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1997 Annual Report
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[LOGO]
THE AMERICAS
INCOME TRUST
XUS
The Americas Income Trust - 1997 Annual Report
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CONTENTS
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Average Annualized Total Returns . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio Managers' Letter . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . . 8
Investments in Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . .23
Federal Income Tax Information . . . . . . . . . . . . . . . . . . . . . . . .24
Shareholder Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Glossary *** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
*** This report includes a glossary to help you understand financial terms used
in the portfolio manager's letter. When you see this symbol, it indicates a word
that is defined in the glossary.
[LOGO]
THE AMERICAS INCOME TRUST
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PRIMARY INVESTMENTS
The fund invests at least 65% of total assets in debt securities of issuers
located in the United States, Canada and Mexico. It may invest up to 35% in debt
securities of issuers in other areas of the world. The fund may invest up to 35%
of its assets in non-investment grade securities or unrated securities of
comparable quality. Non-investment grade securities, commonly known as
"high-yield" or "junk" bonds, are subject to higher risks and greater market
fluctuations than lower yielding, higher rated securities. 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.
International investing involves risks not typically associated with U.S.
investing, including currency fluctuations, political instability and different
accounting standards. Risks are particularly significant when investing in
emerging markets.
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>
AVERAGE ANNUALIZED TOTAL RETURNS
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BASED ON NET ASSET VALUE FOR THE PERIOD ENDED OCTOBER 31, 1997
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[CHART]
SINCE
ONE THREE INCEPTION
YEAR YEAR 1/28/94
THE AMERICAS INCOME TRUST 8.63 6.21 9.6
Lipper World Income Funds 3.84 11.62 12.49
Average: Developed Nations
Lehman Brothers Aggregate Bond Index (60%) -3.19 6.17 8.1
Lehman Brothers Emerging Americas Index (30%)
Salomon Brothers Canada Only Index (10%)
PERFORMANCE
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The Americas Income Trust's total returns are based on the change in its net
asset value (NAV), assume all distributions were reinvested and do not reflect
sales charges. NAV-based performance is used to measure investment management
results.
Average annualized total returns based on the change in market price for the
one-year, three-year and since inception periods ended October 31, 1997, were
21.02%, 3.94%, and -6.16%, respectively. These returns assume reinvestment of
all distributions and reflect sales charges on those distributions described in
the fund's dividend reinvestment plan, but not on initial purchases.
PLEASE REMEMBER, YOU COULD LOSE MONEY WITH THIS INVESTMENT. NEITHER SAFETY OF
PRINCIPAL NOR STABILITY OF INCOME IS GUARANTEED. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. The investment return and principal value of an
investment will fluctuate so that fund shares, when sold, may be worth more or
less than their original cost. Closed-end funds, such as this fund, often trade
at discounts to net asset value. Therefore, you may be unable to realize the
full net asset value of your shares when you sell.
In May 1996, Salomon Brothers Asset Management Inc assumed management of the
fund.
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1997 Annual Report 1 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: Developed Nations is a universe of funds
that represents the average total return of 14 developed nation closed-end
funds. Funds in the average invest in non-U.S. dollar and U.S. dollar debt
instruments with unspecified maturities or other income-producing securities as
characterized by Lipper Analytical Services.
The 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
Lehman Brothers Emerging Americas Index is an unmanaged index that includes all
U.S. dollar-denominated securities from issuers in Latin America. 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 one-year returns of 8.89%, 11.80% and 5.37%; three-year
returns of 10.06%, 16.66% and 12.51%; and since inception returns of 6.60%,
10.66% and 7.15%, respectively.
The benchmark returns assume reinvested distributions and do not include sales
charges. Indexes in the blended benchmark do not reflect expenses or transaction
costs. The since inception returns are calculated from the month end following
the fund's inception through October 31, 1997.
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1997 Annual Report 2 The Americas Income Trust
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PORTFOLIO MANAGER'S LETTER
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DECEMBER 12, 1997
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[PHOTO]
PETER WILBY, CFA, CPA, has primary responsibility for the management of The
Americas Income Trust. He is a managing director at Salomon Brothers Asset
Management Inc and has 14 years of financial experience.
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DEAR SHAREHOLDERS:
FOR THE ONE-YEAR PERIOD ENDED OCTOBER 31, 1997, THE FUND ACHIEVED A NET ASSET
VALUE (NAV) TOTAL RETURN OF 8.63%* WITH ALL DIVIDEND AND CAPITAL GAINS
REINVESTED BUT NOT INCLUDING THE FUND'S SALES CHARGE. During the same period,
the fund's blended benchmark*** returned 9.60%, while the Lipper World Income
Funds Average: Developed Nations gained 6.21%. The blended benchmark** index
consists of the Lehman Brothers Aggregate Bond Index (60%), the Lehman Brothers
Emerging Americas Index (30%) and the Salomon Brothers Canada Only Index (10%).
The funds one-year total return based on market price was 21.02%.
* All returns assume reinvestment of distributions and do not reflect sales
charges, except the fund's total return based on market price, which does
reflect sales charges on those distributions described in the fund's dividend
reinvestment plan, but not on initial purchases. Past performance does not
guarantee future results. The investment return and principal value of an
investment will fluctuate so that fund shares, when sold, may be worth more or
less than their original cost.
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PORTFOLIO COMPOSITION BY COUNTRY
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As a percentage of total assets on October 31, 1997
[CHART]
EMERGING MARKETS
Argentina 3%
Brazil 2%
Bulgaria 1%
Ecuador 2%
Mexico 16%
Panama 4%
Peru 4%
Poland 2%
Russia 1%
Venezuela 1%
Other Assets 9%
DEVELOPED MARKETS
Canada 16%
United States 40%
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1997 Annual Report 3 The Americas Income Trust
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PORTFOLIO MANAGER'S LETTER (continued)
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ALTHOUGH THE FUND PERFORMED BETTER THAN ITS LIPPER PEER GROUP DURING THE YEAR,
IT UNDERPERFORMED ITS BLENDED INDEX. We attribute this underperformance to our
overweighted*** position in emerging market debt.*** While the fund held no
Asian bonds, spill-over from the difficulties in that region nonetheless
impacted prices for all emerging market securities, including those in Eastern
Europe and Latin America. Such widespread sell-offs,*** while not necessarily
justified on purely fundamental grounds, are common among high-risk asset
classes such as emerging market bonds. While our overweighted position in
emerging markets undermined relative performance during the October decline, it
also positioned the fund to benefit from a rebound in emerging market prices.
