<PAGE>
THE AMERICAS
INCOME
TRUST [PHOTO]
* * *
ANNUAL REPORT
1995
<PAGE>
TABLE OF CONTENTS
AVERAGE ANNUALIZED TOTAL RETURNS ... 1
LETTER TO SHAREHOLDERS ............. 2
FINANCIAL STATEMENTS AND NOTES ..... 8
INVESTMENTS IN SECURITIES........... 21
INDEPENDENT AUDITORS' REPORT ....... 25
FEDERAL TAX INFORMATION ............ 26
SHAREHOLDER UPDATE ................. 27
THE AMERICAS INCOME TRUST
The Americas Income Trust is a non-diversified, closed-end fund. The fund's
primary investment objective is to provide a high level of current income and
its secondary objective is to seek long-term capital appreciation. To realize
its objectives, the fund primarily invests in debt securities that are issued
by issuers located in the United States, Canada and Mexico and denominated in
the currencies of those countries.
Debt securities that the fund may invest in include: mortgage-related
securities, including mortgage derivative securities; asset-backed
securities; structured securities, including foreign linked index securities;
municipal obligations; Brady bonds and corporate debt securities; and U.S.
and foreign government securities.
Investments in securities issued by non-U.S. issuers involve risks not
typically associated with investments in securities issued by U.S. issuers,
such as currency exchange risk and the potential of political, economic and
social instability. As with other investment companies, no assurance can be
given that the fund's investment objectives will be achieved. Fund shares
trade on the New York Stock Exchange under the symbol XUS.
<PAGE>
AVERAGE ANNUALIZED TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1995
[GRAPH]
THE AMERICAS INCOME TRUST'S TOTAL RETURN FIGURES ARE BASED ON THE CHANGE IN
ITS NET ASSET VALUE (NAV), ASSUME ALL DISTRIBUTIONS WERE REINVESTED AND DO
NOT REFLECT THE FUND'S SALES CHARGE. 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 AND SINCE INCEPTION PERIODS ENDED OCTOBER 31, 1995, WERE -20.90% AND
- -28.31%, RESPECTIVELY. THESE FIGURES ALSO INCLUDE REINVESTED DISTRIBUTIONS
AND DO NOT REFLECT A SALES CHARGE.
THE LIPPER WORLD INCOME FUNDS AVERAGES REPRESENT THE AVERAGE TOTAL RETURNS,
WITH DISTRIBUTIONS REINVESTED, OF 14 DEVELOPED NATION CLOSED-END FUNDS AND 12
EMERGING NATION CLOSED-END FUNDS WHICH INVEST IN NON-U.S. DOLLAR AND U.S.
DOLLAR DEBT INSTRUMENTS WITH UNSPECIFIED MATURITIES OR OTHER INCOME-PRODUCING
SECURITIES AS CHARACTERIZED BY LIPPER ANALYTICAL SERVICES.
1
<PAGE>
THE AMERICAS INCOME TRUST
[PHOTO]
TOM MCGLINCH, CFA (ABOVE)
SHARES PRIMARY RESPONSIBILITY FOR THE MANAGEMENT
OF THE AMERICAS INCOME TRUST. HE HAS 14 YEARS OF
FINANCIAL EXPERIENCE.
[PHOTO]
BRAD STONE, CFA (BELOW)
SHARES PRIMARY RESPONSIBILITY FOR THE MANAGEMENT
OF THE AMERICAS INCOME TRUST. HE HAS SEVEN YEARS
OF FINANCIAL EXPERIENCE.
December 15, 1995
Dear Shareholders:
THE AMERICAS INCOME TRUST'S NET ASSET VALUE TOTAL RETURN FOR THE ONE-YEAR
PERIOD ENDED OCTOBER 31, 1995, WAS -10.96%.* This compares to the Lipper
World Income Funds Average: Developed Nations return of 14.38% and the Lipper
World Income Funds Average: Emerging Nations return of 7.76% for the same
period. The fund's performance lagged the returns of the Lipper averages due
to the poor performance of the fund's Mexican peso-denominated or peso-linked
securities. In addition, the fund's use of the sale-forward program and
reverse repurchase agreements further contributed to its negative performance
during the year. Keep in mind that funds in the Lipper Developed Nations
category do not invest in Mexican securities, and funds in the Lipper
Emerging Nations category invest in Mexico and other emerging nations. Based
on change in the fund's market price, the fund's total return for the
one-year period ended October 31, 1995, was -20.90%.* Fund returns assume
distributions were reinvested and do not reflect sales charges.
THE DISAPPOINTING PERFORMANCE OF THE FUND OVER THE PAST YEAR WAS PRIMARILY
DUE TO THE DRAMATIC DECLINE IN THE VALUE OF THE MEXICAN PESO, WHICH BEGAN IN
LATE 1994. On December 20, 1994, the Mexican government unexpectedly
announced it would not continue to support the value of its currency, the
peso, within a pre-defined trading
* 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.
2
<PAGE>
THE AMERICAS INCOME TRUST
PORTFOLIO COMPOSITION
OCTOBER 31, 1995
[GRAPH]
range. The result was an immediate, dramatic decline in the peso's value
which also immediately reduced the value of the fund's investments in Mexican
peso-denominated securities and the fund's derivative structured securities,
whose values were linked to the peso. By the end of 1994, the peso had lost
approximately 36% of its value against the U.S. dollar since the beginning of
the year. The fund's net asset value declined from $10.26 on October 31,
1994, to $8.09 on December 31, 1994. In addition, the fund's income level
dropped significantly, which caused the fund's Dividend Committee to reduce
the fund's monthly distribution to 6.25 cents per share from 10.625 cents per
share beginning with the fund's February 1995 distribution.
