<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value*
(including a repurchase agreement of $542,000) (note
2) ................................................... $ 70,766,480
Cash in bank on demand deposit ........................... 50,489
Accrued interest receivable .............................. 114,299
-----------
Total assets ......................................... 70,931,268
-----------
LIABILITIES:
-----------
Total liabilities .................................... --
-----------
Net assets applicable to outstanding capital stock ....... $ 70,931,268
-----------
-----------
REPRESENTED BY:
Capital stock - authorized 1 billion shares of $0.01 par
value; outstanding, 8,005,700 shares ................. $ 80,057
Additional paid-in capital ............................... 71,703,110
Undistributed net investment income ...................... 31,434
Accumulated net realized loss on investments ............. (5,058,996)
Unrealized appreciation of investments ................... 4,175,663
-----------
Total - representing net assets applicable to
outstanding capital stock ........................ $ 70,931,268
-----------
-----------
Net asset value per share of outstanding capital stock ... $ 8.86
-----------
-----------
* Investments in securities at identified cost ........... $ 66,590,817
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
1
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C>
INCOME:
Interest (net of interest expense of $61,730) .......... $ 4,709,801
Fee income (note 2) ...................................... 136,410
-----------
Total investment income .............................. 4,846,211
-----------
EXPENSES (NOTE 3):
Investment management fee ................................ 302,791
Administrative fee ....................................... 84,109
Custodian, accounting and transfer agent fees ............ 96,827
Reports to shareholders .................................. 34,865
Directors' fees .......................................... 11,100
Audit and legal fees ..................................... 35,725
Other expenses ........................................... 37,277
-----------
Total expenses ....................................... 602,694
Less expenses waived by the advisor and the
administrator .......................................... (265,268)
-----------
Net expenses before expenses paid indirectly ......... 337,426
Less expenses paid indirectly ............................ (11,188)
-----------
Total net expenses ................................... 326,238
-----------
Net investment income ................................ 4,519,973
-----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized loss on investments (note 4) ................ (1,754,666)
Net change in unrealized appreciation or depreciation of
investments ............................................ 10,586,897
-----------
Net gain on investments ................................ 8,832,231
-----------
Net increase in net assets resulting from
operations ....................................... $ 13,352,204
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and fee income ................................ $ 4,846,211
Net expenses ............................................. (326,238)
------------
Net investment income ................................ 4,519,973
------------
Adjustments to reconcile net investment income to cash
provided by operating activities:
Change in accrued interest receivable .................. 326,066
Net amortization of bond discount and premium .......... (3,791,578)
Change in accrued fees and expenses .................... (37,060)
------------
Total adjustments .................................... (3,502,572)
------------
Net cash provided by operating activities ............ 1,017,401
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments ....................... 94,055,107
Purchases of investments ................................. (86,330,564)
Net purchases of short-term securities ................... (431,000)
------------
Net cash provided by investing activities ............ 7,293,543
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments for reverse repurchase agreements ........... (4,300,000)
Retirement of fund shares (note 6) ....................... (400,640)
Distributions paid to shareholders ....................... (4,559,984)
------------
Net cash used by financing activities ................ (9,260,624)
------------
Net decrease in cash ..................................... (949,680)
Cash at beginning of year ................................ 1,000,169
------------
Cash at end of year ................................ $ 50,489
------------
------------
Supplemental disclosure of cash flow information:
Cash paid for interest on reverse repurchase
agreements ........................................... $ 63,104
------------
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/95 11/30/94
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 4,519,973 6,325,282
Net realized loss on investments ......................... (1,754,666) (2,995,505)
Net change in unrealized appreciation or depreciation of
investments ............................................ 10,586,897 (13,926,868)
------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................... 13,352,204 (10,597,091)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ............................... (4,503,632) (4,761,820)
In excess of net investment income ....................... (56,352) --
Tax return of capital .................................... -- (1,524,980)
------------ ------------
Total distributions .................................... (4,559,984) (6,286,800)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Payments for retirement of 54,300 shares (note 6) ........ (400,640) --
------------ ------------
Total increase (decrease) in net assets .............. 8,391,580 (16,883,891)
Net assets at beginning of year ............................ 62,539,688 79,423,579
------------ ------------
Net assets at end of year ................................ $ 70,931,268 62,539,688
------------ ------------
------------ ------------
Undistributed (distributions in excess of) net investment
income ................................................. $ 31,434 (16,341)
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
American Government Term Trust Inc. (the fund) is registered
under the Investment Company Act of 1940 (as amended) as a
diversified, closed-end management investment company. Shares of
the fund are listed on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol AGT. As discussed in
footnote 8 to the financial statements, fund shares stopped
trading on the exchanges at the close of business on December
14, 1995, and the fund terminated operations and distributed all
its net assets to shareholders on December 21, 1995.
