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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.___________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
The Americas Income Trust Inc.
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(Name of Registrant as Specified in its Charter)
[Insert Name]
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction :
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(5) Total fee paid:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[PRELIMINARY COPY]
[Logo]
Piper Capital Management
222 South Ninth Street
Minneapolis, MN 55402-3804
800 866-7778
Dear Shareholders:
Attached is the proxy statement for the annual meeting of shareholders of
The Americas Income Trust to be held on May 9, 1996.
SHAREHOLDERS ARE BEING ASKED TO APPROVE TWO PROPOSALS THAT WILL ENABLE PIPER
CAPITAL MANAGEMENT INCORPORATED TO HIRE SALOMON BROTHERS ASSET MANAGEMENT INC
(SBAM) AS THE FUND'S SUBADVISER. The proposals stem from Piper Capital's
decision to concentrate its resources on U.S. investment management services. As
subadviser, SBAM would handle the fund's day-to-day portfolio management duties.
Piper Capital, as the fund's adviser, would remain responsible for the oversight
of the fund's portfolio strategy. The fund's board of directors unanimously
recommends that shareholders vote to approve the proposals.
SHAREHOLDERS ARE BEING ASKED TO VOTE FOR AN AMENDMENT TO THE INVESTMENT
ADVISORY AND MANAGEMENT AGREEMENT BETWEEN THE FUND AND PIPER CAPITAL AUTHORIZING
PIPER CAPITAL TO RETAIN A SUBADVISER OR SUBADVISERS TO ASSIST IN FURNISHING
INVESTMENT ADVICE TO THE FUND. ALSO, SHAREHOLDERS ARE BEING ASKED TO VOTE FOR A
SUBADVISORY AGREEMENT BETWEEN PIPER CAPITAL AND SBAM. In addition, fund
shareholders are being asked to re-elect the members of the fund's board of
directors and ratify the selection of KPMG Peat Marwick LLP as the independent
public accountants for the fund. The following shareholder Q&A and proxy
statement provide more detailed information about these issues.
PLEASE TAKE A MOMENT NOW TO READ THE INFORMATION AND SIGN AND RETURN THE
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Your prompt attention to this
proxy statement will save solicitation expenses for the fund. If you haven't
already voted as the date of the meeting approaches, you may receive a telephone
call from Shareholder Communications Corporation, a professional proxy
solicitation firm, reminding you to exercise your right to vote. If you have
questions about these proposals, please contact your broker.
Sincerely,
William H. Ellis
President
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[PRELIMINARY COPY]
[Logo]
SHAREHOLDER Q&A
March 4, 1996
AFTER DECIDING TO CONCENTRATE ITS RESOURCES ON U.S. INVESTMENT MANAGEMENT
SERVICES, PIPER CAPITAL MANAGEMENT INC. RECOMMENDED TO THE BOARD OF DIRECTORS OF
THE AMERICAS INCOME TRUST THAT SALOMON BROTHERS ASSET MANAGEMENT INC (SBAM) BE
HIRED AS THE FUND'S SUBADVISER. THE FUND'S BOARD OF DIRECTORS APPROVED THE
RECOMMENDATION AND RECOMMENDS SHAREHOLDERS VOTE FOR (1) AN AMENDMENT TO THE
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT BETWEEN THE FUND AND PIPER CAPITAL
AUTHORIZING PIPER CAPITAL TO RETAIN SBAM AND (2) A SUBADVISORY AGREEMENT BETWEEN
PIPER CAPITAL AND SBAM.
WHAT EXPERIENCE WOULD SBAM BRING TO THE MANAGEMENT OF THE FUND?
Incorporated in 1987 and based in New York, SBAM -- together with its
affiliates in London, Frankfurt, Tokyo and Hong Kong -- provides a full range of
fixed income and equity investment management services for individual and
institutional clients throughout the world. SBAM provides advisory services to
both proprietary and nonproprietary mutual funds, offshore funds, institutional
accounts, wrap fee products and private clients. SBAM currently serves as
investment adviser to four investment companies that have an investment
objective similar to that of The Americas Income Trust. These investment
companies are Salomon Brothers High Yield Bond Fund, Salomon Brothers High
Income Fund, Salomon Brothers Worldwide Income Fund, and Global Partners Income
Fund. As of December 31, 1995, SBAM and its affiliates had approximately $13
billion of assets under management.
WOULD THERE BE CHANGES IN THE FUND'S INVESTMENT POLICIES?
Yes. In connection with the proposed employment of SBAM as subadviser, the
fund's board of directors approved two changes in the fund's investment policies
as requested by SBAM. The first change will allow the fund to invest up to 35%
of its assets in non-investment grade securities or unrated securities of
comparable quality. The fund is currently permitted to invest up to 10% of its
total assets in such securities. 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. The second change
will allow the fund to invest up to 35% of its total assets in unrated
securities, up from the current limit of 20% in such 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. These changes do not require shareholder approval. They were
approved by the board of directors and will be implemented if shareholders
approve the subadvisory agreement with SBAM.
WHY DID SBAM REQUEST THESE CHANGES?
SBAM believes that non-investment grade securities currently present an
attractive opportunity in emerging markets such as Mexico. In addition, SBAM
believes the fund should be allowed to invest more of its assets in unrated
securities because a significant percentage of foreign securities that are of
non-
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investment grade quality are unrated. Keep in mind, however, that additional
risks accompany these changes, which are described in more detail on pages 4 and
5 of the proxy statement.
WOULD THE MANAGEMENT FEES INCREASE IF SBAM WERE HIRED AS SUBADVISER?
No. The total advisory fee paid by the fund would remain at the current rate
of 0.50% of the fund's average weekly net assets.
WHAT WILL I BE VOTING ON IN REGARD TO HIRING SBAM AS SUBADVISER?
First of all, shareholders are being asked to approve an amendment to the
investment advisory and management agreement between the fund and Piper Capital
authorizing Piper Capital to retain a subadviser or subadvisers to assist in
furnishing investment advice to the fund. In addition, shareholders are being
asked to approve a subadvisory agreement between Piper Capital and SBAM.
WILL I BE VOTING ON ANY OTHER ISSUES?
Yes. Fund shareholders are also being asked to re-elect the members of the
fund's board of directors and ratify the selection of KPMG Peat Marwick LLP as
the independent public accountants for the fund.
WHEN IS MY PROXY DUE? WHERE DO I SEND IT?
We'd like to receive your completed, signed and dated proxy as soon as
possible. A postage-paid envelope is enclosed for mailing your proxy. If you
have misplaced your envelope, please mail your proxy to: Piper Capital
Management Proxy Services, The Americas Income Trust, P.O. Box 731, Deer Park,
New York, 11729-9852. If you haven't returned your ballot as the meeting date
approaches, you may receive a call from Shareholder Communications Corporation
(SCC) reminding you to vote. Piper Capital has hired SCC to assist with the
solicitation of proxies.
WHEN AND WHERE WILL THE SPECIAL SHAREHOLDER MEETING TAKE PLACE?
The shareholder meeting will take place at 10 a.m. on May 9, 1996, on the
third floor of the Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota. Regardless of whether you plan to attend the meeting, you should
return your proxy card in the mail as soon as possible.
PLEASE READ THE FULL TEXT OF THE ATTACHED PROXY STATEMENT FOR FURTHER
INFORMATION.
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[PRELIMINARY COPY]
THE AMERICAS INCOME TRUST INC.