BECAUSE WE FORESAW CONTINUED INSTABILITY IN THE PESO - AT LEAST IN THE NEAR
TERM - WE REDUCED OUR POSITION IN MEXICO TO PROTECT AGAINST FURTHER DECLINES
IN THE PESO'S VALUE. We liquidated several peso-denominated positions
immediately following the peso devaluation and reinvested the proceeds and
those of several maturing Mexican bonds into the U.S. bond market. By October
31, 1995, our position in Mexican peso-denominated or linked securities had
been reduced to approximately 14%, down from 31% on October 31, 1994. Our
investment in U.S. securities increased from 38% on October 31, 1994, to 52%
on October 31, 1995. The remainder of the fund, 32% of total assets, is
invested in Canadian securities, as of October 31, 1995.
3
<PAGE>
THE AMERICAS INCOME TRUST
NET ASSET VALUE SUMMARY PER SHARE
Initial Offering Price (1/28/94) .... $15.00
Initial Offering and
Underwriting Expenses ............... ($0.96)
Accumulated Realized
Losses at 10/31/95 .................. ($3.77)
-------
Subtotal ........................ $10.27
Unrealized Depreciation
on Investments at 10/31/95 .......... ($2.06)
NET ASSET VALUE ON 10/31/95 ......... $8.21
OUR RESTRUCTURING OF THE PORTFOLIO HAS BENEFITED THE FUND'S NET ASSET VALUE
PERFORMANCE. The fund's net asset value total return since January 1, 1995,
through October 31, 1995, was 10.30%, assuming distributions were reinvested
and not including sales charges. This improved performance was due to the
portfolio's emphasis on U.S. and Canadian securities - which have performed
strongly this year - and the fund's low weighting in Mexican securities. Had
we maintained our previous higher weighting in peso-denominated securities,
the fund's net asset value total return thus far in 1995 would have likely
been negative because the peso's value has continued to decline throughout
the year. Because the fund continues to hold some peso-denominated
securities, its performance during this 10-month period lagged the Lipper
World Income Funds Average: Developed Nations return of 16.21% and the Lipper
World Income Funds Average: Emerging Nations return of 15.01%. While the
fund's net asset value performance improved, the fund's performance based on
its market price has remained disappointing. From January 1, 1995, through
October 31, 1995, the fund's total return based on change in its market price
was -7.18%, assuming distributions were reinvested and not including sales
charges. As of October 31, the fund's shares were trading at approximately a
16% discount to its net asset value. (See "Premium vs. Discount" discussion
on page 5.)
ALTHOUGH THE FUND'S NET ASSET VALUE HAS IMPROVED IN 1995, WE BELIEVE IT IS
UNLIKELY OVER THE FORESEEABLE FUTURE THAT THE AMERICAS INCOME TRUST WILL
RECOVER THE DECLINE IN ITS NET ASSET VALUE THAT OCCURRED IN LATE 1994 AND
DURING THE FIRST FEW MONTHS OF 1995. The fund realized significant losses
when we sold many of its
4
<PAGE>
THE AMERICAS INCOME TRUST
PREMIUM VS. DISCOUNT
The underlying value of a fund's securities and other assets, minus its
liabilities, is the fund's "net asset value." Closed-end funds may trade in
the market at a price that is equal to, above, or below this net asset value.
Shares are trading at a "premium" when investors purchase or sell shares in
the market at a price that is greater than the shares' net asset value.
Conversely, when investors purchase or sell shares in the market at a price
that is lower than the shares' net asset value, they are said to be trading
at a "discount."
Mexican securities. In addition, many of the fund's derivative structured
notes, which were linked to a foreign currency or interest rate, were also
sold at significant losses. Also, now that the fund's exposure to Mexico has
been reduced, the positive impact of any potential appreciation in the value
of the peso will not be as significant.
AS DISCUSSED IN LAST JUNE'S SEMIANNUAL REPORT, WE EXPECTED ALL OF THE FUND'S
DISTRIBUTIONS IN 1995 WOULD BE CLASSIFIED AS RETURNS OF CAPITAL FOR TAX
PURPOSES, WHICH THEY WERE. This was due to the foreign currency losses that
were realized when we sold the fund's peso-denominated securities. Although
the fund was earning net investment income during 1995 (interest income
earned less expenses), tax accounting rules require that foreign currency
losses be offset against net investment income when determining ordinary
income. For you as an investor, a return of capital means the distribution is
not reported as taxable income but reduces your cost basis in the fund. It
will, therefore, likely affect the capital gain or loss calculation upon your
sale of the fund's shares. Your tax adviser can provide more information
about how this will affect you in your tax reporting, both now and in the
future.
IT IS LIKELY THAT MOST, IF NOT ALL, OF THE FUND'S DISTRIBUTIONS IN FISCAL
YEAR 1996 WILL ALSO BE CLASSIFIED AS RETURNS OF CAPITAL FOR TAX PURPOSES. The
remaining Mexican and some Canadian securities held in the fund currently
have unrealized foreign currency losses. Because these securities mature or
may be sold during the next year, the fund will likely realize significant
additional foreign currency losses in fiscal year 1996.
5
<PAGE>
THE AMERICAS INCOME TRUST
RECENTLY, THE FUND'S MONTHLY DISTRIBUTION AGAIN HAD TO BE REDUCED TO BRING IT
IN LINE WITH THE FUND'S EARNINGS (NET INVESTMENT INCOME). Mexican interest
rates dropped from approximately 70% at the beginning of July to
approximately 30% at the end of September, which, along with the continued
decline in the value of the peso in 1995, have resulted in lower net
investment income available for distribution from the fund's peso-denominated
securities. In addition, the decline in U.S. and Canadian interest rates this
year has contributed to lower portfolio income. As a result, the fund's
Dividend Committee reduced the fund's monthly distribution to 5.25 cents per
share from 6.25 cents per share, beginning with the fund's November
distribution. On an annualized basis, the new distribution level represents a
7.67% distribution rate based on the fund's net asset value ($8.21), and a
9.16% distribution rate based on the fund's market price ($6.875), as of
October 31, 1995. As of October 31, the fund's monthly earnings (net
investment income) were approximately 5.16 cents per share, based on a
three-month average.
