<PAGE>
The Americas
Income
Trust
[LOGO] [PHOTO]
SEMIANNUAL REPORT
1996
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Table of Contents
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. The
fund may invest up to 35% of its assets in securities of other countries.
Average Annualized Total Returns... 1
Letter to Shareholders............. 2
Financial Statements and Notes..... 10
Investments in Securities.......... 21
Shareholder Update................. 24
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.
CALL TO RECEIVE QUARTERLY UPDATES
If you would like to be put on our mailing list to receive quarterly fund
summaries for The Americas Income Trust (XUS), call our Shareholder Services
Department at 1 800 866-7778.
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Average Annualized Total Returns
Periods ended April 30, 1996
[CHART]
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 April 30, 1996, were 8.18% and
- -21.35%, 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 and not including sales charges, 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. The since inception numbers for the averages
are calculated from the month end closest to the fund's inception through
April 30, 1996.
Figures shown reflect past performance and do not guarantee future results.
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The Americas Income Trust
[PHOTO]
WILLIAM H. ELLIS
PRESIDENT, PIPER CAPITAL MANAGEMENT
June 20, 1996
Dear Shareholders:
IN THIS REPORT, WE ARE PLEASED TO INTRODUCE YOU TO THE NEW SUBADVISER TO THE
AMERICAS INCOME TRUST --SALOMON BROTHERS ASSET MANAGEMENT INC (SBAM).
Shareholders recently approved SBAM as the fund's subadviser, a change that
took effect May 22. SBAM now handles the fund's day-to-day portfolio
management duties, while Piper Capital Management, as the fund's adviser,
remains responsible for the oversight of the fund's portfolio strategy. This
change allows Piper Capital to concentrate its resources on U.S. investment
management services.
THE CHANGE ALSO ALLOWS YOU TO BE SERVED BY A COMPANY WITH EXTENSIVE
EXPERIENCE IN GLOBAL BOND MARKETS. SBAM currently serves as investment
adviser to four other investment companies with investment objectives similar
to that of The Americas Income Trust. Of the firm's $14.3 billion in assets
under management, more than $5 billion are in global fixed income products.
SBAM was incorporated in 1987 and is based in New York, with affiliates in
London, Frankfurt and Hong Kong. The firm offers a full range of fixed income
and equity investment management services to proprietary and non-proprietary
mutual funds, offshore funds, institutional accounts, wrap fee products and
private clients.
AS SBAM MOVES FORWARD IN MANAGING THE AMERICAS INCOME TRUST, THEY ARE
FOLLOWING NEW INVESTMENT POLICIES, APPROVED BY THE FUND'S BOARD OF DIRECTORS.
These new policies allow the investment of a higher percentage of the fund's
assets in non-investment grade and unrated securities. Non-investment grade
securities, commonly known as "high yield" or "junk" bonds, are subject to
higher risks and greater market
2
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THE AMERICAS INCOME TRUST
fluctuations than are lower-yielding, higher-rated securities. SBAM believes
these investments present an attractive opportunity in emerging markets such
as Mexico. Peter Wilby, the fund's new portfolio manager, explains the risks
and opportunities involved with the new investment guidelines on page 7.
Starting on page 4, Tom McGlinch from Piper Capital discusses the fund's
performance for the six-month period.
Mr. Wilby, a chartered financial analyst and certified public accountant, is
the senior portfolio manager responsible for directing investment policy and
strategy for all SBAMemerging markets debt and high-yield fixed income
portfolios. He leads a team of professional portfolio managers averaging 12
years of financial experience, who will contribute to the management of the
fund.
We appreciate your investment in The Americas Income Trust, and we can assure
you that SBAM shares our commitment to providing you with top-quality service
and investment management.
Sincerely,
/s/ William H. Ellis
William H. Ellis
President
Piper Capital Management
3
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The Americas Income Trust
[PHOTO]
TOM MCGLINCH, CFA
PIPER CAPITAL MANAGEMENT, WAS PRIMARILY RESPONSIBLE FOR THE MANAGEMENT OF THE
AMERICAS INCOME TRUST THROUGH MAY 22, 1996. HE HAS 15 YEARS OF FINANCIAL
EXPERIENCE.