PIPER JAFFRAY TOWER
222 SOUTH NINTH STREET
MINNEAPOLIS, MINNESOTA 55402-3804
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 9, 1996
---------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of The
Americas Income Trust Inc. (the "Fund") will be held at 10:00 a.m., Central
Time, on Thursday, May 9, 1996, on the third floor of the Piper Jaffray Tower,
222 South Ninth Street, Minneapolis, Minnesota. The purposes of the meeting are
as follows:
1. To vote on an amendment to the Investment Advisory and Management
Agreement between the Fund and Piper Capital Management Incorporated
(the "Adviser") authorizing the Adviser to retain a sub-adviser or
sub-advisers to assist the Adviser in furnishing investment advice to
the Fund
2. To vote on a sub-advisory agreement between the Adviser and Salomon
Brothers Asset Management Inc ("SBAM") pursuant to which SBAM would
direct the investment of the Fund's assets and be responsible for the
formulation and implementation of a continuing program for the
management of the Fund's assets and resources.
3. To fix the number of members of the Board of Directors at six and to
elect a Board of Directors of the Fund.
4. To ratify the selection by a majority of the independent members of the
Board of Directors of the Fund of KPMG Peat Marwick LLP as independent
public accountants for the Fund for the fiscal year ending October 31,
1996.
5. To vote on such other business as may properly come before the annual
meeting or any adjournments or postponements thereof.
Shareholders of record on March 14, 1996, are the only persons entitled to
notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE UPCOMING MEETING, PLEASE FILL IN, SIGN, DATE,
AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE. A stamped return envelope is enclosed for your
convenience.
Susan Sharp Miley, SECRETARY
Dated: , 1996
<PAGE>
[PRELIMINARY COPY]
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PROXY STATEMENT
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THE AMERICAS INCOME TRUST INC.
PIPER JAFFRAY TOWER
222 SOUTH NINTH STREET
MINNEAPOLIS, MINNESOTA 55402-3804
ANNUAL MEETING OF SHAREHOLDERS -- MAY 9, 1996
The enclosed proxy is solicited by the Board of Directors of The Americas
Income Trust Inc. (the "Fund") in connection with the annual meeting of
shareholders of the Fund to be held May 9, 1996, and any adjournments or
postponements thereof. The costs of solicitation, including the cost of
preparing and mailing the Notice of Meeting and this Proxy Statement, will be
paid by the Fund, and such mailing will take place on approximately ,
1996. Representatives of Piper Capital Management Incorporated (the "Adviser"),
the investment adviser and manager of the Fund, may, without cost to the Fund,
solicit proxies on behalf of the management of the Fund by means of mail,
telephone, or personal calls. In addition, the Fund has engaged Shareholder
Communications Corporation to assist in the solicitation of proxies, the cost of
which is anticipated to be approximately $ . The address of the Adviser
is that of the Fund as provided above.
A proxy may be revoked before the meeting by giving written notice of
revocation to the Secretary of the Fund, or at the meeting prior to voting.
Unless revoked, properly executed proxies in which choices are not specified by
the shareholders will be voted "for" each item for which no choice is specified,
in accordance with the recommendation of the Fund's Board of Directors. In
instances where choices are specified by the shareholders in the proxy, those
proxies will be voted or the vote will be withheld in accordance with the
shareholder's choice. With regard to the election of directors, votes may be
cast in favor or withheld; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals other than the election of directors and will be counted as present
for purposes of determining whether a quorum of shares is present at the meeting
with respect to the item on which the abstention is noted, but will be counted
as a vote "against" such item. Under the Rules of the New York Stock Exchange,
proposals 1 and 2 are considered "non-discretionary" proposals, which means that
brokers who hold Fund shares in street name for customers are not authorized to
vote on such proposals on behalf of their customers who have not furnished the
broker specific voting instructions. If a broker returns a "non-vote" proxy,
indicating a lack of authority to vote on a proposal, then the shares covered by
such non-vote shall not be counted as present for purposes of calculating the
vote with respect to such proposal. So far as the Board of Directors of the Fund
is aware, no
1
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matters other than those described in this Proxy Statement will be acted upon at
the meeting. Should any other matters properly come before the meeting calling
for a vote of shareholders, it is the intention of the persons named as proxies
in the enclosed proxy to vote upon such matters according to their best
judgment.
Only shareholders of record on March 14, 1996, may vote at the meeting or
any adjournments thereof. As of that date, there were issued and outstanding
common shares, $.01 par value, of the Fund. Common shares represent the
only class of securities of the Fund. Each shareholder of the Fund is entitled
to one vote for each share held. No person, to the knowledge of Fund management,
was the beneficial owner of more than 5% of the voting shares of the Fund as of
March 14, 1996.
THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995,
INCLUDING FINANCIAL STATEMENTS, WAS PREVIOUSLY MAILED TO SHAREHOLDERS. IF YOU
HAVE NOT RECEIVED THIS REPORT OR WOULD LIKE TO RECEIVE ANOTHER COPY, PLEASE
CONTACT THE FUND AT 222 SOUTH NINTH STREET, MINNEAPOLIS, MINNESOTA 55402, OR
CALL 800-866-7778, EXTENSION 6786, AND ONE WILL BE SENT, WITHOUT CHARGE, BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
PROPOSAL ONE
APPROVAL OF AN AMENDMENT TO THE INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT BETWEEN THE FUND AND
PIPER CAPITAL MANAGEMENT INCORPORATED
THE PROPOSED AMENDMENT
The Fund's Board of Directors has approved, and recommends that shareholders
approve, an amendment (the "Amendment") to the Investment Advisory and
Management Agreement dated January 21, 1994 (the "Advisory Agreement") between
the Fund and Piper Capital Management Incorporated (the "Adviser"). The
Amendment authorizes the Adviser, at its option and expense, to retain a
sub-adviser or sub-advisers to assist the Adviser in furnishing investment
advice to the Fund. The Amendment is being proposed as a result of the Adviser's
decision to concentrate its investment management resources on U.S. investment
management. The Amendment provides that the Adviser shall be responsible for
monitoring compliance by any sub-adviser it retains with the investment policies
and restrictions of the Fund and with any other limitations or directions
prescribed by the Fund's Board of Directors. The Amendment further provides that
any appointment of a sub-adviser will in no way limit or diminish the Adviser's
obligations and responsibilities under the Advisory Agreement.
The Amendment does not change the rate of the advisory fee payable by the
Fund. The Adviser would continue to receive compensation at the current rate of
0.50% of the Fund's average weekly net assets. A sub-advisory agreement (the
"Sub-Advisory Agreement") between the Adviser and Salomon Brothers Asset
Management Inc ("SBAM") is also being presented for shareholder approval. See
"Proposal Two -- Approval of a New Sub-Advisory Agreement Between
2
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Piper Capital Management Incorporated and Salomon Brothers Asset Management
Inc." If the proposed Sub-Advisory Agreement is approved by shareholders, the
Adviser will retain 25% of its advisory fee and pay out the remaining 75% to
SBAM.
The Amendment was approved by the Fund's Board of Directors at a meeting
held February 6, 1996, subject to the approval of the shareholders of the Fund.
A discussion of the factors considered by the Fund's Board of Directors in
approving the Amendment and the Sub-Advisory Agreement is set forth below under
"Proposal Two -- Approval of a New Sub-Advisory Agreement Between Piper Capital
Management Incorporated and Salomon Brothers Asset Management Inc."
GENERAL INFORMATION CONCERNING THE ADVISORY AGREEMENT
The Advisory Agreement was approved by the Fund's initial shareholder on
January 19, 1994, and was last approved by the Fund's Board of Directors,
including the disinterested directors, on May 19, 1995. Pursuant to the Advisory
Agreement, the Adviser furnishes the Fund with investment advice and, in
general, supervises the management and investment program of the Fund. The
Adviser furnishes at its own expense all necessary administrative services,
office space, equipment and clerical personnel for servicing the investments of
the Fund and investment advisory facilities and executive and supervisory
personnel for managing the investments of the Fund and effecting the portfolio
transactions of the Fund. In addition, the Adviser is obligated to pay the
salaries and fees of any affiliates of the Adviser serving as officers or
directors of the Fund. Under the Advisory Agreement, the Fund pays the Adviser
an advisory fee calculated and paid monthly at the per annum rate of 0.50% of
the Fund's average weekly net assets. For the fiscal year ended October 31,
1995, the Fund paid $262,984 in advisory fees to the Adviser.