AT LEAST IN THE NEAR TERM, WE BELIEVE IT IS MOST APPROPRIATE TO FOCUS ON THE
OPPORTUNITIES AVAILABLE IN THE U.S. AND CANADIAN MARKETS. While much higher
interest rates are available in Mexico, continuing economic and political
uncertainty have undermined any near-term return to stability in the value of
the peso - which we believe currently poses too great a risk. To help
minimize currency fluctuation on the fund's current Mexican holdings,
approximately half of our Mexican investments are denominated in U.S. dollars
with the remainder in pesos. As for the U.S. portion of the fund, we have
begun to position it more defensively due to the strong rally in U.S. bond
prices in 1995. For example, in early December of 1995, we sold our 3%
position in U.S. agency inverse floating rate securities. Finally, we believe
Canadian interest rates are more likely than U.S. interest rates to decline,
given Canada's lower economic growth and inflation. Canadian bonds are also
currently offering higher yields than comparable
6
<PAGE>
THE AMERICAS INCOME TRUST
U.S. bonds. Given our favorable outlook for Canada, we intend to maintain the
fund's current weighting of Canadian securities, which was 32% of the fund's
total assets as of October 31. All of the fund's Canadian holdings are
guaranteed by the Canadian government or one of its agencies.
THE DRAMATIC MARKET EVENTS IN MEXICO OVER THE PAST YEAR ARE A CLEAR REMINDER
OF THE IMPORTANCE OF KEEPING A LONG-TERM PERSPECTIVE WHEN INVESTING
INTERNATIONALLY. During 1994 - the year of the fund's inception - the
Canadian, Mexican and U.S. bond markets experienced some of their worst
historical returns. While the Canadian and U.S. bond markets have rebounded
this year, their poor performance in 1994 combined with the magnitude of last
year's events in Mexico continue to be reflected in the fund's net asset
value and market price performance. Even though our short-term outlook for
Mexico remains cautious, we believe its strong long-term growth opportunities
as an emerging nation are still intact. We urge you to maintain a long-term
outlook and contact your investment professional if you have any questions
about your investment in The Americas Income Trust.
Sincerely,
/s/ Tom McGlinch
Tom McGlinch
Portfolio Manager
/s/ Brad Stone
Brad Stone
Portfolio Manager
7
<PAGE>
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FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value (including a
repurchase agreement of $5,406,000)* (note 2) ........ $ 50,824,177
Cash in bank on demand deposit ........................... 50,458
Accrued interest receivable .............................. 965,327
----------------
Total assets ......................................... 51,839,962
----------------
LIABILITIES:
Accrued investment management fee ........................ 21,977
Accrued administrative fee ............................... 8,791
Variation margin payable ................................. 57,000
----------------
Total liabilities .................................... 87,768
----------------
Net assets applicable to outstanding capital stock ....... $ 51,752,194
----------------
----------------
REPRESENTED BY:
Capital stock - authorized 2 billion shares of $0.01 par
value; outstanding, 6,302,305 shares ................. $ 63,023
Additional paid-in capital ............................... 79,275,323
Accumulated net realized loss on investments ............. (14,593,939)
Unrealized depreciation of investments and on translation
of other assets and liabilities denominated in foreign
currencies ............................................. (12,992,213)
----------------
Total - representing net assets applicable to
outstanding capital stock ........................ $ 51,752,194
----------------
----------------
Net asset value per share of outstanding capital stock ... $ 8.21
----------------
----------------
* Investments in securities at identified cost ........... $ 63,732,563
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
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FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INCOME:
Interest (net of interest expense of $132,909) ......... $ 5,474,844
Fee income (note 2) ...................................... 201,358
----------------
Total investment income .............................. 5,676,202
----------------
EXPENSES (NOTE 3):
Investment management fee ................................ 262,984
Administrative fee ....................................... 105,193
Custodian, accounting and transfer agent fees ............ 136,840
Reports to shareholders .................................. 50,279
Directors' fees .......................................... 11,099
Audit and legal fees ..................................... 37,206
Other expenses ........................................... 31,753
----------------
Total expenses ....................................... 635,354
Less expenses paid indirectly ............................ (6,475)
----------------
Total net expenses ................................... 628,879
----------------
Net investment income ................................ 5,047,323
----------------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized loss on investments and foreign currency
transactions (note 4) .................................. (18,243,618)
Net realized gain on expired option contracts written
(note 5) ............................................... 16,688
----------------
Net realized loss on investments and foreign currency
transactions ......................................... (18,226,930)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies .......... 5,519,734
----------------
Net realized and unrealized loss on investments and
foreign currency transactions ........................ (12,707,196)
----------------
Net decrease in net assets resulting from
operations ....................................... $ (7,659,873)
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
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FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and fee income ................................ $ 5,676,202
Expenses ................................................. (628,879)
----------------
Net investment income ................................ 5,047,323
----------------
ADJUSTMENTS TO RECONCILE NET INVESTMENT INCOME TO CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
Change in accrued interest receivable .................. 1,264,471
Net amortization of bond discount and premium .......... (373,615)
Change in accrued fees, expenses and other
liabilities .......................................... 11,557
----------------
Total adjustments .................................... 902,413
----------------
Net cash provided by operating activities ............ 5,949,736
----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments ....................... 68,292,483
Purchases of investments ................................. (48,513,590)
Net purchases of short-term securities ................... (4,702,479)
Net margin deposits received for futures contracts ....... (14,000)
----------------
Net cash provided by investing activities ............ 15,062,414
----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments for reverse repurchase agreements ........... (14,985,582)
Distributions paid to shareholders ....................... (5,613,033)
Retirement of fund shares (note 7) ....................... (967,803)
----------------
Net cash used by financing activities ................ (21,566,418)
----------------
Net decrease in cash ....................................... (554,268)
Cash at beginning of period ................................ 604,726
----------------
Cash at end of period .................................... $ 50,458
----------------
----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest on reverse repurchase
agreements ........................................... $ 147,223
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
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FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period from
Year Ended 1/28/94*
10/31/95 to 10/31/94
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 5,047,323 5,891,756
Net realized loss on investments and foreign currency
transactions ........................................... (18,226,930) (6,222,695)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies .......... 5,519,734 (18,511,947)
---------------- ----------------
Net decrease in net assets resulting from operations ... (7,659,873) (18,842,886)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ............................... -- (4,718,472)
Tax return of capital .................................... (5,613,033) (754,642)
---------------- ----------------
Total distributions .................................... (5,613,033) (5,473,114)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from initial public offering of 5,750,000 shares
of capital stock ....................................... -- 86,250,000
Proceeds from issuance of 675,000 shares in connection
with exercising an over-allotment options granted to
underwriters of the initial public offering ............ -- 10,125,000
Underwriting discounts and offering expenses associated
with the issuance of capital stock ..................... -- (6,208,662)
Proceeds from issuance of 9,938 shares for the dividend
reinvestment plan respectively ......................... -- 122,735
Payments for retirement of 129,300 and 10,000 shares,
respectively ........................................... (948,203) (99,775)
---------------- ----------------
Increase (decrease) in net assets from capital stock
transactions ......................................... (948,203) 90,189,298
---------------- ----------------
Total increase (decrease) in net assets .............. (14,221,109) 65,873,298
Net assets at beginning of period (note 1) ................. 65,973,303 100,005
---------------- ----------------
Net assets at end of period .............................. $ 51,752,194 65,973,303
---------------- ----------------
---------------- ----------------
Distributions in excess of net investment income ......... $ -- (63,126)
---------------- ----------------
---------------- ----------------
</TABLE>
* COMMENCEMENT OF OPERATIONS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
The Americas Income Trust Inc. (the fund) is registered under
the Investment Company Act of 1940 (as amended) as a
non-diversified, closed-end management investment company. The
Americas Income Trust commenced operations on January 28, 1994,
upon completion of its initial public offering of common stock.