(2) SIGNIFICANT
ACCOUNTING
POLICIES
INVESTMENTS IN SECURITIES
The values of fixed income securities are determined using
pricing services or prices quoted by independent brokers.
Exchange-listed options are valued at the last sales price and
open financial futures contracts are valued at the last
settlement price. When market quotations are not readily
available, securities are valued at fair value according to
methods selected in good faith by the board of directors.
Short-term securities with maturities of 60 days or less are
valued at amortized cost which approximates market value.
Securities transactions are accounted for on the date the
securities are purchased or sold. Realized gains and losses are
calculated on the identified-cost basis. Interest income is
recorded on the accrual basis and, except for original issue
discount on zero-coupon bonds, the fund does not amortize
premiums or discounts on long-term bonds for financial reporting
purposes.
OPTION TRANSACTIONS
For hedging purposes, the fund may buy and sell put and call
options, write covered call options on portfolio securities,
write cash-secured puts, and write call options that are not
covered for cross-hedging purposes. The risk in writing a call
option is that the fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing
a put option is that the fund may incur a loss if the market
price of the security decreases and the option is exercised. The
risk in buying an option is the fund pays a premium whether or
not the option is exercised. The fund also has the additional
risk of not being able to enter into a closing transaction if a
liquid secondary market does not exist. The fund also may write
over-the-counter options where the completion of the obligation
is dependent upon the credit standing of the other party.
5
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The fund will realize a gain or loss
upon expiration or closing of the option transaction. When an
option is exercised, the proceeds on the sale for a written call
option, the purchase cost for a written put option, or the cost
of a security for purchased put and call options is adjusted by
the amount of premium received or paid.
FUTURES TRANSACTIONS
In order to gain exposure to or protect from changes in the
market, the fund may buy and sell financial futures contracts
and related options. Risks of entering into futures contracts
and related options include the possibility there may be an
illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the
underlying securities.
Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount (initial margin)
equal to a certain percentage of the contract value. Subsequent
payments (variation margin) are made or received by the fund
each day. The variation margin payments are equal to the daily
changes in the contract value and are recorded as unrealized
gains and losses. The fund recognizes a realized gain or loss
when the contract is closed or expires.
INTEREST RATE TRANSACTIONS
To preserve a return or spread on a particular investment or
portion of its portfolio or for other non-speculative purposes,
the fund may enter into interest rate swaps and may purchase or
sell interest rate caps and floors. Interest rate swaps involve
the exchange of commitments to pay or receive interest, e.g., an
exchange of floating-rate payments for fixed-rate payments. The
purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually based
notional principal amount from the party selling the interest
rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on
a contractually based notional principal amount from the party
selling such interest rate floor.
6
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
If forecasts of interest rates and other market factors are
incorrect, investment performance will diminish compared to what
performance would have been if these investment techniques were
not used. Even if the forecasts are correct, there is risk that
the positions may correlate imperfectly with the asset or
liability being hedged. Other risks of entering into these
transactions are that a liquid secondary market may not always
exist, or that the other party to the transaction may not
perform.
