<PAGE>
AMERICAN STRATEGIC
INCOME PORTFOLIO
ASP
================================================================================
SEMIANNUAL REPORT
2000
[GRAPHIC]FIRST AMERICAN-Registered Trademark-
Asset Management
<PAGE>
[GRAPHIC]FIRST AMERICAN-Registered Trademark-
Asset Management
AMERICAN STRATEGIC INCOME PORTFOLIO
TABLE OF CONTENTS
1 Fund Overview
4 Financial Statements
and Notes
14 Investments in
Securities
17 Shareholder Update
PRIMARY INVESTMENTS Mortgage-related assets that directly or indirectly
represent a participation in or are secured by and payable from mortgage loans.
The fund may also invest in asset-backed securities, U.S. government securities,
corporate-debt securities, municipal obligations, unregistered securities, and
mortgage-servicing rights. The fund borrows through the use of reverse
repurchase agreements. Use of certain of these investments and investment
techniques may cause the fund's net asset value to fluctuate to a greater extent
than would be expected from interest rate movements alone.
FUND OBJECTIVE High level of current income. Its secondary objective is to seek
capital appreciation. As with other investment companies, there can be no
assurance this fund will achieve its objective.
--------------------------------------------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURNS
Based on net asset value for the periods ended May 31, 2000
[GRAPH]
<TABLE>
<CAPTION>
Since Inception
One Year Five Year 12/27/1991
-------- --------- ---------------
<S> <C> <C> <C>
American Strategic Income Portfolio 1.90% 6.89% 7.63%
Lehman Brothers Mutual Fund Govenrment/Mortgage Index 2.75% 6.09% 6.41%
</TABLE>
The average annualized total returns for American Strategic Income Portfolio are
based on the change in its net asset value (NAV), assume all distributions were
reinvested, and do not reflect sales charges. NAV-based performance is used to
measure investment management results.
Average annualized total returns based on the change in market price for the
one-year, five-year, and since-inception periods ended May 31, 2000, were
-0.94%, 6.85%, and 5.92%, respectively. These returns assume reinvestment of all
distributions and reflect sales charges on distributions as 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 fund uses the Lehman Brothers Mutual Fund Government/Mortgage Index as a
benchmark. Although we believe this is the most appropriate benchmark available,
it is not a perfect match. The benchmark index is comprised of U.S. government
securities while American Strategic Income Portfolio is comprised primarily of
nonsecuritized, illiquid whole loans. This limits the ability of the fund to
respond quickly to market changes.
The Lehman Brothers Mutual Fund Government/Mortgage Index is comprised of all
U.S. government agency and Treasury securities and agency mortgage-backed
securities. Developed by Lehman Brothers for comparative use by the mutual fund
industry, this index is unmanaged and does not include any fees or expenses in
its total return calculations.
The since inception number for the Lehman index is calculated from the month end
following the fund's inception through May 31, 2000.
--------------------------------------------------------------------------------
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
--------------------------------------------------------------------------------
<PAGE>
[GRAPHIC] FUND OVERVIEW
FUND MANAGEMENT
JOHN WENKER
is primarily responsible
for the management of
American Strategic Income
Portfolio. He has 14 years of
financial experience.
DAVID STEELE
assists with the management
of American Strategic Income
Portfolio. He has 21 years of
financial experience.
RUSS KAPPENMAN
assists with the management
of American Strategic Income
Portfolio. He has 14 years of
financial experience.
JULY 15, 2000
FOR THE SEMIANNUAL REPORTING PERIOD ENDING MAY 31, 2000, AMERICAN STRATEGIC
INCOME PORTFOLIO HAD A TOTAL RETURN OF 0.75% BASED ON ITS NET ASSET VALUE (NAV).
This compares to a 1.93% return for its benchmark, the Lehman Brothers Mutual
Fund Government/Mortgage Index. The total return based on the fund's market
price was -1.55% over the same time frame. Two factors contributed to the fund's
underperformance compared to the benchmark. First, the fund had to dip into its
dividend reserve to maintain its monthly dividend amount. This caused the fund's
NAV to decrease, thus impacting performance. Second, the fund received no
prepayment penalties from property owners during the six months to help boost
the NAV. Before we discuss the reporting period in more detail, we would like to
tell you about a recent proxy proposal that you should have received.
AT THE AUGUST 3, 2000, ANNUAL MEETING, WE ARE ASKING FUND SHAREHOLDERS TO
APPROVE THE FUND'S INVESTMENT IN ALL TYPES OF SECURITIES BACKED BY REAL ESTATE
OR ISSUED BY COMPANIES THAT DEAL IN REAL ESTATE. IN PARTICULAR, REAL ESTATE
INVESTMENT TRUSTS (REITS), PREFERREDS. REIT companies manage portfolios of real
estate to earn profits for shareholders, and their preferred stock pays out a
specific dividend rate. We currently see good values in this market. They offer
investment-grade quality (BBB rated and above), attractive income potential,
more liquidity than mortgage loans because they are bought and sold on the New
York Stock Exchange, and they have a real estate orientation that we believe
suits the fund. Plus, they offer immediate diversification. For example, one
security we've considered represents 240,000 apartment units all across the
country. However, because these securities will have long durations, they will
be more volatile and more interest rate sensitive than the mortgage loans in the
portfolio.
THE FUND'S BOARD HAS APPROVED AN INCREASE IN THE LIMIT ON COMMERCIAL LOANS IN
THE FUND FROM 25% TO 35% OF TOTAL ASSETS. We currently find the commercial loan
market to be more attractive than single-family or multifamily loans. An
increase in commercial loans would broaden the exposure of the fund to office,
industrial, warehouse, and retail markets.
*All returns assume reinvestment of distributions and do not reflect sales
charges, except the fund's total return based on market price, which does
reflect sales charges on distributions as 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.
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
As a percentage of total assets on May 31, 2000
[PIE CHART]
<TABLE>
<S> <C>
Short-term Securities 1%
Other Assets 1%
U.S. Agency Fixed-rate Morgage-backed Securities 22%
Commercial Loans 23%
Single-family Loans 26%
Multifamily Loans 27%
</TABLE>
DELINQUENT LOAN PROFILE
The chart below shows the percentage of single-family loans** in the portfolio
that are 30, 60, 90, or 120 days delinquent as of May 31, 2000, taken on
principal amounts outstanding.
<TABLE>
<S> <C>
Current 92.3%
--------------------------------------------------
30 Days 2.9%
--------------------------------------------------
60 Days 0.8%
--------------------------------------------------
90 Days 0.4%
--------------------------------------------------
120+ Days 3.6%
--------------------------------------------------
</TABLE>
**As of May 31, 2000, there were no multifamily or commercial loans delinquent.
AMERICAN STRATEGIC INCOME PORTFOLIO SEMIANNUAL REPORT 2000 1 )
<PAGE>
[GRAPHC] FUND OVERVIEW CONTINUED
DURING THE REPORTING PERIOD, THE FEDERAL RESERVE'S INTEREST RATE HIKES BECAME A
CHALLENGE FOR THE FUND. On the positive side, higher rates have slowed the level
of refinancings and loan prepayments. Also, rising rates mean that we can find
new mortgage investments that pay income equal to or higher than the average
coupon in the fund. However, the Fed has raised short-term rates so much that
high borrowing costs are beginning to erode the income levels of the fund. In
June 2000, after the end of this semiannual reporting period, we had to slightly
decrease the monthly dividend of the fund from 8.5 cents per share to 7.25 cents
per share as a result. Even with the decrease, the dividend reserve of 3.63
cents per share continues to support part of the fund's monthly distribution.