The only transaction of The Americas Income Trust prior to
January 28, 1994, was the sale to Piper Jaffray Inc. of 6,667
shares of common stock for $100,005 on January 18, 1994. Shares
of the fund are listed on the New York Stock Exchange under the
symbol XUS.
(2) SUMMARY OF
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,
including level yield amortization of bond discount and premium,
is accrued daily.
FOREIGN CURRENCY TRANSLATIONS AND TRANSACTIONS
The books and records of the fund are maintained in U.S.
dollars. The market value of securities and other assets and
liabilities that are denominated in foreign currencies are
translated into U.S. dollar amounts at current exchange rates at
the end of the period. Purchases and sales of securities, in
addition to income and expenses, are translated at exchange
rates on the respective dates of such transactions. The fund
does not separately identify that portion of realized and
unrealized gain (loss) on investments arising from changes in
the exchange rates from the portion arising from changes in the
market value of investments in the statement of operations under
the caption "realized and unrealized gains (losses)".
The fund also may enter into forward foreign currency exchange
contracts for operational and hedging purposes. The net U.S.
dollar
12
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
value of foreign currency underlying all contractual commitments
held by the fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange
rates from an independent pricing service. The fund is subject
to the credit risk that the other party will not complete the
obligations of the contract.
OPTIONS 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 that 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.
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 sales 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 against changes in the
market, the fund may buy and sell interest rate futures
contracts and related options. Risks of entering into futures
contracts and related options include the possibility that 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
13
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
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 the purchase or
sale of 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 the interest rate floor.
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 another party to a transaction may not perform.
For interest rate swaps, the fund accrues weekly, as an increase
or decrease to interest income, the net amount due or owed by
the fund. Interest rate swap 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.
14
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
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 one 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, securities 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
October 31, 1995, the fund had no outstanding when-issued
securities or forward commitments.
Consistent 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. As an inducement to
"roll over" its purchase commitments, the fund receives
negotiated fees. For the year ended October 31, 1995, such fees
earned by the fund amounted to $201,358.
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
the recognition of certain foreign currency gains (losses) as
ordinary income for tax purposes, losses deferred due to "wash
sale" and "straddle" transactions and the timing of recognition
of income on certain interest-only and principal-only
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.
In addition, due to the timing of
15
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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. Due to the recognition
of certain foreign currency losses as a reduction of ordinary
income for tax purposes, all distributions in fiscal 1995
represented a tax return of capital.
On the statement of assets and liabilities, as a result of
permanent book to tax differences from foreign currency exchange
losses, a reclassification adjustment has been made to decrease
undistributed net investment income by $4,984,197, decrease
accumulated net realized loss on investments and foreign
currency transactions by $8,619,276 and decrease additional paid
in capital by $3,635,079.
DISTRIBUTIONS
The fund pays monthly distributions from net investment income
under normal circumstances. Monthly distributions may also
include short-term capital gains or a return of capital.
Remaining realized capital gains, if any, will be distributed on
an annual basis. 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. However, if the market price exceeds the net
asset value by 10% or more, the fund will issue new shares at a
discount of up to 5% from the current market price.
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 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 the daily market
value of the collateral is in excess of the repurchase amount in
the event of default.
16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(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 investment management fee based on the fund's average
weekly net assets computed at the per annum rate of 0.50%. For
its fee, the adviser provides 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 in an amount equal to an annualized rate of 0.20% of
the fund's average weekly net assets. For its fee, the
administrator provides certain reporting, regulatory and
record-keeping services for the fund.
In addition to the investment management fee and the
administrative fee, 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, insurance, interest, taxes and
other miscellaneous expenses.
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 $33,507,531 and
$66,210,483, respectively, for the year ended October 31, 1995.
During the year ended October 31, 1995, the fund paid no
brokerage commissions to Piper Jaffray Inc., an affiliated
broker.