The Advisory Agreement will terminate automatically in the event of its
assignment. In addition, the Advisory Agreement is terminable at any time,
without penalty, by the Board of Directors of the Fund or by a vote of a
majority of the Fund's outstanding voting securities on 60 days' written notice
to the Adviser, and by the Adviser on 60 days' written notice to the Fund. The
Advisory Agreement shall continue in effect only so long as such continuance is
specifically approved at least annually by either the Board of Directors of the
Fund, or by a vote of a majority, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), of the outstanding voting securities of the
Fund, provided that, in either event, such continuance is also approved by a
vote of a majority of the directors who are not parties to such Agreement, or
interested persons of such parties, cast in person at a meeting called for the
purpose of voting on such approval.
VOTE REQUIRED
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE SHAREHOLDERS OF THE
FUND VOTE TO APPROVE THE PROPOSED AMENDMENT TO THE ADVISORY AGREEMENT. Adoption
of the proposal requires the favorable vote of a majority of the outstanding
shares of the Fund, as defined in the 1940 Act, which means the lesser of the
vote
3
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of (a) 67% of the shares of the Fund present at a meeting where more than 50% of
the outstanding shares are present in person or by proxy, or (b) more than 50%
of the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote for the approval of the proposed Amendment.
PROPOSAL TWO
APPROVAL OF A SUB-ADVISORY AGREEMENT
BETWEEN PIPER CAPITAL MANAGEMENT INCORPORATED AND
SALOMON BROTHERS ASSET MANAGEMENT INC
THE PROPOSED SUB-ADVISORY AGREEMENT
Following the Adviser's decision to concentrate its investment management
resources on U.S. investment management, the Adviser presented the Sub-Advisory
Agreement to the Fund's Board of Directors for its approval. The Board has
approved, and recommends that shareholders approve, the Sub-Advisory Agreement.
A copy of the Sub-Advisory Agreement is attached as Exhibit A to this proxy
statement. The following discussion is qualified in its entirety by reference to
the text of the Sub-Advisory Agreement.
Under the terms of the Sub-Advisory Agreement, and subject to the
supervision of the Adviser, SBAM will direct the investment of the Fund's assets
and will be responsible for the formulation and implementation of a continuing
program for the management of the Fund's assets and resources. SBAM will make
all determinations with respect to the investment of the assets of the Fund and
will take all steps as may be necessary to implement the determinations,
including the placement of purchase and sale orders on behalf of the Fund.
The Sub-Advisory Agreement provides that the Adviser shall pay SBAM a
monthly management fee at an annual rate of .375% of the Fund's average weekly
net assets during each month. Such fee is equal to 75% of the advisory fee
received by the Advisor from the Fund under the Advisory Agreement. See
"Proposal One -- Proposal to Amend the Investment Advisory and Management
Agreement Between the Fund and Piper Capital Management Incorporated."
The Sub-Advisory Agreement will terminate automatically in the event of its
assignment. In addition, the Sub-Advisory Agreement is terminable at any time,
without penalty, by the Board of Directors of the Fund or by a vote of a
majority of the Fund's outstanding voting securities on 60 days' written notice
to the Adviser and SBAM, by the Adviser on 60 days' written notice to the Sub-
Adviser, or by the Sub-Adviser on 60 days' written notice to the Adviser. The
Sub-Advisory Agreement shall continue in effect only so long as such continuance
is specifically approved at least annually by either the Board of Directors of
the Fund, or by a vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Fund, provided that, in either event, such
continuance is also approved by a vote of a majority of the directors who are
not parties to such Agreement, or interested persons of such parties, cast in
person at a meeting called for the purpose of voting on such approval.
4
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BOARD DELIBERATIONS
The Sub-Advisory Agreement was approved by the Fund's Board of Directors,
subject to shareholder approval, at a meeting held February 6, 1996. Prior to
approving the Sub-Advisory Agreement, the Board considered a variety of factors,
including (a) the historical performance of the Fund; (b) the nature, quality
and extent of the services proposed to be provided by the Adviser and SBAM
relative to those currently provided by the Adviser alone; (c) the
organizational depth, reputation and experience of the Adviser in managing
mutual funds and of SBAM in investing globally and in particular in Latin
America and South America; (d) the financial condition of SBAM; and (e) the
performance of accounts advised by SBAM that are similar in portfolio
composition to the Fund. The Board also considered the reasonableness of the
proposed fee allocation between the Adviser and SBAM in light of the Adviser's
reduced investment role but continued overall responsibility. In making its
determination, the Board reviewed, among other things, background information
provided by SBAM and a memorandum furnished by the Adviser setting forth the
basis for the Adviser's recommendation and including information regarding SBAM,
and a memorandum from legal counsel to the independent Directors advising them
of their responsibilities in evaluating the Sub-Advisory Agreement and related
proposals. In addition, a representative of SBAM reviewed with the Board SBAM's
investment strategy for the Fund and responded to questions from Board members.
CHANGES IN INVESTMENT POLICIES
In connection with the proposed employment of SBAM as sub-adviser to the
Fund, the Fund's Board of Directors approved two changes in the Fund's non-
fundamental investment policies that will be implemented if the Sub-Advisory
Agreement is approved by shareholders. The first such change will allow the Fund
to invest a greater percentage of its assets in non-investment grade securities
or unrated securities of comparable quality. SBAM requested this change because
of its belief that non-investment grade securities currently present an
attractive opportunity in emerging markets such as Mexico. However, this
increase in permitted investments in non-investment grade securities will
increase the Fund's credit risk, as described in more detail below.
If the Sub-Advisory Agreement is approved, the Fund will be permitted to
invest up to 35% of its total assets in debt securities rated below BBB by
Standard & Poor's Corporation (S&P) or another generally recognized credit
rating organization or, if unrated, determined by the Sub-Adviser (subject to
the supervision of the Adviser) to be of comparable quality. Such 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.
The Fund is currently permitted to invest up to 10% of its total assets in such
securities.
The prices of high-yield securities have been found to be less sensitive to
changes in prevailing interest rates than higher-rated investments, but are
likely to be more sensitive to adverse economic changes or individual corporate
developments. During an economic downturn or substantial period of rising
5
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interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet their projected business goals or to obtain
additional financing. If the issuer of a fixed-income security owned by the Fund
were to default, the Fund might incur additional expenses to seek recovery. The
risk of loss due to default by issuers of high-yield securities is significantly
greater than that associated with higher-rated securities because such
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. In addition, periods of economic uncertainty and
change can be expected to result in an increased volatility of market prices of
high-yield securities and a concomitant volatility in the net asset value of
shares of the Fund.
High-yield securities frequently have call or redemption features that would
permit an issuer to repurchase the security from the Fund. If a call were
exercised by the issuer during a period of declining interest rates, the Fund
likely would have to replace such called security with a lower yielding
security, thus decreasing the net investment income to the Fund and dividends to
shareholders.
The secondary market for high-yield securities is less liquid than the
markets for higher-quality securities and, as such, may have an adverse effect
on the market prices of certain securities. The limited liquidity of the market
may also adversely affect the ability of the Board to arrive at a fair value for
certain high yield securities at certain times and could make it difficult for
the Fund to sell certain securities.