BECAUSE OF THIS CHALLENGING INTEREST RATE ENVIRONMENT, THE FUND ALSO EXPERIENCED
MORE NET ASSET VALUE VOLATILITY THAN IS TYPICAL, BUT WAS STILL ABLE TO PAY AN
ATTRACTIVE INCOME STREAM. The NAV of the fund began the six-month period at
$12.35 and ended at $11.93 per share. At the end of the reporting period, the
fund's market price of $10.75 per share continued to trade at a discount to its
net asset value. Dividends for the six months totaled $0.51 per share, for an
annualized distribution rate of 9.49% based on the May 31 market price. The
fund's new dividend level would result in an annualized earnings rate of 8.09%
based on the May 31 market price. Keep in mind that past performance is no
guarantee of future results, and the fund's NAV and distribution rate will
fluctuate.
DURING DECEMBER, THE FUND PAID OUT PROCEEDS FROM ITS SHARE REPURCHASE OFFER,
WHICH BROUGHT SHORT-TERM SECURITIES FROM 9% DOWN TO 1% OF THE FUND'S TOTAL
ASSETS. In the last shareholder report, the level of short-term securities was
elevated to prepare for the repurchase offer payout. Single-family, multifamily,
and commercial loans continue to represent the majority of the portfolio with
76% of total assets collectively. (See the chart on the previous page for
individual percentages for each loan category.) In addition, we have moved about
5% of total assets out of whole loans
--------------------------------------------------------------------------------
GEOGRAPHICAL DISTRIBUTION
We attempt to buy mortgage loans in many parts of the country to help avoid
the risks of concentrating in one area. These percentages reflect principal
value of whole loans as of May 31, 2000. Shaded areas without values indicate
states in which the fund has invested less than 0.50% of its assets.
[MAP]
<TABLE>
<S> <C>
Alabama
Alaska Less than 0.50%
Arizona 7%
Arkansas Less than 0.50%
California 10%
Colorado 4%
Connecticut Less than 0.50%
Delaware
Florida 7%
Georgia Less than 0.50%
Hawaii
Idaho
Illinois 1%
Indiana
Iowa Less than 0.50%
Kansas Less than 0.50%
Kentucky Less than 0.50%
Louisiana Less than 0.50%
Maine Less than 0.50%
Maryland 1%
Massachusetts Less than 0.50%
Michigan 1%
Minnesota 11%
Mississippi Less than 0.50%
Missouri Less than 0.50%
Montana 2%
Nebraska Less than 0.50%
New Hampshire 2%
New Jersey 3%
New Mexico 1%
New York 4%
Nevada 6%
North Carolina 1%
North Dakota 3%
Ohio Less than 0.50%
Oklahoma 1%
Oregon 5%
Pennsylvania 1%
Rhode Island
South Carolina
South Dakota
Tennessee 6%
Texas 13%
Utah 2%
Vermont
Virginia Less than 0.50%
Washington 5%
West Virginia
Wisconsin Less than 0.50%
Wyoming
</TABLE>
( 2 AMERICAN STRATEGIC INCOME PORTFOLIO SEMIANNUAL REPORT 2000
<PAGE>
during the period and into agency mortgage securities, mainly Fannie Maes
(Federal National Mortgage Association) and Freddie Macs (Federal Home Loan
Mortgage Corporation). We currently believe agency securities offer good cash
flows, better values, and that they have AAA-rated credit quality. The fund
owned no Treasury securities as of May 31.
ALTHOUGH THE INCREASING RATE ENVIRONMENT HAS BECOME SOMEWHAT PAINFUL FOR THE
FUND, THE FED'S ACTION IS HELPING TO KEEP THE ECONOMY HEALTHY, WHICH IS
BENEFICIAL FOR THE REAL ESTATE MARKETS AND THE FUND OVER THE LONG TERM. In the
multifamily and commercial markets, increased rates mean less new construction,
which translates into higher rent levels and occupancy levels in existing
properties. Since this fund only buys loans on existing properties, less new
supply is a positive factor for the fund. Also, with the U.S. economy continuing
to grow, we are seeing increased values for single-family housing, lower
foreclosure rates, and very low credit losses. As you can see on the map on the
previous page, our mortgage loans are diversified across the majority of states
to help avoid the risk of an economic downturn in one region. We are
overweighted in states that are experiencing the most population and job growth,
such as California, Minnesota, and Texas. We believe the Federal Reserve's moves
will be successful in orchestrating a "soft landing" for the economy without
putting it into a recession, which would be the worst-case scenario for this
fund.
A HEALTHY ECONOMY COUPLED WITH HIGHER RATES HAS HELPED THE FUND HAVE MINOR
CREDIT LOSSES AND NO PREPAYMENTS DURING THE SEMIANNUAL PERIOD. Keep in mind that
the risk of credit losses (i.e. loans defaulting) is the primary risk of
investing in mortgage loans. If the proceeds from the sale of the foreclosed
property are less than the loan price that the fund paid, the fund would suffer
a loss. Since inception, the fund has had net credit losses of $0.05 per share.
Because the fund has experienced no multifamily or commercial loan prepayments
during the six months, it has received no prepayment penalties from these
borrowers.
THANK YOU FOR YOUR INVESTMENT IN AMERICAN STRATEGIC INCOME PORTFOLIO AND THE
TRUST YOU HAVE PLACED IN US AS MANAGERS. We hope you will take a few minutes to
read, vote on, and return the proxy that you received in the mail. We believe
the new investment options described in the proxy will help the fund to maintain
an attractive income level and total return. We will continue to closely monitor
the fund's credit risk and income levels to help you achieve your financial
goals.
--------------------------------------------------------------------------------
VALUATION OF WHOLE LOAN INVESTMENTS
The fund's investments in whole loans (single-family, multifamily, and
commercial), participation mortgages, and mortgage servicing rights are
generally not traded in any organized market and therefore, market quotations
are not readily available. These investments are valued at "fair value"
according to procedures adopted by the fund's board of directors. Pursuant to
these procedures, whole loan investments are initially valued at cost and their
values are subsequently monitored and adjusted pursuant to a First American
Asset Management pricing model designed to incorporate, among other things, the
present value of the projected stream of cash flows on such investments. The
pricing model takes into account a number of relevant factors including the
projected rate of prepayments, the deliquency profile, the historical payment
record, the expected yield at purchase, changes in prevailing interest rates,
and changes in the real or perceived liquidity of whole loans, participation
mortgages, or mortgage servicing rights, as the case may be. The results of the
pricing model may be further subject to price ceilings due to the illiquid
nature of the loans. Changes in prevailing interest rates, real or perceived
liquidity, yield spreads, and credit worthiness are factored into the pricing
model each week. Certain mortgage loan information is received on a monthly
basis and includes, but is not limited to, the projected rate of prepayments,
projected rate and severity of defaults, the delinquency profile, and the
historical payment record. Valuations of whole laons are determined no less
frequently than weekly.