17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
The number of contracts and premium amounts associated with
(5) OPTION
CONTRACTS
WRITTEN
option contracts written during the year ended October 31, 1995,
were as follows:
<TABLE>
<CAPTION>
Call Options
---------------------
Number of Premium
Contracts Amount
--------- ---------
<S> <C> <C>
Balance at 10/31/94..................... 100 $ 16,688
Expired............................... (100) (16,688)
--------- ---------
Balance at 10/31/95..................... -- $ --
--------- ---------
--------- ---------
</TABLE>
The fund pledges securities or cash when making initial margin
(6) FUTURES
CONTRACTS
deposits on futures contracts. On October 31, 1995, the fund had
the following open short futures contracts:
<TABLE>
<CAPTION>
Collateral
Pledged to
Cover Market
Initial Value of Net
Country of Type of Contract Number of Margin Open Unrealized
Denomination and Maturity Contracts Deposits Contracts Loss
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Canadian Dollar
Futures
United States December 1995 50 $73,300 $3,722,000 $(71,000)
</TABLE>
For federal income tax purposes, the fund had a capital loss
(7) CAPITAL LOSS
CARRYOVER
carryover of $14,593,939 on October 31, 1995. If this loss
carryover is not offset by subsequent capital gains, it will
expire in 2002 and 2003. It is unlikely the board of directors
will authorize a distribution of any net realized capital gains
until the available capital loss carryover has been offset or
expires.
The fund's board of directors has approved a plan to repurchase
(8) RETIREMENT OF
FUND SHARES
shares of the fund in the open market and retire those shares.
Repurchases may only be made when the previous day's closing
market price was at a discount from net asset value. Daily
repurchases are limited to 25% of the previous four weeks
average daily trading volume on the New York Stock Exchange.
Under the current plan, cumulative repurchases in the fund
cannot exceed 3% of the total shares originally issued. The
board of directors will review the plan quarterly and may change
the amount which may be repurchased. The plan was last reviewed
and reapproved by the board of directors on August 18, 1995.
Pursuant to the plan, the fund has cumulatively repurchased and
retired 139,300 shares as of October 31, 1995, which represents
2.17% of the shares originally issued.
18
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(9) FINANCIAL
HIGHLIGHTS
Per share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
<TABLE>
<CAPTION>
Period
from
Year 1/28/94*
Ended to
10/31/95 10/31/94
--------- ---------
<S> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period.............$ 10.26 14.04
--------- ---------
Operations:
Net investment income .......................... .79 0.92
Net realized and unrealized losses ............. (1.96) (3.85)
--------- ---------
Total from operations ........................ (1.17) (2.93)
--------- ---------
Distributions to shareholders:
From net investment income ..................... -- (0.73)
Tax return of capital .......................... (0.88) (0.12)
--------- ---------
Total distributions .......................... (0.88) (0.85)
--------- ---------
Net asset value, end of period...................$ 8.21 10.26
--------- ---------
--------- ---------
Per share market value, end of period............$ 6.88 9.75
--------- ---------
--------- ---------
SELECTED INFORMATION
Total investment return, net asset value+ ........ (10.96%) (20.98%)
Total investment return, market value** .......... (20.90%) (29.98%)
Net assets at end of period (in millions) ...... $ 52 66
Ratio of total expenses to average weekly net
assets TRIANGLE ............................... 1.21% 0.93%+++
Ratio of net investment income to average weekly
net assets ..................................... 9.60% 10.82%+++
Portfolio turnover rate (excluding short-term
securities) .................................... 61% 62%
Amount of borrowings outstanding at end of period
(in millions)*** ............................. $ -- 15
Per share amount of borrowings outstanding at end
of period .................................... $ -- 2.33
Per-share asset coverage of borrowings outstanding
at end of period++ $ -- 12.59
Asset coverage ratio TRIANGLE TRIANGLE ......... -- 540%
</TABLE>
<TABLE>
<S> <C>
* COMMENCEMENT OF OPERATIONS.
** 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.
*** 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.
+ BASED ON THE CHANGE IN NET ASSET VALUE OF A SHARE DURING THE PERIOD.
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
++ REPRESENTS THE FUND'S NET ASSETS (EXCLUDING BORROWINGS) DIVIDED BY
SHARES OUTSTANDING.
+++ ADJUSTED TO AN ANNUAL BASIS.
TRIANGLE BEGINNING IN FISCAL 1995, THE EXPENSE RATIO REFLECTS THE EFFECTS OF
GROSS EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIO
HAS NOT BEEN ADJUSTED.
TRIANGLE TRIANGLE REPRESENTS THE FUND'S NET ASSETS, EXCLUDING BORROWINGS,
DIVIDED BY BORROWINGS OUTSTANDING AT THE END OF PERIOD.
