<PAGE>
1996 ANNUAL REPORT
The Americas Income Trust - 1996 Annual Report
THE
AMERICAS
INCOME
TRUST
XUS
[LOGO]
<PAGE>
CONTENTS
Average Annualized Total Returns . . . . . .2
Letter to Shareholders . . . . . . . . . . .4
Financial Statements and Notes . . . . . . .9
Investments in Securities. . . . . . . . . 21
Independent Auditors' Report . . . . . . . 25
Federal Tax Information. . . . . . . . . . 26
Shareholder Update . . . . . . . . . . . . 27
Directors and Officers . . . . . . . . . . 32
Glossary . . . . . . . . . . . . . . . . . 33
[LOGO]
THE AMERICAS INCOME TRUST
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PRIMARY INVESTMENTS
The fund invests primarily in debt securities of issuers located in the United
States, Canada and Mexico (at least 65% of total assets). It may invest (up to
35%) in debt securities of issuers in other areas of the world, which may be
denominated in the currencies of those countries. The fund may invest up to 35%
of its assets in non-investment grade securities or unrated securities of
comparable quality. 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.
FUND OBJECTIVE
High level of current income. Its secondary objective is to seek capital
appreciation. As with other investment companies, there can be no assurance this
fund will achieve its objective.
<PAGE>
[PHOTO]
WILLIAM H. ELLIS
President
Piper Capital
Management
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PRESIDENT'S LETTER
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December 16, 1996
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DEAR SHAREHOLDERS:
Check out the best sellers' list at your local bookstore. You'll notice a
number of books about companies that have gone through dramatic changes in
recent years. Surprising? Not really. Every company experiences change
periodically. And we're no exception. At Piper Capital Management, we've made
significant changes to enhance our ability to achieve consistent, competitive
performance and provide a higher level of quality service.
We've upgraded our toll-free telephone system so you spend less time
listening to voice response and more time receiving information you can put to
use. Also, when calling our toll-free number, you now have the option to listen
to our portfolio managers talk about their current investment strategies. Find
out the many ways to reach us on the back page of this report.
Take a close look at the annual report in your hand. It's simpler and more
inviting, with a glossary of terms at the back to help you better understand
commonly used financial terms. Whenever you see this symbol,*** it indicates a
term that is defined in the glossary.
You'll hear the word "team" more often when we talk about our portfolio
managers. We've reorganized so managers interact more frequently, sharing their
best ideas to improve the investment capabilities of Piper Capital.
The recent changes we have made represent a new way of doing business at
Piper Capital - an approach we believe will enable us to establish an
unparalleled reputation for prudent investing and high-quality service.
That said, we look forward to serving your future financial needs and
exceeding your expectations in every way we can. Thank you for your investment.
Sincerely,
/s/ William H. Ellis
William H. Ellis
*** This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary
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1996 Annual Report 1 The Americas Income Trust
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AVERAGE ANNUALIZED TOTAL RETURNS
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Based on net asset value for the periods ended October 31, 1996.
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[GRAPH]
PERFORMANCE
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
SIX-MONTH, ONE-YEAR AND SINCE INCEPTION PERIODS ENDED OCTOBER 31, 1996, WERE
12.20%, 17.32% AND -14.37%, RESPECTIVELY. THESE FIGURES ALSO INCLUDE REINVESTED
DISTRIBUTIONS AND DO NOT REFLECT A SALES CHARGE.
PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. NEITHER STABILITY OF
INCOME NOR SAFETY OF PRINCIPAL IS GUARANTEED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT FUND SHARES, WHEN SOLD, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
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1996 Annual Report 2 The Americas Income Trust
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AVERAGE ANNUALIZED TOTAL RETURNS (CONTINUED)
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THE FUND'S BENCHMARKS
THE LIPPER WORLD INCOME FUNDS AVERAGE IS AN UNMANAGED INDEX THAT REPRESENTS THE
AVERAGE TOTAL RETURN OF 14 DEVELOPED NATION CLOSED-END FUNDS THAT 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.
* IN PREVIOUS SHAREHOLDER REPORTS, THE LIPPER WORLD INCOME AVERAGE: EMERGING
NATIONS BENCHMARK WAS INCLUDED. DURING THE SIX-MONTH PERIOD, THIS BENCHMARK WAS
REPLACED WITH THE BLENDED BENCHMARK OF LEHMAN BROTHERS AGGREGATE BOND INDEX
(60%), LEHMAN BROTHERS EMERGING AMERICAS INDEX (30% ) AND SALOMON BROTHERS
CANADA ONLY INDEX (10%). MANAGEMENT BELIEVES THAT THE BLENDED BENCHMARK MORE
PROPERLY REFLECTS THE OBJECTIVES OF THE FUND. THE LIPPER WORLD INCOME AVERAGE:
EMERGING NATIONS RETURNS FOR THE SIX-MONTH, ONE-YEAR AND SINCE INCEPTION PERIODS
WERE 20.80%, 47.73% AND 10.99%.
THE LEHMAN BROTHERS EMERGING AMERICAS INDEX IS AN UNMANAGED INDEX THAT INCLUDES
ALL U.S. DOLLAR-DENOMINATED SECURITIES FROM ISSUERS IN ARGENTINA, BRAZIL, MEXICO
AND VENEZUELA. THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS AN UNMANAGED INDEX
THAT INCLUDES ALL FIXED RATE DEBT ISSUES WITH AT LEAST ONE YEAR TO MATURITY THAT
ARE RATED INVESTMENT GRADE OR HIGHER BY A NATIONALLY RECOGNIZED RATINGS SERVICE.
THE SALOMON BROTHERS CANADA ONLY INDEX IS AN UNMANAGED INDEX THAT INCLUDES ALL
CANADIAN DOLLAR-DENOMINATED GOVERNMENT BONDS WITH MORE THAN ONE YEAR TO
MATURITY. THE INDEXES HAD INDIVIDUAL SIX-MONTH RETURNS OF 5.30%, 11.80% AND
13.32%, AND ONE-YEAR RETURNS OF 5.85%, 35.26% AND 15.60%, RESPECTIVELY.