AMERICAN STRATEGIC INCOME PORTFOLIO SEMIANNUAL REPORT 2000 3 )
<PAGE>
FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES May 31, 2000
................................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (note 2) ....... $64,597,286
Real estate owned (identified cost: $250,181) (note 2) ..... 239,326
Accrued interest receivable ............................... 459,001
-----------
Total assets ............................................ 65,295,613
-----------
LIABILITIES:
Reverse repurchase agreements payable (note 2) ............ 14,372,000
Accrued investment management fee ......................... 25,272
Bank overdraft ............................................ 300,876
Accrued administrative fee ................................ 17,059
Accrued interest .......................................... 43,594
Other accrued expenses .................................... 69,451
-----------
Total liabilities ....................................... 14,828,252
-----------
Net assets applicable to outstanding capital stock ...... $50,467,361
===========
COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital .............. $60,517,426
Undistributed net investment income ....................... 153,578
Accumulated net realized loss on investments .............. (9,075,441)
Unrealized depreciation of investments .................... (1,128,202)
-----------
Total - representing net assets applicable to capital
stock ................................................. $50,467,361
===========
* Investments in securities at identified cost ............ $65,714,633
===========
NET ASSET VALUE AND MARKET PRICE:
Net assets ................................................ $50,467,361
Shares outstanding (authorized 1 billion shares of $0.01 par
value) .................................................. 4,230,294
Net asset value ........................................... $11.93
Market price .............................................. $10.75
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
4 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended May 31,
2000
................................................................................
<TABLE>
<S> <C>
INCOME:
Interest (net of interest expense of $583,189) ............. $ 2,345,960
-----------
Total investment income .................................. 2,345,960
-----------
EXPENSES (NOTE 3):
Investment management fee ................................. 155,538
Administrative fee ........................................ 56,945
Custodian and accounting fees ............................. 44,141
Transfer agent fees ....................................... 11,280
Reports to shareholders ................................... 23,968
Mortgage servicing fees ................................... 64,943
Directors' fees ........................................... 1,504
Audit and legal fees ...................................... 30,705
Other expenses ............................................ 33,653
-----------
Total expenses .......................................... 422,677
Less expenses paid indirectly ......................... (8,548)
-----------
Total net expenses ...................................... 414,129
-----------
Net investment income ................................... 1,931,831
-----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
(NOTE 4):
Net realized loss on investments in securities ............ (935,529)
Net realized gain on real estate owned .................... 27,007
-----------
Net realized loss on investments ........................ (908,522)
Net change in unrealized appreciation or depreciation of
investments ............................................. (624,383)
-----------
Net loss on investments ................................. (1,532,905)
-----------
Net increase in net assets resulting from
operations .......................................... $ 398,926
===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
5 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS For the Six Months Ended May 31,
2000
................................................................................
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest income ............................................ $ 2,345,960
Net expenses ............................................... (414,129)
------------
Net investment income .................................... 1,931,831
------------
Adjustments to reconcile net investment income to net cash
provided by operating activities:
Change in accrued interest receivable .................... 63,413
Net amortization of bond discount and premium ............ 2,905
Change in accrued fees and expenses ...................... (6,174)
Change in other assets ................................... 11,532
------------
Total adjustments ...................................... 71,676
------------
Net cash provided by operating activities .............. 2,003,507
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments ......................... 18,442,878
Purchases of investments ................................... (12,648,630)
Net sales of short-term securities ......................... 6,837,032
------------
Net cash provided by investing activities .............. 12,631,280
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on reverse repurchase agreements .............. (6,753,000)
Retirement of fund shares .................................. (5,828,397)
Distributions paid to shareholders ......................... (2,157,450)
------------
Net cash used by financing activities .................. (14,738,847)
------------
Net decrease in cash ....................................... (104,060)
Cash at beginning of period ................................ (196,816)
------------
Cash at end of period .................................. $ (300,876)
============
Supplemental disclosure of cash flow information:
Cash paid for interest on reverse
repurchase agreements .................................. $ 634,460
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
6 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Financial Statements (continued)
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
5/31/00 YEAR ENDED
(UNAUDITED) 11/30/99
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ..................................... $ 1,931,831 $ 4,698,186
Net realized gain (loss) on investments ................... (908,522) 77,048
Net change in unrealized appreciation or depreciation of
investments ............................................. (624,383) (2,991,354)
----------- -----------
Net increase in net assets resulting from operations .... 398,926 1,783,880
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................ (2,157,450) (4,766,526)
----------- -----------
CAPITAL SHARE TRANSACTIONS (NOTE 6):
Decrease in net assets from capital share transactions .... (5,828,397) (248,648)
----------- -----------
Total decrease in net assets ............................ (7,586,921) (3,231,294)
Net assets at beginning of period ......................... 58,054,282 61,285,576
----------- -----------
Net assets at end of period ............................... $50,467,361 $58,054,282
=========== ===========
Undistributed net investment income ....................... $ 153,578 $ 379,197
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------
7 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
--------------------------------------------------------------------------------
(1) ORGANIZATION
............................
American Strategic 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 emphasizes investments in
mortgage-related assets that directly or indirectly
represent a participation in or are secured by and payable
from mortgage loans. It may also invest in asset-backed
securities, U.S. government securities, corporate debt
securities, municipal obligations, unregistered securities
and mortgage servicing rights. The fund may enter into
dollar roll transactions. In addition, the fund may borrow
using reverse repurchase agreements and revolving credit
facilities. Fund shares are listed on the New York Stock
Exchange under the symbol ASP.
(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.
The fund's investments in whole loans (single family,
multifamily and commercial), participation mortgages and
mortgage servicing rights are generally not traded in any
organized market and therefore, market quotations are not
readily available. These investments are valued at "fair
value" according to procedures adopted by the fund's board
of directors. Pursuant to these procedures, whole loan
investments are initially valued at cost and their values
are subsequently monitored and adjusted pursuant to a
First American Asset Management pricing model designed to
incorporate, among other things, the present value of the
projected stream of cash flows on such investments. The
pricing model takes into account a number of relevant
factors including the projected rate of prepayments, the
delinquency profile, the historical payment record, the
expected yield at purchase, changes in prevailing interest
rates, and changes in the real or perceived liquidity of
whole loans, participation mortgages or mortgage servicing
rights, as the case may be. The results of the pricing
model may be further subject to price ceilings due to the
illiquid nature of the loans. Changes in prevailing
interest rates, real or perceived liquidity, yield
spreads, and creditworthiness are factored into the
pricing model each week. Certain mortgage loan information
is received once a month. This information includes, but
is not limited to, the projected rate of prepayments,
projected rate and severity of defaults, the delinquency
profile and the historical payment record. Valuations of
whole loans, mortgage participations and mortgage
servicing rights are determined no less frequently than
weekly.