During November 1997, the fund gained 3.64% on a net asset value basis, compared
to 1.45% for the blended index.*
THE DECLINE IN EMERGING MARKET BOND PRICES CAUSED A VIOLENT WIDENING OF CREDIT
SPREADS. Prior to the Asian crisis, yield differences between U.S. Treasury
bonds and emerging market debt of similar maturities had contracted to just
3.3%. Amid the chaos in Asian markets, however, credit spreads expanded to over
8.0% before shrinking moderately as the reporting period ended. The fund
shortened its credit spread duration*** prior to the Asian crisis, thus
cushioning the impact of the decline in emerging market bond prices.
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PORTFOLIO COMPOSITION BY CURRENCY
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As a percentage of total assets on October 31, 1997
[CHART]
United States* 71%
Canada 14%
Mexico 12%
Argentina 3%
*Includes 9% other assets, denominated in U.S. dollars.
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1997 Annual Report 4 The Americas Income Trust
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PORTFOLIO MANAGER'S LETTER (continued)
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AS QUALITY SPREADS TIGHTENED, THE FUND REDUCED ITS HOLDINGS OF NON-INVESTMENT
GRADE*** DEBT. At the end of the previous fiscal year, the fund held 31% of
total assets in non-investment grade and unrated securities. That amount was
subsequently lowered to 26% as of April 30, 1997, and to 21% by the end of the
reporting period.
THE FUND INCREASED ITS HOLDINGS IN NAFTA COUNTRIES FROM 69% IN APRIL TO 72% AS
OF THE END OF THE REPORTING PERIOD. In particular, the fund took advantage of
attractive yields in the Mexican fixed income market, placing nearly 12% of
assets in peso-denominated treasury bills. We decreased the fund's Mexican
position in Brady Bonds*** during the year and increased its holdings in
Cetes.*** The value of these bonds held up well relative to the Brady Bonds
during the recent global sell-off. The fund lowered its holdings of Canadian
bonds somewhat -- from 15% of assets in April to 14% as of fiscal-year end.
COMPARED TO CONDITIONS IN ASIA, THE UNITED STATES WAS A BASTION OF STABILITY.
During the first quarter of 1997, gross domestic product in the United States
increased at its fastest pace since 1987. Fears that the rapid growth would
ignite inflation prompted the Federal Reserve Board to raise short-term interest
rates by 0.25% in March, the first increase in two years. Economic growth
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PORTFOLIO COMPOSITION BY RATING
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As a percentage of total assets on October 31, 1997
[CHART]
INVESTMENT GRADE 79%
AAA 49%
A 1%
A1 1%
A2 12%
BBB 7%
Other Assets 9%
NON-INVESTMENT GRADE 21%
BB 12%
B 4%
Not Rated 5%
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1997 Annual Report 5 The Americas Income Trust
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PORTFOLIO MANAGER'S LETTER (continued)
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slowed modestly over the remainder of the fiscal year, however, allowing Fed
policy makers to leave rates unchanged at subsequent meetings. The solid
economic growth pushed the nation's unemployment rate to its lowest level since
1973.
DESPITE THE SOLID PACE OF ECONOMIC ACTIVITY IN THIS COUNTRY, INFLATION REMAINED
BENIGN. During the year, consumer prices increased by only 2.1% while producer
prices actually fell during the first seven months of 1997. Despite upward
pressure on wages caused by a tight labor market, inflation was kept in check by
significant productivity gains and by a strong rally in the U.S. dollar, which
exerted downward pressure on the cost of imported goods.
THE FAVORABLE INFLATION PICTURE LED TO A SOLID RALLY IN U.S. BOND PRICES. In
particular, long-term bond yields fell sharply late in the fiscal year after it
became clear that domestic monetary policy was likely to remain stable for the
foreseeable future. Also, the currency crisis in Asia caused a global "flight to
quality" as fixed income investors took refuge in the huge and highly liquid
U.S. Treasury market.
THE FUND TRADED WITHIN THE U.S. FIXED INCOME MARKET IN SEARCH OF RELATIVE VALUE,
BUT KEPT ITS TREASURY DURATION*** STABLE AT 4.7 YEARS. We continue to view the
fund's Treasury holdings as a "safe haven" for the portfolio, and are therefore
inclined to keep durations relatively low. As of October 31, the fund held 35%
of assets in investment-grade U.S. government debt, up from 33% one year
earlier.
LOOKING FORWARD, THE ECONOMIC PROBLEMS IN ASIA ARE LIKELY TO CAUSE A NOTICEABLE
SLOWDOWN IN GROWTH IN JAPAN, EUROPE AND THE UNITED STATES. Overall, we expect
that global economic growth could be reduced by up to 0.75% as a result of weak
demand in Asia. On the plus side, however, the effect of the widespread currency
devaluations will be lower prices for Asian exports. Coupled with continued
expansion in global productive capacity, our outlook for inflation remains
positive. At the same time, we see little likelihood of outright deflation in
the United States, primarily because of the extremely tight domestic labor
market.
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1997 Annual Report 6 The Americas Income Trust
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PORTFOLIO MANAGER'S LETTER (continued)
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WE BELIEVE THAT LATIN AMERICA IS PARTICULARLY WELL POSITIONED FOR GROWTH.
Despite political pressure in Brazil to devalue its currency, the government of
President Cardoso has instituted an austerity program that should reduce federal
spending significantly and keep the country's currency stable. The trend toward
responsible fiscal and monetary policy that has played out in Brazil in recent
years has generally taken hold throughout the region. As of October 31, the fund
had 30% of assets invested in Argentina, Brazil, Ecuador, Mexico, Panama, Peru
and Venezuela, down from 32% in April.