THE BENCHMARK FIGURES ASSUME REINVESTED DISTRIBUTIONS AND DO NOT INCLUDE SALES
CHARGES. THEY DO NOT REFLECT EXPENSES OR TRANSACTION COSTS. THE SINCE INCEPTION
NUMBERS ARE CALCULATED FROM THE MONTH END CLOSEST TO THE FUND'S INCEPTION
THROUGH OCTOBER 31, 1996.
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1996 Annual Report 3 The Americas Income Trust
<PAGE>
[PHOTO]
PETER WILBY, CFA, CPA,
has primary
responsibility for the
management of The
Americas Income
Trust. He is a
managing director at
Salomon Brothers Inc.
and has 13 years of
financial experience.
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THE AMERICAS INCOME TRUST
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December 16, 1996
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DEAR SHAREHOLDERS:
FOR THE SIX-MONTH PERIOD ENDED OCTOBER 31, 1996, THE NET ASSET VALUE (NAV)
TOTAL RETURN FOR THE AMERICAS INCOME TRUST WAS 12.94%,* A FAVORABLE RETURN
COMPARED TO THE FUND'S BENCHMARKS. The Lipper World Income Funds Average:
Developed Nations returned 11.39% over the same time period; and the blended
benchmark comprised of the Lehman Brothers Aggregate Bond Index, the Lehman
Brothers Emerging Americas Index and the Salomon Brothers Canada Only Index
returned 8.04%. The fund's strong relative performance during the six-month
period was largely due to key asset allocation decisions that proved successful,
which we will explain in greater detail in this letter. While the fund performed
well during the last six months, it underperformed its Lipper benchmark for the
year. For the one-year period ended October 31, its NAV total return
was 15.78%,* compared to a Lipper return of 19.03%, and a blended index return
of 15.27%
* 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.
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PORTFOLIO COMPOSITION BY COUNTRY
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As a percentage of total assets on October 31, 1996.
[PIE]
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1996 Annual Report 4 The Americas Income Trust
<PAGE>
THE AMERICAS INCOME TRUST (CONTINUED)
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for the same period. The fund's benchmarks benefited from strong returns in the
non-investment grade *** (high yield) sector of the foreign markets; however,
the fund's guidelines limited it to a 10% position in this market sector during
the first half of its fiscal year.
AT THE END OF THE PERIOD, THE COMPOSITION OF THE FUND LOOKED SIGNIFICANTLY
DIFFERENT THAN IT DID AT THE BEGINNING. This was due to a major change that took
place within the fund. In May, Salomon Brothers Asset Management was named
subadviser of the fund, and the prospectus guidelines were modified so we could
invest up to 35% of the fund's assets in non-investment grade securities or
unrated*** securities (up from a previous limit of 10% in non-investment grade
and 20% in unrated). We also made a decision to take advantage of an existing
investment policy that allows the investment of up to 35% of assets in countries
outside the United States, Canada and Mexico. Before May, the fund allocated
virtually all of its assets to securities in these three countries. Both changes
enable the fund to take advantage of the improving credit of emerging market***
debt.
OUR DECISION TO INCREASE THE FUND'S INVESTMENT IN DOLLAR-DENOMINATED BRADY BONDS
AND REDUCE ITS EXPOSURE TO PESO-DENOMINATED MEXICAN
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PORTFOLIO COMPOSITION BY CURRENCY
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As a percentage of total investments on October 31, 1996.
[PIE]
*** This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary
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1996 Annual Report 5 The Americas Income Trust
<PAGE>
THE AMERICAS INCOME TRUST (CONTINUED)
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SECURITIES PROVED TO BE A PROFITABLE INVESTMENT STRATEGY. Brady bonds are
securities that are issued in connection with the restructuring of debt incurred
by emerging market countries. At the start of the period, yields on Brady bonds
were approximately 7.5 to 8% higher than those of U.S. Treasuries of comparable
maturities. Historically, the yield spreads have been as narrow as 4%. We
believed the additional yield from Brady bonds more than offset the risk
associated with them. This decision proved correct, as the value of Brady bonds
rose higher, compared to U.S. Treasuries. Late in the period, we took profits in
some of our Mexican Brady bonds. We used the proceeds to repurchase attractively
priced, peso-denominated Mexican securities that had cheapened relative to the
Brady market.
THE FUND'S 22% ALLOCATION IN CENTRAL AND SOUTH AMERICA HAD A POSITIVE EFFECT ON
PERFORMANCE. In particular, we realized capital appreciation from our positions
in Panama, Venezuela and Argentina. The reason these securities fared well is
that institutional investors, such as U.S. pension funds and insurance
companies, increased their allocation to them as their fundamental credit
worthiness improved. Investors were encouraged by the sound fiscal policies of
these countries and the
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PORTFOLIO COMPOSITION BY RATING
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As a percentage of total investments on October 31, 1996.
[PIE]
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1996 Annual Report 6 The Americas Income Trust
<PAGE>
THE AMERICAS INCOME TRUST (CONTINUED)
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relatively high yields available. It should be noted that Argentina's financial
markets experienced short-term volatility following the unexpected resignation
of Domingo Cavallo, the country's finance minister, who is widely regarded as
the chief architect of Argentina's economic recovery. However, this volatility
quickly subsided when investors realized that the reforms instituted by Mr.
Cavallo are expected to remain in place long term.
ADDITIONALLY, OUR POSITION IN CANADIAN BONDS HELPED OUR INVESTMENT RESULTS. In
Canada, bond prices advanced as the Bank of Canada reduced short-term interest
rates to stimulate economic growth. In addition, the provincial government's
apparent commitment to spend less on expensive social programs also proved
positive for bonds. The environment for Canadian bonds remains good. While the
reduction of interest rates has helped improve economic conditions, inflation,
now hovering around 1.5%, is well under control. Moreover, the employment
picture remains generally subdued. This should bode well for Canadian debt
prices going forward.