Dear Shareholders:
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1996, THE NET ASSET VALUE TOTAL
RETURN FOR THE AMERICAS INCOME TRUST WAS 2.51%.* This compares to the Lipper
World Income Funds Average: Developed Nations return of 6.81% and the Lipper
World Income Funds Average: Emerging Nations return of 22.26% for the same
period. The funds in both Lipper groups generally benefited from the strong
returns of the non-investment grade (high-yield) sector of the foreign
markets. The Americas Income Trust was limited to a 10% position in that
market sector until recent changes were made to the fund's investment
guidelines, which accounts for a large share of the difference in performance.
AT THE END OF APRIL, THE FUND'S SHARES WERE TRADING AT APPROXIMATELY A 15%
DISCOUNT TO THEIR NET ASSET VALUE. (See "Premium vs. Discount" discussion in
box at left.) Based on the change in the fund's market price, the fund's
total return for the six-month period was 4.56%.* Fund returns assume
distributions were reinvested and do not reflect sales charges.
THE SIX-MONTH PERIOD WAS VOLATILE IN THE U.S. MARKET. THIS IS SIGNIFICANT,
SINCE THE UNITED STATES REPRESENTED 61% OF THE FUND'S TOTAL ASSETS AS OF
APRIL 30. The Federal Reserve Board reduced short-term rates in January 1996;
however, the bond market had already factored in a more significant decline,
based on expectations of a weak economy. Once economic reports
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."
*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.
4
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The Americas Income Trust
showed stronger than expected growth, interest rates rose and bond prices
fell sharply, ending the bond market rally abruptly and resulting in the
third worst quarter for bonds in general since interest rates peaked in 1981.
The fund was positioned for this volatility, having sold long-duration
derivative securities in anticipation of rising rates and by holding more
cash and defensive securities as rates were rising.
THE MOST SIGNIFICANT EVENT IN CANADA DURING THE SIX MONTHS WAS THE QUEBEC
REFERENDUM IN LATE 1995. We hedged a portion of the fund's position in the
Canadian dollar futures market prior to the vote, but did not sell bonds
because we wanted to maintain the fund's income. The referendum's failure,
its expected deferral for several years, and the country's increased focus on
balancing its fiscal budgets resulted in a positive environment for Canadian
investments. For example, the yield on 10-year Canadian government bonds had
traded at a spread of 1.75% over U.S. government bonds in late 1995. That
spread has since fallen below 1%, which benefited the fund's Canadian
investments.
IN 1996, WE'VE MAINTAINED THE FUND'S MEXICAN EXPOSURE. As of April 30, the
fund was a bit underweighted in Mexico, with about half of its Mexican
investments denominated in pesos and the remainder denominated in U.S.
dollars. The Mexican economy appears somewhat more stable this year. Although
there is weak economic growth,
PORTFOLIO COMPOSITION
April 30, 1996
[CHART]
5
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The Americas Income Trust
inflation is falling and interest rates are expected to be in the 20% range,
as compared to rates as high as 80% in the past year. While the peso
depreciated more than 15% over the past six months, it has recently
stabilized.
ALL OF THE FUND'S DISTRIBUTIONS FOR THE FISCAL YEAR ENDING OCT. 31, 1996,
WILL BE CLASSIFIED AS RETURNS OF CAPITAL FOR TAX PURPOSES. The returns of
capital resulted from foreign currency losses experienced by the fund. 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.
Therefore, while it defers taxes on your earnings now, it will likely affect
the capital gain or loss calculation when you sell fund shares. Your tax
adviser can provide more information about how this will affect you in your
tax reporting.
I URGE YOU TO READ AND UNDERSTAND THE PLANS FOR FUTURE INVESTMENTS IN THE
AMERICAS INCOME TRUST. On the next pages, Peter Wilby, the fund's primary
portfolio manager at Salomon Brothers Asset Management, outlines some of the
changes in the fund's investment policy. We believe SBAM is the best company
to take the fund through these changes, and we look forward to working with
them.
