<PAGE>
AMERICAN ADJUSTABLE RATE TERM TRUST 1995
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 1, 1994 TO APRIL 17, 1995*
<TABLE>
<S> <C>
INCOME:
Interest $ 3,708,822
---------------
EXPENSES (NOTE 3):
Investment management fee 223,388
Administrative fee 95,738
Custodian, accounting and transfer agent fees 85,167
Audit and legal fees 102,706
Directors' fees 5,833
Registration fees 6,979
Shareholder reports 49,378
Federal excise taxes (note 2) 126,882
Other expenses 7,907
---------------
Total expenses 703,978
Less management and administrative fees waived
by the adviser and administrator (319,126)
---------------
Total net expenses 384,852
---------------
Net investment income 3,323,970
---------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized loss on investments (note 4) (2,054,247)
Net realized loss on put options (note 5) (480,200)
---------------
Net realized loss on investments (2,534,447)
Net change in unrealized appreciation or
depreciation of investments 1,757,539
---------------
Net loss on investments (776,908)
---------------
Net increase in net assets resulting
from operations $ 2,547,062
---------------
---------------
</TABLE>
* The fund terminated operations and distributed all net assets to shareholders
on April 17, 1995.
See accompanying Notes to Financial Statements.
<PAGE>
AMERICAN ADJUSTABLE RATE TERM TRUST 1995
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from Year
9/1/94 to Ended
4/17/95* 8/31/94
--------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,323,970 7,170,681
Net realized loss on investments (2,534,447) (7,054,516)
Net change in unrealized appreciation or depreciation of investments 1,757,539 (1,749,435)
--------------- ------------
Net increase (decrease) in net assets resulting from operations 2,547,062 (1,633,270)
--------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (note 1) (5,238,785) (4,245,411)
--------------- ------------
CAPITAL CONTRIBUTION (NOTE 7):
Capital contribution by affiliate 5,000,000 --
--------------- ------------
CAPITAL SHARE TRANSACTIONS:
Payments for retirement of 118,300 and 155,500 shares, respectively (note 6) (1,089,990) (1,407,063)
Payments for 10,836,200 shares in connection with termination of --
fund operations (note 1) (102,145,489)
--------------- ------------
Total decrease in net assets from capital share transactions (103,235,479 (1,407,063)
--------------- ------------
Total decrease in net assets (100,927,202) (7,285,744)
Net assets at beginning of period 100,927,202 108,212,946
--------------- ------------
Net assets at end of period $ -- 100,927,202
--------------- ------------
--------------- ------------
Undistributed net investment income $ -- 5,237,932
--------------- ------------
--------------- ------------
<FN>
* The fund terminated operations and distributed all net assets to
shareholders on April 17, 1995.
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
AMERICAN ADJUSTABLE RATE TERM TRUST 1995
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
American Adjustable Rate Term Trust 1995 (ADJ), is registered under the
Investment Company Act of 1940 (as amended) as a diversified, closed-end
management investment company. ADJ commenced operations on March 29, 1990,
upon completion of an initial public offering of common stock. Shares of
ADJ were listed on the New York Stock Exchange and the Chicago Stock
Exchange from the commencement of operation through the April 6, 1995. The
fund terminated operations and distributed all its net assets on April 17,
1995 in accordance with the terms of its prospectus. The final distribution
to shareholders was $105,861,222 or $9.77 which consisted of $102,145,489,
or $9.43 per share, from principal and $3,715,733, or $0.34 per share, from
net investment income.
(2) SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS IN SECURITIES
The values of fixed income securities were determined using pricing
services or prices quoted by independent brokers. When market quotations
were not readily available, securities were valued at fair value according
to methods selected in good faith by the board of directors. Short-term
securities with maturities less than 60 days were valued at amortized cost
which approximates market value.
Securities transactions were accounted for on the date the securities were
purchased or sold. Realized gains and losses were calculated on the
identified-cost basis. Interest income, including amortization of bond
discount and premium computed on a level-yield basis, was accrued daily.
FEDERAL TAXES
The fund's policy is 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. However, the fund incurred federal excise taxes of $126,882
($0.012 per share) on income retained by the fund during the 1994 excise
tax year. Net investment income and net realized gains (losses) may differ
for financial statement and tax purposes and 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. 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.
DISTRIBUTIONS
The fund paid monthly distributions from net investment income. Realized
gains, if any, were distributed on an annual basis. These distributions
were recorded as of the close of business on the ex-dividend date. Such
distributions were payable in cash or, pursuant to the fund's dividend
reinvestment plan, reinvested in additional shares of the fund's common
stock. Under the plan, shares were purchased in the open market.