Under the Fund's new investment policy, there will be no lower limit with
respect to rating categories for securities in which the Fund may invest.
Securities rated D by S&P are in the lowest rating class, which indicates that
payments are in default or that a bankruptcy petition has been filed with
respect to the issuer. See Exhibit B to this proxy statement for a description
of S&P's corporate bond ratings.
The Board of Directors also approved a related change in the Fund's non-
fundamental investment policies that will allow the Fund to invest up to 35% of
its total assets in unrated securities. The Fund is currently permitted to
invest up to 20% of its total assets in such securities. SBAM believes that this
change is necessary because a significant percentage of securities that are of
non-investment grade quality are unrated. The Fund will be more reliant on
SBAM's and the Adviser's evaluation of an issuer's credit risk to the extent it
invests in unrated securities. The Fund will not invest more than 35% of its
total assets, collectively, in unrated securities and non-investment grade or
comparable quality securities.
In approving the proposed changes in the Fund's investment policies, the
Board considered a number of factors in addition to those discussed above
including, among others, the potential benefits of the proposed changes relative
to the risks, the experience of SBAM in managing portfolios with significant
investments in non-investment grade securities and securities of comparable
quality, and the performance of those portfolios.
6
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VOTE REQUIRED
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE SHAREHOLDERS OF THE
FUND VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT. Adoption of the
proposal requires the favorable vote of a majority of the outstanding shares of
the Fund, as defined in the 1940 Act, which means the lesser of the vote of (a)
67% of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote for the approval of the proposed Sub-Advisory Agreement.
PROPOSAL THREE
ELECTION OF DIRECTORS
Fund shareholders are being asked to re-elect the members of the Fund's
Board of Directors. The Bylaws of the Fund provide that the shareholders have
the power to fix the number of Directors. The Directors recommend that the size
of the Board of Directors be maintained at six.
It is intended that the enclosed proxy will be voted for the re-election of
the six persons named below as Directors of the Fund unless such authority has
been withheld in the proxy. The term of office of each person elected will be
until the next annual meeting of shareholders or until his or her successor is
duly elected and shall qualify. Pertinent information regarding each nominee for
the past five years is set forth following his or her name below. Each of the
nominees also serves as a Director of each of the other closed-end and open-end
investment companies managed by the Adviser, except that Mr. Bennett does not
serve as a Director of Piper Global Funds Inc. and Hercules Funds Inc. Each
Director has served as a Director of the Fund since the commencement of
operations on January 28, 1994.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME AGE DURING PAST 5 YEARS
- - - - ----------------------- --- -----------------------------------------------------------
<S> <C> <C>
David T. Bennett Of counsel to the law firm of Gray, Plant, Mooty, Mooty &
Bennett, P.A., located in Minneapolis, Minnesota. Mr.
Bennett is chairman of a group of privately held companies
and serves on the board of directors of a number of
non-profit organizations.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME AGE DURING PAST 5 YEARS
- - - - ----------------------- --- -----------------------------------------------------------
<S> <C> <C>
Jaye F. Dyer President of Dyer Management Company, a private management
company, since January 1, 1991; prior thereto, Mr. Dyer
was President and Chief Executive Officer of Dyco
Petroleum Corporation, a Minneapolis based oil and natural
gas development company he founded, from 1971 until March
1, 1989, and Chairman of the Board until December 31,
1990. Mr. Dyer serves on the board of directors of
Northwestern National Life Insurance Company, The
ReliaStar Financial Corp. (the holding company of
Northwestern National Life Insurance Company) and various
privately held and nonprofit corporations.
William H. Ellis* President of Piper Jaffray Companies Inc. since September
1982; Director and Chairman of the Board of the Adviser
since October 1985 and President of the Adviser since
December 1994.
Karol D. Emmerich President of The Paraclete Group, a consultant to nonprofit
organizations, since May 1993; prior thereto, Ms. Emmerich
was Vice President, Treasurer and Chief Accounting Officer
of Dayton Hudson Corporation from 1980 to May 1993. Ms.
Emmerich is an Executive Fellow at the University of St.
Thomas Graduate School of Business and serves on the board
of directors of a number of privately held and nonprofit
corporations.
Luella G. Goldberg Member of the Board of Directors of Northwestern National
Life Insurance Company (since 1976), The ReliaStar
Financial Corp. (since 1989), TCF Financial Corporation
(since 1988), the holding company of TCF Bank Savings fsb,
and Hormel Foods Corp. (since 1993). Ms. Goldberg also
serves as a Trustee of Wellesley College and as a director
of a number of other organizations, including the
University of Minnesota Foundation and the Minnesota
Orchestral Association. Ms. Goldberg was Chairman of the
Board of Trustees of Wellesley College from 1985 to 1993
and acting President from July 1, 1993 to October 1, 1993.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
NAME AGE DURING PAST 5 YEARS
- - - - ----------------------- --- -----------------------------------------------------------
<S> <C> <C>
George Latimer Chief Executive Officer of National Equity Fund, Chicago,
Illinois since November 1995; prior thereto, Director,
Special Actions Office, Office of the Secretary,
Department of Housing and Urban Development since 1993;
and prior thereto, Mr. Latimer had been Dean of Hamline
Law School, Saint Paul, Minnesota, from 1990 to 1993. Mr.
Latimer also serves on the board of directors of Digital
Biometrics, Inc. and Payless Cashways, Inc.
</TABLE>
- - - - ------------------------
* Denotes Directors who are "interested persons" (as defined by the Investment
Company Act of 1940, as amended) of the Fund. Mr. Ellis is deemed an
"interested person" of the Fund because of his positions with the Adviser
and/or its affiliates.
As of March 14, 1996, the officers and Directors of the Fund as a group
beneficially owned less than 1% of the Fund's outstanding shares. None of the
Fund's officers or Directors have family relationships with any other Fund
officers or Directors.
The Board of Directors of the Fund has established an Audit Committee,
currently consisting of Mr. Dyer, Ms. Emmerich and Ms. Goldberg, who serves as
its chairperson. The Audit Committee met twice during the fiscal year ended
October 31, 1995. The Fund does not have nominating or compensation committees.
The functions to be performed by the Audit Committee are to recommend
annually to the Board a firm of independent certified public accountants to
audit the books and records of the Fund for the ensuing year; to monitor that
firm's performance; to review with the firm the scope and results of each audit
and determine the need, if any, to extend audit procedures; to confer with the
firm and representatives of the Fund on matters concerning the Fund's financial
statements and reports including the appropriateness of its accounting practices
and of its financial controls and procedures; to evaluate the independence of
the firm; to review procedures to safeguard portfolio securities; to review the
purchase by the Fund from the firm of non-audit services; to review all fees
paid to the firm; and to facilitate communications between the firm and the
Fund's officers and Directors.
During the fiscal year ended October 31, 1995, there were eight meetings of
the Fund's Board of Directors. All Directors attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings of committees of which they were members that were held
while they were serving on the Board of Directors or on such committee.
No compensation is paid by the Fund to any of its Directors who are officers
or employees of the Adviser or any of its affiliates. The Fund, together with
all closed-end investment companies managed by the Adviser, pays each of the
9
<PAGE>
other Directors an aggregate quarterly retainer of $5,000, which is allocated
among the Fund and such other investment companies on the basis of each
company's net assets. In addition, the Fund pays each such Director a fee for
each in-person meeting of the Board of Directors he or she attends. Such fee is
based on the net asset value of the Fund and ranges from $250 (net assets of
less than $200 million) to $1,500 (net assets of $5 billion or more). Members of
the Audit Committee who are not affiliated with the Adviser receive $1,000 per
meeting attended ($2,000 for the chairperson of such Committee) with such fee
being allocated among all closed-end and open-end investment companies managed
by the Adviser on the basis of relative net asset values. Members of other
committees currently receive no additional compensation. In addition, each
Director who is not affiliated with the Adviser is reimbursed for expenses
incurred in connection with attending meetings.
