All-American Term Trust Inc. Distribution Declaration.NEW YORK--(BUSINESS WIRE)--May 4, 1998--All-American Term Trust Inc. (NYSE NYSE See: New York Stock Exchange :AAT Alpha-1-antitrypsin (AAT) A blood component that breaks down infection-fighting enzymes such as elastase. Mentioned in: Chronic Obstructive Lung Disease ), a closed-end management investment company with an investment objective of providing a high level of current income, consistent with the preservation of capital Preservation of Capital An investment strategy whose primary goal is to prevent the loss of an investment's total value. Notes: For investors using the capital preservation strategy to achieve their goal, they must ensure their portfolio is producing a return that is at , 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 Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. 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 flat·ten v. flat·tened, flat·ten·ing, flat·tens v.tr. 1. To make flat or flatter. 2. To knock down; lay low: The boxer was flattened with one punch. slightly; the intermediate portion (maturities between two and five years) underperformed the short and long ends of the curve. The "January Effect January Effect A phenomenon occurring at the end of the year when investors, starting to worry about taxes, sell some stocks that are down so the losses can be written off against capital gains. " - 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 termination date, n See expiration 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 Adjustable-rate mortgage (ARM) A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or , 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 Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. 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 CALENDER. An almanac. Julius Caesar ordained that the Roman year should consist of 365 days, except every fourth year, which should contain 366, the additional day to be reckoned by counting the twenty-fourth day of February (which was the 6th of the calends of March) twice. , 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 bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. 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 spill·o·ver n. 1. The act or an instance of spilling over. 2. An amount or quantity spilled over. 3. A side effect arising from or as if from an unpredicted source: effects from Asia will not be fully felt until the latter part of 1998. CONTACT: Linda Buckley, 201/902-5450 |
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