AT THE END OF THE PERIOD, THE FUND'S INVESTMENTS WERE SPREAD AMONG NUMEROUS
SECTORS. We had approximately 28% of the fund's total assets in non-U.S.
investment grade*** bonds (20% in Canada, 5% in Mexico and 3% in Poland), 26% in
non-investment grade emerging market securities (5% in Argentina, 5% in Brazil,
3% in Ecuador, 2% in Mexico, 4% in Panama, 3% in Russia and 4% in Venezuela),
36% in U.S. investment grade securities, 2% in U.S. non-investment grade bonds
and 2% in Canadian non-investment grade bonds. The fund had an average effective
duration*** of 4.6 years.
OUR OUTLOOK FOR U.S. INTEREST RATES, A SIGNIFICANT FACTOR IN THE PERFORMANCE OF
MANY BOND MARKETS AROUND THE WORLD, IS NEUTRAL. Recent U.S. economic reports
paint a mixed picture, which should keep interest rates trading in a relatively
narrow range. The global economy appears to be showing signs of strength,
particularly in emerging markets. However, since these countries are
increasingly becoming exporters of supplies and labor, we expect prices (and,
therefore, inflationary pressures) to remain subdued.
WE ARE OPTIMISTIC THAT THE FIXED INCOME SECTORS REPRESENTED IN THE FUND WILL
FARE WELL IN THE MONTHS AHEAD. Although many of the high-yield
*** This symbol represents a graduation cap, used throughout this report to
indicate terms defined in the glossary
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1996 Annual Report 7 The Americas Income Trust
<PAGE>
THE AMERICAS INCOME TRUST (CONTINUED)
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bonds of emerging countries have had a solid run-up in value, their spreads
compared to U.S. Treasuries of comparable maturities remain attractive on a
historical basis. At the end of the period, the spreads between many of these
securities and U.S. Treasuries was still approximately 6%. As noted earlier,
spreads have been as narrow as 4% in the past.
IN THE MONTHS AHEAD, WE WILL CONTINUE TO INVEST IN EMERGING MARKET DEBT OF
COUNTRIES WHOSE ECONOMIES ARE, IN OUR JUDGMENT, FUNDAMENTALLY SOUND. Although
bonds issued by emerging market countries carry more risk than those issued by
countries with mature markets, we believe the significant yield advantage still
outweighs the risk. Moreover, we believe emerging market countries may see their
economies grow at twice the rate of the U.S. economy in the next few years.
BEGINNING WITH THE NOVEMBER DISTRIBUTION, THE FUND'S MONTHLY DISTRIBUTIONS BEGAN
TO BE CLASSIFIED AS TAXABLE ORDINARY INCOME DIVIDENDS, AS OPPOSED TO RETURNS OF
CAPITAL. Given the current portfolio composition, it is likely that fiscal 1997
distributions will continue to be classified as income. However, because of
accounting practices, foreign currency losses can result in distributions being
classified as a return of capital, and such losses are always a possibility for
the fund. 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 shares. Your tax adviser can
provide more information.
Thank you for your investment in The Americas Income Trust. We remain committed
to providing you with quality service and look forward to helping you achieve
your financial goals.
Sincerely,
/s/ Peter Wilby
Peter Wilby
Managing Director, Portfolio Manager
Salomon Brothers Asset Management
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1996 Annual Report 8 The Americas Income Trust
<PAGE>
Financial Statements
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STATEMENT OF ASSETS AND LIABILITIES October 31, 1996
..................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (note 2)
(including a repurchase agreement of $2,331,000) ......... $69,571,085
Receivable for investment securities sold .................. 881,250
Accrued interest receivable ................................ 745,422
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Total assets ............................................. 71,197,757
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LIABILITIES:
Payable for investment securities purchased on a when-issued
basis (note 2) ........................................... 14,852,792
Payable for investment securities purchased ................ 382,778
Bank overdraft ............................................. 855,927
Accrued investment management fee .......................... 23,150
Accrued administrative fee ................................. 9,260
Other accrued expenses ..................................... 10,705
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Total liabilities ........................................ 16,134,612
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Net assets applicable to outstanding capital stock ......... $55,063,145
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REPRESENTED BY:
Capital stock - authorized 2 billion shares of $0.01 par
value; outstanding, 6,251,305 shares ..................... $ 62,513
Additional paid-in capital ................................. 72,403,100
Accumulated net realized loss on investments and foreign
currency transactions .................................... (20,124,855)
Unrealized appreciation of investments and on translation of
other assets and liabilities denominated in foreign
currencies ............................................... 2,722,387
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Total - representing net assets applicable to outstanding
capital stock .......................................... $55,063,145
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-----------------
Net asset value per share of outstanding capital stock ..... $ 8.81
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* Investments in securities at identified cost ............. $66,853,937
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1996 Annual Report 9 The Americas Income Trust
<PAGE>
Financial Statements (continued)
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STATEMENT OF OPERATIONS For the Year Ended October 31, 1996
..................................................................
<TABLE>
<S> <C>
INCOME:
Interest ................................................... $ 4,225,678
Fee income (note 2) ........................................ 141,639
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Total investment income .................................. 4,367,317
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EXPENSES (NOTE 3):
Investment management fee .................................. 257,197
Administrative fee ......................................... 102,879
Transfer agent and dividend disbursing agent fees .......... 27,280
Custodian and accounting fees .............................. 85,289
Reports to shareholders .................................... 64,177
Directors' fees ............................................ 11,472
Audit and legal fees ....................................... 68,040
Other expenses ............................................. 36,238
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Total expenses ........................................... 652,572
Less expenses paid indirectly .............................. (2,241)
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Total net expenses ....................................... 650,331
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Net investment income .................................... 3,716,986
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NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on:
Investments (note 4) ....................................... (11,740,709)
Foreign currency transactions .............................. (52,758)
Closed futures contracts ................................... (32,850)
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Net realized loss ........................................ (11,826,317)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies ............ 15,714,600
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Net gain on investments and foreign currency ............. 3,888,283
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Net increase in net assets resulting from operations ..... $ 7,605,269
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1996 Annual Report 10 The Americas Income Trust
<PAGE>
Financial Statements (continued)
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STATEMENTS OF CHANGES IN NET ASSETS
..................................................................