--------------------------------------------------------------------------------
8 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
Securities transactions are accounted for on the date
securities are purchased or sold. Realized gains and
losses are calculated on the identified-cost basis.
Interest income, including amortization of bond discount
and premium, is recorded on an accrual basis.
WHOLE LOANS AND PARTICIPATION MORTGAGES
Whole loans and participation mortgages may bear a greater
risk of loss arising from a default on the part of the
borrower of the underlying loans than do traditional
mortgage-backed securities. This is because whole loans
and participation mortgages, unlike most mortgage-backed
securities, generally are not backed by any government
guarantee or private credit enhancement. Such risk may be
greater during a period of declining or stagnant real
estate values. In addition, the individual loans
underlying whole loans and participation mortgages may be
larger than the loans underlying mortgage-backed
securities. With respect to participation mortgages, the
fund generally will not be able to unilaterally enforce
its rights in the event of a default, but rather will be
dependent on the cooperation of the other participation
holders.
At May 31, 2000, loans representing 1.7% of net assets
were 60 days or more delinquent as to the timely monthly
payment of principal. Such delinquencies relate solely to
single family whole loans and represent 4.7% of total
single family principal outstanding at May 31, 2000. The
fund does not record past due interest as income until
received. The fund may incur certain costs and delays in
the event of a foreclosure. Also, there is no assurance
that the subsequent sale of the property will produce an
amount equal to the sum of the unpaid principal balance of
the loan as of the date the borrower went into default,
the accrued unpaid interest and all of the foreclosure
expenses. In this case, the fund may suffer a loss. The
fund recognized net realized gains of $27,007 or $0.006
per share on real estate sold during the six months ended
May 31, 2000.
Real estate acquired through foreclosure, if any, is
recorded at estimated fair value. The fund may receive
rental or other income as a result of holding real estate.
In addition, the fund may incur expenses associated with
maintaining any real estate owned. On May 31, 2000, the
fund owned two single family homes with an aggregate value
of $239,326, or 0.5% of net assets.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of a
portfolio-eligible security by the fund, coupled with an
agreement to repurchase the security at a specified date
and price. Reverse repurchase agreements may increase
volatility of the fund's net asset value and involve the
risk that interest costs on money borrowed may exceed the
return on securities purchased with that borrowed money.
Reverse repurchase agreements are considered to be
borrowings by the fund, and are subject to the fund's
overall restriction on borrowing under which it must
maintain asset coverage of at least 300%. For the six
months ended May 31, 2000, the average borrowings
outstanding were $16,592,000 and the average rate was
6.77%.
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 market
fluctuation and may increase or decrease in value prior to
their delivery. The fund segregates, with its custodian,
assets with a
--------------------------------------------------------------------------------
9 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
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 May 31, 2000, the fund had no outstanding when-issued
or forward commitments.
MORTGAGE SERVICING RIGHTS
The fund may acquire interests in the cash flow from
servicing fees through contractual arrangements with
mortgage servicers. Mortgage servicing rights, similar to
interest-only securities, generate no further cash flow
when a mortgage is prepaid or goes into default. Mortgage
servicing rights are accounted for on a level-yield basis
with recognized income based on the estimated amounts and
timing of cash flows. Such estimates are adjusted
periodically as the underlying market conditions change.
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
also intends to distribute its taxable net investment
income and realized gains, if any, to avoid the payment of
any federal excise taxes.
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.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are made monthly
and realized capital gains, if any, will be distributed at
least annually. These 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
unless the market price plus commissions exceeds the net
asset value by 5% or more. If, at the close of business on
the dividend payment date, the shares purchased in the
open market are insufficient to satisfy the dividend
reinvestment requirement, the fund will issue new shares
at a discount of up to 5% from the current market price.
REPURCHASE AGREEMENTS AND OTHER SHORT-TERM SECURITIES
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
secured by U.S. government or 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
--------------------------------------------------------------------------------
10 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
excess of the repurchase amount, including accrued
interest, to protect the fund in the event of a default.
In addition to repurchase agreements, the fund may invest
in money market funds advised by the fund's advisor.
USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United
States requires management to make estimates and
assumptions that affect the reported amounts in the
financial statements. Actual results could differ from
these estimates.
(3) 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 in an amount
equal to an annualized rate of 0.20% of the fund's average
weekly net assets and 4.50% of the daily gross income
accrued by the fund during the month (i.e., investment
income, including amortization of discount and premium,
other than gains from the sale of securities or gains from
options and futures contracts less interest on money
borrowed by the fund). The monthly investment management
fee shall not exceed in the aggregate 1/12 of 0.725% of
the fund's average weekly net assets during the month
(approximately 0.725% on an annual basis). For the six
months ended May 31, 2000, the effective investment
management fee incurred by the fund was 0.61%. For its
fee, the advisor provides investment advice and conducts
the management and investment activity of the fund.
The administration agreement provides the administrator
with a monthly fee based on an annual percentage of the
fund's average weekly net assets (computed by subtracting
liabilities 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 month of December, 1999, the fund paid the
administrator a monthly fee in an amount equal to an
annual rate of 0.20% of the fund's average weekly net
assets. Effective January 1, 2000, the administrator's fee
increased to an annual rate of 0.25% of the fund's 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.
MORTGAGE SERVICING FEES
The fund enters into mortgage servicing agreements with
mortgage servicers for whole loans and participation
mortgages. For a fee, mortgage servicers maintain loan
records, such as insurance and taxes and the proper
allocation of payments between principal and interest.
OTHER FEES AND EXPENSES
In addition to the investment management, administrative
and mortgage servicing 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
--------------------------------------------------------------------------------
11 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
--------------------------------------------------------------------------------
expenses; legal, auditing and accounting services;
insurance; interest; expenses related to real estate
owned; fees to outside parties retained to assist in
conducting due diligence; taxes and other miscellaneous
expenses.
During the six months ended May 31, 2000, the fund paid
$9,215 to U.S. Bank for custody services.
EXPENSES PAID INDIRECTLY
Expenses paid indirectly represent reimbursements of
custodian fees received from mortgage servicers of $8,548.
(4) INVESTMENT
SECURITY
TRANSACTIONS
............................
Cost of purchases and proceeds from sales of securities,
other than temporary investments in short-term, for the
six months ended May 31, 2000 aggregated $12,645,725 and
$18,442,878, respectively. Included in proceeds from sales
are $335,515 from sales of real estate owned. The fund
received no prepayment penalties during the period.
(5) CAPITAL LOSS
CARRYOVER
............................
For federal income tax purposes, the fund had capital loss
carryovers of $8,166,919 as of November 30, 1999, which if
not offset by subsequent capital gains, will expire in
2003. 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.