Sincerely,
/s/ Tom McGlinch
Tom McGlinch
Portfolio Manager
Piper Capital Management
6
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The Americas Income Trust
[PHOTO]
PETER WILBY, CFA, CPA,
SALOMON BROTHERS ASSET MANAGEMENT, IS PRIMARILY RESPONSIBLE FOR THE MANAGEMENT
OF THE AMERICAS INCOME TRUST, BEGINNING MAY 22, 1996. PETER HAS 13 YEARS OF
FINANCIAL EXPERIENCE. HE JOINED SBAM IN 1989 AS A DIRECTOR OF HIGH-YIELD AND
EMERGING MARKETS FIXED INCOME PORTFOLIO MANAGEMENT. IN 1996, HE WAS APPOINTED A
MANAGING DIRECTOR OF SALOMON
BROTHERS INC.
Dear Shareholders:
SALOMON BROTHERS ASSET MANAGEMENT IS PLEASED TO ACCEPT ITS NEW ROLE AS
SUBADVISER TO THE AMERICAS INCOME TRUST. We believe now is an excellent time
to take action in response to favorable market conditions in the countries
represented in the fund, as well as in other international markets.
A CHANGE IN THE FUND'S INVESTMENT POLICIES ALLOWS US TO INVEST A HIGHER
PERCENTAGE OF ASSETS IN THE HIGH-YIELD BOND MARKET, WHICH WE BELIEVE PRESENTS
AN ATTRACTIVE OPPORTUNITY. The Americas Income Trust now has the ability to
invest up to 35% of its total assets in non-investment grade securities or
unrated securities of comparable quality (up from a previous limit of 10%).
Non-investment grade securities, commonly known as "high-yield" or "junk"
bonds, are subject to higher risks and greater market fluctuations than are
lower-yielding, higher-rated securities. Another policy change allows the
investment of up to 35% of total assets in unrated securities of any quality
(up from a previous limit of 20%). Unrated securities deemed comparable to
non-investment grade securities will have similar characteristics to those
securities. The fund will not invest any more than 35% of its total assets,
collectively, in unrated securities of any quality and non-investment grade
or comparable quality securities.
WITH THESE NEW POLICIES IN EFFECT, WE ANTICIPATE CHANGING THE FUND'S
ALLOCATION. Our expected allocation will include a significant portion of
U.S. and Canadian investment grade bonds, but will also include emerging
markets debt, high-yield bonds and international investment grade bonds. We
believe the ability to invest in the high-yield bond market in the United
States and Canada could bring positive results. We also believe that stable
to
7
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The Americas Income Trust
improving credit quality trends and strong cash flows into mutual funds
should continue to support the high-yield market. In the emerging markets,
moderate economic growth and political stability should support the markets,
providing adequate liquidity for buyers of emerging markets debt. The
emerging debt market currently yields approximately 7% over U.S. Treasuries,
while U.S. BB/B sectors yield 2.5% to 4.3% above U.S. Treasuries.
WE ARE ENCOURAGED BY THE FISCAL AND ECONOMIC TRENDS IN THE UNITED STATES,
CANADA AND MEXICO, AND WE BELIEVE THEY SHOULD HAVE A POSITIVE EFFECT ON THE
AMERICAS INCOME TRUST. In the United States, signs of economic strength
continue to emerge, suggesting that the accelerated pace of growth in the
first quarter of 1996 will carry forward. Canada's current low inflation
rate, the government's commitment to fiscal discipline, and stability in the
Canadian dollar indicate a positive outlook for bonds. In Mexico, there is
adequate liquidity in the market and buyers still have an appetite for
Mexican bonds, as demonstrated by new long-dated, uncollateralized bonds
being issued.
NEWS FROM EMERGING MARKET COUNTRIES IS ENCOURAGING. In mid-January, Moody's
eliminated the single grade rating gap between Eurobonds and Brady bonds,
effectively giving Bradys a credit boost. This upgraded Poland's Brady bonds
to an investment grade rating, the first of its kind for a Brady bond. (Both
S&P and Moody's, two independent rating agencies, upgraded Poland's Eurobonds
to investment grade during 1995.) This credit rating boost had a positive
effect on the entire emerging markets debt
INVESTMENT GRADE SECURITIES
Investment grade securities are those rated from AAA to BBBby rating agencies
like Standard & Poor's or Moody's. They usually are considered to be good
quality.
NON-INVESTMENT GRADE SECURITIES
Non-investment grade securities (also known as high-yield securities or "junk
bonds") are rated BB or lower by rating agencies. They are issued by
companies without long track records of sales and earnings, or by those with
questionable credit strength. Since they are more volatile and pay higher
yields than investment grade bonds, many risk-oriented investors focus on
them.
