OF A PRIVATE PLACEMENT AND MAY NOT BE SOLD TO
THE PUBLIC. THESE SECURITIES ARE CONSIDERED ILLIQUID. THE FUND IS NOT
LIMITED IN ITS ABILITY TO INVEST IN THESE ILLIQUID SECURITIES. ON JANUARY
31, 2000, THE AGGREGATE VALUE OF THESE INVESTMENTS WAS $25,928,498 OR 21.7%
OF TOTAL NET ASSETS. INFORMATION REGARDING THESE SECURITIES IS AS FOLLOWS:
<TABLE>
<CAPTION>
DATE
SECURITY PAR ACQUIRED COST BASIS
- -------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
DUARTE, CA, REDEVELOPMENT AGENCY $ 5,000,000 9/96-2/97 $ 5,764,893
GEORGIA MUNICIPAL ELECTRICAL AUTHORITY 10,000,000 10/95 10,622,412
COMSTOCK, MI, PARK PUBLIC SCHOOLS 3,145,000 10/95-7/96 3,538,557
KENT, MI, HOSPITAL FINANCIAL AUTHORITY-MICHIGAN
HOSPITALS 4,000,000 9/96-2/97 4,642,446
DULUTH, MN, HEALTH CARE TRUST CERTIFICATE 1,110,000 5/94 1,145,692
</TABLE>
(e) PREREFUNDED ISSUES ARE BACKED BY U.S. GOVERNMENT OBLIGATIONS. THESE BONDS
MATURE AT THE DATE AND PRICE INDICATED.
(f) THIS MONEY MARKET FUND IS ADVISED BY U.S. BANK WHICH ALSO SERVES AS ADVISOR
FOR THE FUND. SEE NOTE 2 IN THE NOTES TO FINANCIAL STATEMENTS.
(g) ON JANUARY 31, 2000, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $120,347,032. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 1,855,132
GROSS UNREALIZED DEPRECIATION ...... (4,156,426)
-----------
NET UNREALIZED DEPRECIATION ...... $(2,301,294)
===========
</TABLE>
- --------------------------------------------------------------------------------
2000 Annual Report 21 American Municipal Income Portfolio
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS
AMERICAN MUNICIPAL INCOME PORTFOLIO INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of American Municipal Income
Portfolio Inc. as of January 31, 2000, and the related statements of operations,
changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended January 31, 1999, and the financial
highlights for each of the four years in the period ended January 31, 1999, were
audited by other auditors whose report dated March 12, 1999, expressed an
unqualified opinion.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of January 31, 2000, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 2000 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
American Municipal Income Portfolio Inc. at January 31, 2000, and the results of
its operations, changes in its net assets, and financial highlights for the year
then ended, in conformity with accounting principles generally accepted in the
United States.
[SIGNATURE]
Minneapolis, Minnesota
March 3, 2000
- --------------------------------------------------------------------------------
2000 Annual Report 22 American Municipal Income Portfolio
<PAGE>
FEDERAL INCOME TAX INFORMATION
- --------------------------------------------------------------------------------
The following per-share information describes the federal tax
treatment of distributions made during the fiscal year. Exempt
interest dividends are exempt from federal income tax and should
not be included in your gross income, but need to be reported on
your income tax return for informational purposes. Please
consult a tax advisor on how to report these distributions at
the state and local levels.
COMMON STOCK INCOME DISTRIBUTIONS
(INCOME FROM TAX-EXEMPT SECURITIES, 99.99%
QUALIFYING AS EXEMPT-INTEREST DIVIDENDS)
<TABLE>
<CAPTION>
PAYABLE DATE AMOUNT
- ------------ --------
<S> <C>
February 24, 1999 ...................... $0.06275
March 24, 1999 ......................... 0.06275
April 28, 1999 ......................... 0.06275
May 26, 1999 ........................... 0.06275
June 23, 1999 .......................... 0.06275
July 28, 1999 .......................... 0.06275
August 25, 1999 ........................ 0.06275
September 22, 1999 ..................... 0.06600
October 27, 1999 ....................... 0.06860
November 23, 1999 ...................... 0.06600
December 15, 1999 ...................... 0.06610
January 12, 2000 ....................... 0.06600
--------
Total .............................. $0.77195
========
</TABLE>
PREFERRED STOCK INCOME DISTRIBUTIONS
(INCOME FROM TAX-EXEMPT SECURITIES, 99.99%
QUALIFYING AS EXEMPT-INTEREST DIVIDENDS)
<TABLE>
<CAPTION>
PAYABLE DATE AMOUNT
- ------------ -------
<S> <C>
Total class "T" ........................ $817.20
-------
Total class "TH" ....................... $826.14
=======
</TABLE>
- --------------------------------------------------------------------------------
2000 Annual Report 23 American Municipal Income Portfolio
<PAGE>
SHAREHOLDER UPDATE
- --------------------------------------------------------------------------------
ANNUAL MEETING RESULTS
An annual meeting of the fund's shareholders was held on August
16, 1999. Each matter voted upon at that meeting, as well as the
number of votes cast for, against or withheld, the number of
abstentions, and the number of broker non-votes with respect to
such matters, are set forth below.
(1) The fund's preferred shareholders elected the following
directors:
<TABLE>
<CAPTION>
SHARES SHARES WITHHOLDING
VOTED "FOR" AUTHORITY TO VOTE
------------- ------------------
<S> <C> <C>
David T. Bennett ....................... 1,660 0
Leonard W. Kedrowski ................... 1,660 0
</TABLE>
David Bennett passed away in September, 1999. The fund's
preferred shareholders will be asked to elect a replacement
director at the next annual meeting.