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
10/31/96 10/31/95
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<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 3,716,986 $ 5,047,323
Net realized loss on investments and foreign currency
transactions ............................................. (11,826,317) (18,226,930)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies ............ 15,714,600 5,519,734
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations ............................................. 7,605,269 (7,659,873)
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DISTRIBUTIONS TO SHAREHOLDERS:
Tax return of capital ...................................... (3,942,505) (5,613,033)
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CAPITAL SHARE TRANSACTIONS:
Payments for retirement of 51,000 and 129,300 shares,
respectively (note 6) .................................... (351,813) (948,203)
----------------- -----------------
Total increase (decrease) in net assets .................. 3,310,951 (14,221,109)
Net assets at beginning of year ............................ $51,752,194 $65,973,303
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Net assets at end of year .................................. $55,063,145 $51,752,194
----------------- -----------------
----------------- -----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1996 Annual Report 11 The Americas Income Trust
<PAGE>
Notes to Financial Statements
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(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 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 value of certain fixed income securities will be provided by
an independent pricing service, which determines these valuations
at a time earlier than the close of the New York Stock Exchange.
Fixed income securities for which prices are not available from
an independent pricing service but where an active market exists
will be valued using market quotations obtained from one or more
dealers that make markets in the securities.
Occasionally, events affecting the value of such securities may
occur between the time valuations are determined and the close of
the New York Stock Exchange. If events materially affecting the
value of such securities occur, if the fund's management
determines for any other reason that valuations provided by the
pricing service or market quotations from dealers are inaccurate
or when market quotations are not readily available, securities
will be valued at their fair value according to procedures
decided upon 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.
Exchange-traded options are valued at the last sales price on the
exchange prior to the time when assets are valued. If no sales
were reported that day, the options will be valued at the mean
between
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1996 Annual Report 12 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
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the current closing bid and asked prices. Over-the-counter
options are valued using market quotations obtained from
independent dealers that make markets in the securities.
Financial futures are valued at the last settlement price
established each day by the board of trade or exchange on which
they are traded. Such valuations are determined using independent
pricing services or prices quoted by independent brokers.
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 relating 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 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 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
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1996 Annual Report 13 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
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.
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 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
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1996 Annual Report 14 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
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 when-issued or forward-commitment basis can take
place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to
their delivery. The fund segregates, with its custodian, assets
with a 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
- ---------------------------------------------------------------------
1996 Annual Report 15 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
value if the fund makes such purchases while remaining
substantially fully invested. As of October 31, 1996, the fund
had entered into outstanding when-issued or forward commitments
of $14,852,792.
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
purchased on a forward commitment basis and simultaneously
contracts with a counterparty to repurchase similar (same type,
coupon and maturity) but not identical securities on a specified
future date. As an inducement to "roll over" its purchase
commitments, the fund receives negotiated fees. For the year
ended October 31, 1996, such fees earned by the fund amounted to
$141,639.
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. In addition, on a calendar-year basis, the
fund will distribute substantially all of its taxable net
investment income and realized gains, if any, to avoid the
payment of any federal excise taxes.
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 (loss) for tax purposes and losses deferred due
to "wash sale" transactions.
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 to the timing of
dividend
- ---------------------------------------------------------------------
1996 Annual Report 16 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains
(losses) were recorded by the fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, a reclassification adjustment
has been made to decrease undistributed net investment income by
$3,716,986, decrease accumulated net realized loss on investments
by $6,295,401 and decrease additional paid-in-capital by
$2,578,415.
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
- ---------------------------------------------------------------------
1996 Annual Report 17 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
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
in the financial statements. Actual results could differ from
these estimates.
(3) EXPENSES
................................................................................
The fund has entered into the following agreements with Piper
Capital Management Incorporated (the adviser and administrator):
The investment advisory agreement provides the adviser with a
monthly investment management fee in an amount 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 performs 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. For their
services, Piper Capital Management pays SBAM a fee in an amount
equal to an annualized rate of 0.375% of the fund's average
weekly net assets. Prior to the appointment of SBAM, Piper
Capital Management performed the day-to-day portfolio management
duties.
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 reporting, regulatory and record-keeping
services for the fund.
- ---------------------------------------------------------------------
1996 Annual Report 18 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
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 represent a reduction of custodian fees
for earnings on miscellaneous 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 year
ended October 31, 1996 aggregated $74,285,330 and $56,303,246,
respectively. During the year ended October 31, 1996, no
brokerage commissions were paid to Piper Jaffray Inc., or Salomon
Brothers, both of which are affiliated brokers.
(5) CAPITAL LOSS CARRYOVER
................................................................................
For federal income tax purposes, the fund had capital loss
carryovers of $20,025,238 as of October 31, 1996, which, if not
offset by subsequent capital gains, will expire in 2002 through
2004. 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
program, the fund had cumulatively repurchased and retired
190,300 shares as of February 6, 1996, which represents 3.0% of
the shares originally issued.
- ---------------------------------------------------------------------
1996 Annual Report 19 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- ---------------------------------------------------------------------
(7) FINANCIAL HIGHLIGHTS
................................................................................
Per-share data for a share of capital stock outstanding
throughout each period and selected information for each period
are as follows:
<TABLE>
<CAPTION>
Year Year Period
Ended Ended Ended
10/31/96(j) 10/31/95 10/31/94(g)
------- --------- ---------
<S> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ........ $ 8.21 $ 10.26 $ 14.04
------- --------- ---------
Operations:
Net investment income (loss) .............. 0.59(h) 0.79(h) 0.92
Net realized and unrealized gains (losses)
on investments . 0.64 (1.96) (3.85)
------- --------- ---------
Total from operations ................... 1.23 (1.17) (2.93)
------- --------- ---------
Distributions to shareholders:
From net investment income ................ -- -- (0.73)
Tax return of capital ..................... (0.63) (0.88) (0.12)
------- --------- ---------
Total distributions to shareholders ..... (0.63) (0.88) (0.85)
------- --------- ---------
Net asset value, end of period .............. $ 8.81 $ 8.21 $ 10.26
------- --------- ---------
------- --------- ---------
Market value, end of period ................. $ 7.38 $ 6.88 $ 9.75
------- --------- ---------
------- --------- ---------
SELECTED INFORMATION
Total return, net asset value (a) ........... 15.78% (10.96%) (20.98%)
Total return, market value (b) .............. 17.32% (20.90%) (29.98%)
Net assets at end of period (in millions) ... $ 55 $ 52 $ 66
Ratio of expenses to average weekly net
assets (c)(d) ............................. 1.27% 1.21% 0.93%(i)
Ratio of net investment income to average
weekly net assets 7.23% 9.60% 10.82%(i)
Portfolio turnover rate (excluding short-term
securities) ............................... 104% 61% 62%
Amount of borrowings outstanding at end of
period (in millions) (e) .................. $ -- $ -- $ 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 (f) .................... -- -- 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 IN FISCAL 1995, THE EXPENSE RATIOS REFLECT THE EFFECT OF GROSS
EXPENSES PAID INDIRECTLY BY THE FUND. PRIOR PERIOD EXPENSE RATIOS HAVE NOT
BEEN ADJUSTED.