(3) EXPENSES
The fund had entered into the following agreements with Piper Capital
Management Incorporated (the adviser and administrator):
<PAGE>
The investment advisory agreement provided the adviser with a monthly
investment management fee based on the fund's average weekly net assets
computed at the per-annum rate of 0.35%. For its fee, the adviser provided
investment advice and, in general, conducted the management and investment
activity of the fund.
The administration agreement provided the administrator with a monthly fee
in an amount equal to an annualized rate of 0.15% of the fund's average
weekly net assets. For its fee, the administrator provided certain
reporting, regulatory and record-keeping services for the fund.
For the period ended April 17, 1995, Piper Capital voluntarily waived the
investment management fee of $223,388 and the administrative fee of
$95,738.
In addition to the investment management fee and the administrative fee,
the fund was 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, insurance, interest, taxes and other
miscellaneous expenses.
(4) SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales or maturities of securities
(other than investments in short-term securities) for the period ended
April 17, 1995, were $0 and $78,329,640, respectively.
(5) INVESTMENT IN PUT OPTIONS
In order to hedge the value of adjustable rate mortgage securities under
certain interest rate scenarios, the fund purchased four-year U.S. Treasury
note put option contracts in 1990. On April 13, 1995, the options expired
with no value, resulting in a realized loss of $480,200.
(6) RETIREMENT OF FUND SHARES
The fund's board of directors approved a plan to repurchase shares of the
fund in the open market and retire those shares. Repurchases were only
made when the previous day's closing market price was trading at a discount
from net asset value. Daily repurchases were limited to 25% of the
previous four weeks average daily trading volume on the New York Stock
Exchange. Under the current plan, cumulative repurchases could not exceed
3% of the total shares originally issued. The plan was last reviewed and
reapproved by the board of directors on February 9, 1995. Pursuant to the
plan, the fund cumulatively repurchased and retired 273,800 shares as of
April 17, 1995, which represents 2.46% of the shares originally issued.
(7) CAPITAL CONTRIBUTION BY AFFILIATE
On October 24, 1994, Piper Jaffray Companies Inc. contributed $5,000,000
to the fund. The voluntary contribution, made for the benefit of
shareholders, increased the fund's net asset value.
<PAGE>
(9) QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED NET INCREASE DISTRIBUTIONS
TOTAL NET AND UNREALIZED IN NET ASSETS CAPITAL FROM NET DISTRIBUTIONS
INVESTMENT INVESTMENT GAINS (LOSSES) RESULTING FROM CONTRIBUTION INVESTMENT FROM
INCOME INCOME ON INVESTMENTS OPERATIONS BY AFFILIATE INCOME PRINCIPAL
------------ ---------- -------------- -------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
11/30/94 $ 1,516,313 1,337,261 (882,564) 454,697 5,000,000 (655,222) --
2/28/95 1,433,666 1,383,008 89,813 1,472,821 -- (651,104) --
4/17/95 * 758,843 603,701 15,843 619,544 -- (3,932,459) (102,145,489)
------------ ---------- ----------- ----------- ---------- ---------- ------------
$ 3,708,822 3,323,970 (776,908) 2,547,062 5,000,000 (5,238,785) (102,145,489)
------------ ---------- ----------- ----------- ---------- ---------- ------------
------------ ---------- ----------- ----------- ---------- ---------- ------------
<CAPTION>
PER-SHARE AMOUNTS
NET REALIZED NET INCREASE DISTRIBUTIONS
NET AND UNREALIZED IN NET ASSETS CAPITAL FROM NET DISTRIBUTIONS QUARTER END
INVESTMENT GAINS (LOSSES) RESULTING FROM CONTRIBUTION INVESTMENT FROM NET
INCOME ON INVESTMENTS OPERATIONS BY AFFILIATE INCOME PRINCIPAL ASSET VALUE
---------- -------------- -------------- -------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
11/30/94 $ 0.12 (0.08) 0.04 0.46 (0.06) -- 9.65
2/28/95 0.13 0.01 0.14 -- (0.06) -- 9.73
4/17/95 * 0.06 -- 0.06 -- (0.36) (9.43) --*
---------- ------------ -------------- -------------- ------------ ------------- -----------
$ 0.31 (0.07) 0.24 0.46 (0.48) (9.43)
---------- ------------ -------------- -------------- ------------ ------------- -----------
---------- ------------ -------------- -------------- ------------ ------------- -----------
<FN>
* Period from March 1, 1995 to April 17, 1995 (date of fund termination).