DESPITE RECENT VOLATILITY, WE BELIEVE THAT EMERGING MARKET DEBT CONTINUES TO
REPRESENT A SOLID AND VIABLE ASSET CLASS FOR INVESTORS WITH A LONG-TERM TIME
HORIZON. Certainly, the upheaval that shook emerging markets during October was
painful. But we expect that over time, a well-managed and properly diversified
portfolio of bonds -- with a portion invested in emerging markets -- will
provide solid diversification for long-term investors seeking a high level of
current income. Indeed, since we began managing the fund in May 1996, this
strategy has garnered a 27.26% return through November 1997, versus 20.09% for
the blended index.*
Thank you for your confidence in The Americas Income Trust. We appreciate the
opportunity to help you manage your investments.
Sincerely,
/s/ Peter Wilby
Peter Wilby
Managing Director, Senior Portfolio Manager
Salomon Brothers Asset Management
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1997 Annual Report 7 The Americas Income Trust
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Financial Statements
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STATEMENT OF ASSETS AND LIABILITIES October 31, 1997
................................................................................
<TABLE>
<S> <C>
ASSETS:
Investments in securities at market value* (note 2)
(including a repurchase agreement of $444,000) ........... $72,268,580
Cash in bank on demand deposit ............................. 1,485,753
Receivable for investment securities sold .................. 4,734,027
Accrued interest receivable ................................ 767,144
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Total assets ............................................. 79,255,504
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LIABILITIES:
Payable for investment securities purchased on a when-issued
basis (note 2) ........................................... 19,375,937
Payable for investment securities purchased ................ 3,878,498
Accrued investment management fee .......................... 25,709
Accrued administrative fee ................................. 10,284
Other accrued expenses ..................................... 23,839
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Total liabilities ........................................ 23,314,267
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Net assets applicable to outstanding capital stock ....... $55,941,237
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COMPOSITION OF NET ASSETS:
Capital stock and additional paid-in capital ............... $72,465,613
Undistributed net investment income ........................ 556,355
Accumulated net realized loss on investments and foreign
currency transactions .................................... (15,339,829)
Unrealized depreciation of investments and on translation of
other assets and liabilities denominated in foreign
currencies ............................................... (1,740,902)
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Total - representing net assets applicable to capital
stock .................................................. $55,941,237
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* Investments in securities at identified cost ............. $74,004,595
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NET ASSET VALUE AND MARKET PRICE:
Net assets ................................................. $55,941,237
Shares outstanding (authorized 2 billion shares of $0.01 par
value) ................................................... 6,251,305
Net asset value ............................................ $ 8.95
Market price ............................................... $ 8.25
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 8 The Americas Income Trust
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Financial Statements (continued)
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STATEMENT OF OPERATIONS For the Year Ended October 31, 1997
................................................................................
<TABLE>
<S> <C>
INCOME:
Interest ................................................... $ 4,682,712
Fee income (note 2) ........................................ 404,540
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Total investment income .................................. 5,087,252
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EXPENSES (NOTE 3):
Investment management fee ................................. 288,685
Administrative fee ......................................... 115,474
Custodian and accounting fees .............................. 112,045
Transfer agent fees ........................................ 20,355
Reports to shareholders .................................... 41,707
Directors' fees ............................................ 12,085
Audit and legal fees ....................................... 48,680
Other expenses ............................................. 27,076
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Total expenses ........................................... 666,107
Less expenses paid indirectly .......................... (3,591)
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Total net expenses ....................................... 662,516
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Net investment income .................................... 4,424,736
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NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain on investments (note 4) .................. 4,886,368
Net realized loss on foreign currency transactions ......... (93,913)
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Net realized gain on investments and foreign currency
transactions ........................................... 4,792,455
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies ............ (4,463,289)
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Net gain on investments and foreign currency ............. 329,166
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Net increase in net assets resulting from operations ... $ 4,753,902
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 9 The Americas Income Trust
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Financial Statements (continued)
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STATEMENTS OF CHANGES IN NET ASSETS
................................................................................
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
10/31/97 10/31/96
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<S> <C> <C>
OPERATIONS:
Net investment income ...................................... $ 4,424,736 $ 3,716,986
Net realized gain (loss) on investments and foreign currency
transactions ............................................. 4,792,455 (11,826,317)
Net change in unrealized appreciation or depreciation of
investments and on translation of other assets and
liabilities denominated in foreign currencies ............ (4,463,289) 15,714,600
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Net increase in net assets resulting from operations ..... 4,753,902 7,605,269
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DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. (3,875,810) --
Tax return of capital ...................................... -- (3,942,505)
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Total distributions ...................................... (3,875,810) (3,942,505)
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CAPITAL SHARE TRANSACTIONS: (NOTE 6):
Decrease in net assets from capital share transactions ..... -- (351,813)
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Total increase in net assets ............................. 878,092 3,310,951
Net assets at beginning of year ............................ 55,063,145 51,752,194
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Net assets at end of year .................................. $55,941,237 $55,063,145
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Undistributed net investment income ........................ $ 556,355 $ --
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</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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1997 Annual Report 10 The Americas Income Trust
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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. The fund may invest up to
35% of its assets in non-rated and below investment grade debt
securities. Debt securities that the fund may invest in include:
mortgage-related 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. The fund may purchase
securities through the dollar-roll program. Fund shares are
listed on the New York Stock Exchange under the symbol XUS.
(2) SUMMARY OF
SIGNIFICANT
ACCOUNTING
POLICIES
................................
INVESTMENTS IN SECURITIES
Portfolio securities for which market quotations are readily
available are valued at current market value. If market
quotations or valuations are not available, or if such quotations
or valuations are believed to be inaccurate, unreliable or not
reflective of market value, portfolio securities are valued
according to procedures adopted by the fund's board of directors
in good faith at "fair value", that is, a price that the fund
might reasonably expect to receive for the security or other
asset upon its current sale.