(D) THE RATIO OF EXPENSES TO AVERAGE WEEKLY NET ASSETS EXCLUDES INTEREST
EXPENSE THAT HAS BEEN PRESENTED NET OF THE RELATED INTEREST INCOME IN THE
FINANCIAL STATEMENTS. IF THE INTEREST EXPENSE HAD BEEN INCLUDED IN TOTAL
EXPENSES, THE RATIO OF EXPENSES TO AVERAGE WEEKLY NET ASSETS WOULD HAVE
BEEN 1.60% IN FISCAL 1994.
(E) SECURITIES PURCHASED ON A WHEN-ISSUED BASIS FOR WHICH LIQUID ASSETS ARE
MAINTAINED IN A SEGREGATED ACCOUNT ARE NOT CONSIDERED BORROWINGS. SEE NOTE
2 IN THE NOTES TO FINANCIAL STATEMENTS.
(F) REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
(G) COMMENCEMENT OF OPERATIONS WAS JANUARY 28, 1994.
(H) BASED ON THE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
PERIOD.
(I) ADJUSTED TO AN ANNUAL BASIS.
(J) EFFECTIVE MAY 22, 1996, SALOMON BROTHERS ASSET MANAGEMENT INC. BECAME THE
SUBADVISER TO THE FUND.
- ---------------------------------------------------------------------
1996 Annual Report 20 The Americas Income Trust
<PAGE>
Investments in Securities
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
THE AMERICAS INCOME TRUST October 31, 1996
....................................................................................
Principal Market
Description of Security (a) Amount (b) Value (c)
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
UNITED STATES (53.0%):
CORPORATE SECURITIES (6.2%):
General Motors, 8.80%, 3/1/21 ............... $ 1,000,000(k(1)) $ 1,154,929
Hollinger International Publishing, 9.25%,
2/1/06 .................................... 1,250,000(k(3)) 1,214,063
Royal Caribbean, 8.13%, 7/28/04 ............. 1,000,000(k(1)) 1,058,240
------------
3,427,232
------------
GOVERNMENT SECURITIES (18.5%) (K(1)):
U.S. Treasury Bond, 7.25%, 5/15/16 .......... 2,000,000 2,116,320
U.S. Treasury Note, 5.88%, 2/15/04 .......... 2,000,000 1,956,340
U.S. Treasury Note, 5.88%, 3/31/99 .......... 2,000,000 2,003,240
U.S. Treasury Note, 6.75%, 4/30/00 .......... 4,000,000 4,096,760
------------
10,172,660
------------
MORTGAGE-BACKED SECURITIES (24.1%) (K(1)):
FNMA, 8.00%, 1/1/21 ......................... 13,000,000(i) 13,267,930
------------
SHORT-TERM SECURITIES (4.2%):
Repurchase agreement with State Street,
acquired on 10/31/96, interest of $361,
5.58%, 11/1/96 ............................ 2,331,000(j) 2,331,000
------------
Total United States
(cost: $29,041,513) .................... 29,198,822
------------
CANADA (28.0%):
CORPORATE SECURITIES (2.8%):
Rogers Cablesystems, 10.00%, 3/15/05 ........ 1,500,000(k(3)) 1,545,000
------------
GOVERNMENT SECURITIES (15.7%) (K(1)):
Canadian Government (Canadian Dollar), 9.75%,
5/1/00 .................................... 2,900,000 2,486,333
Canadian Government (Canadian Dollar), 8.00%,
6/1/23 .................................... 3,000,000 2,491,880
Canadian Government (Canadian Dollar), 8.75%,
12/1/05 ................................... 2,850,000 2,477,511
Canadian Government Residual (Canadian
Dollar), 7.17%, 10/1/08 ................... 3,700,000(f) 1,205,846
------------
8,661,570
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1996 Annual Report 21 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security (a) Amount (b) Value (c)
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
MORTGAGE-BACKED SECURITIES (9.5%) (K(1)):
First Heritage (Canadian Dollar), 6.63%,
12/1/98 ................................... 1,442,202 $ 1,108,020
Firstline Trust (Canadian Dollar), 8.00%,
8/1/18 .................................... 1,481,499 1,166,970
Firstline Trust (Canadian Dollar), 7.25%,
11/1/00 ................................... 3,795,365 2,958,420
------------
5,233,410
------------
Total Canada
(cost: $14,542,405) .................... 15,439,980
------------
MEXICO (9.2%):
GOVERNMENT SECURITIES (1.0%):
Mexican Par Bond, 6.25%, 12/31/19 ........... 750,000(k(3)) 527,813
------------
SHORT-TERM SECURITIES (8.2%):
Mexican Cetes (Mexican Peso), 29.05%,
9/4/97 .................................... 39,085,970(f)(k(2)) 3,919,977
Mexican Structured Note, 9.53%, 11/27/96 .... 500,000(g)(k(6)) 613,125
------------
4,533,102
------------
Total Mexico
(cost: $5,139,019) ..................... 5,060,915
------------
ARGENTINA (6.2%):
GOVERNMENT SECURITIES:
Argentina FRB, 6.63%, 3/31/05