(6) CAPITAL SHARE
TRANSACTIONS
............................
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 value was at a discount from
net asset value (NAV). 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
236,151 shares (5% of the outstanding shares as of
September 9, 1998).
Pursuant to the plan, the fund repurchased and retired the
following:
<TABLE>
<CAPTION>
PERIOD % OUTSTANDING WEIGHTED AVERAGE
ENDED SHARES SHARES COST DISCOUNT FROM NAV
-------- ------ ------------- -------- -----------------
<S> <C> <C> <C> <C>
11/30/99 21,000 0.45% $248,648 7.82%
</TABLE>
REPURCHASE OFFER
The fund's board of directors concluded that an offer to
purchase up to 10% of the fund's outstanding shares at net
asset value would be in the best interests of
shareholders. Accordingly, the repurchase offer was sent
to shareholders in November 1999, and the deadline for
submitting shares for repurchase was 5:00 p.m. Eastern
Time on November 29, 1999. The repurchase price was
determined on December 6, 1999, at the close of regular
trading on the New York Stock Exchange (4 p.m. Eastern
Time). The percentage of outstanding shares repurchased,
the number of shares repurchased, the repurchase price per
share (net asset value less two cents per share repurchase
fee) and proceeds paid by the fund on December 10, 1999,
were as follows:
<TABLE>
<CAPTION>
PERCENTAGE SHARES REPURCHASE PROCEEDS
REPURCHASED REPURCHASED PRICE PAID
----------- ----------- ---------- ----------
<S> <C> <C> <C>
10% 470,032 $12.38 $5,818,996
</TABLE>
--------------------------------------------------------------------------------
12 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
(7) FINANCIAL
HIGHLIGHTS
............................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each
period are as follows:
AMERICAN STRATEGIC INCOME PORTFOLIO
<TABLE>
<CAPTION>
Six Months
Ended Year Year Year Year Year
5/31/00 Ended Ended Ended Ended Ended
(Unaudited) 11/30/99 11/30/98(e) 11/30/97 11/30/96 11/30/95
----------- -------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning
of period ............................ $12.35 $12.98 $12.88 $12.65 $13.13 $12.63
------ ------ ------ ------ ------ ------
Operations:
Net investment income ................ 0.47 1.00 1.01 0.97 0.97 1.09
Net realized and unrealized gains
(losses) on investments ............ (0.38) (0.62) 0.06 0.22 (0.10) 1.11
------ ------ ------ ------ ------ ------
Total from operations .............. 0.09 0.38 1.07 1.19 0.87 2.20
------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income ........... (0.51) (1.01) (0.97) (0.96) (1.35) (1.70)
------ ------ ------ ------ ------ ------
Net asset value, end of period ......... $11.93 $12.35 $12.98 $12.88 $12.65 $13.13
====== ====== ====== ====== ====== ======
Per-share market value, end of
period ............................... $10.75 $11.44 $12.13 $11.88 $11.00 $12.25
====== ====== ====== ====== ====== ======
SELECTED INFORMATION
Total return, net asset value(a) ....... 0.75% 3.03% 8.56% 9.83% 7.12% 18.27%
Total return, market value(b) .......... (1.55)% 2.76% 10.69% 17.41% 1.29% 7.75%
Net assets at end of period
(in millions) ........................ $ 50 $ 58 $ 61 $ 68 $ 66 $ 69
Ratio of expenses to average weekly net
assets including interest
expense(c) ........................... 3.91%(f) 3.83% 2.89% 2.56% 2.94% 3.29%
Ratio of expenses to average weekly net
assets excluding interest
expense(c) ........................... 1.65%(f) 1.52% 1.47% 1.47% 1.50% 1.72%
Ratio of net investment income to
average weekly net assets ............ 7.52%(f) 7.86% 7.74% 7.68% 7.67% 8.26%
Portfolio turnover rate (excluding
short-term securities) ............... 19% 22% 38% 61% 63% 120%
Amount of borrowings outstanding at end
of period (in millions) .............. $ 14 $ 21 $ 17 $ 11 $ 14 $ 15
Per-share amount of borrowings
outstanding at end of period ......... $ 3.40 $ 4.50 $ 3.49 $ 2.10 $ 2.67 $ 2.84
Per-share amount of net assets,
excluding borrowings, at end
of period ............................ $15.33 $16.85 $16.47 $14.98 $15.32 $15.97
Asset coverage ratio(d) ................ 451% 375% 471% 715% 574% 563%
</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) INCLUDES 0.02% FROM FEDERAL EXCISE TAXES IN FISCAL YEAR 1995.
(d) REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
(e) EFFECTIVE AUGUST 10, 1998, THE ADVISOR WAS CHANGED FROM PIPER CAPITAL TO
U.S. BANK.
(f) ANNUALIZED.
--------------------------------------------------------------------------------
13 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN STRATEGIC
INCOME PORTFOLIO May 31, 2000
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Date Market
Description of Security Acquired Par Value Cost Value(a)
--------------------------------------------------------- -------- ----------- ----------- -----------
<CAPTION>
<S> <C> <C> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
U.S. GOVERNMENT AND AGENCY SECURITIES (28.3%):
U.S. AGENCY MORTGAGE-BACKED SECURITIES (28.3%):
FIXED RATE (28.3%):
6.50%, FNMA, 6/1/29 ............................... 5/4/99 $ 2,878,280(b) $ 2,857,396 $ 2,662,409
7.50%, FNMA, 3/1/30 ............................... 3/22/00 6,983,984(b) 6,864,150 6,752,640
7.50%, FNMA, 5/1/30 ............................... 5/9/00 2,490,277(b) 2,402,190 2,417,113