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(10) QUARTERLY DATA (UNAUDITED)
DOLLAR AMOUNTS
<TABLE>
<CAPTION>
Net Increase
(Decrease) in
Net Assets
Total Net Net Realized Resulting Tax Return of
Investment Investment and Unrealized from Capital
Income Income Gains (Losses) Operations Distributions
---------- ---------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
January 31, 1995 $ 1,448,403 1,299,669 (15,764,962) (14,465,293) (2,047,173)
April 30, 1995 1,593,549 1,449,964 1,120,340 2,570,304 (1,194,026)
July 31, 1995 1,461,227 1,326,426 1,222,718 2,549,144 (1,186,701)
October 31, 1995 1,173,023 971,264 714,708 1,685,972 (1,185,133)
---------- ---------- -------------- ------------- -------------
$ 5,676,202 5,047,323 (12,707,196) (7,659,873) (5,613,033)
---------- ---------- -------------- ------------- -------------
---------- ---------- -------------- ------------- -------------
</TABLE>
PER SHARE AMOUNTS
<TABLE>
<CAPTION>
Net Increase
(Decrease) in Quarter
Net Net Realized Net Assets Tax Return of End Net
Investment and Unrealized Resulting from Capital Asset
Income Gains (Losses) Operations Distributions Value
---------- -------------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
January 31, 1995 $ 0.20 (2.45) (2.25) (0.32) 7.69
April 30, 1995 0.23 0.18 0.41 (0.19) 7.91
July 31, 1995 0.21 0.19 0.40 (0.18) 8.13
October 31, 1995 0.15 0.12 0.27 (0.19) 8.21
--- ----- ----- -----
$ 0.79 (1.96) (1.17) (0.88)
--- ----- ----- -----
--- ----- ----- -----
</TABLE>
20
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
THE AMERICAS INCOME TRUST
OCTOBER 31, 1995
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
UNITED STATES (41.7%):
MORTGAGE-BACKED SECURITIES (30.8%):
U.S. AGENCY FIXED RATE MORTGAGES (26.1%):
7.00%, FHLMC, 6/1/10 ............................... $ 4,801,523 4,841,951
11.00%, FNMA, 10/15/20 ............................... 1,573,888(i) 1,745,032
7.00%, GNMA, 8/15/23 ................................. 1,934,555 1,922,445
8.00%, GNMA, 5/1/25 .................................. 4,879,764 5,023,034
-----------
13,532,462
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS (4.7%) (B):
INVERSE FLOATER (2.8%):
6.67%, FHLMC, Series 1686, Class SL, COFI, 2/15/24 ... 1,899,826 1,468,832
-----------
Z-TRANCHE (1.9%):
6.50%, FHLMC, Series 1694, Class Z, 3/15/24 .......... 1,114,093 942,322
-----------
Total Collateralized Mortgage Obligations .......... 2,411,154
-----------
Total Mortgage-Backed Securities
(cost: $15,887,053) ............................... 15,943,616
-----------
ASSET-BACKED ADJUSTABLE SECURITIES (4.4%):
MBNA Master Credit Card Trust, 6.13%, 12/15/00 ....... 1,000,000 1,001,870
First USA Credit Card Master Trust, 6.08%,
10/15/01 ............................................ 1,250,000 1,249,600
-----------
Total Asset-Backed Securities
(cost: $2,250,867) ................................ 2,251,470
-----------
CORPORATE SECURITIES (6.5%):
General Motors, 8.80%, 3/1/21 ........................ 1,000,000 1,194,020
General Motors Acceptance Corp., 9.38%, 4/1/00 ....... 1,000,000 1,112,110
Royal Caribbean Cruise, 8.13%, 7/28/04 ............... 1,000,000 1,059,200
-----------
Total Corporate Bonds
(cost: $3,205,718) ................................ 3,365,330
-----------
Total United States Securities
(cost: $21,343,638) ............................... 21,560,416
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
21
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
CANADA (31.8%):
GOVERNMENT SECURITIES (15.3%) (C):
Canadian Government, 9.75%, 5/1/00 ................. $ 2,900,000 2,380,097
Canadian Government, 8.00%, 6/1/23 ................... 3,000,000 2,239,657
Canadian Government, 8.75%, 12/1/05 .................. 2,850,000 2,305,069
Canadian Government Residual, 7.17%, 10/1/08 ......... 3,700,000(d) 999,262
-----------
7,924,085
-----------
MORTGAGE-BACKED SECURITIES (8.7%) (C):
Firstline Trust, 8.00%, 8/1/18 ....................... 1,823,167 1,364,487
Firstline Trust, 7.25%, 11/1/00 ...................... 4,266,177 3,149,943
-----------
4,514,430
-----------
PROVINCIAL SECURITIES (7.8%) (C):
Saskatchewan Canada, 9.88%, 7/6/99 ................... 5,000,000 4,051,435
-----------
Total Canadian Securities
(cost: $16,892,688) ............................... 16,489,950
-----------
MEXICO (14.2%):
GOVERNMENT SECURITIES (8.2%):
Mexican Brady Par - Series A, 6.25%, 12/31/19 ........ 3,500,000(g) 2,065,000
United Mexican States Bondes, 33.99%, 1/25/96 ........ 15,539,400(c)(e) 2,178,595
-----------
4,243,595
-----------
CORPORATE SECURITIES (6.0%):
Banamex SA, Medium-Term Note, 11.25%, 12/31/19 ....... 16,460,000(c) 1,764,820
Mexico-Cuernavaca Trust, 9.25%, 7/25/01 .............. 1,795,080(f)(g) 1,314,896
-----------
3,079,716
-----------
Total Mexican Securities
(cost: $15,005,237) ............................... 7,323,311
-----------
STRUCTURED SECURITIES (0.1%):
FOREIGN LINKED INDEX SECURITIES (0.1%) (H):
Bayerische Vereinsbank, New York, 13.50%, 2/5/96
(cost: $5,000,000) .................................. 5,000,000(1) 44,500
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
22
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
OTHER SECURITIES (0%):
OPTIONS (0.0%):
Argentina Global vs U.S. Treasury spread, 50 call
contracts, strike price of 430 basis points expires
November 1995
(cost: $85,000) ................................... $ -- --
-----------
SHORT-TERM UNITED STATES SECURITIES (10.4%):
Repurchase agreement with Morgan Stanley in a joint
trading account collateralized by U.S. Government
agency securities, acquired on 10/31/95, accrued
interest at repurchase date of $856, 5.70%, 11/1/95
(cost: $5,406,000) .................................. 5,406,000 5,406,000
-----------
Total Investments in Securities
(cost: $63,732,563) (j) ........................... $50,824,177
-----------
-----------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) DESCRIPTIONS OF CERTAIN COLLATERALIZED MORTGAGE OBLIGATIONS ARE AS FOLLOWS:
COFI (11TH DISTRICT) - COST OF FUNDS INDEX OF THE FEDERAL RESERVE'S 11TH
DISTRICT
INVERSE FLOATER - REPRESENTS SECURITIES THAT PAY INTEREST AT RATES THAT
INCREASE (DECREASE) WITH A DECLINE (INCREASE) IN THE SPECIFIED INDEX. THE
INTEREST RATE PAID BY THE INVERSE FLOATER WILL GENERALLY CHANGE AT A
MULTIPLE OF ANY CHANGE IN THE INDEX. INTEREST RATES DISCLOSED ARE IN
EFFECT ON OCTOBER 31, 1995.