(cost: $3,303,264) ........................ 4,165,000(d)(k(3)) 3,436,125
------------
BRAZIL (6.2%):
GOVERNMENT SECURITIES:
Brazil Capitalization Bond, 8.00%, 4/15/14
(cost: $3,120,934) ........................ 4,956,175(e)(k(4)) 3,419,761
------------
ECUADOR (4.7%):
GOVERNMENT SECURITIES:
Ecuador PDI, 6.50%, 2/28/15
(cost: $2,246,324) ........................ 4,757,904(d)(e)(k(6)) 2,640,637
------------
PANAMA (5.3%):
GOVERNMENT SECURITIES:
Panama FLIRB, 3.50%, 7/17/14
(cost: $2,973,283) ........................ 4,500,000(h)(k(6)) 2,934,844
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1996 Annual Report 22 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Principal Market
Description of Security (a) Amount (b) Value (c)
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
POLAND (3.9%):
GOVERNMENT SECURITIES:
Poland Discount Bond, 6.50%, 10/27/24
(cost: $2,093,170) ........................ $ 2,250,000(d)(k(1)) $ 2,157,188
------------
RUSSIA (3.6%):
GOVERNMENT SECURITIES:
Russian When Issued, 12/29/49
(cost: $1,631,250) ........................ 3,000,000(d)(i)(k(6)) 1,982,813
------------
VENEZUELA (5.9%):
GOVERNMENT SECURITIES:
Venezuela DCB, 6.63%, 12/18/07
(cost: $2,762,775) ........................ 4,000,000(d)(k(5)) 3,300,000
------------
Total Investments in Securities
(cost: $66,853,937)(l) ................. $ 69,571,085
------------
------------
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES:
(A) PORTFOLIO ABBREVIATIONS AND DEFINITIONS:
LIBOR - LONDON INTERBANK OFFERED RATE
BRADY BOND - U.S. DOLLAR DENOMINATED FOREIGN GOVERNMENT DEBT ISSUED TO
PAY FOR DELINQUENT PRINCIPAL AND/OR INTEREST PAYMENTS ON BANK LOANS.
ALL OR A PORTION OF PRINCIPAL AND/OR INTEREST PAYMENTS MAY BE
COLLATERALIZED BY U.S. TREASURIES.
PDI - PAST DUE INTEREST BOND - TYPE OF BRADY BOND WHICH IS ISSUED TO
PAY FOR PAST DUE INTEREST ON BANK LOANS.
FRB - FLOATING RATE BOND - TYPE OF PDI THAT HAS A COUPON RATE WHICH
INCREASES (DECREASES) IN LINE WITH AN INCREASE (DECREASE) IN A
FINANCIAL INDEX SUCH AS LIBOR.
PAR BOND - TYPE OF BRADY BOND WHICH IS ISSUED AT THE PAR VALUE OF THE
BANK LOAN.
FLIRB - FRONT-LOADED INTEREST REDUCTION BOND - TYPE OF BRADY BOND FOR
WHICH COUPON RATES ARE FIXED AT AN INCREMENTALLY INCREASING RATE FOR A
SET PERIOD OF TIME AFTER WHICH THE COUPON RATE INCREASES (DECREASES)
IN LINE WITH AND INCREASE (DECREASE) IN A FINANCIAL INDEX SUCH AS
LIBOR.
DISCOUNT BOND - TYPE OF BRADY BOND WHICH IS ISSUED AT A DISCOUNT TO THE
PAR VALUE OF THE BANK LOAN.
DCB - DEBT CONVERSION BOND - TYPE OF FLOATING RATE BRADY BOND.
(B) SECURITIES ARE DENOMINATED IN AND PRINCIPAL AMOUNTS ARE STATED IN U.S.
DOLLARS EXCEPT FOR THOSE DENOTED OTHERWISE.
(C) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS. MARKET VALUES ARE STATED IN U.S. DOLLARS.
(D) VARIABLE RATE BOND. INTEREST RATE INCREASES (DECREASES) WITH AN INCREASE
(DECREASE) IN LIBOR. INTEREST RATE DISCLOSED IS THE RATE IN EFFECT ON
OCTOBER 31, 1996.
(E) A PORTION OF THE COUPON INTEREST ON THIS BOND IS ADDED TO PRINCIPAL AND A
PORTION IS RECEIVED IN CASH.
(F) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
- ---------------------------------------------------------------------
1996 Annual Report 23 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
(G) ZERO-COUPON INVESTMENT. REDEMPTION VALUE LINKED TO THE GREATER OF THE ONE
YEAR LIBOR RATE ON DECEMBER 1, 1995 OR CETES INDEXING FORMULA. THIS FORMULA
FACTORS IN THE 28 DAY CETES RATE AND THE CHANGE IN MEXICAN PESO/U.S. DOLLAR
EXCHANGE RATE BETWEEN DECEMBER 1, 1995, AND NOVEMBER 25, 1996. RATE SHOWN
IS THE ACTUAL YIELD ON THE REDEMPTION DATE.
(H) VARIABLE RATE BOND. COUPON RATE ON THIS SECURITY INCREASES ANNUALLY IN
0.25% INCREMENTS FROM 3.50% IN 1996 TO 5.00% IN 2002, THEREAFTER RATE
INCREASES (DECREASES) WITH AN INCREASE (DECREASE) IN LIBOR.
(I) ON OCTOBER 31, 1996, THE TOTAL COST OF INVESTMENTS PURCHASED ON A
WHEN-ISSUED BASIS WAS $14,852,792.
(J) REPURCHASE AGREEMENT WHICH IS COLLATERALIZED BY U.S. GOVERNMENT AGENCY
SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS INTEREST DUE AT MATURITY OF
THE REPURCHASE AGREEMENT.
(K) THE STANDARD & POOR'S (S&P) AND MOODY'S INVESTORS SERVICE INC. (MOODY'S)
RATINGS ARE A CURRENT ASSESSMENT OF THE CREDITWORTHINESS OF AN ISSUER WITH
RESPECT TO A SPECIFIC OBLIGATION.