The current market value of certain fixed income securities is
provided by an independent pricing service. Fixed income
securities for which prices are not available from an independent
pricing service but where an active market exists are valued
using market quotations obtained from one or more dealers that
make markets in the securities or from a widely-used quotation
system. Short-term securities with maturites of 60 days or less
are valued at amortized cost, which approximates market value.
Securities transactions are accounted for on the date securities
are purchased or sold. Realized gains and losses are calculated
on the identified-cost basis. Interest income, including
amortization of bond discount and premium, is recorded on an
accrual basis.
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1997 Annual Report 11 The Americas Income Trust
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Notes to Financial Statements (continued)
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FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the
closing rate of exchange. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are
translated at the exchange rate on the transaction date. For
financial reporting purposes the realized and unrealized gain
(loss) on investments reflects changes in exchange rates as well
as changes in the 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.
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 value if the fund makes such purchases while
remaining substantially fully invested. As of October 31, 1997,
the fund had entered into outstanding when-issued or forward
commitments of $19,375,937.
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
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1997 Annual Report 12 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
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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,
1997, such fees earned by the fund amounted to $404,540.
FEDERAL TAXES
The fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and not
be subject to federal income tax. Therefore, no income tax
provision is required. The fund also intends to distribute its
taxable net investment income and realized gains, if any, to
avoid the payment of any federal excise taxes.
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. 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 distributions, the
fiscal year in which amounts are distributed may differ from the
year that the income or realized gains and 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 increase undistributed net investment income and
increase accumulated net realized loss on investments by $7,429.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income are made monthly and
realized capital gains, if any, will be distributed at least
annually.
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1997 Annual Report 13 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
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These distributions are recorded as of the close of business on
the ex-dividend date. Such distributions are payable in cash or,
pursuant to the fund's dividend reinvestment plan, reinvested in
additional shares of the fund's capital stock. Under the plan,
fund shares will be purchased in the open market unless the
market price plus commissions exceeds the net asset value by 10%
or more. If, at the close of business on the dividend payment
date, the shares purchased in the open market are insufficient to
satisfy the dividend reinvestment requirement, the fund will
issue new shares at a discount of up to 5% from the current
market price.
REPURCHASE AGREEMENTS
For repurchase agreements entered into with certain
broker-dealers, the fund, along with other affiliated registered
investment companies, may transfer uninvested cash balances into
a joint trading account, the daily aggregate of which is invested
in repurchase agreements secured by U.S. government or agency
obligations. Securities pledged as collateral for all individual
and joint repurchase agreements are held by the fund's custodian
bank until maturity of the repurchase agreement. Provisions for
all agreements ensure that the daily market value of the
collateral is in excess of the repurchase amount, including
accrued interest, to protect the fund in the event of a default.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ from
these estimates.
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1997 Annual Report 14 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
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(3) EXPENSES
................................
INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES
The fund has entered into the following agreements with Piper
Capital Management Incorporated (the advisor and the
administrator):
The investment advisory agreement provides the advisor with a
monthly investment management fee equal to an annualized rate of
0.50% of the fund's average weekly net assets. For its fee, the
advisor provides investment advice and conducts the management
and investment activity of the fund.
Salomon Brothers Asset Management Inc. has been retained by Piper
Capital Management Incorporated as the subadvisor of the fund and
is paid a fee equal to 75% of the investment management fee.
The administration agreement provides the administrator with a
monthly fee in an amount equal to an annualized rate of 0.20% of
the fund's average weekly net assets. For its fee, the
administrator will provide reporting, regulatory and
record-keeping services for the fund.
OTHER FEES AND EXPENSES
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.
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1997 Annual Report 15 The Americas Income Trust
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
(4) INVESTMENT
SECURITY
TRANSACTIONS
................................
Cost of purchases and proceeds from sales of securities, other
than temporary investments in short-term securities and dollar
roll transactions, for the year ended October 31, 1997,
aggregated $83,505,606 and $84,696,692, respectively. Including
dollar rolls, such purchases and sales aggregated $281,344,634
and $282,535,720, respectively.
(5) CAPITAL LOSS
CARRYOVER
................................
For federal income tax purposes, the fund had capital loss
carryovers at October 31, 1997, which, if not offset by
subsequent capital gains, will expire on the fund's fiscal
year-ends as indicated below. It is unlikely the board of
directors will authorize a distribution of any net realized
capital gains until the available capital loss carryovers have
been offset or expire.
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER EXPIRATION
------------- ---------------
<S> <C> <C>
$ 300,876 2002
9,607,653 2003
5,431,300 2004
-------------
$ 15,339,829
-------------
-------------
</TABLE>
(6) RETIREMENT OF
FUND SHARES
................................
The fund's board of directors voted to discontinue the share
repurchase program effective February 6, 1996. Pursuant to the
plan, the fund repurchased and retired 51,000 shares during the
year ended October 31, 1996. Cummulatively, the fund has
repurchased and retired 190,300 shares, which represents 3.0% of
the shares originally issued.