The following table sets forth the aggregate compensation received by each
Director from the Fund for the fiscal year ended October 31, 1995 as well as the
total compensation received by each Director from the Fund and all other open-
end and closed-end investment companies managed by the Adviser or an affiliate
of the Adviser (the "Fund Complex") during the calendar year ended December 31,
1995. Directors who are officers or employees of the Adviser or any of its
affiliates did not receive any such compensation and are not included in the
table.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED ESTIMATED COMPENSATION
FROM AS PART OF ANNUAL BENEFITS FROM
DIRECTOR THE FUND FUND EXPENSE UPON RETIREMENT FUND COMPLEX*
- - - - ----------------------- ------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
David T. Bennett $ None None $
Jaye F. Dyer $ None None $
Karol D. Emmerich $ None None $
Luella G. Goldberg $ None None $
George Latimer $ None None $
</TABLE>
- - - - ------------------------
* Consists of open-end and closed-end investment companies managed by the
Adviser or an affiliate of the Adviser, including the Fund. Each director
included in the table serves on the board of each such open-end and closed end
investment company, except Mr. Bennett served on the Board of Directors of
open-end and closed-end investment companies managed by the Adviser
during this period.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE IN
FAVOR OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS OF THE FUND. The vote of a
majority of shares of the Fund represented at the meeting, provided at least a
quorum (a majority of the outstanding shares) is represented in person or by
proxy, is sufficient for the election of the above nominees to the Board of
Directors. Unless otherwise instructed, the proxies will vote for the above six
nominees. In the event any of the above nominees are not candidates for election
at the meeting, the proxies will vote for such other persons as the Board of
Directors may designate. Nothing currently indicates that such a situation will
arise.
10
<PAGE>
PROPOSAL FOUR
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or its investment adviser. The 1940 Act
requires that the selection be submitted for ratification or rejection by the
shareholders at their next annual meeting following the selection.
The Directors, including a majority who are not interested persons of the
Adviser or the Fund, have selected KPMG Peat Marwick LLP to be the Fund's
independent public accountants for the fiscal year ending October 31, 1996. KPMG
Peat Marwick LLP has no direct or material indirect financial interest in the
Fund or in the Adviser, other than receipt of fees for services to the Fund.
KPMG Peat Marwick LLP also serves as the independent public accountants for each
of the other investment companies managed by the Adviser. KPMG Peat Marwick LLP
has been the independent public accountants for the Fund since commencement of
operations in January 1994.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
meeting. Such representatives will be given the opportunity to make a statement
to the shareholders if they desire to do so and are expected to be available to
respond to any questions that may be raised at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE IN
FAVOR OF THE RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FUND. The vote of a majority of the
shares of the Fund represented at the meeting, provided at least a quorum (a
majority of the outstanding shares) is represented in person or by proxy, is
sufficient for the ratification of the selection of the independent public
accountants. Unless otherwise instructed, the proxies will vote for the
ratification of the selection of KPMG Peat Marwick LLP as the Fund's independent
public accountants.
SUPPLEMENTAL INFORMATION ABOUT THE ADVISER
The Adviser is a wholly owned subsidiary of Piper Jaffray Companies Inc., a
publicly held corporation which is engaged through its subsidiaries in various
aspects of the financial services industry. The address of the Fund, the Adviser
and Piper Jaffray Companies Inc. is Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota 55402-3804. No officer or Director of the Fund owns any
voting securities of the Adviser or more than 1% of the voting securities of
Piper Jaffray Companies Inc. No officers or Directors of the Fund have family
relationships with other officers or Directors of the Fund.
11
<PAGE>
The names and principal occupations of the principal executive officer and
each director of the Adviser are set forth below. The address of all individuals
is that of the Fund.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- - - - ----------------------- -----------------------------------------------------------------
<S> <C>
William H. Ellis Director, Chairman of the Board and President of Piper Capital
Management Incorporated (the "Adviser"); President of Piper
Jaffray Companies Inc.
David E. Rosedahl Director of the Adviser; Managing Director, Secretary and General
Counsel for Piper Jaffray Inc.; Managing Director and General
Counsel for Piper Jaffray Companies Inc.
Charles N. Hayssen Director of the Adviser; Chief Information Officer of Piper
Jaffray Companies Inc.
Bruce C. Huber Director of the Adviser; Managing Director of Piper Jaffray Inc.
Momchilo Vucenich Director of the Adviser; Managing director of regional sales of
Piper Jaffray Companies Inc.
</TABLE>
The Adviser currently serves as investment adviser for the following
investment companies that have an investment objective similar to that of the
Fund:
<TABLE>
<CAPTION>
NET ASSETS
OF FUND AT
FUND RATE OF COMPENSATION JANUARY 31, 1996
- - - - -------------------------------------- -------------------------------- ----------------
<S> <C> <C>
American Government Income Fund Inc. * see below $ 126,544,103
("AGF")
American Government Income Portfolio, * see below $ 170,391,789
Inc. ("AAF")
American Opportunity Income Fund Inc. ** see below $ 151,523,844
("OIF")
American Strategic Income Portfolio ** see below $ 68,120,566
Inc. ("ASP")
American Strategic Income Portfolio ** see below $ 263,018,043
Inc. -- II ("BSP")
American Strategic Income Portfolio ** see below $ 336,545,645
Inc. -- III ("CSP")
Highlander Income Fund Inc. Annual rate of .60% of average $ 28,173,334
weekly net assets
American Select Portfolio Inc. Annual rate of .50% of average $ 170,846,586
weekly net assets
Institutional Government Adjustable Annual rate of .30% of average $ 8,585,850
Portfolio (series of Piper daily net assets
Institutional Funds Inc.)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
OF FUND AT
FUND RATE OF COMPENSATION JANUARY 31, 1996
- - - - -------------------------------------- -------------------------------- ----------------
<S> <C> <C>
Government Income Fund (series of Annual rate of .50% on first $ 100,479,827
Piper Funds Inc.) $250,000,000; .45% on next
$250,000,000; and .40% on
average daily net assets over
$500,000,000
Institutional Government Income Annual rate of .30% on first $ 275,618,941
Portfolio (series of Piper Funds $100,000,000; .25% on next
Inc.) $150,000,000; and .20% on
average daily net assets over
$250,000,000
Hercules World Bond Fund (series of Annual rate of 1.00% of average $ 7,501,534
Hercules Funds Inc.) daily net assets
</TABLE>
- - - - ------------------------
* With respect to AGF and AAF, the Adviser receives monthly advisory fees in an
amount equal to the sum of .025% of the average weekly net assets of each
such fund during the month (approximately .30 of 1% on an annual basis) and
5.25% of the daily gross income (i.e., income other than gains from the sale
of securities or gains received from options and futures contracts less
interest on money borrowed by the fund) accrued by the fund during the month,
but such monthly management fee may not exceed in the aggregate 1/12 of .60%
of such fund's average weekly net assets during the month (approximately .60%
on an annual basis).
** The Adviser receives a monthly management fee from each of OIF, ASP, BSP and
CSP equal to the sum of .01667% of the average weekly net assets of such fund
during the month (approximately .20 of 1% on an annual basis) and 4.5% of the
daily gross income (i.e., income other than gains from the sale of securities
or gains received from options and futures contracts less interest on money
borrowed by such fund) accrued by such fund during the month, but such
monthly management fee shall not exceed in the aggregate 1/12 of .725% of the
fund's average weekly net assets during the month (approximately .725% on an
annual basis).