UNRATED SECURITIES
Unrated securities are securities that, for any number of reasons, do not
have a rating. The name "unrated" does not necessarily mean that a security
is risky or that a rating has been denied. Many issuers do not apply for a
rating, or they determine that the cost of applying for and maintaining a
rating is too great.
8
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The Americas Income Trust
sector. Buyers from the U.S. high-yield market and from Europe and Asia have
entered the emerging debt markets following the ratings upgrade. Consistent
demand should support the market going forward.
WE ARE OPTIMISTIC THAT THE FIXED INCOME SECTORS REPRESENTED IN THE AMERICAS
INCOME TRUST WILL RESULT IN STRONG INVESTMENT PERFORMANCE OVER THE LONG TERM.
The combination of investment grade, high-yield and emerging markets debt
should provide the opportunity for relatively higher yields than a portfolio
of solely domestic bonds. In addition, we believe diversification across a
broad range of bond sectors reduces dependency on any one individual market
and helps limit portfolio fluctuations.
Thank you for your investment in The Americas Income Trust. We consider it a
privilege to manage your money, and we are committed to providing you with
the best service.
Sincerely,
/s/ Peter Wilby
Peter Wilby
Managing Director, Portfolio Manager
Salomon Brothers Asset Management
9
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FINANCIAL STATEMENTS (Unaudited)
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (including
a repurchase agreement of $563,000) (note 2) ......... $ 49,853,501
Cash in bank on demand deposit ........................... 185,542
Other assets ............................................. 10,052
Accrued interest receivable .............................. 684,297
----------------
Total assets ......................................... 50,733,392
----------------
LIABILITIES:
Accrued investment management fee ........................ 20,739
Accrued administrative fee ............................... 8,296
Other accrued expenses ................................... 67,332
----------------
Total liabilities .................................... 96,367
----------------
Net assets applicable to outstanding capital stock ....... $ 50,637,025
----------------
----------------
REPRESENTED BY:
Capital stock - authorized 2 billion shares of $0.01 par
value; outstanding, 6,251,305 shares ................. $ 62,513
Additional paid-in capital ............................... 78,924,020
Distributions in excess of net investment income ......... (81,096)
Accumulated net realized loss on investments ............. (23,045,817)
Unrealized depreciation of investments and on translation
of other assets and liabilities denominated in foreign
currencies ............................................. (5,222,595)
----------------
Total - representing net assets applicable to
outstanding capital stock ........................ $ 50,637,025
----------------
----------------
Net asset value per share of outstanding capital stock ... $ 8.10
----------------
----------------
* Investments in securities at identified cost ........... $ 55,078,462
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
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FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996
<TABLE>
<S> <C>
INCOME:
Interest ............................................... $ 2,207,797
----------------
EXPENSES (NOTE 3):
Investment management fee ................................ 127,271
Administrative fee ....................................... 50,908
Custodian, accounting and transfer agent fees ............ 57,939
Reports to shareholders .................................. 26,465
Directors' fees .......................................... 5,650
Audit and legal fees ..................................... 33,056
Other expenses ........................................... 15,267
----------------
Total expenses ....................................... 316,556
Less expenses paid indirectly ............................ (1,008)
----------------
Total net expenses ................................... 315,548
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Net investment income ................................ 1,892,249
----------------
NET REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized loss on investments and foreign currency
transactions (note 4) .................................. (8,419,028)
Net realized loss on closed futures contracts ............ (32,850)
----------------
Net realized loss on investments and foreign currency
transactions ......................................... (8,451,878)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies .......... 7,769,618
----------------
Net realized and unrealized loss on investments and
foreign currency transactions ........................ (682,260)
----------------
Net increase in net assets resulting from
operations ....................................... $ 1,209,989
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
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FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
4/30/96 Year Ended
(Unaudited) 10/31/95
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................. $ 1,892,249 5,047,323
Net realized loss on investments and foreign currency
transactions and on translation of other assets and
liabilities denominated in foreign currencies .......... (8,451,878) (18,226,930)
Net change in unrealized appreciation or depreciation of
investments ............................................ 7,769,618 5,519,734
---------------- ----------------
Net increase (decrease) in net assets resulting from
operations ........................................... 1,209,989 (7,659,873)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Tax return of capital .................................... (1,973,345) (5,613,003)
---------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Payments for retirement of 51,000 and 129,300 shares,
respectively ........................................... (351,813) (948,203)
---------------- ----------------
Total decrease in net assets ......................... (1,115,169) (14,221,079)
Net assets at beginning of period .......................... 51,752,194 65,973,303
---------------- ----------------
Net assets at end of period .............................. $ 50,637,025 51,752,194
---------------- ----------------
---------------- ----------------
Distributions in excess of net investment income ......... $ (81,096) --
---------------- ----------------
---------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(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 investment management company. 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. Fund shares 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 amortization of bond discount and premium computed on
a level-yield basis, is accrued daily.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the
closing rate of exchange. Foreign currency amounts related to
the purchase or sale of securities and income and expenses are
translated at the exchange rate on the transaction date. For
financial reporting purposes the realized and unrealized gain
(loss) on investments reflects changes in exchange rates as well
as changes in the foreign denominated market value of
investments.