- ---------------------------------------------------------------------
1997 Annual Report 16 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 Year Period
Ended Ended Ended Ended
10/31/97 10/31/96(e) 10/31/95 10/31/94(f)
--------- --------------- --------- ---------------
<S> <C> <C> <C> <C>
PER-SHARE DATA
Net asset value, beginning of period ... $ 8.81 $ 8.21 $10.26 $14.04
Operations:
Net investment income ................ 0.71 0.59 0.79 0.92
Net realized and unrealized gains
(losses) on investments ............ 0.05 0.64 (1.96) (3.85)
--------- ------- --------- ---------------
Total from operations .............. 0.76 1.23 (1.17) (2.93)
--------- ------- --------- ---------------
Distributions to shareholders:
From net investment income ........... (0.62) -- -- (0.73)
Tax return of capital ................ -- (0.63) (0.88) (0.12)
--------- ------- --------- ---------------
Total distributions to
shareholders ..................... (0.62) (0.63) (0.88) (0.85)
--------- ------- --------- ---------------
Net asset value, end of period ......... $ 8.95 $ 8.81 $ 8.21 $10.26
--------- ------- --------- ---------------
--------- ------- --------- ---------------
Market value, end of period ............ $ 8.25 $ 7.38 $ 6.88 $ 9.75
--------- ------- --------- ---------------
--------- ------- --------- ---------------
SELECTED INFORMATION
Total return, net asset value (a) ...... 8.63% 15.78% (10.96)% (20.98)%
Total return, market value (b) ......... 21.02% 17.32% (20.90)% (29.98)%
Net assets at end of period (in
millions) ............................ $ 56 $ 55 $ 52 $ 66
Ratio of expenses to average weekly net
assets excluding interest expense .... 1.15% 1.27% 1.21% 0.93%(g)
Ratio of expenses to average weekly net
assets including interest expense .... 1.15% 1.27% 1.21% 1.60%(g)
Ratio of net investment income to
average weekly net assets ............ 7.66% 7.23% 9.60% 10.82%(g)
Portfolio turnover rate (excluding
short-term securities and dollar roll
transactions) ........................ 121% 104% 61% 62%
Amount of borrowings outstanding at end
of period (in millions)(c) ........... -- -- -- $ 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 (d) ............... -- -- -- 540%
</TABLE>
(a) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT NET ASSET VALUE AND DOES NOT
REFLECT A SALES CHARGE.
(b) ASSUMES REINVESTMENT OF DISTRIBUTIONS AT ACTUAL PRICES PURSUANT TO THE
FUND'S DIVIDEND REINVESTMENT PLAN.
(c) SECURITIES PURCHASED ON A WHEN-ISSUED BASIS FOR WHICH LIQUID SECURITIES ARE
SEGREGATED WITH THE CUSTODIAN ARE NOT CONSIDERED BORROWINGS. SEE NOTE 2 IN
THE NOTES TO FINANCIAL STATEMENTS.
(d) REPRESENTS NET ASSETS, EXCLUDING BORROWINGS, AT END OF PERIOD DIVIDED BY
BORROWINGS OUTSTANDING AT END OF PERIOD.
(e) EFFECTIVE MAY 22, 1996, SALOMON BROTHERS ASSET MANAGEMENT INC. BECAME THE
SUBADVISOR TO THE FUND.
(f) COMMENCEMENT OF OPERATIONS WAS JANUARY 28, 1994.
(g) ANNUALIZED.
- ---------------------------------------------------------------------
1997 Annual Report 17 The Americas Income Trust
<PAGE>
Investments in Securities
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
THE AMERICAS INCOME TRUST October 31, 1997
.................................................................................................
Credit
Principal Rating Market
Description of Security (a) Amount (b) (c) Value (d)
- --------------------------------------------------------- ----------- -------- ------------
<S> <C> <C> <C>
(PERCENTAGES OF EACH INVESTMENT CATEGORY RELATE TO TOTAL NET ASSETS)
UNITED STATES OF AMERICA (56.8%):
CORPORATE SECURITIES (6.4%):
General Motors, 8.80%, 3/1/21 ....................... 1,000,000 A- $ 1,216,118
Hollinger International Publishing, 9.25%, 2/1/06 ... 1,250,000 BB- 1,284,375
Royal Caribbean Cruises, 8.13%, 7/28/04 . 1,000,000 BBB- 1,078,840
------------
3,579,333
------------
GOVERNMENT SECURITIES (16.7%):
U. S. Treasury Bond, 7.25%, 5/15/16 ................. 2,000,000 N/A 2,234,320
U. S. Treasury Note, 5.88%, 2/15/04 ................. 2,000,000 N/A 2,010,780
U. S. Treasury Note, 5.88%, 3/31/99 ................. 1,000,000 N/A 1,003,750
U. S. Treasury Note, 6.75%, 4/30/00 ................. 4,000,000 N/A 4,097,800
------------
9,346,650
------------
MORTGAGE-BACKED SECURITIES (32.9%):
FHLMC, 6.50%, 10/1/30 ............................... 5,000,000(e) N/A 4,921,850
FNMA, 8.00%, 1/1/30 ................................. 13,000,000(e) N/A 13,467,090
------------
18,388,940
------------
SHORT-TERM SECURITIES (0.8%):
Repurchase agreement with Goldman Sachs, acquired on
10/31/97, interest of $212, 5.73%, 11/3/97 ........ 444,000(f) N/A 444,000
------------
Total United States of America
(cost: $31,234,999) ............................ 31,758,923
------------
CANADA (23.3%):
CORPORATE SECURITIES (2.9%):
Rogers Cablesystems, 10.00%, 3/15/05 ................ 1,500,000 BB+ 1,635,000
------------
GOVERNMENT SECURITIES (15.8%):
Canadian Government (Canadian Dollar), 9.75%,
5/1/00 ............................................ 2,900,000 AAA 2,296,199
Canadian Government (Canadian Dollar), 8.00%,
6/1/23 ............................................ 3,000,000 AAA 2,674,942
Canadian Government (Canadian Dollar), 8.75%,
12/1/05 ........................................... 2,850,000 AAA 2,459,521
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 18 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Credit
Principal Rating Market
Description of Security (a) Amount (b) (c) Value (d)
- --------------------------------------------------------- ----------- -------- ------------