The Adviser has not waived, reduced or otherwise agreed to reduce its
compensation under any contract applicable to the above Funds.
In addition to providing investment advisory services to the Fund, the
Adviser provides administrative services to the Fund pursuant to an
Administration Agreement between the Adviser and the Fund (the "Administration
Agreement"). Under the Administration Agreement, the Adviser is required to
manage the Fund's business affairs, supervise its overall day to day operations
(other than providing investment advice) and provide other administrative
services. Under the Administration Agreement, the Fund pays the Adviser an
administration fee, calculated and paid monthly, at the per annum rate of 0.20%
13
<PAGE>
of the Fund's average weekly net assets. For the fiscal year ended October 31,
1995, the Fund paid $105,193 in administration fees to the Adviser. The Adviser
will continue to serve as the Fund's administrator whether or not the Amendment
to the Advisory Agreement discussed above is approved.
As investment adviser to the Fund, the Adviser also receives research
services from broker-dealers that execute portfolio transactions for the Fund.
In selecting brokers to execute portfolio transactions for the Fund, the Adviser
seeks to obtain the best price and execution of orders. When consistent with
these criteria, business may be placed with broker-dealers who furnish
investment research services to the Adviser. Such research services are used by
the Adviser in carrying out its investment management responsibilities with
respect to its client accounts generally, but not necessarily in connection with
the Fund.
For the fiscal year ended October 31, 1995, the Fund paid no brokerage
commissions to affiliated brokers.
SUPPLEMENTAL INFORMATION ABOUT THE SUB-ADVISER
SBAM is a registered investment adviser that was incorporated in 1987. SBAM
is a wholly owned subsidiary of Salomon Brothers Holding Company Inc., which is
in turn wholly owned by Salomon Inc. SBAM in New York, together with its
affiliates in London, Frankfurt, Tokyo and Hong Kong, provides a full range of
fixed income and equity investment management services for individual and
institutional clients throughout the world, and serves as investment adviser to
various investment companies. As of December 31, 1995, SBAM and its affiliates
had approximately $13.3 billion of assets under management. SBAM provides
advisory services to a variety of types of investment accounts including both
proprietary and nonproprietary mutual funds, offshore funds, institutional
accounts, wrap fee products and private clients.
Berkshire Hathaway Inc., a Delaware corporation that may be deemed to be
controlled by Warren E. Buffet, owned beneficially as of November 30, 1995,
6,633,600 shares of Capital Stock and 560,000 shares of Preferred Stock, Series
A, of Salomon Inc., constituting approximately 17.6% of the votes entitled to be
cast by the holders of the outstanding voting securities of Salomon Inc.
14
<PAGE>
The principal address of SBAM and each of its directors and principal
executive officer is 7 World Trade Center, 38th Floor, New York, New York 10048.
The names and principal occupations of the principal executive officer and each
director of SBAM are set forth below.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- - - - ----------------------------- -----------------------------------------------------------
<S> <C>
Thomas Wise Brock Chairman of the Board and Chief Executive Officer of SBAM.
Michael Stephen Hyland President and Director of SBAM.
Rodney B. Berens Director of SBAM; Managing Director of Salomon Brothers
Inc.
James Joseph Lee Director of SBAM; marketing director for SBAM.
Vilas Gadkari Director of SBAM; Managing Director of Salomon Brothers
Asset Management Ltd.
</TABLE>
SBAM currently serves as investment adviser for the following investment
companies that have an investment objective similar to that of the Fund:
<TABLE>
<CAPTION>
FEES WAIVED NET ASSETS
RATE OF SBAM'S PURSUANT TO OF FUND AT
FUND COMPENSATION ADVISORY AGREEMENT JANUARY 31, 1996
- - - - ---------------------- ------------------------ ---------------------- ----------------
<S> <C> <C> <C>
Salomon Brothers High Annual rate of .75% of .24% $ 32,670,845
Yield Bond Fund Inc. average daily net (through 12/31/95)
assets
Salomon Brothers High Annual rate of .70% of None $ 66,450,261
Income Fund Inc. average weekly net
assets
Salomon Brothers Annual rate of .90% of None $ 172,668,055
Worldwide Income Fund average weekly net
Inc. assets
Salomon Brothers Annual rate of .65% of None $ 193,362,012
Global Partners average weekly net
Income Fund Inc. assets
</TABLE>
EXECUTIVE FUND OFFICERS
Certain information about the executive officers of the Fund is set forth
below. Unless otherwise indicated, all positions have been held more than five
years.
<TABLE>
<CAPTION>
POSITION AND TERM OF OFFICE WITH THE FUND AND
NAME AGE BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
- - - - ------------------------- --- ---------------------------------------------------------
<S> <C> <C>
William H. Ellis President of the Fund since December 1994; see "Proposal
Three -- Election of Directors" for additional
biographical information.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
POSITION AND TERM OF OFFICE WITH THE FUND AND
NAME AGE BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
- - - - ------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Robert H. Nelson Senior Vice President and Treasurer of the Fund since
1995; previously, Vice President of the Fund since
inception; Senior Vice President of the Adviser since
November 1993; previously, Vice President of the Adviser
from 1991 to 1993 and Assistant Vice President from 1989
to 1991.
Thomas S. McGlinch Vice President of the Fund since inception; Senior Vice
President of the Adviser since November 1995;
previously, Vice President of the Adviser since November
1992, Assistant Vice President of the Adviser from
January to November 1992 and a specialty products trader
at FBS Investment Services from 1990 to 1992.
J. Bradley Stone Vice President of the Fund since 1995; Senior Vice
President of the Adviser since November 1995;
previously, Vice President of the Adviser since 1991.
Susan S. Miley Secretary of the Fund since 1996; Senior Vice President
and General Counsel of the Adviser since 1995;
previously, counsel for American Express Financial
Advisors, Minneapolis, Minnesota from 1994 to 1995 and
attorney at Simpson Thacher & Bartlett, New York, New
York from 1984 to 1992.
</TABLE>
SUPPLEMENTAL INFORMATION AND SHAREHOLDER PROPOSALS
Based on Fund records and other information, the Fund believes that all SEC
filing requirements applicable to its Directors, officers, Adviser and companies
affiliated with the Adviser, pursuant to Section 16(a) of the Securities
Exchange Act of 1934, with respect to the Fund's fiscal year ended October 31,
1995, were complied with except that each failed to timely
file a Form 3. There were no transactions reportable that were not reported on a
timely basis and the required Forms were all subsequently filed.
Any proposal by a shareholder to be considered for presentation at the next
Annual Meeting must be received at the Fund's offices, Piper Jaffray Tower, 222
South Ninth Street, Minneapolis, Minnesota 55402, no later than ,
1997.
Susan Sharp Miley, SECRETARY
Dated: , 1996
16
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
Agreement, dated as of , 1996, by and between Piper Capital
Management Incorporated, a Delaware corporation (the "Adviser"), and Salomon
Brothers Asset Management Inc, a Delaware corporation (the "Sub-Adviser").