The fund also may enter into forward foreign currency exchange
contracts for hedging purposes. The net U.S. dollar value of
foreign
13
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
currency underlying all contractual commitments held by the
fund, and the resulting unrealized appreciation or depreciation,
are determined using foreign currency exchange rates from
independent pricing sources. 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, and
write cash-secured puts. 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 of
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.
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The fund will realize a gain or loss
upon expiration or closing of the option transaction. When an
option is exercised, the proceeds on the sale of a written call
option, the purchase cost of 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 financial futures contracts
and related options. Risks of entering into futures contracts
and related options include the possibility there may be an
illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the
underlying securities.
Upon entering into a futures contract, the fund is required to
deposit either cash or securities in an amount (initial margin)
equal to a certain percentage of the contract value. Subsequent
payments (variation margin) are made or received by the fund
each day. The variation margin payments are equal to the daily
changes in the
14
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 various hedging transactions, such as
interest rate swaps and the purchase 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 the other party to the transaction may not
perform.
For interest rate swaps, caps and floors, the fund accrues
weekly, as an increase or decrease to interest income, the
current net amount due to or owed by the fund. Interest rate
swaps, caps and floors are valued from prices quoted by
independent brokers. These valuations represent the present
value of all future cash settlement amounts based on implied
forward interest rates.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have been purchased by
the fund on a forward-commitment or when-issued basis can take
place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to
market fluctuation and
15
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
may increase or decrease in value prior to their delivery. The
fund maintains, in a segregated account with its custodian,
assets with a market value equal to the amount of its purchase
commitments. The purchase of securities on a when-issued or
forward-commitment basis may increase the volatility of the
fund's net asset value if the fund makes such purchases while
remaining substantially fully invested. As of April 30, 1996,
the fund had no outstanding when-issued or forward-commitments.
In connection with its ability to purchase securities on a
when-issued or forward-commitment basis, the fund may enter into
mortgage "dollar rolls" in which the fund sells securities for
delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future
date. As an inducement to "roll over" its purchase commitments,
the fund receives negotiated fees. For six months ended April
30, 1996, the fund earned no such fees.
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
market discount amortization, the differences in amortization
policies for notional principal contracts, the recognition of
certain foreign currency gains (losses) as ordinary income
(loss) for tax purposes, the "mark-to-market" investments for
tax purposes, losses deferred due to "wash sale" and "straddle"
transactions and the timing of recognition of income on certain
collateralized mortgage-backed securities
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.
Distributions that exceed the net investment income or net
realized gains recorded on a tax basis are presented as a "tax
return of capital" in the statements of changes in net assets
and the financial highlights. In addition, due
16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the fund.
DISTRIBUTIONS 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 10% 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
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 excess of the repurchase
amount, including accrued interest, to protect the fund in the
event of a default.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported results of operations during the reporting period.
Actual results could differ from those estimates.
17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(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 equal to an annualized rate of
0.50% of the fund's average weekly net assets. For its fee, the
adviser provides investment advice and conducts the management
and investment activity of the fund. Effective May 22, 1996,
Salomon Brothers Asset Management Inc. (SBAM) became the
subadviser to the fund. SBAM now handles the fund's day-to-day
portfolio management duties, while Piper Capital Management, as
the fund's adviser, remains responsible for the oversight of the
fund's portfolio strategy.