For interest rate swaps, the fund accrues weekly, as an increase
or decrease to interest income, the net amount due to or owed by
the fund. Interest rate swap, cap and floor valuations are based
on prices quoted by independent brokers. These valuations
represent the net present value of all future cash settlement
amounts based on implied forward interest rates. As of November
30, 1995, the fund had no open interest rate swap agreements.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been purchased by
the fund on a forward-commitment or when-issued basis can take
place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to
market fluctuations and may increase or decrease in value prior
to their delivery. The fund maintains, in a segregated account
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 NAV to the extent the fund makes such
purchases while remaining substantially fully invested. As of
November 30, 1995, the fund had no outstanding when-issued or
forward commitments.
In connection with its ability to purchase securities on a
when-issued or forward-commitment basis, the fund may enter into
mortgage "dollar rolls" in which the fund sells securities for
delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future
date. As an inducement to "roll over" its purchase commitments,
the fund receives negotiated fees. For the year ended November
30, 1995, such fees earned by the fund amounted to $136,410.
7
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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.
Net investment income and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of
losses deferred due to "wash sale" and "straddle" transactions
and the timing of recognition of income on certain
interest-only, principal-only and residual interest securities.
The character of distributions made during the year from net
investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. The
effect on dividend distributions of certain book-to-tax
differences is presented as an "excess distribution" in the
statement of changes in net assets and financial highlights.
Also, 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 (losses) were recorded by the
fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, reclassification adjustments
have been made to increase undistributed net investment income
and increase accumulated net realized losses on investments by
$87,786.
DISTRIBUTIONS
The fund pays monthly distributions from net investment income,
however, certain book-to-tax adjustments may result in a portion
of the income distributions being characterized as a return of
capital for tax purposes. Realized capital gains, if any, will
be distributed on an annual basis. Distributions are recorded as
of the close of business on the ex-dividend date. Such
distributions are payable in cash or, pursuant to the fund's
dividend reinvestment plan, reinvested in additional shares of
the fund's capital stock. Under the plan, fund shares will be
purchased in the open market.
REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain
broker-dealers, the fund, along with other affiliated registered
investment companies, may transfer uninvested cash balances into
a joint trading account, the daily aggregate of which is
invested in repurchase agreements
8
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
secured by U.S. government and agency obligations. Securities
pledged as collateral for all individual and joint repurchase
agreements are held by the fund's custodian bank until maturity
of the repurchase agreement. Provisions for all agreements
ensure that the daily market value of the collateral is in
excess of the repurchase amount in the event of default.
(3) EXPENSES
The fund has entered into the following agreements with Piper
Capital Management Incorporated (the adviser and the
administrator):
The investment advisory agreement provides the adviser with a
monthly advisory fee based on the fund's average weekly net
assets computed at the per-annum rate of 0.60% of the fund's
average weekly net assets through January 31, 1993; 0.45% from
February 1, 1993, through January 31, 1997; and 0.30% from
February 1, 1997, until termination of the fund. For its fee,
the adviser will provide investment advice and, in general, will
conduct the management and investment activity of the fund.
The administration agreement provides the administrator with a
monthly fee based on the fund's average weekly net assets
computed at the per annum rate of 0.15% of the fund's average
weekly net assets through January 31, 1993; 0.125% from February
1, 1993, through January 31, 1997; and 0.10% from February 1,
1997, until termination of the fund. For its fee, the
administrator will provide reporting, regulatory and
record-keeping services for the fund.
For the year ended November 30, 1995, Piper Capital voluntarily
waived investment management fees of $207,601 and administrative
fees of $57,667.
In addition to advisory and administrative 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, auditing and accounting
services, organizational costs, insurance, interest, taxes, and
other miscellaneous expenses.
9
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Expenses paid indirectly represent a reduction of custodian fees
for earnings on cash balances maintained with the custodian by
the fund.