WHEREAS, the Adviser is the investment adviser to The Americas Income Trust
Inc. (the "Company"), a closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to assist the Adviser
in furnishing an investment program to the Company.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Adviser and the Sub-Adviser agree as follows:
1. The Adviser hereby employs the Sub-Adviser to serve as sub-adviser with
respect to the assets of the Company, and to perform the services hereinafter
set forth. The Sub-Adviser hereby accepts such employment and agrees, for the
compensation herein provided, to assume all obligations herein set forth and to
bear all expenses of its performance of such obligations (but no other
expenses). The Sub-Adviser shall not be required to pay expenses of the Company,
including, but not limited to (a) brokerage and commission expenses; (b)
federal, state, local and foreign taxes, including issue and transfer taxes
incurred by or levied on the Company; (c) interest charges on borrowings; (d)
the cost of other personnel providing services to the Company; (e) fees and
expenses of registering and maintaining registration of the Company's shares
under appropriate federal securities laws and of registering or otherwise
qualifying and maintaining registration or qualification of the shares of the
Company under applicable state securities laws; (f) fees and expenses of listing
and maintaining the listing of the Company's shares on the principal exchanges
where listed or, if the Company's shares are not so listed, fees and expenses of
listing and maintaining the quotation of the Company's shares on the principal
over-the-counter market where traded; (g) expenses of printing and distributing
reports to shareholders; (h) costs of shareholders' meetings and proxy
solicitation; (i) charges and expenses of the Company's administrator, custodian
and registrar, transfer agent and dividend disbursing agent; (j) compensation of
the Company's officers, directors and employees that are not Affiliated Persons
or Interested Persons (as defined in Section 2(a)(19) of the 1940 Act and the
rules, regulations and releases relating thereto) of the Adviser or the
Sub-Adviser; (k) legal and auditing expenses; (l) costs of certificates
representing common shares of the Company; (m) costs of stationery and supplies;
(n) insurance expenses; (o) association membership dues; (p) travel expenses of
officers and employees of the Sub-Adviser to the extent such expenses relate to
the attendance of such persons at meetings at the request of the Board of
Directors of the Company; (q) travel expenses for attendance at Board of
Directors meetings by members of the Board of Directors of the Company, if any,
who are also "interested persons" or "affiliated persons" of the Sub-Adviser;
and (r) all other charges and costs of the
<PAGE>
Company's operation unless otherwise explicitly provided herein. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or on behalf of the Company in any way or otherwise
be deemed an agent of the Company.
2. The Sub-Adviser shall direct the investment of the Company's assets in
accordance with the 1940 Act, the provisions of the Internal Revenue Code of
1986, as amended, relating to regulated investment companies, applicable laws,
and the investment objective, policies and restrictions set forth in the
Company's Prospectus and Statement of Additional Information filed with the
Securities and Exchange Commission pursuant to Rule 497 under the Securities Act
of 1933, subject to the supervision of the Company, its officers and directors,
and the Adviser and in accordance with the investment objectives, policies and
restrictions from time to time prescribed by the Board of Directors of the
Company and communicated by the Adviser to the Sub-Adviser and subject to such
further limitations as the Adviser may from time to time impose by written
notice to the Sub-Adviser.
3. The Sub-Adviser shall formulate and implement a continuing program for
the management of the Company's assets. The Sub-Adviser shall amend and update
such program from time to time as financial and other economic conditions
warrant. The Sub-Adviser shall make all determinations with respect to the
investment of the assets of the Company and shall take such steps as may be
necessary to implement the same, including the placement of purchase and sale
orders on behalf of the Company. The Sub-Adviser shall advise the Adviser and,
if requested by the Adviser, advise the Company's Board of Directors (which
shall make all non-investment decisions with respect to the securities in which
the assets of the Company may be invested), of the manner in which voting
rights, rights to consent to corporate action, and any other non-investment
decisions pertaining to the Company's portfolio securities should be exercised.
4. The Sub-Adviser shall furnish such reports to the Adviser as the Adviser
may reasonably request for the Adviser's use in discharging its obligations
under the Investment Advisory and Management Agreement between the Company and
the Adviser (the "Advisory Agreement"), which reports may be distributed by the
Adviser to the Company's Board of Directors at periodic meetings of such Board
and at such other times as may be reasonably requested by the Company's Board of
Directors. Copies of all such reports shall be furnished to the Adviser for
examination and review within a reasonable time prior to the presentation of
such reports to Company's Board of Directors.
5. The Sub-Adviser shall select the brokers and dealers that will execute
the purchases and sales of portfolio instruments for the Company and markets on
or in which such transactions will be executed and shall place, in the name of
the Company or its nominee, all such orders.
(a) When placing such orders, the Sub-Adviser is authorized to employ such
dealers and brokers as may, in the judgment of the Sub-Adviser (taking into
2
<PAGE>
account such factors as price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities),
implement the policy of the Fund to obtain the best price and execution.
Consistent with this policy, the Sub-Adviser is authorized to direct the
execution of the Fund's portfolio transactions to dealers and brokers furnishing
statistical information or research deemed by the Sub-Adviser to be useful or
valuable to the performance of its sub-advisory functions for the Fund.
Information so received will be in addition to and not in lieu of the services
required to be performed by the Sub-Adviser.
It is understood that certain other clients of the Sub-Adviser may have
investment objectives and policies similar to those of the Company, and that the
Sub-Adviser may, from time to time, make recommendations that result in the
purchase or sale of a particular security by its other clients simultaneously
with the Company. If transactions on behalf of more than one client during the
same period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. In
such event, the Sub-Adviser shall allocate advisory recommendations and the
placing of orders in a manner that is deemed equitable by the Sub-Adviser to the
accounts involved, including the Company. When two or more of the clients of the
Sub-Adviser (including the Company) are purchasing or selling the same security
on a given day from the same broker or dealer, such transactions may be averaged
as to price.
(b) The Sub-Adviser agrees that, except to the extent permitted under Rule
17a-7 under the 1940 Act, or under any no-action letter or exemptive order
issued to the Company by the Securities and Exchange Commission, it will not
purchase or sell securities for the Company in any transaction in which it, the
Adviser or any "affiliated person" of the Company, the Adviser or Sub-Adviser or
any affiliated person of such "affiliated person" is acting as principal. The
Sub-Adviser agrees that any transactions effected under Rule 17a-7 shall comply
with the then-effective procedures adopted under such rule by the Company's
Board of Directors.
(c) The Sub-Adviser agrees that it will not execute any portfolio
transactions for the Company with a broker or dealer or futures commission
merchant which is an "affiliated person" of the Company, the Adviser or the
Sub-Adviser or an "affiliated person" of such an "affiliated person" without the
prior written consent of the Adviser. Notwithstanding the foregoing,
transactions may be effected through Piper Jaffray Inc. if commissions, fees or
other remuneration received are reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers or dealers or other futures
commission merchants in connection with comparable transactions involving
similar securities or similar futures contracts or options thereon being
purchased or sold on an exchange or contract market during a comparable period
of time. In effecting such transactions, the Sub-Adviser-shall comply with
Section 17(e)(1) of the 1940 Act and the then-effective procedures adopted
pursuant to Rule 17e-1 thereunder by the Company's Board of Directors.
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(d) The Sub-Adviser shall promptly communicate to the Adviser and, if
requested by the Adviser, to the Company's Board of Directors, such information
relating to portfolio transactions as the Adviser may reasonably request. The
parties understand that the Company shall bear all brokerage commissions in
connection with the purchases and sales of portfolio securities for the Company
and all ordinary and reasonable transaction costs in connection with purchases
of such securities in private placements and subsequent sales thereof.
6. The Sub-Adviser may (at its cost except as contemplated by paragraph 5
of this Agreement) employ, retain or otherwise avail itself of the services and
facilities of persons and entities within its own organization or any other
organization for the purpose of providing the Sub-Adviser, the Adviser or the
Company with such information, advice or assistance, including but not limited
to advice regarding economic factors and trends and advice as to transactions in
specific securities, as the Sub-Adviser may deem necessary, appropriate or
convenient for the discharge of its obligations hereunder or otherwise helpful
to the Adviser or the Company, or in the discharge of the Sub-Adviser's overall
responsibilities with respect to the other accounts for which it serves as
investment manager or investment adviser.