8.00%, FNMA, 5/1/30 ............................... 5/9/00 2,500,000(b) 2,466,823 2,478,125
----------- -----------
Total U.S. Government and Agency Securities .... 14,590,559 14,310,287
----------- -----------
PRIVATE MORTGAGE-BACKED SECURITIES (0.2%):
FIXED RATE (0.2%):
13.04%, Minnesota Mortgage
Corporation, 7/25/14 ............................ 5/19/92 36,506(e) 37,316 37,054
12.26%, Minnesota Mortgage
Corporation, 10/25/14 ........................... 5/19/92 51,334(e) 52,464 52,103
----------- -----------
Total Private Mortgage-Backed Securities ....... 89,780 89,157
----------- -----------
WHOLE LOANS AND PARTICIPATION MORTGAGES (c,d,e) (98.0%):
COMMERCIAL LOANS (29.7%):
Bekins Building, 8.50%, 10/1/04 ................... 9/2/97 1,111,523 1,111,523 1,080,083
El Centro Market Place, 9.75%, 9/1/01 ............. 8/5/99 745,145 745,145 747,901
James Plaza, 8.55%, 12/1/01 ....................... 11/15/96 1,145,313 1,145,313 1,139,143
Main Street Office Building, 8.50%, 11/1/07 ....... 10/21/97 870,965 869,514 843,386
One Eastern Heights Office Building,
8.33%, 12/1/07 .................................. 11/7/97 1,064,925 1,064,925 1,016,845
Pacific Periodicals Building, 8.15%, 1/1/08 ....... 12/9/97 1,336,492 1,336,492 1,267,217
Pine Island Office Building, 8.15%, 11/2/02 ....... 10/8/97 1,572,621 1,572,621 1,539,307
Rice Street Convention Center, 9.10%, 2/1/04 ...... 1/23/97 816,310 816,310 804,821
Schendel Office Building, 8.32%, 10/1/07 .......... 9/30/97 1,158,741 1,158,741 1,115,009
Schendel Retail Center, 8.70%, 9/1/07 ............. 8/28/97 776,844 776,844 755,801
Shallowford Business Park, 9.25%, 7/1/01 .......... 6/25/96 1,572,421 1,572,246 1,564,024
Sherwin Williams, 8.63%, 1/1/04 ................... 12/20/96 1,386,480 1,386,480 1,363,136
Stephens Retail Center, 9.35%, 8/1/03 ............. 9/6/96 1,148,669 1,143,883 1,146,647
Union Hill Village Office Buliding,
8.00%, 10/1/08 .................................. 9/30/98 666,845 666,845 623,371
----------- -----------
15,366,882 15,006,691
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Date Market
Description of Security Acquired Par Value Cost Value(a)
----------------------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
MULTIFAMILY LOANS (34.7%):
Applewood Manor, 8.75%, 1/1/01 .................... 12/23/93 $ 659,294 $ 655,998 $ 555,720
Charleston Plaza Apartments, 7.50%, 7/1/08 ........ 7/1/98 1,557,129 1,557,129 1,441,512
Franklin Woods Apartments, 9.90%, 3/1/10 .......... 2/24/95 1,204,984 1,201,726 1,262,438
Garden Oaks Apartments, 8.55%, 4/1/06 ............. 3/7/96 1,760,339 1,757,036 1,728,028
Garden Park Apartments, 9.40%, 6/1/02 ............. 5/2/00 900,000 900,000 918,000
Mark Twain Apartments, 8.00%, 2/1/03 .............. 1/9/98 969,007 969,007 896,423
Royal Knight Apartments, 8.50%, 4/1/06 ............ 3/4/96 1,543,457 1,540,080 1,511,522
Rush Oaks Apartments, 7.90%, 12/1/07 .............. 11/26/97 536,116 536,116 505,700
Sadletree Apartments, 9.32%, 12/1/01 .............. 11/18/98 2,375,000 2,351,250 2,334,206
Stanley Court Apartments, 8.50%, 11/1/02 .......... 10/31/95 1,056,351 1,052,990 1,044,961
Union Hill Village Townhomes, 8.00%, 10/1/08 ...... 9/30/98 945,026 945,026 893,345
Vanderbilt Condominiums, 8.16%, 10/1/09 ........... 9/29/99 1,194,432 1,194,432 1,144,301
Westgate Apartments, 10.00%, 2/1/08 ............... 1/28/93 1,344,925 1,331,476 1,326,458
Westhollow Place Apartments, 8.58%, 4/1/03 ........ 3/20/96 965,992 956,332 955,172
Woodland Garden Apartments, 7.50%, 9/1/08 ......... 8/26/98 1,048,218 1,048,218 962,770
----------- -----------
17,996,816 17,480,556
----------- -----------
SINGLE FAMILY LOANS (33.6%):
Aegis, 9.21%, 3/26/10 ............................. 10/26/95 167,450 158,190 164,145
Aegis II, 9.65%, 1/28/14 .......................... 12/28/95 317,779 291,165 316,336
American Bank, Mankato, 10.00%, 12/10/12 .......... 12/15/92 39,114 31,932 39,368
American Portfolio, 7.00%, 10/18/15 ............... 7/18/95 204,944 195,223 194,671
Anivan, 7.77%, 4/14/12 ............................ 6/14/96 239,606 241,155 233,469
Bank of New Mexico, 9.10%, 3/31/10 ................ 5/31/96 374,695(b) 367,720 374,582
Bluebonnet Savings and Loan, 11.68%, 8/31/10 ...... 5/12/92 29,241 28,651 27,282
Bluebonnet Savings and Loan, 7.81%, 8/31/10 ....... 5/12/92 751,488(b) 688,495 716,924
CLSI Allison Williams, 10.02%, 8/1/17 ............. 2/28/92 406,005(b) 373,424 408,989
Crossroads Savings and Loan, 9.13%, 1/1/21 ........ 12/23/91 261,601 246,021 260,262
Crossroads Savings and Loan, 9.38%, 1/1/21 ........ 12/23/91 204,702 193,589 205,432
Fairbanks, Utah, 10.39%, 9/23/15 .................. 5/21/92 57,157 48,512 56,773
First Boston Mortgage Pool #5, 9.12%, 6/29/03 ..... 6/23/92 298,844 244,248 290,209
Hamilton Financial, 8.68%, 6/29/10 ................ 7/8/92 114,918 105,437 112,085
Huntington MEWS, 9.00%, 8/1/17 .................... 1/17/92 591,487(b) 510,642 551,550
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
--------------------------------------------------------------------------------
14 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (Unaudited) (continued)
--------------------------------------------------------------------------------