(4) SECURITIES
TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other
than short-term securities) aggregated $75,203,392 and
$93,653,993, respectively, for the year ended November 30, 1995.
(5) CAPITAL LOSS
CARRYOVER
For federal income tax purposes, the fund had a capital loss
carryover of $5,058,996 on November 30, 1995, which, if not
offset by subsequent capital gains, will expire in 2001 and
2002. It is unlikely the board of directors will authorize a
distribution of any net realized capital gains until the
available capital loss carryover has been offset or expires.
(6) RETIREMENT OF
FUND SHARES
The fund's board of directors has approved a plan to repurchase
shares of the fund in the open market and retire those shares.
Repurchases may only be made when the previous day's closing
market price was at a discount from net asset value. Daily
repurchases are limited to 25% of the previous four weeks'
average daily trading volume on the New York Stock Exchange.
Under the current plan, cumulative repurchases in the fund
cannot exceed 3% of the total shares originally issued. The
board of directors reviews the plan every quarter and may change
the amount which may be repurchased. The plan was last reviewed
and reapproved by the board of directors on November 30, 1995.
Pursuant to the plan, the fund has cummulatively repurchased and
retired 54,300 shares as of November 30, 1995, which represents
0.67% of the shares originally issued.
(7) PENDING
LITIGATION
An amended complaint purporting to be a class action was filed
on September 7, 1995, in the United States District Court for
the Western District of Washington against the fund, seven other
closed-end investment companies for which Piper Capital
Management Incorporated acts as investment adviser, Piper
Jaffray Companies Inc., Piper Jaffray Inc., Piper Capital
Management Incorporated and certain individuals. The complaint
alleges, among other things, violations of federal and state
securities laws. Damages are being sought in an unspecified
amount. The Fund intends to defend this lawsuit vigorously.
Although it is impossible to predict the outcome,
10
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
management believes, based on the facts currently available,
that there will be no material adverse effect on the financial
results of the fund.
(8) SUBSEQUENT
EVENT--
LIQUIDATION
At the close of business on December 14, 1995, shares of AGT
stopped trading on the New York and Chicago Stock Exchanges. The
scheduled liquidating distribution of $8.91887 per share,
consisting of $0.00393 from income and $8.91494 from principal,
was paid to shareholders on December 21, 1995.
The following table presents the results of operations of AGT
for the period from November 30, 1995 to December 21, 1995, and
the subsequent liquidation of the net assets of the fund.
<TABLE>
<CAPTION>
Dollar
Amount Per Share
----------- -----
<S> <C> <C>
Net assets on 11/30/95 ........................................ $ 70,931,268 8.86
Results of operations on 12/21/95:
Net investment income ......................................... 80,324 0.01
Net realized gain on investments .............................. 4,565,878 0.57
Net change in appreciation or depreciation of investments ..... (4,175,663) (0.52)
----------- -----
Net increase in net assets resulting from operations .......... 470,539 0.06
----------- -----
Net assets prior to liquidation on 12/21/95 ................... 71,401,807 8.92
Liquidation of AGT on 12/21/95 representing 8,005,700
shares ....................................................... (71,401,807) (8.92)