(K(1)) RATED INVESTMENT GRADE BY S&P. INVESTMENT GRADE BONDS ARE BONDS
WITH A RATING OF BBB OR GREATER. BONDS RATED BBB ARE REGARDED AS
HAVING AN ADEQUATE CAPACITY TO PAY INTEREST AND REPAY PRINCIPAL.
ADVERSE ECONOMIC CONDITIONS OR CHANGING CIRCUMSTANCES ARE MORE LIKELY
TO LEAD TO A WEAKENED CAPACITY TO PAY INTEREST AND REPAY PRINCIPAL FOR
DEBT IN THIS CATEGORY THAN FOR DEBT IN HIGHER-RATED CATEGORIES.
(K(2)) COMMERCIAL PAPER RATING OF 'A2' BY S&P - CAPACITY FOR TIMELY
PAYMENTS ON ISSUES WITH THIS DESIGNATION IS STRONG. COMMERCIAL PAPER
WITH THIS RATING IS CONSIDERED INVESTMENT GRADE.
(K(3)) RATED 'BB' BY S&P - LESS NEAR-TERM VULNERABILITY TO DEFAULT THAN
OTHER SPECULATIVE ISSUES. HOWEVER, IT FACES MAJOR ONGOING
UNCERTAINTIES OR EXPOSURE TO ADVERSE BUSINESS, FINANCIAL, OR ECONOMIC
CONDITIONS WHICH COULD LEAD TO INADEQUATE CAPACITY TO MEET TIMELY
INTEREST PAYMENTS AND PRINCIPAL REPAYMENTS.
(K(4)) RATED 'B' BY S&P - A GREATER VULNERABILITY TO DEFAULT BUT
CURRENTLY HAS THE CAPACITY TO MEET INTEREST PAYMENTS AND PRINCIPAL
REPAYMENTS. ADVERSE BUSINESS, FINANCIAL OR ECONOMIC CONDITIONS WILL
LIKELY IMPAIR CAPACITY OR WILLINGNESS TO PAY INTEREST AND REPAY
PRINCIPAL.
(K(5)) RATED 'BA2' BY MOODY'S - BONDS WITH THIS RATING ARE EQUIVALENT
TO THOSE RATED 'BB' BY S&P AND THEREFORE NOT INVESTMENT GRADE.
(K(6)) NOT RATED BY EITHER S&P OR MOODY'S.
(L) ON OCTOBER 31, 1996, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $66,953,554. THE AGGREGATE GROSS UNREALIZED
APPRECIATION AND DEPRECIATION OF INVESTMENTS IN SECURITIES BASED ON THIS
COST WERE AS FOLLOWS:
</TABLE>
<TABLE>
<S> <C>
GROSS UNREALIZED APPRECIATION ...... $ 2,942,332
GROSS UNREALIZED DEPRECIATION ...... (324,801)
------------
NET UNREALIZED APPRECIATION ...... $ 2,617,531
------------
------------
</TABLE>
- ---------------------------------------------------------------------
1996 Annual Report 24 The Americas Income Trust
<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, 1996 and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights presented in note 7 to
the financial statements. These financial statements and the financial
highlights are the responsibility of the fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered, we
request confirmations from brokers and, where replies are not received, we carry
out other appropriate auditing procedures. 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, 1996, and the results of its operations for the year then ended, the
changes in its net assets for each of the years in the two-year period then
ended and the financial highlights presented in note 7 to the financial
statements, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 13, 1996
- ---------------------------------------------------------------------
1996 Annual Report 25 The Americas Income Trust
<PAGE>
Federal Income Tax Information
- ----------------------------------------
The following per-share information describes the federal tax
treatment of distributions made during the fiscal year.
Distributions for the calendar year will be reported to you on
Form 1099-DIV. Please consult a tax adviser on how to report
these distributions at the state and local levels.
Distributions shown below are considered returns of capital for
tax purposes.
<TABLE>
<CAPTION>
PAYABLE DATE AMOUNT
- --------------------------------------------- --------
<S> <C>
November 22, 1995 ........................... $ 0.0525
December 27, 1995 ........................... 0.0525
January 11, 1996 ............................ 0.0525
February 21, 1996 ........................... 0.0525
March 27, 1996 .............................. 0.0525
April 24, 1996 .............................. 0.0525
May 29, 1996 ................................ 0.0525
June 26, 1996 ............................... 0.0525
July 24, 1996 ............................... 0.0525
August 28, 1996 ............................. 0.0525
September 25, 1996 .......................... 0.0525
October 23, 1996 ............................ 0.0525
--------
Total ................................... $ 0.6300
--------
--------
</TABLE>
- ---------------------------------------------------------------------
1996 Annual Report 26 The Americas Income Trust
<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 AUTHORITY
"FOR" 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>
- ---------------------------------------------------------------------
1996 Annual Report 27 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- ---------------------------------------------------------------------
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>
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>
TERMS AND CONDITIONS OF THE DIVIDEND REINVESTMENT PLAN
As a shareholder, you may choose to participate in the Dividend
Reinvestment Plan. It's a convenient and economical way to buy
additional shares of the fund by automatically reinvesting
dividends and capital gains. 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 request
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.
- ---------------------------------------------------------------------
1996 Annual Report 28 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- ---------------------------------------------------------------------
Banks, brokers or nominees, on behalf of their beneficial owners
who wish to reinvest dividend and capital gains 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
Beginning no more than 5 business days before the dividend
payment date, IFTC will buy shares of the fund on the New York
Stock Exchange (NYSE) or elsewhere on the open market only when
the price of the fund's shares on the NYSE plus commissions is
less than a 10% premium over the fund's most recently calculated
net asset value (NAV) 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
requirement, IFTC will accept payment of the dividend, or the
remaining portion, in authorized but unissued shares of the fund.
These shares will be issued at a per-share price equal to the
higher of (a) the NAV per share as of the close of business on
the payment date or (b) 95% of the closing market price per share
on the payment date.
By participating in the dividend reinvestment plan, you may
receive benefits not available to shareholders who elect not to
participate. For example, if the market price plus commissions of
the fund's shares is 10% or more above the NAV, you will receive
shares at a discount of up to 5% from the current market value.