</TABLE>
<PAGE>
(8) 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>
PERIOD FROM YEAR YEAR YEAR YEAR PERIOD FROM
9/1/94 TO ENDED ENDED ENDED ENDED 3/29/90**
4/17/95* 8/31/94 8/31/93 8/31/92 8/31/1 8/31/90
----------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period $ 9.21 9.74 9.99 9.76 9.67 9.60
------- ------- ------- ------- ------- ---------
Operations:
Net investment income 0.31 0.65 0.71 0.89 0.90 0.36
Net realized and unrealized gains (losses) on investments (0.07) (0.80) (0.36) 0.12 0.08 0.02
------- ------- ------- ------- ------- ---------
Total from operations 0.24 (0.15) 0.35 1.01 0.98 0.38
------- ------- ------- ------- ------- ---------
Distributions to shareholders:
From net investment income (0.48) (0.38) (0.59) (0.77) (0.88 (0.31)
From realized gains -- -- (0.01) (0.01) (0.01) --
------- ------- ------- ------- ------- --------
Total distributions to shareholders (0.48) (0.38) (0.60) (0.78) (0.89) (0.31)
------- ------- ------- ------- ------- --------
Capital contribution by affiliate 0.46 -- -- -- -- --
------- ------- ------- ------- ------- --------
Payments for principal on April 17, 1995 (9.43)** -- -- -- -- --
------- ------- ------- ------- ------- --------
Net asset value, end of period $ --** 9.21 9.74 9.99 9.76 9.67
------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- --------
Per-share market value, end of period $ --** 8.88 9.88 10.50 10.13 9.75
------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- --------
SELECTED INFORMATION
Total return, net asset value ~ 7.63% (1.59%) 3.65% 10.75% 10.66 3.98%
Total return, market value ~ ~ 11.72% (6.55%) (0.28%) 11.73% 13.24 0.55%
Net assets at end of period (in millions) $ -- 101 108 111 108 107
Ratio of expenses to average weekly net assets# 0.60%* 0.27% 0.70% 0.72% 0.73% 0.61%*
Ratio of net investment income to average weekly net assets# 5.21%* 6.78% 7.25% 8.95% 9.45% 9.00%*
Portfolio turnover rate (excluding short-term securities) 0% 69% 64% 55% 66% 33%
Amount of borrowings outstanding at end of period (in millions) $ -- -- 29 29 43 35
Per-share amount of borrowings outstanding at end of period $ -- -- 2.64 2.64 3.88 3.13
Per-share asset coverage of borrowings outstanding at end of $ -- -- 12.38 12.63 13.64 12.80
<FN>
* Termination of the fund.
** Commencement of operations.
. Adjusted to an annual basis.
.. On April 17, 1995, the fund terminated operations and distributed all of
its net assets to shareholders. Shares of the fund ceased to trade on the
NYSE on April 6, 1995.
- - Total return, net asset value, is based on the change in net asset value of
a share during the period and assumes reinvestment of distributions at net
asset value. On October 24, 1995, an affiliate contributed $5 million to the
fund. Had the affiliate not contributed $5 million, the fund's NAV total
return, for the period ended April 17, 1995, would have been 2.61%.
- -- Total return, market value, is based on the change in market price of a
share during the period and assumes reinvestment of distributions at actual
prices pursuant to the fund's dividend reinvestment plan.
# Includes 0.20% and 0.05% from federal excise taxes for the period ended
April 17, 1995 and fiscal year 1994, repsectively.
During the period ended April 17, 1995 and the fiscal year 1994, investment
management and administrative fees were waived by the Adviser. Had fees not
been waived, the ratios of expenses and net investment income would have
been 1.10%/4.71% and 0.77%/6.28%, respectively.
## Represents net assets (excluding borrowings) divided by common shares
outstanding.
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
AMERICAN ADJUSTABLE RATE TERM TRUST INC. - 1995
We have audited the accompanying statement of operations for the period from
September 1, 1994 to April 17, 1995 (date of termination) and the statements of
changes in net assets for the period from September 1, 1994 to April 17, 1995
and the year ended August 31, 1994, and the financial highlights presented in
footnote 8 to the financial statements of American Adjustable Rate Term Trust
Inc. - 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 from material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. 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 present fairly, in all material
respects, for American Adjustable Rate Term Trust Inc. - 1995, the results of
its operations for the period from September 1, 1994 to April 17, 1995, the
changes in its net assets for the period from September 1, 1994 to April 17,
1995 and the year ended August 31, 1994, and the financial highlights presented
in footnote 8 to the financial statements, in conformity with generally accepted
accounting principles.
As described in footnote 1 to the financial statements, American Adjustable Rate
Term Trust Inc. - 1995 terminated operations and distributed all of its net
assets to shareholders on April 17, 1995.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 2, 1995