<S> <C> <C> <C>
Canadian Government Residual (Canadian Dollar),
7.17%, 10/1/08 .................................... 3,700,000(g) N/A $ 1,404,150
------------
8,834,812
------------
MORTGAGE-BACKED SECURITIES (4.6%):
First Heritage (Canadian Dollar), 6.63%, 12/1/98 .... 1,026,362 N/A 741,449
Firstline Trust (Canadian Dollar), 8.00%, 8/1/18 .... 581,912 N/A 441,143
Firstline Trust (Canadian Dollar), 7.25%, 11/1/00 ... 1,900,046 N/A 1,404,370
------------
2,586,962
------------
Total Canada
(cost: $12,092,676) ............................ 13,056,774
------------
MEXICO (22.3%):
GOVERNMENT SECURITIES (5.9%):
United Mexican States, 11.50%, 5/15/26 .............. 600,000 BB 644,039
United Mexican States, 11.38%, 9/15/16 .............. 2,500,000 BB 2,625,000
------------
3,269,039
------------
SHORT-TERM SECURITIES (16.4%):
Mexican Cetes (Mexican Peso), 17.70%, 4/2/98 ........ 85,000,000(g) A2 9,190,220
------------
Total Mexico
(cost: $13,747,527) ............................ 12,459,259
------------
ARGENTINA (4.3%):
GOVERNMENT SECURITIES (4.3%):
Argentina Global, 8.38%, 12/20/03 ................... 125,000 BB 112,188
Argentina Global (Argentine Peso), 11.75%,
2/12/07 ........................................... 1,750,000 BBB- 1,448,965
Argentina Global 144A (Argentine Peso), 11.75%,
2/12/07 ........................................... 1,000,000(h) BBB- 826,250
------------
Total Argentina
(cost: $2,873,565) ............................. 2,387,403
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 19 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Credit
Principal Rating Market
Description of Security (a) Amount (b) (c) Value (d)
- --------------------------------------------------------- ----------- -------- ------------
<S> <C> <C> <C>
BRAZIL (2.5%):
GOVERNMENT SECURITIES (2.5%):
Brazil DCB, 6.75%, 4/15/12
(cost: $1,601,041) ................................ 2,000,000(i) BB- $ 1,370,000
------------
BULGARIA (1.0%):
GOVERNMENT SECURITIES (1.0%):
Bulgaria FLIRB, 2.25%, 7/28/12
(cost: $623,682) .................................. 1,000,000(j) B3 542,452
------------
ECUADOR (2.5%):
GOVERNMENT SECURITIES (2.5%):
Ecuador PDI, 6.69%, 2/27/15 ......................... 1,640,332( ,(k) B1 943,191
Ecuador PDI Bearer, 6.69%, 2/27/15 .................. 820,169( ,(k) B1 471,596
------------
Total Ecuador
(cost: $1,395,863) ............................. 1,414,787
------------
PANAMA (5.4%):
GOVERNMENT SECURITIES (5.4%):
Panama IRB, 3.75%, 7/17/14 .......................... 1,750,000(l) BB+ 1,233,750
Panama PDI, 6.69%, 7/17/16 .......................... 2,465,112( ,(k) BB+ 1,811,857
------------
Total Panama
(cost: $3,533,466) ............................. 3,045,607
------------
PERU (5.4%):
GOVERNMENT SECURITIES (5.4%):
Peru FLIRB, 3.25%, 3/7/17 ........................... 3,000,000(m) N-R 1,500,000
Peru PDI, 4.00%, 3/7/17 ............................. 2,700,000(n) N-R 1,532,250
------------
Total Peru
(cost: $3,541,176) ............................. 3,032,250
------------
POLAND (3.8%):
GOVERNMENT SECURITIES (3.8%):
Poland Discount, 6.69%, 10/27/24
(cost: $2,094,847) ................................ 2,250,000(i) BBB- 2,115,000
------------
</TABLE>
SEE ACCOMPANYING NOTES TO INVESTMENTS IN SECURITIES.
- ---------------------------------------------------------------------
1997 Annual Report 20 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
THE AMERICAS INCOME TRUST
(CONTINUED)
<TABLE>
<CAPTION>
Credit
Principal Rating Market
Description of Security (a) Amount (b) (c) Value (d)
- --------------------------------------------------------- ----------- -------- ------------
<S> <C> <C> <C>
RUSSIA (1.4%):
GOVERNMENT SECURITIES (1.4%):
Russian IAN When Issued, 6.69%, 12/29/49
(cost: $994,500) .................................. 1,200,000 N-R $ 796,500
------------
VENEZUELA (0.5%):
GOVERNMENT SECURITIES (0.5%):
Venezuela Global, 9.25%, 9/15/27
(cost: $271,253) .................................. 350,000 B+ 289,625
------------
Total Investments in Securities
(cost: $74,004,595) (o) ........................ $ 72,268,580
------------
------------
</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) 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 / IRB - 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) WITH AN 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.
IAN - INTEREST ARREARS NOTE.
CETES - MEXICAN TREASURY NOTE.
(b) SECURITIES ARE DENOMINATED IN AND PRINCIPAL AMOUNTS ARE STATED IN U.S.
DOLLARS EXCEPT AS INDICATED PARENTHETICALLY.
(c) THE STANDARD & POOR'S (S&P) AND MOODY'S INVESTORS SERVICE INC. (MOODY'S)
RATINGS ARE A CURRENT ASSESSMENT OF THE CREDIT WORTHINESS OF AN ISSUER WITH
RESPECT TO A SPECIFIC OBLIGATION. RATINGS PROVIDED AND DESCRIBED BELOW ARE
S&P RATINGS EXCEPT FOR THE MOODY'S "B1" AND "B3" RATINGS DESCRIBED BELOW.
SECURITIES DESIGNATED AS "N-R" ARE NOT RATED BY STANDARD & POOR'S OR
MOODY'S.
"AAA" - EXTREMELY LOW SENSITIVITY TO CHANGING MARKET CONDITIONS AND
OFFER THE GREATEST STABILITY OF RETURNS.
"AA" - LOW SENSITIVITY TO CHANGING MARKET CONDITIONS AND OFFER STABLE
RETURNS OVER SHORT AND INTERMEDIATE HOLDING PERIODS.
"A" - SENSITIVE TO CHANGING MARKET CONDITIONS AND OFFER STABLE RETURNS
OVER INTERMEDIATE AND LONG HOLDING PERIODS.
- ---------------------------------------------------------------------
1997 Annual Report 21 The Americas Income Trust
<PAGE>
Investments in Securities (continued)
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
"A1" - S&P COMMERCIAL PAPER RATING. THE DEGREE OF SAFETY REGARDING
TIMELY PAYMENT IS VERY STRONG.