(2) The fund's preferred and common shareholders, voting as a
class, elected the following directors:
<TABLE>
<CAPTION>
SHARES SHARES WITHHOLDING
VOTED "FOR" AUTHORITY TO VOTE
------------- ------------------
<S> <C> <C>
Robert J. Dayton ....................... 5,459,217 17,710
Roger A. Gibson ........................ 5,459,217 17,710
Andrew M. Hunter III ................... 5,459,217 17,710
John M. Murphy, Jr. .................... 5,459,217 17,710
Robert L. Spies ........................ 5,459,217 17,710
Joseph D. Strauss ...................... 5,459,217 17,710
Virginia L. Stringer ................... 5,459,217 17,710
</TABLE>
(3) The fund's preferred and common shareholders, voting as a
class, ratified the selection by the fund's Board of
Directors of Ernst & Young LLP as the independent public
- --------------------------------------------------------------------------------
2000 Annual Report 24 American Municipal Income Portfolio
<PAGE>
SHAREHOLDER UPDATE (continued)
- --------------------------------------------------------------------------------
accountants for the fund for the fiscal year ending
January 31, 2000. The following votes were cast regarding
this matter:
<TABLE>
<CAPTION>
SHARES SHARES BROKER
VOTED "FOR" VOTED "AGAINST" ABSTENTIONS NON-VOTES
------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
5,455,297 7,837 13,793 --
</TABLE>
TERMS AND CONDITIONS OF THE DIVIDEND REINVESTMENT PLAN
As a shareholder, you may choose to participate in the Dividend
Reinvestment Plan. It's a convenient and economical way to buy
additional shares of the fund by automatically reinvesting
dividends and capital gains. The plan is administered by
EquiServe, the plan agent.
ELIGIBILITY/PARTICIPATION
You may join the plan at any time. Reinvestment of distributions
will begin with the next distribution paid, provided your
request is received at least 10 days before the record date for
that distribution.
If your shares are in certificate form, you may join the plan
directly and have your distributions reinvested in additional
shares of the fund. To enroll in this plan, call EquiServe at
1-800-543-1627. If your shares are registered in your brokerage
firm's name or another name, ask the holder of your shares how
you may participate.
Banks, brokers or nominees, on behalf of their beneficial owners
who wish to reinvest dividend and capital gains distributions,
may participate in the plan by informing EquiServe at least 10
days before the next dividend and/or capital gains distribution.
PLAN ADMINISTRATION
Beginning no more than five business days before the dividend
payment date, EquiServe will buy shares of the fund on the New
York Stock Exchange (NYSE) or elsewhere on the open market.
- --------------------------------------------------------------------------------
2000 Annual Report 25 American Municipal Income Portfolio
<PAGE>
SHAREHOLDER UPDATE (continued)
- --------------------------------------------------------------------------------
The fund will not issue any new shares in connection with the
plan. All reinvestments will be at a market price plus a pro
rata share of any brokerage commissions, which may be more or
less than the fund's net asset value per share. The number of
shares allocated to you is determined by dividing the amount of
the dividend or distribution by the applicable price per share.
There is no direct charge for reinvestment of dividends and
capital gains, since EquiServe fees are paid for by the fund.
However, each participant pays a pro rata portion of the
brokerage commissions. Brokerage charges are expected to be
lower than those for individual transactions because shares are
purchased for all participants in blocks. As long as you
continue to participate in the plan, distributions paid on the
shares in your account will be reinvested.
EquiServe maintains accounts for plan participants holding
shares in certificate form and will furnish written confirmation
of all transactions, including information you need for tax
records. Reinvested shares in your account will be held by
EquiServe in noncertificated form in your name.
TAX INFORMATION
Distributions invested in additional shares of the fund are
subject to income tax to the same extent they would be if
received in cash. Shareholders, as required by the Internal
Revenue Service, will receive Form 1099 regarding the federal
tax status of the prior year's distributions.
PLAN WITHDRAWAL
If you hold your shares in certificate form, you may terminate
your participation in the plan at any time by giving written
notice to EquiServe. If your shares are registered in your
brokerage firm's name, you may terminate your participation via
verbal or written instructions to your investment professional.
Written instructions should include your name and address as
they appear on the certificate or account.
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2000 Annual Report 26 American Municipal Income Portfolio
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SHAREHOLDER UPDATE (continued)
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If notice is received at least 10 days before the record date,
all future distributions will be paid directly to the
shareholder of record.
If your shares are issued in certificate form and you
discontinue your participation in the plan, you (or your
nominee) will receive an additional certificate for all full
shares and a check for any fractional shares in your account.
PLAN AMENDMENT/TERMINATION
The fund reserves the right to amend or terminate the plan.
Should the plan be amended or terminated, participants will be
notified in writing at least 90 days before the record date for
such dividend or distribution. The plan may also be amended or
terminated by EquiServe with at least 90 days written notice to
participants in the plan.
Any question about the plan should be directed to your
investment professional or to EquiServe LP, P.O. Box 8218,
Boston, Massachusetts 02266, 1-800-543-1627.
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2000 Annual Report 27 American Municipal Income Portfolio
<PAGE>
[LOGO] FIRST AMERICAN-Registered Trademark-
ASSET MANAGEMENT
American Municipal Income Portfolio
2000 ANNUAL REPORT
[GRAPHIC] This document is printed on paper
made from 100% total recovered fiber,
including 15% post-consumer waste.
3/2000 3015-00