AMERICAN STRATEGIC INCOME PORTFOLIO
(CONTINUED)
<TABLE>
<CAPTION>
Date Shares/ Market
Description of Security Acquired Par Value Cost Value(a)
----------------------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Knutson Mortgage Portfolio #1, 8.84%, 8/1/17 ...... 2/19/92 $ 650,466(b) $ 620,691 $ 600,053
Knutson Mortgage Portfolio #2, 9.32%, 9/25/17 ..... 5/26/92 466,332(b) 429,958 469,938
McClemore, Matrix Funding Corporation,
10.86%, 9/30/12 ................................. 9/9/92 470,425(b) 446,904 451,254
Meridian, 9.59%, 12/1/20 .......................... 12/21/92 525,061(b) 500,776 529,166
Nomura III, 8.74%, 4/29/17 ........................ 9/29/95 1,583,065(b) 1,431,003 1,505,256
Norwest II, 7.83%, 11/27/22 ....................... 2/27/96 764,715(b) 760,906 719,542
Norwest III, 9.59%, 11/27/22 ...................... 2/27/96 205,621(b) 205,628 208,536
Norwest V, 8.66%, 2/3/25 .......................... 9/3/96 961,591(b) 946,746 908,425
Norwest X, 8.21%, 2/1/22 .......................... 3/12/98 2,147,906(b) 2,151,557 2,053,998
Norwest XIII, 8.05%, 12/1/25 ...................... 10/28/98 1,905,991(b) 1,896,461 1,806,520
Norwest XIV, 7.86%, 7/12/24 ....................... 12/3/98 686,964(b) 680,094 647,519
Norwest XV, 7.92%, 1/1/25 ......................... 12/23/98 1,036,456(b) 1,023,500 977,029
Norwest XVI, 7.80%, 4/30/26 ....................... 3/4/99 808,039(b) 784,643 761,143
Norwest XVII, 7.51%, 10/4/23 ...................... 5/20/99 539,801(b) 521,962 499,205
Rand Mortgage Corporation, 9.58%, 8/1/17 .......... 2/21/92 193,464 158,569 193,476
Salomon II, 9.21%, 11/23/14 ....................... 12/23/94 484,693(b) 421,897 479,831
Valley Bank of Commerce, N.M., 7.94%, 8/31/10 ..... 5/6/92 202,806 172,520 196,112
----------- -----------
16,878,219 16,959,080
----------- -----------
Total Whole Loans and Participation Mortgages ... 50,241,917 49,446,327
----------- -----------
MORTGAGE SERVICING RIGHTS (e,f) (0.4%):
Matrix Servicing Rights, 14.00%, 7/10/22 .......... 7/10/92 -- 237,855 196,993
----------- -----------
RELATED PARTY MONEY MARKET FUND (1.1%):
First American Prime Obligations Fund ............. 5/31/00 554,522(g) 554,522 554,522
----------- -----------
Total Investments in Securities (h) ............ $65,714,633 $64,597,286
=========== ===========
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES
(a) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(b) ON MAY 31, 2000, SECURITIES VALUED AT $28,452,316 WERE PLEDGED AS
COLLATERAL FOR THE FOLLOWING OUTSTANDING REVERSE REPURCHASE AGREEMENTS:
<TABLE>
<CAPTION>
NAME OF
BROKER
ACQUISITION ACCRUED AND DESCRIPTION
AMOUNT DATE RATE* DUE INTEREST OF COLLATERAL
----------- ----------- ----- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 2,552,000 5/15/00 6.53% 6/15/00 $ 7,406 (1)
6,518,000 5/15/00 6.53% 6/15/00 18,918 (2)
2,382,000 5/15/00 6.52% 6/15/00 6,902 (3)
2,320,000 5/15/00 6.52% 6/15/00 6,723 (4)
600,000 5/1/00 7.29% 6/1/00 3,645 (5)
----------- -------
$14,372,000 $43,594
=========== =======
</TABLE>
<TABLE>
<S> <C>
* INTEREST RATE AS OF MAY 31, 2000. RATES ARE BASED ON THE LONDON INTERBANK
OFFERED RATE (LIBOR) AND RESET MONTHLY.
Name of broker and description of collateral:
(1) MORGAN STANLEY DEAN WITTER;
FNMA, 6.50%, 6/1/29, $2,878,280 PAR
(2) MORGAN STANLEY DEAN WITTER;
FNMA, 7.50%, 3/1/30, $6,983,984 PAR
(3) NOMURA;
FNMA, 8.00%, 5/1/30, $2,500,000 PAR
(4) NOMURA;
FNMA, 7.50%, 5/1/30, $2,490,277 PAR
(5) NOMURA;
BANK OF NEW MEXICO, 9.10%, 3/31/10, $331,168 PAR
BLUEBONNET SAVINGS AND LOAN, 7.81%, 8/31/10, $751,488 PAR
CLSI ALLISON WILLIAMS, 10.02%, 8/1/17, $406,005 PAR
HUNTINGTON MEWS, 9.00%, 8/1/17, $591,487 PAR
KNUTSON MORTGAGE PORTFOLIO #1, 8.84%, 8/1/17, $525,757 PAR
KNUTSON MORTGAGE PORTFOLIO #2, 9.32%, 9/25/17, $462,083 PAR
MCCLEMORE, MATRIX FUNDING CORPORATION, 10.86%, 9/30/12, $470,425
PARMERIDIAN, 9.59%, 12/1/20, $525,061 PAR
NOMURA III, 8.74%, 4/29/17, $1,583,065 PAR
NORWEST II, 7.83%, 11/27/22, $764,715 PAR
NORWEST III, 9.59%, 11/27/22, $205,621 PAR
NORWEST V, 8.66%, 2/3/25, $882,477 PAR
NORWEST X, 8.21%, 2/1/22, $2,008,696 PAR
NORWEST XIII, 8.05%, 12/1/25, $1,905,991 PAR
NORWEST XIV, 7.86%, 7/12/24, $686,964 PAR
NORWEST XV, 7.92%, 1/1/25, $997,254 PAR
NORWEST XVI, 7.80%, 4/30/26, $808,039 PAR
NORWEST XVII, 7.51%, 10/4/23, $410,290 PAR
SALOMON II, 9.21%, 11/23/14, $484,693 PAR
THE FUND HAS ENTERED INTO A LENDING COMMITMENT WITH NOMURA. THE AGREEMENT
PERMITS THE FUND TO ENTER INTO REVERSE REPURCHASE AGREEMENTS UP TO
$15,000,000 USING WHOLE LOANS AS COLLATERAL. THE FUND PAYS A FEE OF 0.25%
TO NOMURA ON ANY UNUSED PORTION OF THE $15,000,000 LENDING COMMITMENT.
(c) INTEREST RATES ON COMMERCIAL AND MULTIFAMILY LOANS ARE THE RATES IN EFFECT
ON MAY 31, 2000. INTEREST RATES AND MATURITY DATES DISCLOSED ON SINGLE
FAMILY LOANS REPRESENT THE WEIGHTED AVERAGE COUPON AND WEIGHTED AVERAGE
MATURITY FOR THE UNDERLYING MORTGAGE LOANS AS OF MAY 31, 2000.
(d) COMMERCIAL AND MULTIFAMILY LOANS ARE DESCRIBED BY THE NAME OF THE MORTGAGED
PROPERTY. POOLS OF SINGLE FAMILY LOANS ARE DESCRIBED BY THE NAME OF THE
INSTITUTION FROM WHICH THE LOANS WERE PURCHASED. THE GEOGRAPHICAL LOCATION
OF THE MORTGAGED PROPERTIES AND, IN THE CASE OF SINGLE FAMILY, THE NUMBER
OF LOANS, IS PRESENTED BELOW.