Z-TRANCHE - REPRESENTS SECURITIES THAT PAY NO INTEREST OR PRINCIPAL DURING
THEIR INITIAL ACCRUAL PERIODS, BUT ACCRUE ADDITIONAL PRINCIPAL AT
SPECIFIED RATES. INTEREST RATE DISCLOSED REPRESENTS CURRENT YIELD BASED
UPON THE CURRENT COST BASIS AND ESTIMATED TIMING OF FUTURE CASH FLOWS.
(C) PAR VALUE IS STATED IN THE LOCAL CURRENCY.
(D) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(E) INTEREST RATE VARIES TO REFLECT CURRENT MARKET CONDITIONS; RATE SHOWN IS
THE EFFECTIVE RATE ON OCTOBER 31, 1995.
(F) SECURITIES SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM AND MAY BE
SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER ACCREDITED INVESTORS.
(G) REPRESENTS BONDS ISSUED BY FOREIGN ENTITIES AND DENOMINATED IN U.S.
DOLLARS, WHOSE VALUE DEPENDS UPON THE OVERALL LEVEL OF INTEREST RATES IN
THE UNITED STATES AND THE ECONOMIC CONDITIONS OF THE SPECIFIC COUNTRY.
23
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
<TABLE>
<S> <C>
(H) FOREIGN LINKED INDEX SECURITIES ARE ISSUED BY U.S. ISSUERS AND ARE
DENOMINATED IN U.S. DOLLARS. THESE SECURITIES WERE PURCHASED AS PART OF A
PRIVATE PLACEMENT, HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 AND ARE DEEMED TO BE
ILLIQUID BY THE ADVISER. THESE SECURITIES RETURN PRINCIPAL AND/OR INTEREST
IN AMOUNTS WHICH ARE LINKED TO THE INDICES INDICATED BELOW. PRINCIPAL
RECEIVED AT MATURITY AND INTEREST EARNED MAY BE LIMITED TO CERTAIN MAXIMUM
AND MINIMUM LEVELS. THE RESULTANT EFFECT ON PRINCIPAL OR INTEREST MAY ALSO
BE AT A MULTIPLE OF THE CHANGE IN THE SPECIFIED INDEX.
(1) PRINCIPAL AMOUNT AT MATURITY IS LINKED INVERSELY, AND THE COUPON
VARIES INVERSELY WITH THE NUEVOS PESOS/U.S. DOLLAR EXCHANGE RATE.
(I) PLEDGED AS INITIAL MARGIN DEPOSIT ON OPEN FUTURES POSITIONS.
(J) ALSO APPROXIMATES COST FOR FEDERAL INCOME TAX PURPOSES. THE AGGREGATE
UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED
ON THIS COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 731,207
GROSS UNREALIZED DEPRECIATION ...... (13,554,593)
------------
NET UNREALIZED DEPRECIATION .... $ (12,823,386)
------------
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE AMERICAS INCOME TRUST:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of The Americas Income Trust as of
October 31, 1995, and the related statements of operations and cash flows for
the year then ended, and the statements of changes in net assets and the
financial highlights for the year ended October 31, 1995 and the period from
January 28, 1994 (commencement of operations) to October 31, 1994. 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 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 referred to above present fairly, in
all material respects, the financial position of The Americas Income Trust as of
October 31, 1995, the results of its operations and cash flows for the year then
ended, and the changes in its net assets and the financial highlights for the
year ended October 31, 1995 and the period from January 28, 1994 to October 31,
1994, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 8, 1995
25
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION
Fiscal Year Ended October 31, 1995
Federal tax information is presented as an aid to you in
reporting distributions. Please consult a tax advisor on
how to report these distributions at the state and local
levels.
Distributions shown below are considered returns of
capital for tax purposes. In early February 1996, you
will receive a Form 1099-DIV reporting distributions
made by the fund for calendar year 1995.
<TABLE>
<CAPTION>
Tax Return
of Capital
Payable Date Per Share
- ---------------------------------------------- -----------
<S> <C>
November 23, 1994 .......................... $ 0.10625
December 28, 1994 ............................ 0.10625
January 13, 1995 ............................. 0.10625
February 22, 1995 ............................ 0.06250
March 29, 1995 ............................... 0.06250
April 26, 1995 ............................... 0.06250
May 24, 1995 ................................. 0.06250
June 28, 1995 ................................ 0.06250
July 26, 1995 ................................ 0.06250
August 23, 1995 .............................. 0.06250
September 27, 1995 ........................... 0.06250
October 25, 1995 ............................. 0.06250
-----------
Total .................................... $ 0.88125
-----------
-----------
</TABLE>
26
<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 matters, are set forth below.
1. The fund's shareholders elected the following six directors:
<TABLE>
<CAPTION>
Shares Shares Withholding
Voted "For" Authority to Vote
----------- ------------------
<S> <C> <C>
David T. Bennett 5,589,675 186,602
Jaye F. Dyer 5,589,675 186,602
William H. Ellis 5,589,675 186,602
Karol D. Emmerich 5,589,675 186,602
Luella G. Goldberg 5,589,675 186,602
George Latimer 5,589,675 186,602
</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 October 31, 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>
5,640,331 43,100 92,846 --
</TABLE>
SHARE REPURCHASE PROGRAM
Your fund's board of directors has reapproved 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 3% of the fund's originally issued shares.
WHAT EFFECT WILL THIS PROGRAM HAVE ON SHAREHOLDERS?
- - We do not expect any adverse impact on the adviser's ability to manage the
fund.
- - Because repurchases will be at a price below net asset value, remaining shares
outstanding may experience a slight increase in net asset value.
- - Although the effect of share repurchases on 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.
27
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER UPDATE
WHEN WILL SHARES BE REPURCHASED?
Share repurchases may be made from time to time and may be discontinued at any
time. 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 adviser. The board of directors will consider whether to
continue the share repurchase program on at least a semiannual basis and will
notify shareholders of its determination in the next semiannual or annual
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.
TERMS AND CONDITIONS OF THE DIVIDEND REINVESTMENT PLAN
As a shareholder, you may choose to participate in the Dividend Reinvestment
Plan. It is a convenient and economical way to buy additional shares of the fund
by automatically reinvesting dividends and capital gains distributions. The plan
is administered by Investors Fiduciary Trust Company (IFTC), the plan agent.