"A2" - S&P COMMERCIAL PAPER RATING. THE DEGREE OF SAFETY REGARDING
TIMELY PAYMENT IS STRONG.
"BBB" - AN ADEQUATE CAPACITY TO PAY INTEREST AND REPAY PRINCIPAL.
WHEREAS IT NORMALLY EXHIBITS 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 DEBT IN
THIS CATEGORY THAN IN HIGHER RATED CATEGORIES.
"BB" - 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.
"B" / "B1" OR "B3" (S&P / MOODY'S) - 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.
"N/A" - CERTAIN U.S. AND CANADIAN SECURITIES ARE NOT INDIVIDUALLY RATED
BY S&P OR MOODY'S. SUCH SECURITIES ARE IMPLIED TO CARRY THE COUNTRY'S
OVERALL DEBT RATING WHICH IN THESE CASES IS "AAA". IN ADDITION,
REPURCHASE AGREEMENTS ARE NOT RATED BY S&P OR MOODY'S. THE SHORT-TERM
RATING OF THE COUNTERPARTY IS A1.
(d) SECURITIES ARE VALUED IN ACCORDANCE WITH PROCEDURES DESCRIBED IN NOTE 2 TO
THE FINANCIAL STATEMENTS. MARKET VALUES ARE STATED IN U.S. DOLLARS.
(e) ON OCTOBER 31, 1997, THE TOTAL COST OF INVESTMENTS PURCHASED ON A
WHEN-ISSUED BASIS WAS $19,375,937.
(f) REPURCHASE AGREEMENT WHICH IS COLLATERALIZED BY U.S. GOVERNMENT AGENCY
SECURITIES. ACCRUED INTEREST SHOWN REPRESENTS INTEREST DUE AT MATURITY OF
THE REPURCHASE AGREEMENT.
(g) FOR ZERO-COUPON INVESTMENTS, THE INTEREST RATE SHOWN IS THE EFFECTIVE YIELD
ON THE DATE OF PURCHASE.
(h) SECURITY SOLD WITHIN TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT FROM
REGISTRATION UNDER RULE 144(A) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER ACCREDITED
INVESTORS. SECURITY IS CONSIDERED LIQUID UNDER GUIDELINES ESTABLISHED BY
THE BOARD OF DIRECTORS.
(i) FLOATING RATE BOND. INTEREST RATE DISCLOSED IS THE RATE IN EFFECT ON
OCTOBER 31, 1997.
(j) COUPON RATE ON THIS SECURITY INCREASES ANNUALLY IN 0.25% INCREMENTS FROM
2.00% IN 1996 TO 3.00% IN 2001, THEREAFTER RATE INCREASES (DECREASES) WITH
AN INCREASE (DECREASE) IN LIBOR.
(k) A PORTION OF THE COUPON INTEREST ON THIS BOND IS ADDED TO PRINCIPAL AND A
PORTION IS RECEIVED IN CASH.
(l) 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.
(m) COUPON RATE ON THIS SECURITY INCREASES EVERY OTHER YEAR FROM 3.25% IN 1997
TO 5.00% IN 2007, THEREAFTER RATE INCREASES (DECREASES) WITH AN INCREASE
(DECREASE) IN LIBOR.
(n) COUPON RATE ON THIS SECURITY INCREASES PERIODICALLY IN 0.50% INCREMENTS
FROM 4.00% IN 1997 TO 5.00% IN 2007, THEREAFTER RATE INCREASES (DECREASES)
WITH AN INCREASE (DECREASE) IN LIBOR.
(o) ON OCTOBER 31, 1997, THE COST OF INVESTMENTS IN SECURITIES FOR FEDERAL
INCOME TAX PURPOSES WAS $74,004,595. 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 ...... $ 1,703,108
GROSS UNREALIZED DEPRECIATION ...... (3,439,123)
------------
NET UNREALIZED DEPRECIATION ...... $ (1,736,015)
------------
------------
</TABLE>
- ---------------------------------------------------------------------
1997 Annual Report 22 The Americas Income Trust
<PAGE>
Independent Auditors' Report
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE AMERICAS INCOME TRUST INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of The Americas Income Trust Inc. as
of October 31, 1997, 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 ended October 31, 1997, and the financial highlights for each of
the periods 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 and the financial highlights referred
to above present fairly, in all material respects, the financial position of The
Americas Income Trust Inc. as of October 31, 1997, 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 ended October 31, 1997, and the financial
highlights for the periods presented in note 7 to the financial statements, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 12, 1997
- ---------------------------------------------------------------------
1997 Annual Report 23 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.
INCOME DISTRIBUTIONS
(TAXABLE AS ORDINARY DIVIDENDS, NONE QUALIFYING FOR DEDUCTION
BY CORPORATIONS)
<TABLE>
<CAPTION>
PAYABLE DATE AMOUNT
- ---------------------------------------- -------
<S> <C>
November 27, 1996 ...................... $0.0500
December 18, 1996 ...................... 0.0500
January 10, 1997 ....................... 0.0500
February 26, 1997 ...................... 0.0500
March 26, 1997 ......................... 0.0500
April 23, 1997 ......................... 0.0500
May 28, 1997 ........................... 0.0500
June 25, 1997 .......................... 0.0500
July 23, 1997 .......................... 0.0550
August 27, 1997 ........................ 0.0550
September 24, 1997 ..................... 0.0550
October 29, 1997 ....................... 0.0550
-------
Total ................................ $0.6200
-------
-------
</TABLE>
- ---------------------------------------------------------------------
1997 Annual Report 24 The Americas Income Trust
<PAGE>
Shareholder Update
- --------------------------------------------------------------------------------
ANNUAL MEETING RESULTS
An annual meeting of the fund's shareholders was held on August
20, 1997. Each matter voted upon at that meeting, as well as the
number of votes cast for, against or withheld, the number of
abstentions, and the number of broker non-votes with respect to
such matters, are set forth below.
