All-American Term Trust Inc. Distribution Declaration.

NEW YORK--(BUSINESS WIRE)--May 4, 1998--All-American Term Trust Inc. (NYSE:AAT), a closed-end management investment company with an investment objective of providing a high level of current income, consistent with the preservation of capital, today announced that the Trust's Board of Directors has declared a dividend from net investment income of $0.0850 per share. The dividend is payable on May 29, 1998 to shareholders of record as of May 14, 1998. The ex-dividend date is May 12, 1998. -0-

Portfolio Statistics (as of 4/30/98)

Composition (% of net assets)

Corporates                     64.62
ARMs/Mortgages                 27.91
Municipals                      7.04
Cash & Cash Equivalents         0.43


Ratings (% of net assets)

AAA                            35.38
A                              12.09
BBB                            18.77
BB                              5.44
B                              22.23
Non-Rated                       4.82
Below B                         1.27


Top Five Sectors (% of net assets)

Finance/Banking                12.62
Diversified Industrials         9.71
Cable/Media                     8.67
Municipals                      7.04
Energy                          5.14


Weighted Averages

Maturity                        6.50 Years
Duration                        3.71 Years

Commentary

U.S. bond market yields ended the first quarter of 1998 basically unchanged. Interest rates fell in January 1998 and the yield curve steepened as shorter maturities rallied more than longer maturities. The market sold off in February after it became clear that the Federal Reserve was on hold with a bias towards increasing short-term rates. The countervailing forces at work in the markets should keep the Fed on hold in the near term. The yield curve flattened slightly; the intermediate portion (maturities between two and five years) underperformed the short and long ends of the curve.

The "January Effect" - where there is pent-up demand for spread products such as corporates - did not transpire this year, as a record supply of corporate issues met with lackluster demand. Much of the softness in spreads, however, was erased in February, as investors became more comfortable with the markets and spread products in particular.

Portfolio Positioning

The Trust's focus lies in meeting its goal of returning the original $15 per share investment to shareholders when it terminates on or about January 31, 2003. To that end, about 60% of the Trust's assets are in corporate bonds that will mature near that deadline. The overall portfolio's duration (the Trust's sensitivity to changes in interest rates) is kept in line with the termination date, and will gradually drop from its current 3.8 years as 2003 approaches.

Although the Trust is leveraged, which tends to boost volatility, it uses proceeds of that borrowing to invest in adjustable-rate mortgages, which are relatively interest-rate insensitive instruments that don't pose much threat to net asset value volatility. The Trust has a 28% stake in below-investment grade securities, which has helped the Trust outperform most of its intermediate-term peers from the recent strength of the high-yield market.

The Trust's focus on cable/media and finance issuers has also helped the Trust's performance. We believe these sectors represent the most favorable risk/reward profiles in the current economic environment. In particular, the cable/media sector continues to perform well as consolidation and cash flow growth, coupled with ongoing deleveraging occurs. In the finance sector, the Trust's holdings are generally broker dealer paper, insurance paper and credit card bank paper as opposed to well-known banks that are fully priced.

Going forward

With a heavy corporate calender, the focus is on the new issue market. We view any possible widening that may occur - as dealers' inventories increase - as a buying opportunity. The current environment, characterized by strong domestic growth, low inflation and a rising stock market should bode well for spread products and yield oriented strategies. We expect the 30-year Treasury bond to trade within the 5.75% - 6.00% yield range. We continue to believe that the spillover effects from Asia will not be fully felt until the latter part of 1998.

CONTACT: Linda Buckley, 201/902-5450