7. The Sub-Adviser shall cooperate with and make available to the Adviser,
the Company and any agents engaged by the Company, the Sub-Adviser's expertise
relating to matters affecting the Company.
8. For the services to be rendered and the facilities to be furnished under
this Agreement, the Adviser shall pay to the Sub-Adviser a monthly management
fee at the annual rate of .375% of the Company's average weekly net assets
during each month, as calculated below.
For purposes of the calculation of such fee, average weekly net assets shall
be determined on the basis of the Company's average net assets for each weekly
period (ending on Friday) ending during the month. The net assets for each
weekly period are determined by averaging the net assets on the Friday of such
weekly period with the net assets on the Friday of the immediately preceding
weekly period. When a Friday is not a business day for the Company, then the
calculation will be based on the Company's net assets on the business day
immediately preceding such Friday. Such fee shall be payable on the fifth day of
each calendar month for services performed hereunder during the preceding month.
If this Agreement becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for that part of
the month during which this Agreement is in effect shall be prorated in a manner
consistent with the calculation of fees as set forth above.
Anything to the contrary herein notwithstanding, the Sub-Adviser may at any
time and from time to time waive any part or all of any fee payable to it
pursuant to this Agreement.
9. The Sub-Adviser represents, warrants and agrees that:
(a) The Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") and is currently in
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compliance and shall at all times continue to comply with the requirements
imposed upon it by the Advisers Act and other applicable laws and
regulations. The Sub-Adviser agrees to (i) supply the Adviser with such
documents as the Adviser may reasonably request to document compliance with
such laws and regulations and (ii) immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving
as an investment adviser of a registered investment company pursuant to any
applicable law or regulation.
(b) The Sub-Adviser will maintain, keep current and preserve on behalf
of the Company in the manner provided by the 1940 Act all records required
by the 1940 Act with respect to the Sub-Adviser's activities hereunder. The
Sub-Adviser agrees that such records are the property of the Company, and
will be surrendered to the Company promptly upon request.
(c) The Sub-Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Adviser or the Company's
administrator may from time to time require to document compliance with the
1940 Act, the Advisers Act, the Internal Revenue Code, applicable state
securities laws and other applicable laws and regulations or regulatory and
taxing authorities in countries other than the United States.
(d) After filing with the Securities and Exchange Commission any
amendment to its Form ADV, the Sub-Adviser will promptly furnish a copy of
such amendment to the Adviser.
(e) The Sub-Adviser will immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving
as an investment adviser of an investment company pursuant to Section 9 of
the 1940 Act or any other applicable statute or regulation.
10. The Adviser represents, warrants and agrees that:
(a) It has been duly authorized by the Board of Directors of the Company
to delegate to the Sub-Adviser the provision of the services contemplated
hereby.
(b) The Adviser and the Company are currently in compliance and shall at
all times continue to comply with the requirements imposed upon the Adviser
and the Company by applicable law and regulations.
11. The Sub-Adviser will not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company or its shareholders in connection
with the performance of its duties under this Agreement, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement.
12. This Agreement shall become effective as of the date first set forth
above. Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect for a period of two years from the date of its execution, and
thereafter shall continue in effect only so long as such continuance is
specifically
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approved at least annually (a) by the Board of Directors of the Company or by
the vote of a majority of the outstanding voting securities of the Company, and
(b) by the vote of a majority of the directors who are not parties to this
Agreement or Interested Persons of any such parties, cast in person at a meeting
called for the purpose of voting on such approval. It shall be the duty of the
Directors of the Company to request and evaluate, and the duty of the Adviser
and Sub-Adviser to furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement and any renewal thereof.
This Agreement may be terminated at any time without the payment of any
penalty (a) by the vote of the Board of Directors of the Company or by the vote
of the holders of a majority of the outstanding voting securities of the
Company, upon 60 days' written notice to the Adviser and the Sub-Adviser, or (b)
by the Adviser, upon 60 days' written notice to the Sub-Adviser; or (c) by the
Sub-Adviser, upon 60 days' written notice to the Adviser. This Agreement shall
automatically terminate in the event of its assignment as defined in the 1940
Act and the rules thereunder. This Agreement shall automatically terminate upon
completion of the dissolution, liquidation or winding up of the Company.
Wherever referred to in this Agreement, the vote or approval of the holders
of a majority of the outstanding voting securities or shares of the Company
shall mean the vote of 67% or more of such shares if the holders of more than
50% of such shares are present in person or by proxy or the vote of more than
50% of such shares, whichever is less.
13. No amendment to or modification of this Agreement shall be effective
unless and until approved by the vote of a majority of the outstanding shares of
the Company.
14. This Agreement shall be binding upon, and inure to the benefit of, the
Adviser and the Sub-Adviser, and their respective successors.
15. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
16. Nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or any affiliate of the Sub-Adviser, or any employee of the
Sub-Adviser, to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
17. To the extent that state law is not preempted by the provisions of any
law of the United States heretofore or hereafter enacted, as the same may be
amended from time to time, this Agreement shall be administered, construed and
enforced according to the laws of the State of Minnesota.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers thereunto duly authorized in multiple counterparts,
each of which shall be an original but all of which shall constitute one of the
same instrument.
PIPER CAPITAL MANAGEMENT
INCORPORATED
By _________________________________________
Name:
Title:
SALOMON BROTHERS ASSET
MANAGEMENT INC
By _________________________________________
Name:
Title:
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EXHIBIT B
STANDARD & POOR'S CORPORATION CORPORATE BOND RATINGS
AAA: Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus to show relative standing within the major rating
categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
<PAGE>
THE AMERICAS INCOME TRUST INC.
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints William H. Ellis, Brian L. Patterson and Susan S.
Miley, and each of them, with power to act without the other and with the
right of substitution in each, the proxies of the undersigned to vote all
shares of The Americas Income Trust Inc. (the "Fund"), held by the
undersigned at the annual meeting of shareholders of the Fund to be held on
May 9, 1996, and at any adjournments thereof, with all the powers the
undersigned would possess if present in person. All previous proxies given
with respect to the meeting are revoked.
THE PROXIES ARE INSTRUCTED:
1. To vote: FOR_____ AGAINST_____ ABSTAIN_______ approval of an amendment
to the Investment Advisory and Management Agreement between the Fund and
Piper Capital Management Incorporated (the "Adviser") authorizing the Adviser
to retain a sub-adviser or sub-advisers to assist the Adviser in furnishing
investment advice to the Fund.
2. To vote: FOR______ AGAINST______ ABSTAIN______ approval of a
sub-advisory agreement between the Adviser and Salomon Brothers Asset
Management Inc. ("SBAM") pursuant to which SBAM would direct the investment
of the Fund's assets and be responsible for the formulation and
implementation of a continuing program for the management of the Fund's
assets and resources.
3. To vote:
______FOR all nominees listed below (except as marked to the contrary below)
______WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: David T. Bennett, Jaye F. Dyer, William H. Ellis, Karol D.
Emmerich, Luella G. Goldberg and George Latimer. (Instruction: To withhold
authority to vote for any individual nominee, write that nominee's name on
the line provided below.)
- - - - -------------------------------------------------------------------------------
4. To vote: FOR_______ AGAINST_______ ABSTAIN______ ratification of the
selection of KPMG Peat Marwick LLP as independent public accountants for the
Fund.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments
or postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR"
ALL ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE
BEST INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT
IS ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN
THE ADDRESSED ENVELOPE-NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE
FUND FURTHER SOLICITATION EXPENSE.
Dated:_________________________, 1996
_____________________________________
_____________________________________
IMPORTANT: Please date and sign this proxy.
If the stock is held jointly, signature should
include both names. Executors, administrators,
trustees, guardians, and others signing in a
representative capacity should give their full
title as such.