1. The fund's shareholders elected the following directors:
<TABLE>
<CAPTION>
SHARES SHARES WITHHOLDING
VOTED "FOR" AUTHORITY TO VOTE
------------- ------------------
<S> <C> <C>
David T. Bennett ....................... * *
Jaye F. Dyer ........................... 3,802,751 219,071
William H. Ellis ....................... * *
Karol D. Emmerich ...................... 3,804,351 217,471
Luella G. Goldberg ..................... 3,804,251 271,571
David A. Hughey ........................ 3,804,613 217,209
George Latimer ......................... 3,804,351 217,471
</TABLE>
The names of Mr. Bennett and Mr. Ellis were inadvertently omitted
from the proxy cards for the annual meeting. To assure that their
terms of office continue, the remaining board members have
elected Mr. Bennett and Mr. Ellis to serve as directors of the
fund.
2. The fund's shareholders ratified the selection by a majority
of the independent members of the fund's board of directors
of KPMG Peat Marwick LLP as the independent public
accountants for the fund for the fiscal year ending October
31, 1997. The following votes were cast regarding this
matter:
<TABLE>
<CAPTION>
SHARES SHARES VOTED BROKER
VOTED "FOR" "AGAINST" ABSTENTIONS NON-VOTES
------------- ------------ ----------- ---------
<S> <C> <C> <C>
3,810,464 170,118 41,238 --
</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
- ---------------------------------------------------------------------
1997 Annual Report 25 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- --------------------------------------------------------------------------------
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.
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 the record date for that dividend and/or capital gain
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 at
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.
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1997 Annual Report 26 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- --------------------------------------------------------------------------------
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 an 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 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 and will furnish written confirmation of all
transactions, including information you need for tax records.
Reinvested shares in your account will be held by IFTC in
noncertificated form in your name.
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
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1997 Annual Report 27 The Americas Income Trust
<PAGE>
Shareholder Update (continued)
- --------------------------------------------------------------------------------
IFTC. If your shares are registered in your brokerage firm's
name, you may terminate your participation via verbal or written
instructions to your investment professional. Written
instructions should include your name and address as they appear
on the certificate or account.
If notice is received at least 10 days before the record date,
all future distributions will be paid directly to the shareholder
of record.
If your shares are 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.
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1997 Annual Report 28 The Americas Income Trust
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
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1997 Annual Report 29 The Americas Income Trust
<PAGE>
THIS PAGE WAS INTENTIONALLY LEFT BLANK.
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1997 Annual Report 30 The Americas Income Trust
<PAGE>
GLOSSARY OF TERMS***
- --------------------------------------------------------------------------------
BENCHMARK
An established basis of comparison for an investment's performance. A benchmark
may be an unmanaged market index or a group of similar investments.
BRADY BONDS
Created as part of the Brady Plan to reorganize the outstanding debt of emerging
market nations. Brady Bonds provided the source of new funds these countries
needed to continue repayment of their loans to U.S. banks. Named after Nicolas
Brady, Secretary of the Treasury,who designed the bailout plan.
CETES
Bonds issued by the Mexican government and denominated in pesos.
CREDIT SPREAD DURATION
Credit spread duration estimates how much the value of a security is expected to
change with a given change in credit spreads. The credit spread of a security is
the incremental yield over the Treasury curve that investors demand for assuming
the credit risk of the security. Higher credit spread durations indicate more
sensitivity to changes in credit spreads. For example, if yield spreads were to
increase by 1%, the market value of a bond with a credit spread duration of five
years would decrease by about 5%, with all other factors being constant.
EMERGING MARKET DEBT
Debt issued by countries characterized as emerging market countries. According
to the World Bank, "emerging market" refers to countries with per-capita annual
incomes of less than $8,625 that have the potential for development. In this
fund, examples include: Brazil, Argentina, Poland and Mexico. Emerging market
debt is usually non-investment grade.
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1997 Annual Report 31 The Americas Income Trust
<PAGE>
GLOSSARY OF TERMS (continued)
- --------------------------------------------------------------------------------
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.
OVERWEIGHTED OR OVERWEIGHTING
In portfolio management, overweighting means a fund's portfolio contains a
higher percentage of a certain sector than its benchmark.
SELL-OFF
When securities are sold to avoid declines in prices.
TREASURY DURATION, OR 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. 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. In addition, effective duration is difficult
to calculate precisely for bonds with prepayment options, such as
mortgage-backed securities, and can be greatly affected by interest rate
changes. Effective duration does not estimate changes in the value of a security
caused by changes in the credit worthiness of the underlying issuer, and is not
a complete measure of the risk associated with investing in high-yield
securities.
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1997 Annual Report 32 The Americas Income Trust
<PAGE>
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, Retired 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 ADVISOR
- --------------------------------------------------------------------------------
PIPER CAPITAL MANAGEMENT INCORPORATED
222 South Ninth Street, Minneapolis, MN 55402-3804
SUBADVISOR
- --------------------------------------------------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT INC
Seven World Trade Center, New York, NY 10048
CUSTODIAN
- --------------------------------------------------------------------------------
MORGAN STANLEY TRUST COMPANY
1 Pierrepont Plaza, Brooklyn, NY 11201
ACCOUNTING AND TRANSFER AGENT
- --------------------------------------------------------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania, Kansas City, MO 64105-1307
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
KPMG PEAT MARWICK LLP
4200 Norwest Center, Minneapolis, MN 55402
LEGAL COUNSEL
- --------------------------------------------------------------------------------
DORSEY & WHITNEY LLP
220 South Sixth Street, Minneapolis, MN 55402
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
BY PHONE [GRAPHIC]
- --------------------------------------------------------------------------------
800 866-7778
FOR GENERAL INFORMATION
press 5, our Mutual Fund Services representatives are ready to answer your
questions.
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 800 866-7778, or mail a request to us.
ON-LINE [GRAPHIC]
- --------------------------------------------------------------------------------
http://www.piperjaffray.com/
<PAGE>
[LOGO]
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