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 will provide reporting, regulatory and
record-keeping services for the fund.
In addition to the investment management and administrative
fees, the fund is responsible for paying most other operating
expenses, including: outside directors' fees and expenses;
custodian fees; registration fees; printing and shareholder
reports; transfer agent fees and expenses; legal, auditing and
accounting services; insurance; interest; taxes and other
miscellaneous expenses.
Expenses paid indirectly represents a reduction of custodian
fees for earnings on cash balances maintained by the fund.
(4) INVESTMENT SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities, other
than temporary investments in short-term securities, for the six
months ended April 30, 1996 aggregated $15,813,307 and
$11,171,197, respectively.
During the six months ended April 30, 1996, no brokerage
commissions were paid to Piper Jaffray Inc., an affiliated
broker.
(5) CAPITAL LOSS CARRYOVER
For federal income tax purposes, the fund had capital loss
carryovers of $14,593,939 as of October 31, 1995, which, if not
offset by
18
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
subsequent capital gains, 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.
(6) RETIREMENT OF FUND SHARES
The fund's board of directors voted to discontinue the share
repurchase program effective February 6, 1996. Pursuant to the
plan, the fund had cumulatively repurchased and retired 190,300
shares as of February 6, 1996, which represents 3.0% of the
shares originally issued.
19
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(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:
<TABLE>
<CAPTION>
Six months
ended Year Period from
4/30/96 Ended 1/28/94 (f)
(Unaudited) 10/31/95 to 10/31/94
------------ -------- ------------
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ............... $ 8.21 10.26 14.04
------------ -------- ------------
Operations:
Net investment income (loss) ....................... 0.30 (0.79) 0.92
Net realized and unrealized loss on investments .... (0.09) (1.96) (3.85)
------------ -------- ------------
Total from operations ........................... 0.21 (1.17) (2.93)
------------ -------- ------------
Distributions to shareholders:
From net investment income ......................... -- -- (0.73)
Tax return of capital .............................. (0.32) (0.88) (0.12)
------------ -------- ------------
Total distributions to shareholders ............. -- (0.88) (0.85)
------------ -------- ------------
Net asset value, end of period ................. $ 8.10 8.21 10.26
------------ -------- ------------
------------ -------- ------------
Market value, end of period .................... $ 6.88 6.88 9.75
------------ -------- ------------
------------ -------- ------------
SELECTED INFORMATION
Total return, net asset value (a) .................... 2.51% (10.96%) (20.98%)
Total return, market value (b) ....................... 4.56% (20.90%) (29.98%)
Net assets at end of period (in millions) .......... $ 51 52 66
Ratio of expenses to average daily net assets (c) .... 1.24%(g) 1.21% 0.93%(g)
Ratio of net investment income ....................... 7.44%(g) 9.60% 10.82%(g)
Portfolio turnover rate (excluding short-term
securities) ........................................ 21% 61% 62%
Amount of borrowings outstanding at end of period (in
millions) (d) .................................... $ -- -- 15
Per-share amount of borrowings outstanding at end of
period ........................................... $ -- -- 2.33
Per-share amount of net assets, excluding borrowings,
at end of period ................................. $ -- -- 12.59
Asset coverage ratio (e) ............................. -- -- 540%
</TABLE>
(A) BASED ON THE CHANGE IN NET ASSET VALUE OF A SHARE DURING THE PERIOD AND
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE.
(B) BASED ON THE CHANGE IN MARKET PRICE OF A SHARE DURING THE PERIOD AND
ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
(C) BEGINNING IS FISCAL 1995, THE EXPENSE RATIO REFLECTS THE EFFECT OF GROSS
EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIO HAS NOT
BEEN ADJUSTED.
(D) 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.
(E) REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
(F) COMMENCEMENT OF OPERATIONS WAS ON JANUARY 28, 1994.
(G) ADJUSTED TO AN ANNUAL BASIS.