ELIGIBILITY/PARTICIPATION
You may join the plan at any time. Reinvestment of distributions will begin with
the next distribution paid, provided your enrollment card is received at least
10 days before the record date for that distribution.
If your shares are in certificate form, you may join the plan directly and have
your distributions reinvested in additional shares of the fund. To enroll in
this plan, call IFTC at 1-800-543-1627. If your shares are registered in your
brokerage firm's name or another name, ask the holder of your shares how you may
participate.
Banks, brokers or nominees, on behalf of their beneficial owners who wish to
reinvest dividend and capital gain distributions, may participate in the plan by
informing IFTC at least 10 days before each share's dividend and/or capital
gains distribution.
PLAN ADMINISTRATION
Fund shares to cover reinvestments will generally be purchased by IFTC in the
open market. However, if the market price plus commissions of fund shares is at
a 10% or greater premium over net asset value, and in certain other
circumstances, the fund may issue new shares to cover such reinvestments at a
discount of up to 5% of the market price without brokerage commissions.
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SHAREHOLDER UPDATE
Beginning no more than five business days before the dividend payment date, IFTC
may purchase fund shares on behalf of participants in the plan to satisfy
dividend reinvestments. Such purchases are made on the New York Stock Exchange
(the Exchange) or elsewhere at any time when the price of the fund's common
stock on the Exchange plus commissions is at less than a 10% premium over the
fund's most recently calculated net asset value per share. 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 requirements - either
because the price of the fund's shares plus commissions has been at a 10% or
greater premium over net asset value or because IFTC, for any other reason, has
not been able to purchase a sufficient number of shares - IFTC will accept
payment of the dividend, or the remaining portion therefore, in authorized but
unissued shares of the fund. Such shares will be issued at a price per share
equal to the higher of (1) the net asset value per share as of the close of
business on the payment date, or (2) 95% of the closing market price per share
on the payment date. The number of shares allocated to you will be determined by
dividing the amount of the dividend or distribution by the applicable price per
share.
There is no direct charge to you for reinvestment of dividends and capital
gains, since IFTC fees are paid by the fund. However, if fund shares are
purchased in the open market, each participant in the plan pays a pro rata
portion of the brokerage commissions. Brokerage charges are expected to be lower
than those for individual transactions because the plan purchases shares for all
participants in blocks. Distributions paid on the shares in your plan account
will also be reinvested as long as you continue to participate in the plan.
IFTC maintains accounts for plan participants holding shares in certificate form
and will furnish written confirmation of all transactions, including information
you need for tax records. Reinvested shares in your account will be held by IFTC
in non-certificated form in your name.
TAX INFORMATION
Distributions reinvested in shares purchased in the open market are subject to
income tax, the same as if such distributions were received as cash. When shares
are issued by the fund at a discount from market value, shareholders will be
treated as having received distributions of an amount equal to the full market
value of those shares. Shareholders, as required by the Internal Revenue
Service, will receive a Form 1099 information return regarding the federal tax
status of the prior year's distributions.
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SHAREHOLDER UPDATE
PLAN WITHDRAWAL
If you hold your shares in certificate form, you may terminate your
participation in the plan at any time by giving written notice to IFTC. If your
shares are registered in your brokerage firm's name, you may terminate your
participation via verbal or written instructions to your investment
professional. Written instructions should include your name and address as they
appear on the certificate or account.
If notice is received at least 10 days before the record date, all future
distributions will be paid directly to the shareholder of record.
If your shares are in certificate form and you discontinue your participation in
the plan, you (or your nominee) will receive an additional certificate for all
full shares and a check for any fractional shares in your account.
PLAN AMENDMENT/TERMINATION
The fund reserves the right to amend or terminate the plan. Should the plan be
terminated, participants will be notified in writing at least 90 days before the
record date for the next dividend or distribution. The plan may also be amended
or terminated by IFTC with at least 90 days' written notice to participants in
the plan.
Any questions about the plan should be directed to your investment professional
or to Investors Fiduciary Trust Company, P.O. Box 419432, Kansas City, Missouri
64141, 1-800-543-1627.
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DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
DIRECTORS David T. Bennett, ATTORNEY, PRINCIPAL
GRAY, PLANT, MOOTY, MOOTY & 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,
NWNL COMPANIES, HORMEL FOODS CORP.
George Latimer, CHIEF EXECUTIVE OFFICER,
NATIONAL EQUITY FUNDS
OFFICERS William H. Ellis, CHAIRMAN OF THE BOARD AND PRESIDENT
Thomas S. McGlinch, VICE PRESIDENT
Robert H. Nelson, SENIOR VICE PRESIDENT AND TREASURER
J. Bradley Stone, VICE PRESIDENT
David E. Rosedahl, SECRETARY
INVESTMENT Piper Capital Management Incorporated
ADVISER 222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402
CUSTODIAN Morgan Stanley Trust Company
1 PIERREPONT PLAZA, BROOKLYN, NY 11201
TRANSFER AND Investors Fiduciary Trust Company
RECORD KEEPING 127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
AGENT
INDEPENDENT KPMG Peat Marwick LLP
AUDITORS 4200 NORWEST CENTER, MINNEAPOLIS, MN 55402
LEGAL COUNSEL Dorsey & Whitney P.L.L.P.
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
</TABLE>
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PIPER CAPITAL ---------------
MANAGEMENT Bulk Rate
U.S. Postage
PIPER CAPITAL MANAGEMENT INCORPORATED PAID
222 SOUTH NINTH STREET Permit No. 3008
MINNEAPOLIS, MN 55402-3804 Mpls., MN
---------------
[LOGO] PIPER JAFFRAY INC., FUND SPONSOR AND NASD MEMBER.
THIS DOCUMENT IS PRINTED ON PAPER MADE FROM
100% TOTAL RECOVERED FIBER, INCLUDING 15% POST-CONSUMER WASTE.
033-96 XUS-01 12/95
STAPLES