----------- -----
Net assets at close of business on 12/21/95 ................. $ -- --
----------- -----
----------- -----
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(9) FINANCIAL
HIGHLIGHTS
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
<TABLE>
<CAPTION>
Year Ended November 30,
--------------------------------------------
1995 1994 1993 1992 1991
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ...... $ 7.76 9.85 9.47 9.97 9.13
-------- ------ ------ ------ ------
Operations:
Net investment income ..................... 0.56 0.78 0.90 0.87 1.09
Net realized and unrealized gains (losses)
on investments ........................... 1.11 (2.09) 0.34 (0.43) 0.70
-------- ------ ------ ------ ------
Total from operations ................... 1.67 (1.31) 1.24 0.44 1.79
-------- ------ ------ ------ ------
Distributions to shareholders:
From net investment income ................ (0.56) (0.59) (0.66) (0.85) (0.95)
In excess of net investment income ........ (0.01) -- -- -- --
Tax return of capital ..................... -- (0.19) (0.20) -- --
From net realized gains ................... -- -- -- (0.09) --
-------- ------ ------ ------ ------
Total distributions to shareholders ..... (0.57) (0.78) (0.86) (0.94) (0.95)
-------- ------ ------ ------ ------
Net asset value, end of period ............ $ 8.86 7.76 9.85 9.47 9.97
-------- ------ ------ ------ ------
-------- ------ ------ ------ ------
Per-share market value, end of period ..... $ 8.63 8.63 10.25 10.88 10.38
-------- ------ ------ ------ ------
-------- ------ ------ ------ ------
SELECTED INFORMATION
Total investment return, market value* ...... 7.38% (8.58%) 2.12% 14.29% 13.68%
Total investment return, net asset
value** ................................... 22.17% (13.75%) 13.54% 4.54% 20.49%
Net assets at end of period (in
millions) ............................... $ 71 63 79 76 80
Ratio of expenses to average weekly net
assets+ ................................... 0.50% 0.82% 0.86% 1.04% 1.11%
Ratio of net investment income to average
weekly net assets+ ........................ 6.72% 9.02% 9.28% 8.93% 11.48%
Portfolio turnover rate (excluding short-term
securities) ............................... 106% 47% 79% 70% 53%
Amount of borrowings outstanding at end of
period (in millions)*** ................. $ -- 4 19 13 20
Per-share amount of borrowings outstanding at
end of period ........................... $ -- 0.53 2.41 1.60 2.47
Per-share amount of net assets, excluding
borrowings, at end of period ............ $ -- 8.29 12.26 11.07 12.44
Asset coverage ratio++ ...................... -- 1554% 509% 693% 503%
</TABLE>
* BASED ON THE CHANGE IN MARKET PRICE OF A SHARE DURING THE PERIOD. ASSUMES
REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE FUND'S
DIVIDEND REINVESTMENT PLAN.
** BASED ON THE CHANGE IN NET ASSET VALUE OF A SHARE DURING THE PERIOD.
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
*** SECURITIES PURCHASED ON A WHEN-ISSUED BASIS FOR WHICH LIQUID, HIGH-GRADE
DEBT OBLIGATIONS ARE MAINTAINED IN A SEGREGATED ACCOUNT ARE NOT CONSIDERED
BORROWINGS. SEE FOOTNOTE 2 IN THE NOTES TO FINANCIAL STATEMENTS.
+ DURING THE YEAR ENDED NOVEMBER 30, 1995, THE ADVISER AND THE ADMINISTRATOR
VOLUNTARILY WAIVED FEES AND EXPENSES. HAD AGT PAID ALL EXPENSES, THE RATIOS
OF EXPENSES AND NET INVESTMENT INCOME TO AVERAGE WEEKLY NET ASSETS WOULD
HAVE BEEN: 0.90%/6.32%. BEGINNING IN FISCAL 1995, THE EXPENSE RATIO
REFLECTS THE EFFECT OF GROSS EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR
PERIOD EXPENSE RATIOS HAVE NOT BEEN ADJUSTED.
++ REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(10) QUARTERLY DATA (UNAUDITED)
DOLLAR AMOUNTS
<TABLE>
<CAPTION>
Net Realized Net Increase in
Total Net and Unrealized Net Assets
Investment Investment Gains (Losses) Resulting from
Income Income Investments Operations Distributions
----------- ----------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
2/28/95 $ 1,375,841 1,264,990 3,613,038 4,878,028 (1,470,950)
5/31/95 1,239,066 1,153,177 3,818,236 4,971,413 (1,167,298)
8/31/95 1,128,571 1,103,169 (105,153) 998,016 (961,052)
11/30/95 1,102,733 998,637 1,506,110 2,504,747 (960,684)
----------- ----------- -------------- --------------- ------------
$ 4,846,211 4,519,973 8,832,231 13,352,204 (4,559,984)
----------- ----------- -------------- --------------- ------------
----------- ----------- -------------- --------------- ------------
</TABLE>
PER-SHARE AMOUNTS
<TABLE>
<CAPTION>
Net Realized Net Increase
Net and Unrealized in Net Assets Quarter End
Investment Gains (Losses) Resulting Net Asset
Income Investments from Operations Distributions Value
---------- -------------- --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
2/28/95 $ 0.15 0.46 0.61 (0.18) 8.19
5/31/95 0.15 0.48 0.63 (0.15) 8.67
8/31/95 0.14 (0.01) 0.13 (0.12) 8.68
11/30/95 0.12 0.18 0.30 (0.12) 8.86
--- ----- --- -----
$ 0.56 1.11 1.67 (0.57)
--- ----- --- -----
--- ----- --- -----
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
AMERICAN GOVERNMENT TERM TRUST
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- --------- ----------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
U.S. GOVERNMENT SECURITIES (99.0%):
U.S. Treasury Note, 4.63%, 2/15/96 .................. $ 860,000 858,624
U.S. Treasury Note, 4.25%, 5/15/96 .................... 835,000 830,592
U.S. Treasury Note, 5.25%, 7/31/98 .................... 995,000 991,149
U.S. Treasury Note, 4.38%, 8/15/96 .................... 885,000 878,646
U.S. Treasury Note, 5.00%, 1/31/99 .................... 335,000 330,581
U.S. Treasury Note, 4.75%, 2/15/97 .................... 910,000 903,202
U.S. Treasury Note, 6.50%, 5/15/97 .................... 875,000 888,624
U.S. Treasury Note, 6.50%, 8/15/97 .................... 930,000 946,731
U.S. Treasury Note, 7.38%, 11/15/97 ................... 905,000 937,888
U.S. Treasury Note, 7.25%, 2/15/98 .................... 960,000 996,278
U.S. Treasury Note, 7.25%, 11/15/96 ................... 850,000 864,501
U.S. Treasury Note, 9.00%, 5/15/98 .................... 940,000 1,016,779
U.S. Treasury Note, 8.88%, 11/15/98 ................... 985,000 1,076,260
U.S. Treasury Principal Strip, 6.87%, 8/15/01 ......... 80,500,000(b) 58,704,625
----------
Total U.S. Government Securities
(cost: $66,048,817) ................................ 70,224,480
----------
SHORT-TERM SECURITIES (0.8%):
Repurchase agreement with Goldman Sachs in a joint
trading account, collateralized by U.S. government
agency securities, acquired on 11/30/95, accrued
interest at repurchase date of $88, 5.85%, 12/1/95
(cost: $542,000) .................................... 542,000 542,000
----------
Total Investments in Securities
(cost: $66,590,817)(c) ............................ $ 70,766,480
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
14
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(C) ALSO EQUALS COST FOR FEDERAL INCOME TAX PURPOSES. THE AGGREGATE GROSS
UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED
ON THE COST WERE AS FOLLOWS:
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 4,175,663
GROSS UNREALIZED DEPRECIATION ...... --
----------
NET UNREALIZED APPRECIATION .... $ 4,175,663
----------
----------
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
AMERICAN GOVERNMENT TERM TRUST INC.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in
securities, of American Government Term Trust Inc. as of
November 30, 1995, and the related statements of operations and
cash flows for the year then ended, the statements of changes in
net assets for each of the years in the two-year period ended
November 30, 1995, and the financial highlights for each of the
years in the five-year period ended November 30, 1995. These
financial statements and the financial highlights are the
responsibility of the fund's management. Our responsibility is
to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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. Investment securities held in custody are
confirmed to us by 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 audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial
highlights referred to above present fairly, in all material
respects, the financial position of American Government Term
Trust Inc. as of November 30, 1995, the results of its
operations and its cash flows for the year then ended, the
changes in its net assets for each of the years in the two-year
period ended November 30, 1995, and the financial highlights for
each of the years in the five-year period ended November 30,
1995, in conformity with generally accepted accounting
principles.