20
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (Unaudited)
THE AMERICAS INCOME TRUST
APRIL 30, 1996
<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 (57.7%):
U.S. Government Securities (19.7%):
U.S. Treasury Bond, 7.25%, 5/15/16 .................. $ 2,000,000 2,039,740
U.S. Treasury Note, 5.88%, 2/15/04 .................... 2,000,000 1,909,040
U.S. Treasury Note, 5.88%, 3/31/99 .................... 2,000,000 1,983,180
U.S. Treasury Note, 6.75%, 4/30/00 .................... 4,000,000 4,054,758
-----------
Total U.S. Government Securities
(cost: $10,292,145) ................................ 9,986,720
-----------
Mortgage-Backed Securities (29.6%):
U.S. Agency Fixed Rate Mortgages (27.9%):
6.50%, FHLMC, 12/1/10 ................................. 1,949,689 1,890,555
7.00%, FHLMC, 6/1/10 .................................. 4,521,425 4,473,317
11.00%, FNMA, 10/1/20 ................................. 1,399,429 1,561,651
7.00%, GNMA, 8/15/23 .................................. 1,896,509 1,830,700
8.00%, GNMA, 5/1/25 ................................... 4,305,649 4,363,431
-----------
14,119,654
-----------
Collateralized Mortgage Obligations - Z-Tranche (b) (1.7%):
6.50%, FHLMC, Series 1694, Class Z, 3/15/24 ........... 1,144,595 884,257
-----------
Total Mortgage-Backed Securities
(cost: $15,031,077) ................................ 15,003,911
-----------
Corporate Bonds (8.4%):
Ford Motor Credit, 7.50%, 1/15/03 ..................... 1,000,000 1,018,980
General Motors, 8.80%, 3/1/21 ......................... 1,000,000 1,111,100
General Motors Acceptance Corporation, 9.38%,
4/1/00 ............................................... 1,000,000 1,085,920
Royal Caribbean Cruises, 8.13%, 7/28/04 ............... 1,000,000 1,014,770
-----------
Total Corporate Bonds
(cost: $4,209,454) ................................. 4,230,770
-----------
Total United States Securities
(cost: $29,532,676) ................................ 29,221,401
-----------
CANADIAN SECURITIES (26.0%):
Government Securities (15.2%) (c):
Canadian Government, 9.75%, 5/1/00 .................... 2,900,000 2,336,433
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
21
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Name of Issuer Amount Value (a)
- --------------------------------------------------------- ---------- -----------
<S> <C> <C>
Canadian Government, 8.00%, 6/1/23 .................. $ 3,000,000 2,136,015
Canadian Government, 8.75%, 12/1/05 ................... 2,850,000 2,225,127
Canadian Government Residual, 7.17%, 10/1/08 .......... 3,700,000(d) 985,870
-----------
Total Government Securities
(cost: $7,843,062) ................................. 7,683,446
-----------
Mortgage-Backed Securities (10.8%) (c):
First Heritage, 6.54%, 12/1/98 ........................ 1,458,955 1,066,627
Firstline Trust, 7.87%, 8/1/18 ........................ 1,797,314 1,333,787
Firstline Trust, 7.25%, 11/1/00 ....................... 4,187,840 3,077,978
-----------
Total Mortgage Backed Securities
(cost: $5,750,259) ................................. 5,478,392
-----------
Total Canadian Securities
(cost: $13,593,321) ................................ 13,161,837
-----------
MEXICAN SECURITIES (13.7%):
Government Securities (7.6%):
Mexican Brady Par - Series A, 6.25%, 12/31/19 ......... 3,500,000(g) 2,314,375
United Mexican States Bondes, 40.17%, 2/26/98 ......... 11,300,000(c)(e) 1,507,439
-----------
Total Government Securities
(cost: $4,353,502) ................................. 3,821,814
-----------
Corporate Debt Securities (6.1%):
Banamex SA, Medium-Term Note, 0.11%, 12/2/96 .......... 16,460,000(c) 1,913,246
Mexico-Cuernavaca Trust, 9.25%, 7/25/01 ............... 1,717,514(f)(g) 1,172,203
-----------
Total Corporate Debt Securities
(cost: $7,035,964) ................................. 3,085,449
-----------
Total Mexican Securities
(cost: $11,389,466) ................................ 6,907,263
-----------
SHORT-TERM SECURITIES (1.1%):
Repurchase agreement with Morgan Stanley,
collateralized by U.S. Government agency securities,
acquired on 4/30/96, accrued interest of $80, 5.10%,
5/1/96
(cost: $563,000) ..................................... 563,000 563,000
-----------
Total Investments in Securities
(cost: $55,078,462) (h) ........................... $ 49,853,501
-----------
-----------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES (UNAUDITED)
NOTES TO INVESTMENTS IN SECURITIES:
(A) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS.