However, if the market price plus commissions is below the NAV,
you will receive distributions in shares with a NAV greater than
the value of any cash distributions you would have received.
There is no direct charge for reinvestment of dividends and
capital gains, since IFTC fees are paid for by the fund. However,
if fund shares are purchased in the open market, each participant
pays a pro rata portion of the brokerage commissions. Brokerage
charges are expected to be lower than those for individual
transactions
- ---------------------------------------------------------------------
1996 Annual Report 29 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- ---------------------------------------------------------------------
because shares are purchased for all participants in blocks. As
long as you continue to participate in the plan, distributions
paid on the shares in your account will be reinvested.
IFTC maintains accounts for plan participants holding shares in
certificate form. You will receive a monthly statement detailing
total dividend and capital gain distributions, date of
investment, shares acquired, price per share, and total shares
held in your account, both certificate-form shares and unissued
shares acquired through the plan.
TAX INFORMATION
Distributions invested in additional shares of the fund are
subject to income tax, just as they would be if received in 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 Form 1099 regarding the federal tax status
of the prior year's distributions.
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.
- ---------------------------------------------------------------------
1996 Annual Report 30 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- ---------------------------------------------------------------------
If your shares are issued 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 amended or terminated, participants will be
notified in writing at least 90 days before the record date for
such 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 question 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.
- ---------------------------------------------------------------------
1996 Annual Report 31 The Americas Income Trust
<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.
David A. Hughey, RETIRED EXECUTIVE VICE PRESIDENT AND CHIEF
ADMINISTRATIVE OFFICER OF DEAN WITTER INTERCAPITAL INC. AND
DEAN WITTER TRUST CO.
George Latimer, CHIEF EXECUTIVE OFFICER, NATIONAL EQUITY FUNDS
OFFICERS
William H. Ellis,
CHAIRMAN OF THE BOARD
Paul A. Dow,
PRESIDENT
Robert H. Nelson,
VICE PRESIDENT AND TREASURER
Susan Sharp Miley,
SECRETARY
INVESTMENT ADVISER
Piper Capital Management Incorporated
222 SOUTH NINTH STREET, MINNEAPOLIS, MN 55402-3804
SUB ADVISER
Salomon Brothers Asset Management Inc.
SEVEN WORLD TRADE CENTER, NEW YORK, NY 10048
CUSTODIAN
Morgan Stanley Trust Company
1 PIERREPONT PLAZA, BROOKLYN, NY 11201
TRANSFER AND RECORD KEEPING AGENT
Investors Fiduciary Trust Company
127 WEST 10TH STREET, KANSAS CITY, MO 64105-1716
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
4200 NORWEST CENTER, MINNEAPOLIS, MN 55402
LEGAL COUNSEL
Dorsey & Whitney LLP
220 SOUTH SIXTH STREET, MINNEAPOLIS, MN 55402
- --------------------------------------------------------------------------------
1996 Annual Report 32 The Americas Income Trust
<PAGE>
GLOSSARY OF TERMS ***
- --------------------------------------------------------------------------------
EMERGING MARKET
According to the World Bank, countries with per-capita annual incomes less
than $8,625 that have the potential for development.
INVESTMENT GRADE
Securities rated from AAA to BBB by rating agencies like Standard & Poor's or
Moody's. They usually are considered to be good quality. However, securities
rated Baa are considered by Moody's as medium-grade obligations lacking
outstanding investment characteristics and in fact have speculative
characteristics as well, while securities rated BBB are regarded by Standard
& Poor's as having adequate capacity to pay principal and interest.
EFFECTIVE DURATION
Effective duration estimates how much the value of a security is expected to
change with a given change in interest rates. Longer effective durations
indicate more sensitivity to changes in interest rates. For example, if
interest rates were to increase by 1%, the market value of a bond with an
effective duration of five years would decrease by about 5%, with all other
factors being constant. It is important to remember that effective duration
calculations are based on various assumptions and have several limitations.
Effective duration is most effective as a measure when interest rate changes
are small, rapid and occur equally across all the different points of the
yield curve. In addition, effective duration is difficult to calculate
precisely for bonds with prepayment options, such as mortgage-backed
securities. Effective duration applies only to movements in interest rates of
the currency in which the security is denominated. It is not a measure of
variability due to changes in foreign currency exchange rates.
NON-INVESTMENT GRADE
(Also known as high-yield securities or "junk bonds.") Securities rated BB or
lower by rating agencies. They are subject to higher risk and greater market
fluctuation than higher-rated securities. They are issued by companies
without long track records of sales and earnings, or by those with
questionable credit strength. Because they are more volatile and pay higher
yields than investment grade bonds, many risk-oriented investors focus on
them.
UNRATED
Many issuers of securities do not apply for a rating, or they determine that
the cost of applying for and maintaining a rating is too great.
FOR MORE INFORMATION
BY PHONE [GRAPHIC]
1 800 866-7778
FOR GENERAL INFORMATION
press 5, our Mutual Fund Services
representatives are ready to answer
your questions.
TO LISTEN TO MONTHLY FUND UPDATES
press 3, press 2, then press:
36 The Americas Income Trust
TO ORDER LITERATURE
press 5, ask a service
representative to mail you
additional literature, including a
Quarterly Update. You can also
request to be put on a mailing list to
receive this information
automatically each quarter.
BY MAIL [GRAPHIC]
Piper Capital Management
Attn: Mutual Fund Services
222 South Ninth Street
Minneapolis, MN 55402-3804
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 Mutual Fund Services area at
1 800 866-7778, or mail a request to us.
On-Line [GRAPHIC]
http://www.piperjaffray.com/
money_management/
33
<PAGE>
----------------
Bulk Rate
U.S. Postage
PAID
Permit No. 3008
Mpls., MN
----------------
[LOGO]
PIPER CAPITAL MANAGEMENT INCORPORATED
222 SOUTH NINTH STREET
MINNEAPOLIS, MN 55402-3804
[GRAPHIC] THIS DOCUMENT IS PRINTED ON PAPER MADE FROM
100% TOTAL RECOVERED FIBER, INCLUDING 15% POST-CONSUMER WASTE.
#11610 12/1996 033-97
STAPLES