As discussed in footnote 8 to the financial statements, American
Government Term Trust Inc. terminated operations and distributed
all of its net assets to shareholders on December 21, 1995.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 19, 1996
16
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER UPDATE
ANNUAL MEETING RESULTS
An annual meeting of the fund's shareholders was held on August 17, 1995. Each
matter voted upon at the 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 matter, are set forth below.
1. The fund's shareholders elected the following eight directors:
<TABLE>
<CAPTION>
Shares Shares Withholding
Voted "For" Authority to Vote
----------- ------------------
<S> <C> <C>
David T. Bennett..... 6,539,439 144,076
Jaye F. Dyer......... 6,539,439 144,076
William H. Ellis..... 6,539,439 144,076
Karol D. Emmerich.... 6,539,439 144,076
Luella G. Goldberg... 6,536,524 146,991
George Latimer....... 6,538,579 144,936
</TABLE>
2. The fund's shareholders ratified the selection by a majority of the
independent members of the fund's Board of Directors of KPMG Peat
Marwick LLP as the independent public accountants for the fund for the
fiscal year ending November 30, 1995. The following votes were cast
regarding this matter:
<TABLE>
<CAPTION>
Shares Shares Voted Broker
Voted "For" "Against" Abstentions Non-Votes
- ----------- --------------- ----------- ---------------
<S> <C> <C> <C>
6,528,946 57,974 96,595 --
</TABLE>
SPECIAL MEETING RESULTS
A special meeting of the fund's shareholders was held on December 7, 1995. The
fund's shareholders approved the Plan of Liquidation and Dissolution of the
Fund. The number of votes cast for, against, the number of abstentions, and the
number of broker non-votes are set forth below.
<TABLE>
<CAPTION>
Shares Shares Voted Broker
Voted "For" "Against" Abstentions Non-Votes
- ----------- --------------- ----------- -----------
<S> <C> <C> <C>
4,253,202 264,580 225,563 --
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
DIRECTORS David T. Bennett, CHAIRMAN, HIGHLAND HOMES, INC., USL
PRODUCTS INC., KIEFER BUILT, INC.,
OF COUNSEL, GRAY, PLANT, MOOTY, MOOTY AND BENNETT, P.A.
Jaye F. Dyer, PRESIDENT, DYER MANAGEMENT COMPANY
William H. Ellis, PRESIDENT, PIPER JAFFRAY COMPANIES INC.,
PIPER CAPITAL MANAGEMENT INCORPORATED
Karol D. Emmerich, PRESIDENT, THE PARACLETE GROUP
Luella G. Goldberg, DIRECTOR, TCF FINANCIAL, RELIASTAR
FINANCIAL CORP., HORMEL FOODS CORP.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL EQUITY
FUND, INC.
OFFICERS William H. Ellis, CHAIRMAN OF THE BOARD AND PRESIDENT
Worth Bruntjen, SENIOR VICE PRESIDENT
Robert H. Nelson, SENIOR VICE PRESIDENT AND TREASURER
David E. Rosedahl, SECRETARY
INVESTMENT Piper Capital Management Incorporated
ADVISER 222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402
CUSTODIAN AND Investors Fiduciary Trust Company
TRANSFER AGENT 127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
LEGAL COUNSEL Dorsey & Whitney P.L.L.P.
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
INDEPENDENT KPMG Peat Marwick LLP
AUDITORS 4200 NORWEST CENTER, MINNEAPOLIS, MN 55402
</TABLE>
18