(B) 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 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 APRIL 30, 1996.
(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.
(H) 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>
<S> <C>
GROSS UNREALIZED APPRECIATION .... $ 317,372
GROSS UNREALIZED DEPRECIATION ...... (5,542,333)
-----------
NET UNREALIZED DEPRECIATION .... $ (5,224,961)
-----------
-----------
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER UPDATE
ANNUAL MEETING RESULTS
An annual meeting of the fund's shareholders was held on May 9, 1996. At the
meeting, shareholders elected the Board of Directors and ratified the selection
of KPMG Peat Marwick LLP as the independent public accountants of the fund for
the fiscal year ended Oct. 31, 1996. The annual meeting was adjourned until May
14, 1996, at which time shareholders approved the Investment Advisory Agreement
between the fund and Piper Capital Management Inc. and the Sub-advisory
agreement between Salomon Brothers Asset Management Inc and Piper Capital
Management Inc. The voting results of these matters, including 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 4,745,242 193,295
Jaye F. Dyer 4,746,249 192,288
William H. Ellis 4,742,249 196,288
Karol D. Emmerich 4,746,015 192,522
Luella G. Goldberg 4,746,149 192,388
George Latimer 4,745,576 192,961
</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 Oct. 31, 1996. The following votes were cast
regarding this matter:
<TABLE>
<CAPTION>
Shares Shares Voted Broker
Voted "For" "Against" Abstentions Non-votes
- ----------- ------------- ----------- ---------------
<S> <C> <C> <C>
4,770,057 52,427 116,054 --
</TABLE>
3. The fund's shareholders approved the Investment Advisory Agreement
between the fund and Piper Capital Management as adviser to the fund.
The following votes were cast regarding this matter:
<TABLE>
<CAPTION>
Shares Shares Voted Broker
Voted "For" "Against" Abstentions Non-votes
- ----------- ------------- ----------- -----------
<S> <C> <C> <C>
2,880,811 153,421 164,470 1,739,836
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER UPDATE
4. The fund's shareholders approved the Sub-advisory Agreement between
Salomon Brothers Asset Management Inc as subadviser to the fund and
Piper Capital Management as adviser to the fund. The following votes
were cast regarding this matter:
<TABLE>
<CAPTION>
Shares Shares Voted Broker
Voted "For" "Against" Abstentions Non-votes
- ----------- ------------- ----------- -----------
<S> <C> <C> <C>
2,854,724 188,223 155,755 1,739,836
</TABLE>
25
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
DIRECTORS David T. Bennett, CHAIRMAN, HIGHLAND HOMES, INC.,
USL PRODUCTS, INC., KIEFER BUILT, INC., OF
COUNSEL, 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,
RELIASTAR FINANCIAL CORP., HORMEL FOODS CORP.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL
EQUITY FUNDS
OFFICERS William H. Ellis, CHAIRMAN OF THE BOARD AND
PRESIDENT
Paul A. Dow, SENIOR VICE PRESIDENT
Thomas S. McGlinch, SENIOR VICE PRESIDENT
Robert H. Nelson, SENIOR VICE PRESIDENT AND
TREASURER
Susan S. Miley, SECRETARY
INVESTMENT ADVISER Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804
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
LEGAL COUNSEL Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
26
<PAGE>
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
----------------
PIPER JAFFRAY INC., NASD MEMBER.
[LOGO] THIS DOCUMENT IS PRINTED ON PAPER MADE FROM
100% TOTAL RECOVERED FIBER, INCLUDING 15%
POST-CONSUMER WASTE.
In an effort to reduce costs to our shareholders, we have
implemented a process to reduce duplicate mailings of the fund's
shareholder reports. This householding process should allow us
to mail one report to each address where one or more registered
shareholders with the same last name reside. If you would like to
have additional reports mailed to your address, please call our
Shareholder Services area at 1 800 866-7778, or mail your request to:
Piper Capital Management
Attn: Communications Department
222 South Ninth Street
Minneapolis, MN 55402-3804
http://www.piperjaffray.com
144-96 XUSO2 6/96