Commercial Loans:
BEKINS BUILDING - COLORADO SPRINGS, CO
EL CENTRO MARKET PLACE - EL CENTRO, CA
JAMES PLAZA - HOUSTON, TX
MAIN STREET OFFICE BUILDING - PARK CITY, UT
ONE EASTERN HEIGHTS OFFICE BUILDING - WOODBURY, MN
PACIFIC PERIODICALS BUILDING - LAKEWOOD, WA
PINE ISLAND OFFICE BUILDING - PLANTATION, FL
RICE STREET CONVENTION CENTER - ROSEVILLE, MN
SCHENDEL OFFICE BUILDING - BEAVERTON, OR
SCHENDEL RETAIL CENTER - BEAVERTON, OR
SHALLOWFORD BUSINESS PARK - CHATANOOGA, TN
SHERWIN WILLIAMS - ORLANDO, FL
STEPHENS RETAIL CENTER - MISSOULA, MT
UNION HILL VILLAGE OFFICE BUILDING - SPENCERPORT, NY
Multifamily Loans:
APPLEWOOD MANOR - DULUTH, MN
CHARLESTON PLAZA APARTMENTS - LAS VEGAS, NV
FRANKLIN WOODS APARTMENTS - FRANKLIN, NH
GARDEN OAKS APARTMENTS - COON RAPIDS, MN
GARDEN PARK APARTMENTS - LAS VEGAS, NV
MARK TWAIN APARTMENTS - MESA, AZ
ROYAL KNIGHT APARTMENTS - MEMPHIS, TN
RUSH OAKS APARTMENTS - LAPORTE, TX
SADLETREE APARTMENTS - SCOTTSDALE, AZ
STANLEY COURT APARTMENTS - BLOOMINGTON, MN
</TABLE>
--------------------------------------------------------------------------------
15 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
INVESTMENTS IN SECURITIES (Unaudited) (continued)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
UNION HILL VILLAGE TOWNHOMES - SPENCERPORT, NY
VANDERBILT CONDOMINIUMS - AUSTIN, TX
WESTGATE APARTMENTS - BISMARCK, ND
WESTHOLLOW PLACE APARTMENTS - HOUSTON, TX
WOODLAND GARDEN APARTMENTS - ARLINGTON, WA
Single Family Loans:
AEGIS - 10 LOANS, MIDWESTERN UNITED STATES
AEGIS II - 4 LOANS, MIDWESTERN UNITED STATES
AMERICAN BANK, MANKATO - 1 LOAN, MINNESOTA
AMERICAN PORTFOLIO - 5 LOANS, TEXAS AND CALIFORNIA
ANIVAN - 3 LOANS, MARYLAND, NEW JERSEY AND VIRGINIA
BANK OF NEW MEXICO - 9 LOANS, NEW MEXICO
BLUEBONNET SAVINGS AND LOAN - 21 LOANS, TEXAS
BLUEBONNET SAVINGS AND LOAN - 4 LOANS, TEXAS
CLSI ALLISON WILLIAMS - 25 LOANS, TEXAS
CROSSROADS SAVINGS AND LOAN - 8 LOANS, OKLAHOMA
CROSSROADS SAVINGS AND LOAN - 8 LOANS, OKLAHOMA
FAIRBANKS, UTAH - 2 LOANS, UTAH
FIRST BOSTON MORTGAGE POOL #5 - 10 LOANS, UNITED STATES
HAMILTON FINANCIAL - 1 LOAN, CALIFORNIA
HUNTINGTON MEWS - 14 LOANS, NEW JERSEY
KNUTSON MORTGAGE PORTFOLIO #1 - 13 LOANS, MIDWESTERN UNITED STATES
KNUTSON MORTGAGE PORTFOLIO #2 - 8 LOANS, MIDWESTERN UNITED STATES
MCCLEMORE, MATRIX FUNDING CORPORATION - 6 LOANS, NORTH CAROLINA
MERIDIAN - 8 LOANS, CALIFORNIA
NOMURA III - 29 LOANS, UNITED STATES
NORWEST II - 10 LOANS, UNITED STATES
NORWEST III - 2 LOANS, TEXAS AND WASHINGTON
NORWEST V - 12 LOANS, UNITED STATES
NORWEST X - 22 LOANS, UNITED STATES
NORWEST XIII - 17 LOANS, UNITED STATES
NORWEST XIV - 5 LOANS, CALIFORNIA, MAINE AND NORTH CAROLINA
NORWEST XV - 8 LOANS, UNITED STATES
NORWEST XVI - 6 LOANS, UNITED STATES
NORWEST XVII - 5 LOANS, UNITED STATES
RAND MORTGAGE CORPORATION - 5 LOANS, TEXAS
SALOMON II - 12 LOANS, MIDWESTERN UNITED STATES
VALLEY BANK OF COMMERCE, N.M. - 14 LOANS, NEW MEXICO
(e) SECURITIES PURCHASED AS PART OF A PRIVATE PLACEMENT WHICH HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933 AND ARE CONSIDERED TO BE ILLIQUID. ON MAY 31, 2000, THE TOTAL
MARKET VALUE OF THESE INVESTMENTS WAS $ 49,732,477 OR 98.6% OF TOTAL NET
ASSETS.
(f) INTEREST RATE DISCLOSED REPRESENTS THE CURRENT YIELD BASED ON THE CURRENT
COST BASIS AND ESTIMATED FUTURE CASH FLOWS.
(g) THIS MONEY MARKET FUND IS ADVISED BY U.S. BANK WHO ALSO SERVES AS THE
ADVISOR FOR THIS FUND. SEE NOTE 2 IN THE NOTES TO FINANCIAL STATEMENTS.
(h) ON MAY 31, 2000, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL INCOME
TAX PURPOSES WAS $65,964,814. THE AGGREGATE GROSS UNREALIZED APPRECIATION
AND DEPRECIATION OF INVESTMENTS IN SECURITIES, INCLUDING REAL ESTATE OWNED,
BASED ON THIS COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 614,053
GROSS UNREALIZED DEPRECIATION ...... (1,742,255)
-----------
NET UNREALIZED DEPRECIATION ...... $(1,128,202)
===========
</TABLE>
--------------------------------------------------------------------------------
16 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
SHAREHOLDER UPDATE
--------------------------------------------------------------------------------
SHARE REPURCHASE PROGRAM
Your fund's board of directors has approved the
continuation of the fund's share repurchase program, which
enables the fund to "buy back" shares of its common stock
in the open market. Repurchases may only be made when the
previous day's closing market price per share was at a
discount from net asset value. Repurchases cannot exceed
5% of the fund's outstanding shares as of September 9,
1998.
WHAT EFFECT WILL THIS PROGRAM HAVE ON SHAREHOLDERS?
We do not expect any adverse impact on the advisor's
ability to manage the fund. Because repurchases will be at
a price below net asset value per share, remaining shares
outstanding may experience a slight increase in net asset
value per share. Although the effect of share repurchases
on the market price is less certain, the board of
directors believes the program may have a favorable effect
on the market price of fund shares. We do not anticipate
any material increase in the fund's expense ratio.
WHEN WILL SHARES BE REPURCHASED?
Share repurchases may be made from time to time and may be
discontinued upon six months notice to shareholders. Share
repurchases are not mandatory when fund shares are trading
at a discount from net asset value; all repurchases will
be at the discretion of the fund's investment advisor. The
board of directors' decision whether to continue the share
repurchase program will be reported in the next
shareholder report.
HOW WILL SHARES BE REPURCHASED?
We expect to finance the repurchase of shares by
liquidating portfolio securities or using current cash
balances. We do not anticipate borrowing in order to
finance share repurchases.
--------------------------------------------------------------------------------
17 2000 Semiannual Report - American Strategic Income Portfolio
<PAGE>
[GRAPHIC]FIRST AMERICAN-Registered Trademark-
Asset Management
AMERICAN STRATEGIC INCOME PORTFOLIO
2000 SEMIANNUAL REPORT
[Recycling Logo] This document is printed on paper
containing 30% post-consumer waste.
7/2000 3041-00
